[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
                 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 6

                            RELATED AGENCIES
                                                                   Page
 Institute of Museum and Library Services.........................    1
 Railroad Retirement Board........................................   97
 Corporation for Public Broadcasting..............................  211
 National Education Goals Panel...................................  401
 Corporation for National and Community Service...................  469
 National Mediation Board.........................................  931
 Federal Mediation and Conciliation Service....................... 1053
 United States Institute of Peace................................. 1239
 Federal Mine Safety and Health Review Commission................. 1423
 National Council on Disability................................... 1475
 National Commission on Libraries and Information Science......... 1547
 Armed Forces Retirement Home..................................... 1609
 Medicare Payment Advisory Commission............................. 1651
 National Labor Relations Board................................... 1709
 Social Security Administration................................... 1997
 Occupational Safety and Health Review Commission................. 2213
                                ________

         Printed for the use of the Committee on Appropriations
                                ________

                     U.S. GOVERNMENT PRINTING OFFICE
 56-836                     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

                              ----------                              

                                          Thursday, March 18, 1999.

                INSTITUTE ON MUSEUM AND LIBRARY SERVICES

                               WITNESSES

DIANE B. FRANKEL, DIRECTOR
LINDA BELL, DIRECTOR OF POLICY, PLANNING, AND BUDGET
BETSY SYWETZ, DIRECTOR, OFFICE OF LIBRARY PROGRAMS

                       Introduction of Witnesses

    Mr. Porter. The subcommittee will come to order.
    We begin our hearings on the appropriations for the 
agencies under the jurisdiction of the subcommittee. And we 
begin with the Institute on Museum and Library Services, 
Library Programs. And we are pleased to welcome the Director of 
the institute, Ms. Diane B. Frankel.
    This, we understand, is your last appearance before the 
subcommittee, which we are sorry to hear. And why don't you 
proceed with your statement, Ms. Frankel, and then we will talk 
about that.
    Ms. Frankel. Thank you very much. And good afternoon, Mr. 
Chairman and Congressman Jackson. I would like to introduce my 
two colleagues, Linda Bell, who is the Director of Policy, 
Planning, and Budget, and Betsy Sywetz, who is the Director of 
the Office of Library Programs.

                           Opening Statement

    It is a pleasure to be here today to testify in support of 
the President's request for the Institute of Museum and Library 
Services programs. The President's request calls for an 
investment of $154.5 million that will leverage millions of 
dollars at the state level and help all types of libraries 
throughout the nation bring information to a broader public.
    I appreciate this opportunity to report to you about our 
programs administering the Library Services and Technology Act. 
We have wonderful stories to tell about how libraries across 
the country are using these funds to leverage additional 
dollars, use technology to bring information resources to the 
public in many new ways, and to increase outreach to those for 
whom a variety of reasons have difficulty using the library.
    This has been, as you can imagine, a very productive and 
busy year for the Institute. We have had constant consultations 
with the library constituency to develop new procedures and 
processes that are streamlined and unbureaucratic. Our tasks 
have been many. We have been developing applications and 
guidelines, creating a peer-review system for competitive 
grants, and consulting on outcome reporting to enhance the 
evaluation of these grants.
    Over and over again we have been called on and received the 
support of the library community, the chief officers of State 
Library Agencies, the National Commission on Library and 
Information Science, and the many professional organizations 
that represent libraries. Through it all, it is clear that 
libraries are part of the answer to a critical question in our 
society right now.
    That question is: How does one gain the tools to be 
information literate?
    The literacy I am speaking of is not the commonly 
recognized function of learning how to read, but rather I am 
speaking about providing resources and training to build 
people's capacity to use information effectively. It is 
probably safe to say that more information is readily available 
now than every before. What individuals, businesses and 
families need is the skill to put this information to work to 
help them make good decisions.
    Information literacy means the ability to not only 
recognize when information is needed but also to identify, to 
locate, to evaluate, and use information effectively. The 
information-literate person, therefore, is empowered for 
effective decision-making, freedom of choice, and full 
participation in the Democratic society.
    For me this calls to mind the wonderfully thought-provoking 
words of T.S. Eliott, ``We shall not cease from exploration, 
and the end of all of our exploring will be to arrive where we 
started and to know the place for the first time.''
    Information-literate people have the gift of exploration 
and of all the wonders that are revealed along the way. Helping 
people use information technology is one way that libraries 
bring information to their patrons. It is a tool in the array 
of resources needed for effective research and problem-solving. 
Federal money helps libraries bring information to people in a 
whole host of ways.
    There are three themes that I would like to talk about. 
One, providing internet access in public libraries, the second 
is electronic access to information resources, and the third, 
outreach.
    One example of internet access is in the state of Florida. 
Florida had a goal of having 95 percent of all public libraries 
connected to the internet by 1998. That goal has been reached, 
and now 96 percent of Florida's 481 public libraries now have 
digital access to the internet for library users. Now even 
small, rural libraries have access to the same resources that 
used to be found only in large, urban libraries.
    The second theme, creating electronic resources to bring 
information to library users, is available in all kinds of 
libraries. These libraries use their federal funds to support 
traditional resources, sharing through interlibrary loans, new 
approaches based on licensed and commercial databases, and 
funds are also used to establish digital libraries that 
facilitate online access to a variety of material.
    And a good example of that is the Magnolia Database in 
Mississippi. It has used its federal funds to purchase 
additional databases, which may be accessed by every 
Mississippian. These databases provide access to full-text 
magazine and newspaper articles, as an example.
    Another example is the Alliance Library System in Illinois, 
which will create a regional digital library of archival 
resources relating to the history of Illinois from 1818 to 
1918. That is in collaboration with the IllinoisState 
Historical Library and other libraries within the state.
    Finally, outreach. Along with the focus on technology, 
libraries are using IMLS funding to develop programs that 
target non-traditional or new audiences. Libraries offer a wide 
range of services to bring library resources to everyone. The 
Houston Public Library is one of the many libraries throughout 
the country that participates in a program called Born to Read. 
Children's librarians make biweekly visits to health clinics to 
encourage new parents to read to their children.
    While doing all of this work, we continue to plan for the 
future, especially in terms of the research that we have been 
doing. We have done a number of studies and analyses of state 
annual reports to see trends, and developed a lexicon, which is 
a thesaurus to help IMLS answer questions about broad trends in 
library services. We will also be doing a museum-library survey 
to establish baseline data to determine the number of current 
collaborations between museums and libraries, and examine core 
characteristics to help us see if the National Leadership Grant 
program makes an impact.
    We are doing evaluations. We have offered training and 
outcome evaluation models, and have a pilot project with five 
states, and we are doing an assessment of the types of 
evaluation plans in the library five-year plans.
    As far as our performance plan, all of our staff is 
involved in developing an application and grants management 
relational database to capture significantly more data on 
grants to produce more reliable sophisticated analysis.
    We have hosted two advisory group meetings of library 
experts to help us with both our research in library and 
information science, and our education and training program.
    And finally, I would like to mention the National Digital 
Library for Education. The President's request includes $5 
million for grants for libraries to participate in development 
of a National Digital Library for Education. Now that we are 
hooking up all libraries and schools to the internet, we need 
content. These funds could be used to support a range of 
competitive projects, such as digitization and registration of 
classic books, digitization of classroom curricular materials 
to teach state history in every state, and research to develop 
and improve retrieval mechanisms.
    We can be very proud, I think, of the way libraries 
throughout this country have used these funds. And I urge you 
to support the President's request of $154.5 million for the 
Office of Library Services at the Institute of Museum and 
Library Services.
    [The prepared statement of Ms. Frankel follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                          director's departure

    Mr. Porter. Ms. Frankel, thank you for that excellent 
statement. You have been giving us good statements for your 
entire three years before this subcommittee, and we do 
understand that you will be leaving. Where are you going?
    Ms. Frankel. I am going back to San Francisco to become a 
constituent of Congresswoman Pelosi. [Laughter.]
    Mr. Porter. Well, I knew I would hear about that in few 
minutes. [Laughter.]
    Is this a term matter? I mean, do you have a term that is 
up?
    Ms. Frankel. No. I was offered a job with a foundation, and 
I am going back for that.
    Mr. Porter. I understand that the next Director would come 
from the library side since you came from the museum side. Is 
that the way it works?
    Ms. Frankel. Yes. And then back and forth.

                           amount of request

    Mr. Porter. It seems to me that at least the library side 
has to stay fairly close to the state of the art in information 
services that exists in our country because of availability so 
broadly outside of library services. And maybe I don't 
understand, but it looks as if you have a cut in your budget of 
about $8 million.
    What was the funding for fiscal year 1999, this year? We 
have it at $166.175 million. Does that sound right?
    Ms. Frankel. That is correct.
    Mr. Porter. All right. Now, I would like to ask, are you 
going to be able to do what you need to do with less funds than 
last year? Or why is there less funds?
    Ms. Frankel. Well, part of the reason is that $15 million 
of that was earmarked funds.
    Mr. Porter. For?
    Ms. Frankel. For specific projects, library projects 
throughout the country.
    Mr. Porter. Did Congress add those?
    Ms. Frankel. Yes. Congress did add those.
    Mr. Porter. And so the base figure that the President 
offered before was a little bit below what he is offering this 
time?
    Ms. Frankel. It was $151 million. So this is a $3 million 
addition.
    Mr. Porter. I see. Okay. That explains it. Now, what was 
the amount that you asked OMB to put forward for you?
    Ms. Frankel. It was the amount that the President had 
requested.
    [The information follows:]

    The Institute of Museum and Library Services request to the 
Office of Management and Budget for library services for FY 
2000 was $160,000,000.

    Mr. Porter. $154 million?
    Ms. Frankel. Yes.
    Mr. Porter. Oh. That's unusual. [Laughter.]
    We don't hear that very often.

                            accomplishments

    What do you feel is the most important accomplishment that 
you have been able to achieve over the last three years?
    Ms. Frankel. Well, I think really the most important thing 
has bringing the library programs from the Department of 
Education and integrating them into the Institute of Museum and 
Library Services. I think we have done it in a beautiful 
transition. The library community has been incredibly 
supportive of this, very responsive, and they feel that they 
are really well-represented through the Institute of Museum and 
Library Services.
    That is really the best accomplishment.
    Mr. Porter. What will be the most important piece of advice 
that you can give to your successor?
    Ms. Frankel. That is a great question. I guess it would be 
to listen, listen hard, before you decide what kinds of 
decisions you are going to make. And really talk to the whole 
constituency because there is a lot of great wisdom and 
knowledge in the field.

                                  GPRA

    Mr. Porter. We are going to talk for a minute about GPRA.
    Ms. Frankel. Aha.
    Mr. Porter. In reading through your budget justification, I 
noticed that you have performance measures for all of your 
programs. However, they have neither baselines to show where we 
were before the programs nor goals to show where we will be or 
want to be. For each performance measure, I would like to see 
quantifiable measures in addition to the qualitative ones.
    For example, one outcome you hope to achieve is to advance 
library services by electronic linkages. I would like to see 
information on where the United States stands today and where 
you expect to be in the future.
    How do you plan to measure whether or not library service 
to the public is in fact enhanced through effective use of new 
technologies and training? Would that be the number of people 
using libraries? Some kind of measure of satisfaction?
    And are any of your goals or objectives going to be 
accomplished in Fiscal Year 2000?
    Ms. Frankel. Well, I think I have to step back a bit and 
just say that we have taken your advice as well as your concern 
about these very seriously, as you know. And we started with a 
content analysis of the state plans because 90 percent of our 
money goes to the states. An analysis of the state library 
plans showed that there are over 670 different kinds of 
programs identified by the states. That was overwhelming to us, 
and I'm sure the states as well, which led us then to look at 
something about how do we create a thesaurus to begin to group 
projects together so that we can begin to get some kind of 
measure.
    As I recall, you said to me, how do we measure apples 
against apples and oranges against oranges. This is our first 
attempt to begin to look at that. The lexicon is our next 
attempt. We also have been working with five states to do a 
model evaluation outcome program. That means that they will 
pick one area that they are doing in common and begin to 
examine the kind of questions that you are asking.
    So much of this is qualitative because it is very hard to 
measure what happens once somebody leaves the library. There is 
the whole privacy issue and we don't want to do output. We 
really want to measure outcomes, as you have suggested. And so 
these five states are going to help us look at that model of 
outcome-based evaluation.
    So I can't say that we are going to finish it in 1999. But 
we are certainly well on our path.
    Mr. Porter. You can say that you are working hard at it and 
you have it in focus?
    Ms. Frankel. We are. We do.

                 national digital library for education

    Mr. Porter. One of the--the goal of the digital library 
initiative is to connect all libraries through internet, is 
that correct? Is $5 million going to be enough to accomplish 
this goal? And how long do you think this will take?
    Ms. Frankel. The goal of the digital library is actually to 
really get digitization and registration of classic books or 
classroom curricular material to teach state history. Five 
million dollars is a good beginning, but it certainly will 
enhance what libraries are already doing.
    Libraries are very much engaged with technology. And 
digitizing their collections is another piece of it. And, as I 
said, it is one piece. It is certainly not going to be the last 
piece of it.

                          administrative costs

    Mr. Porter. The administrative portion of your library 
budget, although still below the 3 percent set-aside permitted 
under law, has increased 9 percent. The bulk of this increase 
is in space rental and research and evaluation.
    Ms. Frankel. Yes.
    Mr. Porter. What will the Institute be doing in Fiscal Year 
2000 in research and evaluation activities that causes this 
increase? And why is there a large increase in your space rent? 
Your justification tells us that the Institute is being forced 
to move from space it is currently occupying to new space. With 
a market rate of $45 a square foot, is this new space bigger or 
the new space more expensive?
    Ms. Frankel. The new space will be more expensive.
    Mr. Porter. Why?
    Ms. Frankel. Because we would be moving, probably, 
intodowntown Washington from our location. And so our rent would be 
market rate. It will go up considerably. Even if we stay where we are, 
our rent is going to go up. And we do need a bit more space. Yes. So 
that is the significant difference.
    In terms of the research, most is related to GPRA. The 
content analysis, the lexicon, the model-based program. We are 
spending a lot of money on research, I think, in an appropriate 
way. And I am really pleased about that.
    Mr. Porter. Thank you, Ms. Frankel. Mr. Jackson.
    We are operating under the eight-minute rule.
    Mr. Jackson. Mr. Chairman, I have no questions.
    Mr. Porter. Pardon?
    Mr. Jackson. I have no questions, sir.
    Mr. Porter. Ms. Pelosi.

                            accomplishments

    Ms. Pelosi. Thank you very much, Mr. Chairman. I appreciate 
your commendation of the service of Director Diane Frankel. We 
were very proud in San Francisco, and in all of California when 
Director Frankel was named, and even prouder now when we see 
the excellent service that we knew she would provide. And she 
is such a wonderful leader that she is able to attract and 
retain wonderfully skilled staff. I know that she is very proud 
of her staff. And as she mentioned herself, because she 
listens, she was able to make good judgments.
    And as your representative in Congress, I want to publicly 
say how proud I am of your service. And we will miss you. But I 
know that you did such a great job when you were here that your 
successor will easily build on those successes.
    Mr. Porter. Will the gentlelady yield? I am beginning to 
believe that you have far exceeded your quota of high officials 
in the Administration in your district. [Laughter.]
    Ms. Pelosi. It is a start.
    Mr. Porter. They all live in San Francisco.
    Ms. Pelosi. What can I say. It is a magnificent place to 
represent because we have such incredible talent and a lively 
engaged population. And that is why they have such an 
appreciation of you, Mr. Chairman, and all of your attention to 
all of the good causes.
    But I do appreciate your recognition of Diane Frankel, and 
we welcome her back home.

          communications technology and disadvantaged children

    But, as for today, I wish you could talk a little about the 
work of the Institute and how it is connected to helping young 
people acquire skills they need in today's information 
technology environment, particularly focusing on the work of 
the institute and how it helps disadvantaged children who may 
not otherwise have access to computers and other communications 
technology.
    Ms. Frankel. Thank you. Well, we have been working with the 
states, and they are really concerned about making sure that 
libraries are available to the disadvantaged. I spent some 
time, actually, in Chicago and saw that with access to the 
internet, they were bringing in teenaged boys from the inner 
city who hadn't used the library in years. That is one way that 
they have really continued to attract young people.
    Another one is, again, the city of Chicago, which is really 
quite outstanding, has a pass. You can come in as a family and 
check out a pass to museums all throughout the city, which I 
think is quite wonderful.
    And finally, many of the libraries have after-school 
programs in which they ensure that latchkey children can come 
into that library and have access to the internet so that they 
can do their homework. And children's librarians are very 
concerned and engaged in these kinds of activities throughout 
America.
    Ms. Pelosi. Well, I don't think you can ever do too much in 
that area because the disparities that already exist for these 
children in terms of that opportunity are exacerbated, of 
course, if they are not technologically oriented as well.
    Ms. Frankel. Right.
    Ms. Pelosi. I note in your budget request, $5 million--and 
also I note, Mr. Chairman, you noticed that we have our fair 
share of appointees from California, San Francisco, but I 
noticed that the good examples that are pointed out usually are 
in Illinois, and Chicago in particular. [Laughter.]
    I congratulate you for the good work of your constituents 
as well.
    Mr. Porter. We wouldn't believe that those were picked out 
just by Ms. Frankel to make a point would we?
    Ms. Pelosi. No, no, no. [Laughter.]
    You wouldn't think that, would you, Mr. Jackson? 
[Laughter.]

                 national digital library for education

    In any case, I note in your budget request, $5 million for 
a National Digital Library. And you did go into some detail 
about it. Is there anything you want to add for the record 
about it?
    Ms. Frankel. Just that I think, again, it is an additional 
amount of money that will let a number of institutions that 
might not be able to digitize their collections do it. Quality 
content on the internet is the critical piece. Technology is 
simply a tool, and if we don't have good content, then it is 
really useless.
    And the organization of the content, which libraries are 
famous for, is why we really want the ability to digitize these 
collections.
    Ms. Pelosi. I think that is so important. Mr. Chairman, my 
colleagues, when I first--my first official position in 
politics or in government was to be a library commissioner in 
the city of San Francisco. And that was a long time ago, over 
20 years ago. And at that time we fought so hard to build a new 
library. And thank God we didn't succeed because it would have 
been obsolete on the spot when it was finished because just in 
a few years--well this was the early seventies, almost 25 years 
ago. Just a few years after that, the state of the art 
completely changed, and we couldn't build our library because 
we couldn't get a site. By the time they got a site years 
later, they built a magnificent library, which I, again, invite 
the chairman to--we are not asking for money, we are not 
looking for money. I just think you would be edified to see the 
incredible place and the difference that the library--the 
technology--has made to the library. But therefore, also, we 
have to have everyone be computer literate so that they can 
take advantage of that technology.
    So I appreciate your good work in that regard. I have 
nofurther questions.
    But, Mr. Chairman, since we were speaking of talent here 
and there, I want a point of personal privilege to acknowledge 
that my own talented daughter, an assistant district attorney 
from San Francisco, Christine Pelosi, is joining us here today. 
So----
    Mr. Porter. Oh. Wonderful. Welcome. Nice to see you.
    Ms. Pelosi. Thank you, Mr. Chairman. I have no further 
questions.
    Mr. Porter. I have been on this subcommittee a long time, 
and I don't recall your daughter having been here before. Is 
that right?
    Ms. Pelosi. She is here as a member of the Democratic 
National Committee in her own right. And so I have to----
    Mr. Porter. We will forgive her for that. [Laughter.]

                             Y2K compliant

    Ms. Frankel, in the budget justification, you mention that 
in 1998 IMLS began to update their computer system and software 
to become Y2K-compliant. This is an issue, you might imagine, 
that we are very sensitive about on this subcommittee.
    Are any of the funds that you are requesting for Fiscal 
Year 2000 being used for this activity?
    Ms. Frankel. No. But we will have finished it by October 
1st.
    Mr. Porter. You will?
    Ms. Frankel. Yes.
    Mr. Porter. A hundred percent certain?
    Ms. Frankel. Yes. According to my staff, a hundred percent 
certain.
    Mr. Porter. All of us on the subcommittee that, 
particularly the Chairman, sit here in dread fear we are going 
to have some horrible problem when the clock strikes midnight 
on January 1. We are asking everyone about this. You are in 
good shape?
    Ms. Frankel. I am confident. Yes.

                        library grants to states

    Mr. Porter. In the next fiscal year, you are requesting 
$2.6 million to enable states to extend their reach into 
additional rural or previously under-served areas. It is my 
understanding that the library grants to states are based on a 
formula tied to population. How is this $2.6 million going to 
be allocated? And will the funding go to the states that have 
the largest rural population?
    Most states and territories that received grants from IMLS 
inform the institute--must the states and territories that 
receive grants inform you as to what they are using the funds 
for?
    Ms. Frankel. The states' five-year plans lay out the 
groundwork for what they are going to do. If they want to 
modify it, they must notify us by April 1st. I think the two 
point six is probably for the Native American tribal--Is that 
possible?
    Mr. Porter. All we have is the additional rural or 
previously under-served areas.
    Ms. Frankel. Uh-huh.
    [Pause while Ms. Frankel confers with staff members.]
    Ms. Sywetz. I believe that the $2.6 million you mention is 
part of the state allocation. And the reporting of how we 
expect it to be spent is based on the plans that they have 
given us.
    Mr. Porter. It is on page 52 of the justification, 
apparently. Not Native Americans, right?
    Ms. Frankel. No. It is not. You are right.
    I apologize. It is very close to our Native Americans.
    Well, I think it is what Betsy said. As they went through 
the plans, they look through and that is what they recognize 
was going to go to rural.

                 national digital library for education

    Mr. Porter. Your request for the Office of Library Services 
includes the $5 million for competitive grants to develop a 
national digital library. This $5 million is not part of the 
formula-based library grants to states. Why do we need to 
particularly target it this way?
    If you just gave additional money to the states in formula-
based grants, wouldn't they use the money for technology 
anyway?
    Ms. Frankel. They might, but this is a specific White House 
initiative, which we have identified separately and would like 
to have as a competitive grant program in a separate category.
    Mr. Porter. Okay. In Fiscal Year 1999, the Institute 
received $5.5 million for National Leadership Grants for 
libraries. This year, you are asking for another $5.1 million 
for the National Digital Library initiative. Has your agency 
received more project requests that deal with digitization in 
the last few years?
    Ms. Frankel. Digitization has been a big area, yes. The 
preservation and digitization category of National Leadership 
Grants, supported the largest number of awards, 13 awards for 
$1.7 million last year. And so we do find that there are a 
number of applications in that area, along with the others.
    Mr. Porter. You have highlighted the Florinet grants in 
Florida as a state grant that has been able to successfully 
connect 96 percent of public libraries to the internet, 
including rural libraries. How do you share their experience 
with other states? Or do you? Is this part of your role?
    Ms. Frankel. Yes. We have found that the states are very 
interested in promising practices that happen in other states. 
So one of the places we have been sharing promising practices 
is on our web site, identifying practices, letting people know 
what they are so they can talk to each other.
    The other part is that the Chief Officers of the State 
Library Agencies meet together two or three times a year. And, 
again, we use that opportunity to spotlight what people are 
doing.
    Mr. Porter. Well, you have answered our questions so 
efficiently, we have finished quickly. Members may have 
additional questions for the record.
    Ms. Frankel, you have done a wonderful job there. And we 
wish you well in your new position. And give all of that good 
advice to your successor.
    Ms. Frankel. Thank you very much. And thank you for the 
opportunity to have presented before you these three years. I 
have really enjoyed it and appreciate it.
    Mr. Porter. The subcommittee will stand in briefly in 
recess.
    [The following question was submitted to be answered for 
the record:]

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                                          Thursday, March 18, 1999.

                       RAILROAD RETIREMENT BOARD

                               WITNESSES

CHERRYL THOMAS, CHAIR, RAILROAD RETIREMENT BOARD
JEROME KEVER, MANAGEMENT BOARD MEMBER
VIRGIL SPEAKMAN, JR., LABOR BOARD MEMBER

                       Introduction of Witnesses

    Mr. Porter [presiding]. The Subcommittee will come to 
order.
    We continue our hearing on the independent agencies within 
our jurisdiction, and we are pleased to welcome the Railroad 
Retirement Board: Cherryl Thomas, the Chair; Jerome Kever, the 
management board member, and Virgil Speakman, Jr., the labor 
board member.
    Welcome to all of you.
    Ms. Thomas, you have an opening statement, I understand.
    Ms. Thomas. I do, Mr. Chairman.
    Mr. Porter. Why don't you proceed with your statement, and 
then we will go to questions.

                           Opening Statement

    Ms. Thomas. Thank you. Yet again, good afternoon, Mr. 
Chairman and Members of the Committee. I am Cherryl T. Thomas, 
Chair of the Railroad Retirement Board. And as you have stated, 
with me today are V.M. Speakman Jr., the Labor Member of the 
Board, and Jerome F. Kever, the Management Member of the Board.
    The Railroad Retirement Board administers comprehensive 
retirement-survivor, and unemployment-sickness insurance 
benefit programs for railroad workers and their families under 
the Railroad Retirement and Unemployment Insurance Acts. I must 
emphasize that the basic entitlement programs we administer are 
not subject to discretionary spending, and the administrative 
expenses associated with these programs are paid primarily by 
payroll taxes from railroad employers and employees.
    While these stakeholders expect effective and efficient 
programs, they also expect service levels appropriate to the 
taxes they pay. It is not unreasonable to expect them to 
question how, with continued cuts to our funding and staffing 
levels, we can expect to adequately administer what has been 
described as a very complex pension system.

                    request for administrative funds

    The funding level proposed by the President for the Board's 
fiscal year 2000 administrative expenses was set at $86.5 
million. It appears to the Board, however, that to ensure 
adequate service, we would need an additional $7.5 million, 
including approximately $5.9 million for salary and benefits, 
and $1.6 million for information technology investments.
    We are, therefore, requesting $94 million. In addition, the 
General Services Administration has announced its intention to 
charge us commercial rental rates rather than the actual cost 
currently charged to trust-fund agencies. This would increase 
our rent by an estimated $3.35 million in fiscal year 2000. 
Because GSA notified us only last month of its intention, this 
potential increase in our rent is not included in our $94 
million budget request.
    At the President's proposed funding level, we would be 
forced to make staffing cuts that would have an immediate 
negative impact on our customers and our trust funds. The 
accuracy and timeliness of benefit payments would suffer. 
Program integrity activities, which help to identify erroneous 
payments, would be sharply curtailed. And customer service 
would decline as we defer numerous automation initiatives 
designed to improve our operations and efficiency.
    One of the major challenges we face is to solidify our 
plans for conducting business in the 21st century. We envision 
our customers having a variety of choices when contacting the 
Board, whether that be in person, by telephone, by U.S. 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 the context of that one 
initial contact.
    To create this environment, the Board will need highly 
trained employees who are able to resolve customer issues or 
facilitate resolution of issues when contacted. Board employees 
will in turn need enhanced information technology capabilities 
to complete their handling of each transaction on the spot.
    With careful planning and investments, we believe we can 
establish a framework of an efficient and effective information 
technology environment that supports our vision and our 
strategic goals well into the future. To get to that point, the 
Board is requesting additional technology funding in year 2000 
as detailed in the written statement.
    We estimate that based on the projected average salary for 
our employees in fiscal year 2000, the proposed funding would 
be sufficient for only 1,000 [Clerk's note.--Later corrected to 
1,002] full-time equivalent staff years. We anticipate being 
reimbursed by the Health Care Financing Administration for 
Medicare activities in fiscal year 2000 for an additional 
estimated 44 FTE's and other administrative costs.
    We, therefore, will be able to fund only 1,046 FTE's, which 
is 150 less than we expect to need in fiscal year 1999. As a 
result, we would be required to implement a significant 
reduction-in-force on October 1, 1999 of 119 FTE's, which would 
be 10 percent of our workforce.

                       recent staffing reductions

    Over the last several years, our agency has undergone 
dramatic reductions in both staffing and funding, which affect 
our ability to withstand further cuts. At the President's 
proposed level of $86.5 million, FTE reductions from 1993 
through fiscal year 2000 are projected to be 38.4 percent of 
the Board's total staff. This is more than double the reduction 
of 15.7 percent projected for total civilian employment in the 
Executive Branch of the Government and nearly seven times the 
reduction of 5.7 percent projected for non-defense employment 
shown in the analytical perspectives published as part of the 
President's proposed budget for fiscal year 2000.
    Further, while total Government-wide discretionary outlays 
are projected to rise in fiscal year 2000 as compared to fiscal 
year 1999, the Board's administrative budget would undergo a 
3.9 percent cut.
    Within this proposed budget, the Board would be required to 
both absorb this actual cut in spending as well as pay for an 
expected 4.4 percent January 2000 pay increase for our 
employees.

                         year 2000 preparations

    Regarding technology, as we approach the next millennium, 
we are continuing to focus heavily on the Year 2000 project. As 
of January 15, 1999, we had implemented 100 percent of our 
mission-critical systems and approximately 70 percent of our 
non-mission-critical systems. We are very confident in our 
ability to bring this project to a successful conclusion before 
the new millennium.
    In concluding our testimony, we want to stress the Board's 
commitment to improving our operations and providing quality 
service to our beneficiaries in the face of tight budgetary 
resources.

                 comments on suggestions for the future

    On a final note, Mr. Chairman, during the appropriation 
hearing last year, you requested that as the new Chair I 
present my thoughts on former Chairman Bower's ``Suggestions 
for the Future.'' For the record, I am submitting that response 
today.
    I thank you for the opportunity to appear before you today. 
We will be happy to answer any questions you may have.
    [The prepared statements follow:]

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                      Comments by Chairman Porter

    Mr. Porter. While you were testifying, I was thinking to 
myself, you really ought to tell us how you really feel about 
the President's budget. [Laughter.]
    I am sorry Ms. Pelosi is not here so that Mr. Jackson and I 
could join in showing her that not all the high officials of 
the Clinton administration come from San Francisco. Some of 
them come from Chicago.
    Ms. Thomas. Thank you.
    Mr. Porter. And, I am sure I speak for Jesse and myself in 
welcoming you and saying we are very proud that a Chicagoan 
holds this important position.
    I like--I'm not sure. Oh, Jesse's gone. I'm not sure Jesse 
likes it, but most of the people who come to testify before us, 
when we say, Do you like what the President gave us? they say 
Oh, yes. And we know they really don't.
    In your case, you are telling us right out, and I suppose 
that is what we mean when we say independent agency. You can be 
independent and say what you really believe ought to be part of 
your budget.
    Let me say that we think this agency is historically one 
that has done an excellent job of husbanding its money and 
doing its work in an efficient way. And I don't think you ought 
to be penalized for doing that. I think you ought to be 
rewarded.
    Because you have done such a good job, I suppose the 
President thinks you should cut your budget. I think the 
opposite should be the case. If you have done a good job, you 
ought to get the resources that you feel you truly need to do 
your work. And so, I can tell you right now, I am going to do 
my best to accede to your request because I think the agency is 
a very well-run agency and one that ought to be given the 
resources it needs to continue to do the fine work that it has 
been doing.
    You also have individuals on your Board, representatives 
who are experienced, able people that do a wonderful job. Two 
of them are right there. And we feel that they ought to be 
encouraged in their work as well as you as Chairman.
    So we do have some questions, but I just claim Ms. Thomas 
as ours. Nancy didn't stay, Jesse, to hear that. [Laughter.]
    But let me ask you a few questions before I yield.

               carry-over of funds from fiscal year 1999

    In fiscal year 1999, the Committee gave each agency 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 date for these accounts 
become January 1 to December 31.''
    It is my understanding, in spite of this distinction, the 
Office of Management and Budget has apportioned $1.5 million of 
your funds into the fifth quarter, absent any emergency or 
unforeseen circumstances.
    What is the status of this situation? And has this caused 
your agency any problems?
    Ms. Thomas. Mr. Chairman, it is very interesting. This 
issue was resolved only yesterday with the Office of Budget and 
Management. What it caused us was some bit of uncertainty as to 
how we were going to proceed. But it has been resolved and we 
will get back on track in utilizing those funds.

                impact of budget on performance measures

    Mr. Porter. Here's a question on the adequacy of the 
President's request. I think you have answered that one. 
[Laughter.]
    As I have said in the past, I believe your agency is doing 
a very good job in terms of identifying and tracking important 
performance measures. Most of your measures focus on the 
customer, which is exactly what we, of course, want to see. Can 
you describe the impact of the President's budget on your 
performance measures, particularly the impact upon customer 
service and--I think you have done that, primarily.
    Would you anticipate performance on these--what would you 
anticipate performance--I think you have answered this as well. 
What would you anticipate would happen to that performance if 
you received the President's budget? I think you have covered 
that pretty well in your statement already.

                   agency staffing and customer base

    What is the current number of FTE's?
    Ms. Thomas. We are right at about 1,202 FTE's.
    Mr. Porter. And, under the President's requested level, you 
have told me you would lose a hundred and----
    Ms. Thomas. We would have to RIF 119.
    Mr. Porter. A hundred and nineteen.
    Ms. Thomas. On October 1st.
    Mr. Porter. Over the last 10 years, how has your customer 
base changed?
    Ms. Thomas. Over the last 10 years, if we were to go 
forward with the amount that has been appropriated to us, we 
would have changed about 38.4 percent in terms of staffing and 
cuts.
    Mr. Porter. Okay.
    And is it projected to change, the customer base, over the 
next two years?
    Ms. Thomas. Just the customers, yes.
    Mr. Porter. Yes.
    Ms. Thomas. Yes. It would go down over the next two years.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Porter. Go down. All right.

           information technology funding in fiscal year 1999

    Last year, we provided you with $1.34 million to 
fundtechnology initiatives and system evaluations. Can you tell us what 
you have done with the money so far? And explain to the Subcommittee 
some of the new systems development projects that you have planned at 
your requested level for fiscal year 2000. And how will these 
improvements impact your performance measures and your customers?
    Ms. Thomas. Congressman, I certainly will submit for the 
record, a total breakdown of that $1.34 million. But certainly 
a great majority of that, about $746,000, is for wide-area 
network communications involving the use of frame relay 
communications links for our field offices, of which we have 
53. Three hundred and twenty-five thousand is for document 
imaging and work-flow systems. That's the bulk of that kind of 
money. Fifty thousand is for customer personal identification 
numbers. That is what we talk about, a customer calling in and 
being able to communicate--you know, one and done, as we like 
to call it. They talk to one person and they can conduct all of 
their business in that one contact.
    [The information follows:]

   Fiscal Year 1999 Information Technology Initiatives Supported by 
               Additional Funds Provided by the Congress

    The following are our latest estimates of fiscal year 1999 
information technology initiatives being supported by the 
additional $1.34 million provided by Congress:
    $746,000 for wide area network communications involving the 
use of frame relay communications links with our field offices.
    $325,000 as part of a multi-year project to implement a 
comprehensive electronic document imaging and workflow system 
for railroad retirement claims material used in the day-to-day 
operations of the agency. It is expected to provide benefits 
through reduced contracting costs, improved access to claims 
material, elimination of paper and folder handling within the 
agency, and improved customer service.
    $123,000 for the continued lease for a virtual tape server 
which provides modern tape storage and handling technology, 
including automatic, robotic capability for handling and 
changing tapes.
    $75,000 to upgrade various local area network servers in 
the headquarters facility to ensure that they will be able to 
continue processing into the year 2000.
    $50,000 to purchase software to provide our customers with 
Personal Identification Numbers (PINs) which would ensure 
adequate safeguards for personal information to be provided 
through our Interactive Voice Response telephone system and the 
Internet.
    And finally $50,000 to use outside expertise to achieve 
enhanced system integration and support on a task order basis. 
The contractor would provide technical assistance as needed in 
new technologies and programming languages.
    These amounts total $1,369,000, which is slightly higher 
than the $1.34 million of additional funds provided. The extra 
amount needed will be taken from other administrative funds 
provided the agency.

    Mr. Porter. Mr. Jackson.

                        comments by mr. jackson

    Mr. Jackson. Thank you very much, Mr. Chairman. And Ms. 
Thomas, let me take this opportunity to welcome you before the 
Committee.
    Ms. Thomas. Thank you.
    Mr. Jackson. I note that the Chairman and I are excited to 
have a Chicagoan, someone from Illinois, here because the state 
of Illinois hails such qualified and competent people to serve 
in public service. I wish Ms. Pelosi were here to hear that.

                       impact of staff reductions

    Ms. Thomas, your agency is one of the few agencies that can 
request more than the President's request. Is that correct?
    Ms. Thomas. That is correct.
    Mr. Jackson. Is it also correct, that as a result of the 
President's request, that your agency has experienced a 
reduction in force to the tune of about 10 percent?
    Ms. Thomas. That is what would have to happen if we were to 
only receive the $86.5 million. Yes.
    Mr. Jackson. And therefore, you are asking for an increase 
above that to help stave off the 10 percent reduction in force. 
Is that correct?
    Ms. Thomas. That is correct.
    Mr. Jackson. I am interested in what the impact, from your 
perspective, of those staff reductions have been since--let's 
say over the last five years.
    Ms. Thomas. Well, I would like to answer that, Congressman, 
framed this way. I do think that the focus over the last many--
let's say 10 years--has been, if you make gains in technology 
that those gains will help you to replace people. And we don't 
see it that way. We look at technology as an enhancement and as 
an assist to help people serve our customers. We have many 
people--you know, our customer base may be lessening but the 
fact of the matter is that customer base is aging. And all of 
them are not as computer literate as we would have them be or 
like them to be.
    And we need to have personal contact, if you will, with our 
customers to serve them. While we need to educate our people 
such that they are more computer literate and can utilize the 
technology to assist our customers, we still need the people 
there to do that.

                      transfer of agency functions

    Mr. Jackson. Ms. Thomas, I have heard some people from time 
to time talk about transferring the railroad retirement 
functions to other agencies, for example, the Social Security 
Administration. Do you have any comments on these suggestions?
    Ms. Thomas. I do. Congressman, that is a very good 
question. While there are some parallels and some similarities 
with Social Security and other agencies, the systems are not 
identical with what is in place in terms of the Railroad 
Retirement Act and the Railroad Unemployment Insurance Act. 
There are some significant differences.
    There have been commissions convened in the past that were 
comprised of rail labor and rail management, and there were 
some parameters that were outlined during those meetings that 
both of them agreed might be of an assist if you hadcertain, 
shall we say, issues that Social Security and other agencies deal with. 
If you had both particular parameters transferred to them, it might 
work. But as a whole, it would be very disruptive and would not serve 
the people who have paid into the fund if this were to be done in a 
wholesale manner.
    Mr. Jackson. Thank you very much, Ms. Thomas. And, I will 
tell the other members of the Board, thank you for joining us 
today. Mr. Chairman?

                          investment practices

    Mr. Porter. Thank you, Mr. Jackson. Ms. Thomas, I 
understand that the Inspector General has concerns about the 
practices and policies of the RRB's Investment Committee and 
has recommended that the Department of the Treasury manage the 
$17 billion in Railroad Retirement Board trust funds. What is 
your answer to the IG's suggestion?
    Ms. Thomas. Well, I would say that, certainly the IG has--
they have the right and rightly so, to look into how we conduct 
our business. We respectfully disagree with the IG on this 
particular point. That is not the only suggestion that has been 
made. There are some suggestions also that were involved with 
that primary suggestion. And we feel that what we can do is 
work with the IG to absolutely allay their concerns as to how 
we are conducting business and investing the funds.
    While there have been some losses, the gains certainly 
outweigh the losses in terms of the monies that have been made 
over the last year for the investment fund. We have made 
approximately $673 million for the fund. So I believe the IG 
does a good job in pointing out to us some remedies that we 
need to make. And we are going to take those suggestions to 
make those remedies, but we certainly don't think that the 
investment powers should be transferred from the Board.
    Mr. Porter. Is the crux of the IG's recommendation simply 
that you haven't earned as much as you should on these funds? 
Or are there other problems that they identify?
    Ms. Thomas. Well, certainly this is my interpretation of 
what the IG has stated. I do think there have been some 
practices that we need to change, and we have already set about 
doing that. I have gotten counsel for myself in terms of people 
who are money managers and are experts in this field. And I 
think that is some of what has been a concern of the IG, and I 
think that there have been some trades made that certainly were 
paper losses, but I would like to reiterate, we have certainly 
made quite a bit, a substantial sum of money for the fund over 
the last year.

                                gsa rent

    Mr. Porter. In the past, it is my understanding, that trust 
fund agencies have not paid full rent costs to GSA. However, I 
understand that you recently received a letter from GSA asking 
you to pay full rent beginning fiscal year 2000. What's the 
status of the situation? And can you provide for the record a 
history on this issue and tell me what it would mean if that 
requirement holds?
    Ms. Thomas. Mr. Chairman, I certainly will provide an 
extensive letter for the record concerning the history of how 
this has come about. But I would say to you, in an agreement 
that was crafted in 1975, it was determined that the Board was 
to pay cost, that is the cost of maintaining the building, of 
maintaining the utility, of upgrades to the building. And we 
have done that. The Board is also paying over a 30-year period 
the initial cost of the property.
    So we have been holding up our end of the bargain. And to 
all of a sudden get hit with a letter stating that we are going 
to have to pay full rent--somehow it goes from--we pay $2.8 
[Clerk's note: Later corrected to $2.87 million] million, I 
believe, currently. And if we had to pay more than that, if we 
had to pay rent, that would increase our expenses to $6.22 
million, which is a 217 percent increase of actual cost.
    So you can see that would be a burden for us, and we did 
have an agreement crafted. So I think we need to look into 
this.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Porter. Is the $94 million you are asking take that 
into account or would that be above that?
    Ms. Thomas. That would be above that. It does not take it 
into account.
    Mr. Porter. Even if you got the $94 million, you might 
conceivably have a $4 million outflow on the rent.

                          material weaknesses

    Mr. Porter. Last year, you noted that your audit revealed 
three material weaknesses in the area of accuracy of benefit 
payments, overall control environment, and railroad retirement 
tax deposits. What progress have you made on these material 
weaknesses? And what is proposed for attaining either a 
qualified opinion or a clean audit next year?
    Ms. Thomas. We have made significant progress in this area 
with the help of the IG and our management staff. I would have 
to say to you, that in terms of the three weaknesses that were 
found, number one, we still disagree but we are working on it. 
We have made significant progress but we don't agree--
management does not agree with the IG--that we have a problem 
in the overall control environment.
    The accuracy of benefit payments has been removed 
altogether. And the railroad retirement tax deposits issue has 
been downgraded to a reportable condition.
    So we are still working with the IG, but we think we have 
made significant progress.

                      status of year 2000 project

    Mr. Porter. Thank you. Now to a very important issue, 
particularly an agency like this one: Y2K. What is the status 
of your efforts? Are your mission-critical systems fully 
compliant? What remains to be done?
    Ms. Thomas. We are absolutely ecstatic about our standing 
relative to Y2K. As I stated earlier, and it is in our written 
statement as well, we are 100 percent compliant as of January 
15th on all mission-critical systems. We are 70 percent--
approximately 70 percent compliant on non-mission-critical 
systems. We believe that by September of this year we will be 
100 percent compliant. And we are looking to OMB to allow us 
monies for a contract to get an independent outside validation 
for our systems.
    We are very pleased as to where we are at this point in 
time.
    Mr. Porter. That is wonderful to hear. If on January 1st 
there were problems, we would have to claim that you come from 
San Francisco. [Laughter.]
    This is a subject that we are very sensitive on. I'm sure 
you are much more so. But we are hopeful that all the agencies, 
and many of them are like your agency, ones that deal with a 
large customer base that need the resources. We are hopeful 
that there will not be any glitches and that everything will go 
smoothly. So we are going to keep on everyone about this 
because it is so important.

                        point of contact service

    Your budget justification references a planned point of 
contact service delivery system you have termed one and done. 
Could you describe this initiative in greater detail? Tell how 
this would result in improved customer service, improved 
efficiency, and lower cost to your agency.
    Ms. Thomas. Well, we would like to think time is money. And 
our vision is that we should conduct our business such that 
when a customer contacts the RRB they will have a variety of 
choices: talking directly to someone or utilizing a menu-driven 
system. They should feel very comfortable that their problem 
will be taken care of immediately, if you will, or very soon. 
Or they should have an answer as to when their concerns or 
their problems can be addressed.
    That is what it is all about. Of course, we need people and 
we need technology to do that. As I have stated earlier, I see 
technology as an assist to help our people to make our 
customers feel like we are serving them well. And that is what 
it is about.
    I think that it will help to, if you will, get us into the 
21st century and maybe also help to bring some of our customers 
along who aren't as computer literate but we can help them get 
there in utilizing these kinds of services.
    Mr. Porter. Mr. Jackson, do you have a question?

                         trust fund investments

    Mr. Jackson. Ms. Thomas, let me ask a question to follow up 
on something the Chairman asked a few moments ago. How are 
railroad retirement funds presently invested?
    Ms. Thomas. Railroad retirement funds are presently 
invested in government-backed securities and Treasury bonds. 
That is how they are invested. Now we do have a discretion to 
invest 5 percent of that money in Ginnie Mae's or Fannie Mae's, 
which we have not done, other than government-backed Treasury 
bonds. We can do that, but we have not.
    Mr. Jackson. Is it your impression that, considering the 
history of the Railroad Retirement Board and the outstanding 
job that you have done with respect to investing the funds, 
that maybe the Treasury Department could do it better.
    I don't say that facetiously as if to suggest that there is 
a movement afoot, but I think you have done an outstanding job 
with it, but the question has been raised I guess, by the 
Treasury Department, that they could do it--I'm sorry.
    Ms. Thomas. It's by our own IG, our independent 
investigator.
    Mr. Jackson. Yes. I am very interested in hearing what the 
thinking was behind that.
    Ms. Thomas. You know, to some degree, I think it is a 
matter of opinion. And as long as you are making money over the 
long haul and not losing money--we do have to remember that we 
do have a $17 billion surplus, and I think that is laudable. 
Certainly anything can be done better.
    But most portfolios are managed such that over the long 
term, you put a yard marker for yourself of 5, 10, 15, 20 years 
into the future, not unlike a personal portfolio where you want 
to have a certain number of monies at a certain point in time. 
Over a short period of time, you may lose money if you trade a 
bond in favor of getting another long-term bond that may show 
you better interest in the long run. These things happen in a 
portfolio. That is within the context of a portfolio.
    I would say, though, over the long haul I think we have 
done an admirable job.
    Mr. Jackson. Let me say that I agree, and am very 
supportive of the outstanding work that you all have done at 
the Board. And I would certainly hope that this Committee and 
this Congress will see fit to let you continue to do the job 
that you are doing.
    Ms. Thomas. Thank you.
    Mr. Jackson. Thank you.
    Ms. Thomas. Appreciate it.
    Mr. Jackson. Thank you, Mr. Chairman.

                            buyout authority

    Mr. Porter. Thank you, Mr. Jackson. Ms. Thomas, last 
question. You are requesting authority in fiscal year 2000 to 
provide buyouts to employees who resign from your agency before 
the end of the fiscal year. As you know, this is a matter for 
the authorizing committee to approve. What is your estimate of 
the number of employees who would take a buyout, assuming it is 
authorized for the next fiscal year? That is question one.
    Do the President's budget request level and resulting FTE 
numbers assume buyout authority? And that is question two. Does 
your request assume buyout authority? And that is question 
three. And four is, if the buyout is not authorized, how would 
this impact your request in number of FTE's.
    Ms. Thomas. Well, we have utilized buyout authority in the 
past, and some 177 people, I believe, in the last couple of 
years took the buyout. For the near future, over this year, 
there would be approximately 55 people who may participate in 
the buyout.
    No. We have not budgeted for that. We did not expect that 
to happen, so our numbers don't reflect buyout authority. And 
neither do the President's.
    [The information follows:]

               Clarification Concerning Buyout Authority

    The President's proposed budget for the RRB includes buyout 
authority, but we have not been able to determine specifically 
how it was reflected in the budget numbers.

    Mr. Porter. You have answered all of our questions. You are 
doing a terrific job there. We want to try and give you the 
resources that you need to continue to do that good job, and we 
thank you for your appearance before our Subcommittee this 
afternoon.
    Ms. Thomas. Thank you very much.
    Mr. Porter. Thank you. The Subcommittee will stand in 
recess until 10:00 a.m. next Tuesday.

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                                           Tuesday, March 23, 1999.

                  CORPORATION FOR PUBLIC BROADCASTING

                                WITNESS

ROBERT COONROD, PRESIDENT AND CHIEF EXECUTIVE OFFICER

                              Introduction

    Mr. Porter. The subcommittee will come to order. Let me 
apologize to our witnesses this afternoon and members of the 
subcommittee. I unfortunately was on the phone with a 
journalist, and it took longer than I had expected; so I 
apologize for that.
    We continue our hearings on the independent agencies under 
our subcommittee's jurisdiction with the Corporation for Public 
Broadcasting, and we are pleased to welcome this afternoon 
Robert Coonrod, the President and Chief Executive Officer of 
CPB.
    And Mr. Coonrod, why don't you proceed with your statement 
and then we will have questions.

                           Opening Statement

    Mr. Coonrod. Thank you, Mr. Chairman. I have submitted 
written testimony for the record. I would request that it be 
included in the record.
    What I would like to do this afternoon is take a few 
moments to draw your and the subcommittee's attention to the 
nexus of two critical elements that I include in my written 
testimony: digital technology and the social and demographic 
changes that are taking place in this country.
    Before I do that, however, I would like to express the 
appreciation of public broadcasting's tens of millions of 
viewers and listeners and of the community of broadcasting 
professionals for the support you and members of the 
subcommittee have extended to public broadcasting.
    It is a truism that nearly 1,000 public radio and 
television stations serve nearly every community in America. 
Every day we see examples of how these stations offer essential 
services in their communities. But it is only in moments such 
as these, Mr. Chairman, that we are able to reflect on the 
wonderfully complex array of local and national support that 
makes it all possible; and an essential ingredient in that 
mixture is the support provided by the Congress through an 
appropriation that this subcommittee initiates annually.
    We appreciate the generosity and the support extended by 
the Congress. It is essential to broadcasting's continued 
growth and development. But your support is also tremendously 
important symbolically as a tangible expression of the 
national, local, and public-private partnerships that are at 
the heart of public broadcasting.
    The value and strength of these partnerships are increasing 
in importance. They are the basis of our planning for the 
transition to digital.
    Congressional support for the digital transition is far 
more than a source of much-needed funding. It is an essential 
ingredient in the case stations make locally in their capital 
campaigns and their appeals to their members and in their 
approaches to State and local governments. It is essential to 
developing the enhanced services stations will provide in their 
communities.
    Now, some of us are already growing weary of the phrase 
``the New Millennium,'' but the fact is, we as a country are 
turning a corner. In a generation, the United States will look 
very different from the America of today. Our audience will 
become younger and older at the same time. While people will 
live longer, the young will become a growing proportion of the 
overall population.
    Simultaneously, our audience is growing strikingly more 
diverse ethnically and racially. By the year 2050 the term 
``minority'' will have a whole new meaning. Minorities as the 
word is used today will comprise approximately half of the 
American population.
    Shifts in age and ethnic makeup will also mean shifts in 
community power and prosperity, a national identity and in our 
senses of ourselves as Americans, and racial diversity may not 
automatically mean racial harmony. There will be a critical 
need for education, communication, and dialogue and these are 
the keys to harmony, understanding, and respect.
    As a unique national educational institution with universal 
access and a 30-year record of public service in the community, 
we believe there will be an expanded role for public 
broadcasting in this historic transformation. Our experience in 
public radio vividly illustrates how public broadcasting can 
help create that sense of community that is so important.
    The number of minority listeners to public radio is double 
what it was 10 years ago. That audience growth is the result, 
in part, of new programming which addresses the needs and 
appeals to the values of these new listeners. We initiated 
services such as Satelite to deliver a stream of Latino 
programming nationally to serve Native American stations. We 
also initiated targeted talk shows such as Power Point which 
offers an African-American perspective; Native American 
Calling, and Linea Albierta, for Native American and Latino 
audiences. We have also increased our support to stations which 
broadcast this type of programming. This accounts for a portion 
of the increased listenership to public radio.
    But just as important has been our work to strengthen 
public radio's basic services. A person's character, values, 
and attitudes, rather than ethnic or racial background, are 
often a stronger indicator of program interests. This is an 
important part of the story of public radio, of public 
broadcasting in general. We grow our audience, we serve our 
public when we emphasize what unites us.
    Public television's role is also very important. For all of 
our differences as a nation, Americans have one thing in 
common, television. There are 99 million television households 
in this country. More than 256 million Americans live in those 
households. A powerful mechanism for education, communication, 
and dialogue is already in place. And while it eagerly 
anticipates the arrival of digital, public television is moving 
forward with today's technology to advance education, 
communications, and dialogue.
    For example, Mr. Chairman, the annual Webby Awards are 
given to the best Internet web sites in the Nation. For the 
third year in a row, PBS was awarded the best TV web site 
award. It was both the unanimous choice of the judges and the 
participants, the public. The other good news is that the award 
for the best education web site went to Journey North, which is 
a web site sponsored by the Annenberg/CPB Project.
    The Annenberg/CPB Project is a 10-year collaboration 
between Ambassador Walter Annenberg and the Corporation for 
Public Broadcasting to develop educational learning and 
educational materials around education reform and math and 
science. So both the best education web site and the best 
television web site went to public broadcasting organizations, 
and that is a sign that we are doing something right as we go 
forward and as we prepare for digital.
    On June 5, people from all over the country will 
participate in Safe Night, U.S.A. It is a collaboration between 
PBS, the Black Entertainment Television, WisconsinPublic 
Television, and hundreds of public television stations in their 
communities. On that night, 10,000 Safe Night events will take place 
around the country providing an environment for America's teens that is 
free of violence, drugs, and alcohol. And all of this will be captured 
on a live broadcast that will be aired simultaneously by PBS and BET.
    Another example of the work that public television is 
already doing is Many Faces, Many Voices, an unprecedented 3-
year collaboration by the Corporation for Public Broadcasting, 
the Public Broadcasting Service, and the Public Television 
Outreach Alliance to utilize public television programming in 
an ongoing effort on the part of stations and their communities 
to address the issues of race in America. There it is also the 
Television Race Initiative, which is a ground-breaking effort 
to build a sustained community dialogue around race relations 
using the many multicultural programs on public television. And 
many of those programs are made possible by the fine work that 
is done by the Minority Consortia and the Independent 
Television Service, both of which are supported by the 
Corporation for Public Broadcasting.
    We are on the threshold of a new and intriguing alignment 
of technology content and mission. And we thank this 
subcommittee very much for helping the community of public 
radio and public television stations to realize the potential 
that this convergence offers.
    I would be happy to take any questions, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Coonrod.
    [The prepared statement follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Porter. Let me just begin with a small admonition. Each 
year the subcommittee expects that agencies within our 
jurisdiction will provide members and staff with their budget 
justification in a timely fashion and with sufficient numbers 
of copies so we can review the materials.
    I understand that you had some difficulties with that 
process this year, and I hope that you will give this your 
personal attention to ensuring that things run smoothly in the 
future.
    Mr. Coonrod. Indeed I will give it my personal attention, 
Mr. Chairman.

                    digital conversion authorization

    Mr. Porter. Last year, Mr. Coonrod, we provided $50 million 
for digital conversion, subject to an authorization by the 
Commerce Committee by the end of the fiscal year. What is the 
status of the authorization effort? Has CPB submitted an 
authorization proposal to the Commerce Committee?
    Mr. Coonrod. Last year, Mr. Chairman, an authorization bill 
was introduced. A hearing was held last October on an 
authorization, and we expect--based on conversations that we 
have had with Chairman Tauzin and Representative Markey--that 
an authorization bill will begin to move in the Commerce 
subcommittee this spring.
    Our sense is that the legislation will be similar to the 
legislation that was introduced last year.

                          commercial stations

    Mr. Porter. The FCC has established a time frame for 
conversion to digital that requires all commercial stations in 
the top 10 markets to begin transmitting a digital signal by 
May of this year. Commercial television stations in the top 30 
markets must offer digital signal by November of this year.
    How many commercial stations are there in the top 10 
markets? Do you know?
    Mr. Coonrod. I don't know. I could venture a guess.
    Mr. Porter. Provide that for the record. Do you want to 
venture a guess?
    Mr. Coonrod. There are four or five in each, so between 40 
and 50. But I would rather provide the exact information for 
the record.
    [The information follows:]

    There are a total of 139 commercial stations in the top ten 
markets. Currently, the FCC is requiring only the top four 
networks, ABC, NBC, CBS, and FOX, to be on the air with a 
digital signal by May 1, 1999. Therefore, the May 1, 1998 
deadline for filing applications with the FCC for digital 
conversion and the May 1, 1999 deadline for being on the air 
with a digital signal applies only to 41 stations.

    Mr. Porter. Do you want to venture a guess or provide the 
exact information as to how many commercial stations in the top 
10 markets have converted to digital to date?
    Mr. Coonrod. I don't know the answer to that. I would have 
to find out.
    Mr. Porter. How many commercial stations do you anticipate 
will be transmitting a digital signal by the end of this year? 
In other words, are they going to make this deadline or not?
    Mr. Coonrod. I know it is their intent to make the 
deadline. Whether they will do it or not is something else. But 
I could provide you with the most current information 
available.
    Mr. Porter. I would appreciate that.
    [The information follows:]

    I have enclosed a chart compiled by the FCC on the status 
of digital conversion for stations in the top 10 markets. With 
one exception, every station required to file an application by 
May 1, 1998 has done so, and been granted a construction permit 
by the FCC. Twenty-one are already on the air in advance of the 
May 1, 1999 deadline.
    Please see the attached chart for a station by station 
breakdown.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                   funding for digital: ptfp and cpb

    Mr. Porter. Your budget justification notes a shift in the 
proposed source of funding for digitalization with the bulk of 
your request now going through Commerce-State-Justice 
Appropriations Subcommittee. What is the policy rationale for 
this shift and will the funds requested in the two different 
subcommittees support different activities?
    Mr. Coonrod. The funds will support complementary 
activities, Mr. Chairman. The justification is that 
traditionally there have been two important sources of Federal 
funding for public broadcasting, the Public Telecommunications 
Facilities Program at the Department of Commerce, and the 
Corporation for Public Broadcasting.
    Last year, we presented to this committee a request which 
had the endorsement of the administration, which foresaw that 
the bulk of those funds would flow through the Corporation for 
Public Broadcasting. But this year, based on a number of 
factors, the administration thinks it would be better to run 
the money through the Public Telecommunications Facilities 
Program.
    Some of the reasons for that are practical. There is 
already existing authorization available for that program. The 
PTFP has a long record of providing capital equipment for 
public television and radio stations. These are some of the 
practical reasons why this shift was proposed.
    From our perspective, Mr. Chairman, the important thing is 
that the money be made available so that the stations can move 
quickly to make the necessary transition. If it makes more 
sense to run it through the PTFP, that is fine. If it makes 
more sense to run it through CPB, we are prepared to do that. 
We have had a digital task force working for about 9 months to 
develop policies and procedures that we would use, should the 
money come to CPB.
    Mr. Porter. I am not sure this is a fair question, but how 
sanguine are you that Commerce-Justice-State will be able to 
provide those funds, or is it too early to make a judgment?
    Mr. Coonrod. I would say it is too early to make a 
judgment. The best information that I have currently is that 
until a lot of other things are settled, it is hard to know 
whether that is possible. I know from reading the newspapers 
some of the technical budget issues that are involved in this, 
and I don't know how those are going to get resolved.

                             ready to learn

    Mr. Porter. Ready to Learn TV is a program funded by the 
Department of Education, but the Corporation for Public 
Broadcasting is the sole grantee. In both fiscal year 1997 and 
1998, we provided $7 million for this program and in fiscal 
year 1999 we provided $11 million. However, according to 
reports from the Department of Education, none of these funds 
from fiscal years 1997, 1998, or 1999 have been outlayed. Do 
you know why this is so?
    Mr. Coonrod. I know that--I would have to check, but I 
believe some of the funds have been outlayed because I know 
that we have provided funding for the Public Broadcasting 
Service for a number of projects.
    What we have is an arrangement where we have a contract 
with PBS to provide the basic service. There are two major 
programs, however--a television program that will be produced 
by WGBH in Boston called Between the Lions and another called 
Dragon Tales that will be produced by the Children's Television 
Workshop. We have awarded the contracts to both WGBH and 
Children's Television Workshop, but we have not executed those 
contracts as yet because we are awaiting final budgets from 
both organizations.
    As you know, Mr. Chairman, the amount of money that we 
provide for a given project is some small percentage of the 
total cost. And in both cases, both WGBH and the Children's 
Television Workshop must, before we will execute our contract, 
raise the other monies that are necessary to produce the full 
series of programs, and in both cases, they are series. So a 
reason why some of the money has not been outlayed is because 
the fund-raising for these two projects has not been completed 
yet.
    But there may be some other reasons, and I would be happy 
to look into it.
    Mr. Porter. Why don't you give a more complete answer for 
the record, Mr. Coonrod, and I have to say that as of February 
10, the Department has reported to the subcommittee that there 
were no outlays whatsoever in this program--February 10, 1999, 
zero. So please let us have an answer to that for the record.
    [The information follows:]

    There are at least three reasons why DOE has not outlayed 
any FY97, FY98 or FY99 funding for Ready to Learn (RTL). First, 
RTL operated on a delayed May 15 to May 14 fiscal year. Second, 
the statute authorizing RTL funding requires that 60% of the 
money be used for the development of television programs. 
Third, DOE outlays are the last step in the process of funding 
RTL activities. However, of all funds appropriated for Ready to 
Learn and currently available to CPB, all but $125,040 have 
either been disbursed by CPB or are currently obligated.
    1. Because RTL operates on a May 15 to May 14 funding year, 
FY99 money is not yet available to CPB.
    2. The RTL authorizing statute requires that 60% of each 
year's funds be used for the development of ``children and 
family educational programming for preschool and elementary 
school children, and accompanying support materials and 
services that promotes the effective use of such programming.'' 
CPB has obligated $12.4 million to the development of two new 
daily children's educational series. DOE recognizes that 
originating a new daily children's educational television 
series is a three to five year process, so funds that CPB 
obligates for program development, but has not yet disbursed, 
are held at DOE from fiscal year to fiscal year until spent. 
Payments will begin being disbursed to the producers once 
certain production goals are met. We anticipate that payments 
for both these programs to begin being disbursed within one to 
four months. For example, the Children's Television Workshop 
will launch Dragon Tales in the Fall of 1999. The series will 
include 40 half-hour animated programs with a multi-media 
parenting component. The $21 million project will include $6.2 
million from CPB, $4.5 million from Kellogg, with the balance 
underwritten by Columbia Tri-Star and the Children's Television 
Workshop.
    In 1998, CPB transferred daily management of the RTL 
program to PBS. PBS will use programming dollars to fund a new 
season of the children's educational program Arthur, and 
projects such as development of new Spanish language 
translations of educational programming, development of 
distance learning video materials and development of age-
appropriate on-line services.
    3. DOE outlays are the last step in the funding process. 
CPB has in fact obligated or disbursed all but $125,040 of the 
funds made available in fiscal years 1995, 1996, 1997 and 1998. 
CPB is planning another drawdown of DOE funds within the next 
several weeks. Additional drawdowns are anticipated once funds 
obligated for program production begin being disbursed.

                   Diverse and underserved audiences

    Mr. Porter. Ms. Pelosi.
    Ms. Pelosi. Thank you, Mr. Chairman. Are we under the 8-
minute rule?
    Mr. Porter. Eight-minute rule.
    Ms. Pelosi. I am certain I won't use that time. Thank you, 
Mr. Chairman.
    Welcome, President Coonrod. Thank you for your testimony 
and for your leadership at the Corporation for Public 
Broadcasting. I am very pleased to hear your statement and read 
further in your statement about your emphasis on--the 
recognition of our--the blessing we have with our minority 
population and your focus on diversity.
    I noticed that you mentioned in your written statement two 
organizations who work on this issue, the Independent 
Television Service and the National Asian American 
Telecommunications Association, that promote accessibility and 
diversity. Mr. Chairman, I know you won't be surprised to know 
that these two organizations are located in San Francisco.
    Mr. Porter. I am not surprised.
    Ms. Pelosi. Further reason for you to visit us there.
    I want to recognize both of them, and as you know, Congress 
established the Independent Television Service to fund and 
present programs that involve creative risks and address the 
needs of underserved audiences while granting artistic control 
to independent producers.
    The other organization, the National Asian American 
Telecommunications Association, its mission is to advance the 
ideals of cultural pluralism in the U.S. and to promote better 
understanding of Asian Pacific-American experiences through 
film, video, radio, and new technologies. They have both won 
many awards, and I am pleased that you mentioned them; and I 
commend them too for their work and important contributions.
    Public broadcasting has an important mission to serve 
diverse and underserved audiences. What is CPB's position 
regarding its support to groups like the Independent Television 
Service and the Minority Consortia and public broadcasting?
    Mr. Coonrod. Before I answer your question directly, I 
would just like to say a couple of things about both the ITVS 
and NAATA because there is some good news to report about 
activities that they have under way.
    As you may know, one of the highlights of the public 
television schedule in the fall was The Farmer's Wife, which 
was a multipart documentary about the struggles of a family--a 
farm family in Nebraska. It was a production of the Independent 
Television Service, and was very highly regarded.
    In addition, ITVS has a new initiative under way which is 
linking independent producers to local public television 
stations. The purpose of this initiative, according to their 
information, is to fund regionally and cultural diverse 
projects. The program should stimulate civic discourse and 
break traditional modes of exploring complex cultural, 
political, social, and economic issues. It is the kind of work 
that the ITVS has been doing over the years. That really is the 
reason that it merits the support that we provide and the 
Congress provide through CPB.
    The other bit of news to report is that a CPB-funded 
documentary, Regret to Inform, was nominated for an Academy 
Award. It was not ultimately the documentary that won, but it 
is a stunning film, and it is a film CPB is proud to have been 
a part of. It is being presented on public television by the 
National Asian American Telecommunications Association.
    For those of you who aren't familiar with Regret to Inform, 
it is the story of two war widows, one American and one 
Vietnamese, and their mutual exploration of that period in our 
history and Vietnam's history. It is a terrific piece of work. 
ITVS has been part of some great stuff. And so has NAATA.
    To the larger question, just let me say we at the 
Corporation for Public Broadcasting, see this as a significant 
part of our responsibility and mandate, and we will be 
increasing the amount of support we provide for culturally 
diverse programming and issues related to that initiative, such 
as training and professional development.
    Because of the support from this subcommittee, we are going 
to realize some significant increases in our appropriation next 
year and the following year, and we would see putting some 
significant percentage of that towards these kinds of 
initiatives. We will be identifying a senior person who can 
direct this overall effort, and we will be aligning our staff 
to provide adequate support for it.

                          digital multicasting

    Ms. Pelosi. Thank you. Our distinguished chairman asked 
some questions about digital technology, and you have said that 
this will enable public broadcasting to fulfill your public 
service mission in ways not previously possible. What would 
this--can you describe what multicasting is and how it would 
enhance your achievements; and then further to that point, if 
you could work into your answer what CPB is doing to train 
independent producers, develop and train independent producers 
to produce digital programs.
    Mr. Coonrod. Yes, I would be happy to. On the first part, 
multicasting is one of the opportunities that digital offers. 
In effect, what it will allow broadcast stations to do is to 
multiplex their signals so where they now have a single stream 
of programming, they will be able to provide four or five 
streams of programming.
    The advantage of this for public broadcasting is that it 
will allow public broadcasters to simultaneously serve their 
multiple audiences.
    For example, in the day time, most public television 
stations run a Ready to Learn service, which is for children up 
to age 6; but daytime is also an important time of viewing for 
seniors, and a multicast environment would be an opportunity to 
provide a parallel stream of programming for them as well as an 
opportunity to provide instructional television for classroom 
use, particularly in rural areas.
    So multicasting would permit the simultaneous broadcast of 
these multiple signals.
    Digital technology would--interestingly enough, once we 
have completed the transition, permit multicasting at no 
increased cost because we would be using the same basic 
bandwidth that we are currently using for a single analog 
signal. That is one of the advantages that digital television 
would offer.

                           minority training

    There are others, like enhanced television, but the second 
part of your question, I believe, how are we going to work to 
improve our training efforts.
    Ms. Pelosi. Especially in the minority--among minority 
producers. I see in your statement you spend a good deal oftime 
on initiatives that you have taken in terms of training. The Next 
Generation Project, The Multicultural Producer's Forum, Radio 
Scholarships. I just wondered specifically how CPB planned to develop 
and train independent producers--and read into that ``minority''--to 
produce digital----
    Mr. Coonrod. We have a series of what are called ``digital 
road shows''. I don't now remember how many cities we presented 
those in, but some half a dozen cities so far. They are 
basically opportunities for producers from various parts of the 
country to learn about the new technologies, and meet with 
people who are experts in the technology. From that, we have 
developed a number of incubator projects, or digital 
prototypes.
    I notice that you have at your seats some samples of those 
digital prototypes. You will see that those are produced by 
major public television stations, but there is also an 
important independent and minority component in this. We are 
also working with ITVS and with the Minority Consortia to 
provide these same kinds of training opportunities to their 
constituents.
    One of the things we will be doing as part of The 
Multicultural Producer's Forum, which relies heavily on 
independent producers for participation, is focusing on this 
kind of digital production technique and bringing both the 
technologists and the producers together.
    The interesting thing here is when the technologists and 
the producers talk to each other, they come up with ideas that 
the rest of us had never imagined and ideas that seemed radical 
6 months ago now seem kind of old-fashioned. So part of what we 
are doing is trying to make sure that as the technology rolls 
out, as the broadcast capability is there, with which we will 
have the cadres of producers in public television who can 
produce the kind of programming that is of the quality that we 
are familiar and that we expect.
    Ms. Pelosi. Very exciting. Thank you, Mr. Coonrod.
    Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Ms. Pelosi.
    Mr. Jackson.

                digital technology and diverse audiences

    Mr. Jackson. Thank you, Mr. Chairman.
    Welcome to our committee, Mr. Coonrod. You talked about 
diversity and how digital technology will help further your 
goals in addressing more diverse audiences. Can you elaborate 
on that? And how do you see that playing out over the next 
several years?
    Mr. Coonrod. What I said in my earlier statement, is a very 
important fact, that the Nation is both getting older and 
younger simultaneously, and that younger part of the audience 
is also much more ethnically and culturally diverse than the 
audience that we serve now.
    It is very important for public broadcasting to serve its 
loyal audience, the audience that it currently serves and 
serves well. But it is also important for public broadcasting 
to reach beyond that core audience and bring new audiences into 
viewing and listening; and the value of digital television is, 
we can do one without compromising the other. In other words, 
stations around the country will no longer have to make that 
difficult choice. The digital choice will be an easier one.
    The difficult scheduling choice for stations is knowing 
that a program may appeal very well to a certain demographic 
that is an important part of the core audience and knowing it 
has to compete directly with other programs for a place on the 
schedule. We will be able to provide several programs at 
diverse appeal simultaneously.
    Now, that is not the way commercial broadcasters will want 
to do this because, for a commercial broadcaster to further 
niche its audience means that it will dissipate its advertising 
revenues, and it is not good business for them. For us, because 
we are trying to appeal in a different way, it is very good 
business for us.
    So I think the first thing that we see is the fact that we 
will be able to serve multiple audiences simultaneously. That 
is one of the advantages of the multicasting.
    But secondly, as we look at enhanced TV, we see the 
opportunity of much greater interactivity. So, when we look at 
the kind of local debate, the kind of civic discourse that is 
important as communities think through things that are 
important in their development, what we can do is provide a 
broadcast service that will be accessible to everyone that will 
allow for that kind of civic discourse and debate, but do it in 
a way that doesn't deny anybody else whatever their interests 
or whatever their services are.
    So digital really is an opportunity, and it comes as I 
suggest in my opening remarks, at a critical time, we believe, 
in the development of new audiences and the demographic changes 
that are taking place in our society.

                      timing of digital conversion

    Mr. Jackson. Mr. Coonrod, does it really make any 
difference whether public broadcasters begin the conversion 
process now or later, or do we lose anything if the transition 
were put off a few years?
    Mr. Coonrod. There are a couple of reasons why it is 
important to begin the transition now, I believe. First of all, 
one of--public broadcasting has a very distinguished track 
record in providing access to everybody, including the 
disabled.
    Closed captioning, for example, was an innovation that was 
begun in public broadcasting. Now it is widely available on 
broadcast television and cable. There is also a service for the 
visually impaired. These are services that were developed by 
public broadcasting.
    Now, as manufacturers develop new set top boxes and other 
pieces of equipment for digital, they need to know that public 
broadcasting is in the game and that we are going to be there 
asking questions about how people, including the disabled, will 
get access to this technology? That is a very important 
consideration. The manufacturers need to know that we are in 
the game and they need to know the kinds of techniques that 
public broadcasting developed in an analog world will get 
translated into the digital world.
    If public broadcasting were excluded from the digital 
conversion, one of the things that would happen is that those 
people who now have access to analog television through closed 
captioning or through the services that are available for the 
blind would not have access to this rich array of material 
available in a digital world. That is one reason.
    The other reason is that it is very important that certain 
engineering decisions be made soon. Tower decisions are the 
kinds of things that can take several years because you have to 
get in line to get a new tower built.To the extent that public 
broadcasters can make those decisions now, they can be part of the 
transition and they can be part of the wave that will take place.
    So, part of it is a practical engineering issue, but the 
other part really is the access question. I think both are very 
important as we think about the future.
    Mr. Jackson. Thank you very much for your testimony, Mr. 
Coonrod.
    And Mr. Chairman, let me offer an apology. I know Ms. 
Pelosi and myself, and I believe Mrs. Lowey as well, have a 
subcommittee hearing in the Foreign Operations Subcommittee at 
this time. We will be in and out of the committee.
    Thank you, sir.
    Mr. Porter. Thank you, Mr. Jackson.
    Ms. DeLauro.

                public broadcasting and teacher training

    Ms. DeLauro. Thank you very much.
    President Coonrod, it is good to have you here and we thank 
you for your work. We have talked a lot in this committee about 
the importance of having highly trained teachers in the 
classroom. I am interested in public television's role in 
teacher training. You mentioned some of your initiatives in the 
testimony, but could you give us some more information on how 
public television is involved in promoting teacher training?
    Mr. Coonrod. I could give you a global answer now, but I 
would be happy to provide a lot of the specifics for the 
record, because public television is involved in a number of 
ways at the local level, and there are some really--some study 
examples of that. But let me tick off a few right now and start 
with the ones that are closest to CPB.
    We have a project called the Annenberg/CPB Project, which 
is funded by Ambassador Walter Annenberg. It is a K-12 math and 
science project. The entire purpose of the project is to 
provide teachers with the kind of information they need to 
improve their professional skills.
    We are going to work with PBS to expand this service, to 
make it a full-time service that would include more than just 
math and science. It would also include literature, the arts, 
and social studies. It will be a full-time professional 
development channel that will be available to teachers free of 
charge. It would be distributed, as the current service is now, 
by the PBS satellite and therefore available to public 
television stations to retransmit and would also be available 
in schools.
    Currently, the Annenberg/CPB channel for math and science 
is available in about 30,000 schools around the country.
    Another effort that is under way is the work that has been 
done through the National Teacher Training Institute that has 
been supported in part by CPB, and with corporate donations 
through WNET in New York, and it trains teachers to use new 
technology. It is not content-specific, it provides teachers 
with opportunities to use new technologies.
    About 6,000 teachers benefit from a program that PBS has 
under way called MathLine, which is an interactive program that 
helps teachers to improve their math skills. I could go on. 
There are a number of activities like that. We see digital as a 
way of making a comprehensive package of such programs and 
activities widely available.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Ms. DeLauro. How do you connect in with the Department of 
Education? For instance, I went to West Haven High School in my 
district a few weeks ago specifically on the issue of teacher 
training as it has to do with technology. Terrific teacher 
there, mainly getting information on her own and being able 
to--we are preparing for, and I am a proponent of, modernizing 
our schools, getting them wired, getting the computers in 
there, and having our kids have the advantage of this for their 
future.
    But we could have all of this equipment, but if we don't 
have teachers who are qualified to train these youngsters, then 
we are just whistling Dixie here.
    In any case, how do we link up what you are trying to do 
with an education process that says, this is the appropriate 
way to go, that it is accountable, that it is certified, 
whatever needs to get done in order to move us more quickly in 
the direction of trying to train our teachers, particularly in 
the technology aspect?
    Mr. Coonrod. As you probably are well aware, the Secretary 
of Education has said that this is sort of his highest 
priorities. We met with him last week to talk about how we can 
link our efforts more effectively with those of the Department 
of Education, particularly how we can provide services which 
can be localized because it is important at the national level 
to provide the resources around content. It is also important 
to make sure that they can be localized so that the local 
school districts can modify them to provide the kind of 
individual criteria that they are interested in. We are going 
to start a series of in-depth conversations with folks at the 
Department of Education to see how we can take advantage of 
their thinking and how they can use the technology that is 
available through public television.
    As Secretary Riley was quick to recognize, you can get to 
literally every community in this country through public 
television. So if we can--if we can forge that closer 
partnership and, I think we can, we can be quite successful.
    Ms. DeLauro. I would just encourage those conversationsas 
quickly as possible. I don't know if there is a timeline in terms of 
expanding the effort. I think we are wasting precious time when we do 
have available technology. Certainly Secretary Riley is interested in 
it, but have you some sense of the timing on dealing with any of this?

                   new series on american literature

    Mr. Coonrod. For the service that is currently under 
development, the timing is right now. We are doing a 12-hour-a-
day, 6-day-a-week teachers channel that is available widely, 
but not yet universally. It focuses primarily on math and 
science. By January 2000, we will have developed the first 
literature and history components to it, and then we will go 
from there.
    The other thing I might mention, which is a related 
initiative, is a web-based initiative that has, very exciting 
potential. Next week, the National Council of Teachers of 
English will premiere a web site that is based on a number of 
public television dramas that will be on Masterpiece Theater's 
American Collection. We collaborated with PBS and with WGBH to 
develop a series of American dramas that would be part of 
Masterpiece Theater in the years ahead, and we have gotten the 
National Council of Teachers of English [about 18 months before 
the shows actually premiere on television,] to begin on-line 
dialogues and other services about the novels that are being 
converted to film. This is another opportunity for teachers to 
learn from other teachers and from experts in the field about 
how to teach the novel more effectively.
    That is something else that is under way.
    I might just mention that the works that have already been 
determined to be part of this American Collection are The 
Ponder Heart by Eudora Welty, Willa Cather's The Song of the 
Lark, Langston Hughes' Cora Unashamed, Henry James' The 
American, and The Glass Menagerie, by Tennessee Williams.

                      digital transition deadlines

    Ms. DeLauro. You are asking for funding for fiscal year 
2000 to help work on digital conversion. What are the deadlines 
that you are facing in terms of timing of the transition to 
digital broadcasting? How much funding do you expect from the 
Federal Government, meeting that deadline? How much will come 
from other sources? How will you fill the gap if you do not 
receive Federal funding that you are requesting?
    Mr. Coonrod. To start with the last part first, Federal 
funding is essential for two very important reasons. One, 
obviously the money is important, but it is also important to 
be able to demonstrate to viewers, members, foundations, 
corporate underwriters, and to State and local governments that 
there is Federal support for this conversion to digital. 
Furthermore, it is a Federal mandate.
    The money itself is extremely important, but some 
expression of support at the national level is also extremely 
important. So I just make that point.
    The total cost of conversion would be about $1.8 billion. 
That includes converting television stations, and it also 
anticipates that there will be some conversion of radio in the 
future. We don't know exactly what that would be, but we 
anticipated that cost as well.
    The public television stations asked for $770 million, 
which is about 45 percent of the total cost of conversion. The 
vision behind that request is that more than a pass-through 
capability is important. It is important to be able to localize 
the services, as we were talking about earlier.
    The administration has requested a total of $450 million, 
which would be, in part, through the Public Telecommunications 
Facilities Program, at the Department of Commerce, and in part 
through CPB. We support the administration's request because we 
think that the $450 million, about 25 percent of the total, 
would enable public television stations to make the digital 
transition. It would provide them with the basic broadcast and 
pass-through capability that they need to establish a digital 
broadcast.
    But I would also say that I am sympathetic to the ambitions 
of the public television stations because to the extent that we 
can do more than provide a pass-through capability, we can more 
quickly provide those local services that will be so important 
as we go forward.
    Ms. DeLauro. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Ms. DeLauro.
    Mr. Dickey.

               the importance of the federal contribution

    Mr. Dickey. Is it Mr. or Dr. Coonrod?
    Mr. Coonrod. Mister.
    Mr. Dickey. Mr. Coonrod, tell me what would happen if this 
scenario took place--that the Federal Government was displaced 
as a benefactor and a private enterprise in industry supplied 
all of your funds? What would happen to the product?
    Mr. Coonrod. To the product or to the availability of the 
product? I think those are two important questions.
    Mr. Dickey. Well, availability first.
    Mr. Coonrod. It seems pretty clear to me the importance of 
Federal support that we have gotten over the years. The product 
would still be available in large cities, major markets as we 
call them, but the rural stations, the stations that serve the 
less populated parts of the country would be the first to lose 
out.
    So, the Federal contribution is an important consideration 
in terms of availability. We would no longer be able to provide 
a universally accessible service. There is a longer answer to 
that. If you would like, we can explain to you how the 
economics of it work and why we see communities of a certain 
size not being able to sustain a public television station. In 
terms of the product itself, the answer is more speculative. It 
seems to me that it would veer more toward the kind of product 
you see on commercial television because the decisions that 
would go into making--the program decisions--would be similar 
in nature to commercial television. You would see the product 
begin to lose the distinctiveness of a public broadcasting 
product, and it would begin to look and sound more like 
commercial television.

                            ancillary income

    Mr. Dickey. Well, I have several thoughts, and I am going 
to run out of time, I know, with all these questions, but tell 
me, are we getting anything from Barney, any royalties at all?
    Mr. Coonrod. Yes. The short answer is yes.
    Mr. Dickey. How long has that been taking place?
    Mr. Coonrod. It has been taking place from the very 
beginning. The difference is that after about '95 or '96 when 
the new season was renegotiated, a different arrangementwas 
made but there has always been some level of royalties from Barney.
    Mr. Dickey. I didn't understand that. In dollars, how much 
did we get in fiscal year 1998 in royalties?
    Mr. Coonrod. I do not know the answer to that but I can 
certainly provide it to you.
    Mr. Dickey. Can you come close?
    Mr. Coonrod. No, because CPB does not have any financial 
involvement with Barney. That is a PBS issue and I would have 
to ask PBS what the numbers are. I wouldn't want to speak for 
them at this point. But I am sure I can get you the answer.
    [The information follows:]

    The information about public broadcasting's share of the 
income generated through the sale of merchandise related to the 
PBS series, Barney & Friends is subject to the terms of a 
confidential agreement between the Public Broadcasting Service, 
Connecticut Public Television and The Lyons Group, the 
producers of Barney & Friends. With the permission of the other 
parties, PBS is able to share this information on a 
confidential basis and respectfully requests that its 
distribution be limited to the Members of the Subcommittee and 
not be included in the public record.

                               censorship

    Mr. Dickey. I would like that. I think the most serious 
concern that I have is censorship. Do you think that because 
the Federal Government is involved, we have a right to censor 
what comes across on your stations?
    Mr. Coonrod. No. I believe that one of the terrific things 
about public broadcasting is that it has multiple sources of 
funding. About 15 percent of the funds come from the Congress.
    Mr. Dickey. How much is that in dollars?
    Mr. Coonrod. In this fiscal year that is $250 million. It 
is roughly a $1.8 billion enterprise of which this year $250 
million comes from the CPB appropriation. You add to that maybe 
another $2 or $3 million that come through other government 
sources. It is less than $300 million total. So it is roughly 
one-sixth of the entire industry's income.
    The other sources of funding are from state and local 
governments. A lot of state networks are seen in their 
communities as educational institutions because they provide 
important educational services so they get some funding from 
state and local governments. Twenty-five percent, the largest 
single source of funding, comes from viewers and listeners, and 
then there is corporate underwriting and foundation support and 
everything else. But it is the diversity of funding sources 
that is so important, so that no one source of revenue becomes 
the dominant source of revenue. I think that provides a certain 
creative and editorial freedom.
    Mr. Dickey. Who censors it then? Who censors what comes 
across on your stations?
    Mr. Coonrod. Well, I am not familiar with the word 
censoring in this context. I can tell you how program decisions 
are made. Each station makes its own program decisions. 
Stations are individually licensed, locally licensed. They are 
licensed either to community boards or to local educational 
institutions and each station makes its own decisions as to 
what programming it will carry. There is a general consensus 
among public television stations that they will carry 8 hours a 
week of PBS programing which is called common carriage. That is 
not a requirement, it is an agreement.

                         programming decisions

    Mr. Dickey. Who decides what that content is going to be?
    Mr. Coonrod. That is determined by the program staff at 
PBS, the chief programming executive at PBS in consultation 
with a program committee made up of primarily station managers, 
but not exclusively. The basic point, Mr. Dickey, is that these 
are locally licensed stations and each station is responsible 
to its community and ultimately to the FCC for the program 
decisions that are made.
    Mr. Dickey. Let's just say that somebody on this committee 
wanted something done and every year about appropriations time 
they kept making a request. Would that request carry more 
weight than otherwise because of the $250 million that comes 
from this subcommittee?
    Mr. Coonrod. That is a theoretical question to which I will 
give a theoretical answer. No. If we could a little more 
concrete, maybe I could give you a little more specific answer.
    Mr. Dickey. I am concerned that we are going to have 
censorship when you put the Federal money in there. You are so 
close to being completely free of any connection with the 
Federal Government and I am trying to analyze why you want the 
Federal Government involved. Obviously you are saying hands off 
our business. We know better than what you all know except for 
the money. I watch it and I have a granddaughter who watches. I 
think in Arkansas we have an excellent program.
    Mr. Coonrod. I think you do, too.
    Mr. Dickey. My time is up.
    Mr. Porter. You can finish.
    Mr. Dickey. It just seems to me you all are so close to 
getting free of the Federal involvement. Is there any other 
reason you want the Federal involvement other than the money?
    Mr. Coonrod. There are a couple of reasons and, I tried to 
make that point when I spoke about digital. The fact that you 
all support this is important. Stations around the country 
leverage the Federal dollars. The fact that you provide that 
appropriation is in many ways the single most important thing 
that stations have available to them to go out into their 
communities as a way to raise money. It is a terrific 
inducement. So I think that it is more than the amount of 
money, although the amount of money is important. I wouldn't 
want to minimize that.
    That is one area. The other area is for stations that have 
to raise money in their communities, have to raise money from 
underwriters, and have to raise money from foundations. That 
money often comes with strings attached, strings like it is 
only for equipment or it is only for programming or this or 
that. One of the things that the money that Congress provides 
is that over 70 percent, 71 percent of it, I think, goes out as 
community service grants which are available to stations. It is 
an efficient dollar for them because it is unencumbered, and it 
is the kind of thing they can use, A, to raise additional 
funds, and B, they can use to provide for the basic services 
for which they wouldn't otherwise have money. So it is a very 
important component in the whole mix.
    Mr. Porter. Thank you, Mr. Dickey. Mr. Hoyer.
    Mr. Hoyer. I have no questions, Mr. Chairman, not because 
of a lack of interest or support but because of time is running 
and I am going to have to leave pretty soon and I want to hear 
the national goals, but I think in answer to your question, Mr. 
Dickey posited that assuming you had the support of the private 
sector at the levels that the feds, or Federal and state 
governments are giving to public broadcasting, CPB in 
particular, as I understood your answer was you thought even if 
one could expect the level of funding, that you believe the 
tenor of programming would be altered to be more commercial in 
its presentation?
    Mr. Coonrod. If we had to rely more on commercial 
underwriting or corporate underwriting, I think it would 
inevitably lead in that direction.
    Mr. Hoyer. Thank you. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Hoyer. Mrs. Lowey.

                     programming in the digital era

    Mrs. Lowey. Thank you very much and welcome, Mr. Coonrod. 
It is a pleasure to see you again. Thank you so much for all 
you do and I feel particularly proud of public broadcasting in 
the New York area and proud to represent it.
    As I have stated before and we have talked about it, I 
strongly believe in working to give broadcasters the resources 
to convert to digital so that they can meet the legal 
requirements set forth by the FCC, and clearly it is the 
centerpiece of your request this year. I am interested in how 
programming will be affected by the transition to digital. I 
wonder if you can expand upon your comments in your testimony. 
Will programming newly developed for digital technology be 
available on analog systems as well? Will the viewers see any 
changes or disruptions due to the dual digital and analog 
operating system?
    Maybe I will stop there and ask the rest of the questions 
later.
    Mr. Coonrod. Under the current law, the stations would 
continue dual operations in analog and in digital until 85 
percent of the viewers had the ability to receive a digital 
signal. So there would be time for the transition. It is also 
entirely possible that the technology will permit in the short 
term that people with analog television sets could purchase a 
box that would cost somewhere in the neighborhood of $200. That 
would allow them to receive a digital signal and get some of 
the technical benefits of the digital signal but they would 
watch it on an analog television set. So that would mean it 
wouldn't get the clarity of the picture. It wouldn't get the 
same quality of image that you would get on a digital set but 
you would probably be able to get some of the data and other 
enhancements that would be possible in digital.
    Now, that box is not available on the market right now so I 
can't tell you that it actually works, but it is certainly 
something that is being developed and the sooner that we, by we 
I mean all broadcasters, not just public broadcasters, but the 
sooner we make that transition to digital, the more likely that 
the manufacturers will find it worth their while to market a 
box like that.
    One of the things that digital will permit is the use of 
enhanced television. One of the advantages of enhanced 
television is that it combines what we know as broadcast 
television and what we are coming to understand as the World 
Wide Web, the Internet services. So you will actually have 
Internet type services available on your broadcast television. 
The advantage of that is virtually everybody in this country 
has access to a television set and so you can make Internet 
type services universally available this way. That, it seems to 
me, is an important consideration because if you think about 
two children who go to school and have access to a computer at 
school and are doing some work at school and then they go home 
and child A has a computer at home and can continue that work. 
Child B doesn't have a computer at home. If we are able to 
provide digitally enhanced services that are linked to the 
curriculum, then that child who does not have a home computer 
and doesn't have access to the Internet, could have access to 
material that is similar to the Internet. So, public 
broadcasting can narrow the gap between the information haves 
and have nots. I think enhanced services are potentially a very 
important and valuable use of the digital spectrum.
    Mrs. Lowey. Just listening to you talking about it, I find 
that the technology is just leapfrogging along. How much 
coordination is there between public broadcasting and those who 
are developing this capacity for TVs to have this service? And 
I imagine--I don't know--do you think it will be 3 years, 4 
years, 5 years when there will be one piece of equipment, 
computer TV, et cetera.
    Mr. Coonrod. Or another way to look at it, there will be 
two pieces of equipment, your television and your computer, and 
you will be able to use either. You can get television on your 
computer and computer on your television. Public broadcasting 
was very much involved in the development of digital television 
all along. It was part of a grand alliance of broadcasters that 
developed the standards for digital television. In addition, 
there are a number of ways in which public broadcasters are 
keeping in close touch. For example, PBS has a new technologies 
committee which keeps track of all of these things.
    The work that we are supporting through our digital 
incubator projects, is work that brings the producers directly 
in contact with the technologists who are working on this 
together. In every one of our digital incubator projects there 
is a technology partner, somebody who is working on the 
development of the technology. A number of stations have really 
impressive efforts in this area. We are keeping, I think, as 
close touch as is possible, recognizing the point that you made 
earlier that it is unbelievable how quickly things are 
changing. What was a radical idea 6 months ago is now old 
fashioned. It is amazing the velocity with which things 
develop. I think we see this in the commercial side as well.

                benefits of digital public broadcasting

    Mrs. Lowey. In your testimony you actually refer to the 
educational programs that digital will greatly enhance. Can you 
give us some idea of what kinds of services, what kind of 
programming the public should expect to see?
    Mr. Coonrod. You may recall, Mrs. Lowey, that last year we 
put together for the committee a mockup for what a multicasting 
lineup might look like. This year, we have done a different 
one, what it might look like in Louisiana, and it is included 
in the back of your justification. For example, one service 
that we are all pretty much familiar with is the Ready to Learn 
service, the preschool service. But, if you look at the other 
servicesthat are available, you see programs in basically 
community college and educational programming courses, a documentary 
series on Louisiana, and a lifelong learning series for adults. The 
fantastic thing about this mockup is the only thing that is preventing 
us from doing this today is the lack of digital technology. Louisiana 
Public Broadcasting actually has these programs and right now, for 
example, it has to choose between doing Mr. Rogers' Neighborhood or 
doing a GED course on TV for people who would like to get a high school 
diploma. You only have one choice now because you only have one 
channel. In the future, you would have a number of channels, so you 
could air both programs simultaneously.
    I think those are the kind of things that would be 
possible. In addition, we agree that professional development 
for teachers is a critical issue, especially when you think 
about the number of teachers who are retiring and the need to 
provide teachers who are coming along with professional 
enrichment. So we at CPB are working with the Annenberg project 
and in cooperation with PBS to develop an entirely new service 
that would be available for professional development for 
teachers.
    The possibilities are only limited by our imagination. One 
of the things that I find most compelling about these digital 
incubator projects--and I hope you get a chance to look at the 
tape we have provided you--is the variety of things that are 
possible. If you would like, Mr. Chairman, we would be 
delighted to arrange for a demonstration for the committee of 
some of the more interesting prototypes and we could bring in 
some people who could talk to you about those in detail. It is 
kind of an abstraction talking about it but when you see it, it 
is really stunning.
    Mrs. Lowey. I was just going to say I thank you. And I just 
had one other comment, Mr. Chairman, with response to Mr. 
Dickey. There was an article this week about Candice Carpenter, 
the one who has developed the Women's Web Site and with $48 
something million in losses. Did you see that? She is now worth 
$1.8 billion. Now, if we can figure out how you can develop a 
business or perhaps develop CPB where it has $48 million in 
losses but yet it is worth $1.8 billion, maybe we can enrich 
public television somehow with all the knowledge that they are 
getting on the Internet. I haven't figured it out yet and I 
didn't invest in whatever it is called, the Women's Page or 
whatever. But I thank you very much. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mrs. Lowey. Do members have 
questions for round two? Mrs. Lowey, any questions for round 
two?
    Mrs. Lowey. No.
    Mr. Dickey. The only reason I would like to ask questions 
would be to keep Mr. Hoyer away from talking about the--what is 
it--the education goals part of it. That is the only reason. 
That is not sincere though.

                      cpb is not a federal agency

    Mr. Porter. I have questions for round two. Mr. Coonrod, 
CPB is a Federally charted corporation; is that correct? I 
asked my staff and they don't know and I don't know: Are 
employees of CPB considered Federal employees for purposes of 
pension and benefits like health care?
    Mr. Coonrod. They are not.
    Mr. Porter. So you have your own systems for health care 
and the like?
    Mr. Coonrod. Right. For example, under the pension, CPB 
employees are eligible for the TIAA-CREF, which is the teachers 
pension system. We have our own health care plan for employees. 
We operate under overall guidelines that are similar to the 
Federal ones and we maintain personnel practices that parallel 
Federal personnel practices.
    Mr. Porter. But your employees have no access to the 
Federal health system or plan or the like?
    Mr. Coonrod. Right.

                          one grant per market

    Mr. Porter. This is the third and final year of the phase-
in of base grants being restricted to one market--one per 
market, excuse me. What are the results of the initiative?
    Mr. Coonrod. We have some excellent results. There are two 
ways to look at this. One is how digital is affecting the 
decisions that are being made locally and to what extent these 
decisions are being driven by the change in policy. In other 
words, both things are operating simultaneously here, but half 
of the overlap markets are investigating what we would describe 
as the technical feasibility of shared digital facilities. Six 
of them have already made concrete plans for joint transmission 
facilities. So we are seeing the kind of infrastructure 
consolidation we had hoped for.
    Mr. Porter. There was some great fear if we had this policy 
a lot of the smaller stations or stations in markets that had a 
number of outlets would simply cease to exist. Has that 
happened or not?
    Mr. Coonrod. No, that has not happened.
    Mr. Porter. But they have figured out ways of both 
surviving and consolidating their operations with other similar 
stations; is that correct?
    Mr. Coonrod. That is the trend. And I just want to add that 
we think it is the right policy. But I don't want to say these 
cooperative arrangements are just the effect of the policy. I 
think the reality of the digital conversion is also pushing in 
that direction.
    Mr. Porter. All right. And I assume this has not saved any 
money; this is money that is now put into one grant instead of 
four or five in a single market--or has it saved money?
    Mr. Coonrod. Well, in the short term it hasn't saved any 
money, because we used the money that we would have spent on 
these base grants to help with the engineering for the 
consolidations. In the long term what will happen is that money 
will go into the incentive pool and it will be available to 
other stations.
    Mr. Porter. Why should the subcommittee advance fund the 
$20 million a year for digital conversion? Why shouldn't we 
fund that like we do other agencies before our subcommittee? 
Why should we give it preferential treatment as we do, of 
course, to your budget?
    Mr. Coonrod. There are a number of reasons why that would 
be beneficial from our perspective. Part of it is a planning 
issue. The vast majority of public television stations don't 
have access to capital markets, so their long-term funding 
plans for determining something like digital revenues in the 
outyears and future years, can be greatly eased and facilitated 
through this advanced planning.
    In other words, if you are a commercial station, you know 
what the cost of capital is to borrow, and this is included in 
your calculations. So, that is one area that is very important. 
Another area is the one that I was addressing earlier, this 
whole question of access. We have leverage with the 
manufacturers of set top boxes and that sort of thing to make 
sure that services like closed captioning are built into the 
digital systems. If we can demonstrate that we are going to be 
doing that kind of work, that those kinds of programs are going 
to be available, and that is clearly part of what the funding 
that we would request from this committee would be used for.
    The third reason why advanced funding is important is that 
we have to develop the interconnection and the intraconnection 
of the stations. The strength of public broadcasting right now 
is that a station in Nebraska may produce an instructional 
television program that is distributed through an organization 
in Columbia, South Carolina and is seen by students in Alabama. 
This interconnectedness is vital, and is very important.
    Mr. Porter. I think what the staff has in mind here is not 
why it is of advantage to you, but why you on this part of your 
budget, which wouldn't be required to be advanced funded, 
should get preference over other programs the subcommittee 
funds, since in effect it puts you ahead of aid to the disabled 
or aid to primary and secondary education and college students, 
financial institutions and the like, why should digital 
conversation go ahead of everything else? That is the real 
question.
    Mr. Coonrod. I think all of the things you just described 
are very important issues, and I would say that the basic 
difference is that this is a one-time expense. We are not 
seeking annual appropriations for this purpose. I can justify 
asking for all that money in a single year. So, short of asking 
for all of the money in a single year, we would ask for all of 
the money at once, but in the form of multiple appropriations.

                     distribution of digital funds

    Mr. Porter. How would you distribute the money? Would it go 
to stations that have already made some financial commitment to 
digital conversion, will it go to stations only in the top 20 
markets, will it go to rural stations? How will you distribute 
the money for digital conversion?
    Mr. Coonrod. We have had a consultation under way for about 
9 months with a group of stations, and we had a formula in 
place which we would modify, based on the plans that the 
proposal puts fort, some of the money or a major part of the 
money would go through the PTFP program. But we would focus on 
access. And by access, I mean, access for rural, access for the 
disabled and also other kinds of economic hardships.
    We would do this in consultation, we would open up with a 
plan in consultation with our station partners. In fact, the 
digital task force will be meeting I guess this weekend for its 
next round of conversations, and we are going to talk about how 
we would distribute funds. The principles that we would be 
working on would be, first, to assure the kind of 
interconnectedness I talked about before so stations could 
exchange programs. Second, that we would provide, make sure 
that everyone had access; and, third, that we be able to 
continue the modeling and the creation of digital content.
    There is a point, a phrase, embedded in your question, Mr. 
Chairman, that I would like to come back to you, because I 
think it is a very important one, and those are stations that 
have already made the conversion to digital or at least the 
pass-through part of the digital conversion.
    We think it is important that they also have access to 
funding either through the PTFP program or through CPB for two 
reasons. In some cases, their decisions to move quickly were 
driven by economic imperatives. They had to do it because of 
tower space problems and things like that. There are a whole 
range of reasons why they did it, and in our view, you 
shouldn't be disadvantaged because you made what at the time 
was a good business decision.
    The other part of that is what I tried to point out in my 
earlier testimony, the importance of some level of Federal 
commitment to this, that this is important as stations raise 
money locally. I have been traveling around the country and 
talking to potential funders, and that is a question that 
constantly comes up, how much is going to come from the 
Congress. And I wouldn't know how to answer a question about a 
station in a particular community that isn't going to get any 
federal support. You know, so I think it is important.
    Mr. Porter. We have another group to testify this 
afternoon. So if you can give me just short answers to the next 
series of questions. In your request for digital conversion, 
does that support both television and radio conversion?
    Mr. Coonrod. It anticipates both, yes.

                            the future funds

    Mr. Porter. One of your accomplishments is the creation of 
the TV future fund and the radio future fund. How much has CPB 
dedicated in terms of funds to the TV future fund since 1995 
and how much to the radio future fund since 1996?
    Mr. Coonrod. I do not have those figures at my fingertips, 
but it is in the neighborhood of $8 to $10 million, but I could 
provide you with the exact figures. It is 50 percent from CPB 
discretionary funds and 50 percent from station funds.
    [The information follows:]

    From the inception of the Television Future Fund until now, 
CPB has dedicated a total of $9,675,637 of CPB discretionary 
funds, and $8,976,000 from station grant funds.
    Since the inception of the Radio Future Fund, CPB has 
granted $9.2 million toward projects dedicated to augmenting 
non-governmental revenues and/or increasing system efficiences.

    Mr. Porter. And the purpose here is to, in the future, 
gradually reduce dependency on Federal dollars; is that 
correct?
    Mr. Coonrod. There are two purposes. One is to reduce that 
dependency by improving operations, making operations more 
efficient. The other purpose is to improve stations' ability to 
raise money in their communities.

                        Digital Conversion Costs

    Mr. Porter. Can you tell us how much of your regular 
appropriation will be used for activities related to digital 
conversion?
    Mr. Coonrod. Of the regular appropriations?
    Mr. Porter. Regular appropriations.
    Mr. Coonrod. Beginning in next fiscal year, the lion's 
share of the TV program dollars will go to projects that will 
have a digital dimension to them. Right now we are funding what 
we call TV Today and TV of Tomorrow, and beginning next fiscal 
year, we will shift our emphasis to TV of Tomorrow. So I can't 
give you an exact percentage, but it would be most of the TV 
programming dollars. Most of the TV future fund projects 
already have a digital component to them; that is, they are 
positioning stations to plan for digital.
    The operational activities of the stations are supported 
with CPB dollars through the CSG program. There will be a 
transition toward a digital focus there as well. So I can't 
give you an exact percentage. But I can say it would be a 
dramatic shift in that direction.
    Mr. Porter. Mr. Coonrod, you have answered all of our 
questions. I have a number of additional questions for the 
record. We thank you for your appearance today. We thank you 
for the fine job you are doing. We value public television and 
public radio very greatly in our society and, obviously, we 
want to provide you the resources that you need to get the job 
done.
    Mr. Coonrod. Thank you, Mr. Chairman. We appreciate that. 
The work, the support that this committee has provided over the 
years has been phenomenal.
    Mr. Porter. Thank you, sir. The subcommittee stands briefly 
in recess.
    [The following questions were submitted to be answered for 
the record:]

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                                           Tuesday, March 23, 1999.

                     NATIONAL EDUCATION GOALS PANEL

                                WITNESS

KEN NELSON, EXECUTIVE DIRECTOR

                              Introduction

    Mr. Porter. The subcommittee will come to order. We 
continue our hearings on independent agencies and are pleased 
to welcome Mr. Ken Nelson, the Executive Director of the 
National Education Goals Panel. How are you? Good to see you.
    Mr. Nelson. Fine.
    Mr. Porter. And why don't you proceed with your statement.

                           Opening Statement

    Mr. Nelson. It will be brief but to the point. It is good 
to be back before your subcommittee.
    Nine years ago in his 1990 State of the Union address, 
President George Bush announced the national education goals. 
He said to the Nation at that time and I quote, ``education is 
one investment that means more for our future because it means 
the most for our children. That is why tonight I am announcing 
America's education goals.''
    He recognized the challenges that lay ahead. He knew these 
goals were ambitious, and it would not be easy to achieve them, 
but he also knew the future was at stake. He said the Nation 
will not accept anything less than excellence in education. The 
Goals Panel is a unique bipartisan and intergovernmental body 
of state and Federal officials created in 1990 by President 
Bush and the Nation's Governors and authorized by Congress in 
1994 and given the charges to, number one, report state and 
national progress towards thegoals; two, work to establish a 
system of high academic standards and assessments; three, identify 
promising and effective strategies for achieving the goals; and, four, 
build a nationwide bipartisan consensus to achieve the goals.
    I would like to recap this past year very briefly. It was a 
productive one for the Goals Panel with appropriation you 
provided last year. That was under the chairmanship of Governor 
Cecil Underwood of West Virginia. As you know, we transfer 
chairs between Democrat and Republican every year. The Goals 
Panel launched a new series of publications called Lessons from 
the States to help explain how well particular states are 
making significant progress towards the goals.

          Rapid Achievement Gains in North Carolina and Texas

    One of these publications I have here. It examined 
effective education policies that accounted for rapid student 
achievement gains in North Carolina and Texas. And it was 
interesting that the Rand Corporation had already been doing 
some basic research there.
    We used some of their writers and their analysts, and we 
found out that North Carolina and Texas had done some similar 
things to achieve significant advances in student achievement. 
A set of policies and actions that were common to both States 
explain those gains.
    Number one, they really targeted high specific academic 
standards that permeated the classrooms, started at the state 
level, but went to the classroom level. They aligned their 
assessments, they created new assessments in respective States 
and aligned them to the standards. They had an accountability 
system that held the systems, both the school districts and the 
students, accountable for achievement. They developed a very 
effective database, and that is what we are particularly 
interested in, because we use data and we report data.
    Texas and North Carolina use it very effectively by 
reporting achievement data at student level, as well as school 
building level on the Net so the public knows where they are 
at. Then they sustain the support and leadership from the 
business community and the political community over a period of 
time.
    So those were the ingredients that made these two States 
rise to the top of our report in '97. When I came to you last 
year, I had our '97 report before us and we saw that North 
Carolina and Texas had risen to the top in terms of achieving 
multiple indicators around the goals. So we went back to those 
States and said how did you do it, and this is the result of 
that.
    This has been very popular throughout the States, 
especially for state level policymakers, which is our customer 
group. We consider five customer groups, governors, state 
legislators, chief state school officers, school boards of 
education and business education coalitions, and they have seen 
significant worth in this report.

                          Talking About Tests

    The next item that we produced last year was Talking About 
Tests. This came as a result of several governors coming to us 
and saying that they are promoting high academic standards in 
their respective States and they are trying to align 
assessments to those. But a lot of the public is not 
understanding what is going on, and they are apprehensive that 
this movement toward high academic standards will be set back 
if the public is not on board with it.
    For instance, if their students don't achieve as well as 
they did prior, because now they have more significant and 
difficult tests; So Talking About Tests, an idea workbook for 
state leaders was developed in collaboration with a lot of 
States who are doing commendable things, including Maryland, 
Kentucky, Illinois, we cited extensively in here about 
communicating effectively to parents about tests and 
achievement results.

                          Promising Practices

    Then we built a new product called Promising Practices--
this is our '98. We are going to do a '99 version based upon 
our prior year's report. Again, we are back to every goal to 
find out which States had achieved the most progress on the 
respective goals. We went back to those States and said how did 
you do it? It is anecdotal, granted, but it is based upon the 
achievement data that we had previously reported, and we cited 
in here how the respective States did it. And we also put 
contact information on the Web and fax and phone numbers so 
other people throughout the country could contact those 
respective States.
    We have heard repeatedly from governors and state 
legislators that they do like to copy each other. They do like 
to find where there is success in respective States. And we are 
sort of helping to cross fertilize the States with this 
publication. Again, the States that we highlighted were 
California, Florida, Mississippi and Oklahoma.

                        Mathematics and Science

    Then we went to basic NAEP and TIMMS data on math and 
science data and for the first time we reported state-by-state 
comparisons on those respective indicators, math and science, 
both state and national with TIMMS, (30 international math and 
science). This has been very well received, and it allows 
States to benchmark against each other, and benchmark against 
their own baseline, how well have they done over a period of 
time.
    We have broken it down so that they can see themselves in 
comparison to the national cohort as well. As we know, the 
private sector constantly talks about benchmarking against the 
best. What we would like to do is bring that more into the 
public sector and let's benchmark against the best, whether it 
be another state or another country on academic achievement. 
And we think we present it quite well, but we are always 
willing to improve, and we are always try to improve it.

                             Teleconference

    Simultaneously, we delivered this report, our annual report 
to a national teleconference last year, Mr. Chairman. We are 
trying different ways of getting the word out. So we contacted 
every State, again our five customer audiences, we tried to 
convene them at respective downlink cites in every State, so 
when they received our reports they could engage locally around 
the reports and say what are we going to do here in Oklahoma or 
whatever.
    And, in fact, Oklahoma does come to mind, because they are 
so impressed with it, they invited--Governor Frank Keating 
invited us to an educational summit whereby we presented some 
of our reports demonstrating again how well North Carolina and 
Texas had made progress.

                          Annual Goals Report

    Then, of course, our standard delivery is our goals report, 
our data report again, formatted differently, so that it is 
more usable by States so they can see a progress against their 
own baseline, but there are comparisons too against the U.S. as 
well as other states. And we found that that is quite usable, 
quite user friendly, we believe.
    And we have come a long way, as you can see, perhaps 
compared to our first report. This is our eighth report. We 
still have two to go. And then we also summarized it in what--
where we clustered States by most improvement over time, by 
highest performing State, by most improved States,and that was 
a way of demonstrating that several States are making significant 
progress. And we are trying to highlight and give accolades where 
possible to those States that are making improvements, but we also 
report the data as it comes to us.

                                website

    So if it is not good news, they have to hear that as well, 
and we don't shy from that at all. Our website, which we are 
transferring more of our information to, received over a 
million hits last year, a million three. We just did a website 
focus group because we want to make it user friendly, far more 
user friendly. And we will be putting out a new what we will 
probably call a communications brochure, not just a Web 
brochure, which I believe you have in packets which we 
presented to you. We are trying to communicate more thoroughly 
and effectively in other ways.

                             state packets

    We did present to each of the members of the committee, Mr. 
Chair, including you, the state specific packet. We are trying 
to demonstrate a responsiveness to state data needs. And we 
tried to break it down so that it is meaningful across all of 
the eight goals on the complete set of state indicators, how 
respective States have advanced, again back to how they are 
doing in math and science, nationally and internationally, how 
they are doing on reading.
    The reading results were just released about 3 weeks ago, 
and we will be putting the information that we have in that 
packet for you into a publication not unlike this, because it 
will follow up on the specific subject matter and demonstrate 
how the respective States are doing. We prefer to show it over 
time, if there are two data points, by which we can show 
progress.
    We believe that this information and the policymakers that 
we represent, namely, the 18 policymakers on our panel have 
indicated that they want to monitor the progress and the 
respective States over time. They want to benchmark against 
others, and they want to also look at how subgroups in their 
respective States are achieving. And so we break it down by the 
best data that we can find in terms of subgroup participation, 
whether it is minority, female and household income.

                             budget request

    Finally, Mr. Chair, and to the point that I am here, is 
with our budget request. We are asking for an increase of 
$150,000 for next fiscal year, and that is to help us as we 
approach the end of the decade. We have several new initiatives 
that we are launching related to the end of the decade. Let me 
characterize them briefly. In September of this year is the 
10th anniversary date of the Charlottesville Summit which 
President Bush and the Nation's Governors convened in 
Charlottesville, Virginia. We invited President Bush to come 
back.
    We are going to honor all of the previous chairs of the 
panel, and thank them for this visionary effort that they 
launched for the country in 1989. We are taking that 
opportunity of this very festive event to do a lot of 
reflection on how far have we come, how well are we doing, and 
we know we are not going to get to the goals as a Nation. We 
are starting to say that very frankly. But are there growth 
gains that happened because of the goals. We are trying to ask 
those sort of penetrating questions.
    And we have commissioned a series of papers to help explore 
that goal by goal, what have been the impacts of the goals. We 
know that the country has moved from inputs to results 
orientation. We think the goals help that. We know we have 
moved toward academic achievement or academic standards, and we 
think the goals have helped that.
    In some respective goals areas, we know that goal one, we 
have really been a catalyst in the country for early childhood 
and readiness to go to school. But in the September event, we 
are planning to launch what we are calling Message 2000. That 
will bridge the entire year of 2000 with the end of the decade 
statements, but also the launching of a new decade, where are 
we going, America, in respective States in education reform.
    Now that a lot of the standards are driving reform in 
respective States, we believe that data is driving and 
policymakers are getting better and clearer data than ever 
before, and we are going to try to help the Nation in a 
dialogue fashion with multiple publications and meetings over 
this 2-year span starting in September of this year up until 
when we deliver our final end of the decade report in 2001, 
when we can capture the 2000 data.

                             budget summary

    Well, Mr. Chair, that is my best summary of what we would 
hope to do with that $150,000 budget request, beyond what we 
presently deliver in our services. And we are excited about the 
opportunities that are before us, and we will continue to 
provide you and your colleagues as well as governors, state 
legislators and the public with the best information that we 
can provide in the best user friendly format so that 
policymakers can use it for their decisions.
    Thank you very much, Mr. Chair.
    [The prepared statement follows:]

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                           meeting the goals

    Mr. Porter. Thank you, Mr. Nelson. I am going to submit 
most of these questions for the record, and actually you have 
answered a good number of them in your statement. But let's 
talk for a minute about where we are and where we are going, 
because it seems clear now that none of the eight goals that 
President Bush enunciated are going to be met for the Nation by 
the year 2000.
    These national goals really in a sense have become state 
goals as well; is that correct?
    Mr. Nelson. That is correct.
    Mr. Porter. Are any of the States going to make--have any 
of the States made all eight by now?
    Mr. Nelson. Not all eight. Some States have made some 
goals.
    Mr. Porter. Some of the eight.
    Mr. Nelson. Right. Right, we can document that.
    Mr. Porter. But you have seen a lot of progress on all of 
them; is that correct? No?
    Mr. Nelson. I have my chief author of our report, Cindy 
Prince. And we have seen progress on a lot of goals by a lot of 
States. That is why we shifted our focus to the States. But 
let's come back, that was a rather comprehensive question. This 
is Dr. Cindy Prince, who does our reports.
    Mr. Porter. Ms. Prince, why don't you comment on that?
    Ms. Prince. The area probably where we have seen the least 
amount of progress is the goal on safe discipline, alcohol and 
drug free schools. On most of the indicators that are at the 
state level we have either seen no progress or on some of the 
measures, we have actually seen States getting worse. So that 
is the goal that is probably least likely to be met.
    Mr. Porter. All right. Well, now you are going to have a 
little get together or a celebration down in Charlottsville 
again?
    Mr. Nelson. In town here.
    Mr. Porter. In Washington? And you are approaching the year 
2000 deadline, the goals were for the year 2000. Apparently we 
are not going to meet any of those as a Nation. Some states are 
going to meet some of them.
    Mr. Nelson. That is right.

                          future of the goals

    Mr. Porter. And where do we go from here? Do we adopt a 10-
year plan where we restate some of the goals or upgrade them to 
reflect the progresses that have been made? Do you go out of 
business? Do we renew ourselves? What do you think about this?
    Mr. Nelson. Well, thank you, Mr. Chair. That is a very good 
question, which we anticipated and have been thinking about a 
bit. Over a year ago we formed a task force called the Future 
Goals Task Force, cochaired by Governors John Engler of 
Michigan and Jim Hunt of North Carolina.
    They came up with recommendations back to the panel and the 
panel at its February 20th meeting voted unanimously to work 
for continuation of the goals and the panel with these changes 
recommended, and they would be changing the title from National 
Goals to America's Goals. The governors feel that that 
decentralizes it more, it has more ownership by the American 
people and also the American Goals Panel then, and removing the 
date of 2000 and instead, not substituting a new date, but work 
on continuous improvement against respective baselines for 
respective States.
    We are looking at alternative ways of reporting. There is 
more attention now given to what you can call value added 
reporting, the gain growth that respective States have been 
able to give to their students. And I know Rand Corporation is 
coming out with a study fairly soon looking at all States in 
terms of how much they have value added to their students.
    A very critical ingredient here, Mr. Chair, that I think we 
have to deal with is the socioeconomic background of 
youngsters. Those who come from disadvantaged backgrounds, we 
are looking at how much the system gives them gain versus those 
who come from less disadvantaged background. There is certain 
school systems that say they do very, very well. And they do 
well, except when you look at their clientele, their students 
already come from very advantaged homes and so the value added 
to the system is not so great, and Rand will look at that quite 
critically within respective States.
    We are doing two studies of that. We are trying to see 
whether, in fact, we should report more on value added, because 
we believe for state policymakers the value added might give 
them a little more data by which they can make policy 
decisions, because if a respective state or school district has 
value added and a lot of low socioeconomic students, then they 
are on to something, especially with the concentration of a lot 
of students in urban environments.
    So that when I talk about a new way of reporting, 
alternative reporting we are calling it, we are exploring 
those. And we hope to do it early enough so that if the panel 
is continued, and this is a reauthorization question, then we 
would be poised to report beyond the year 2000 into however 
long--I guess reauthorization is for five years--with more 
value added reported and less guided by a particular time line 
like the year 2000.
    Mr. Porter. I don't think we could end up looking like the 
former Soviet Union with 5-year plans or 10-year plans. That, I 
think, is not necessarily the proper approach. I like the 
concept of value added. But it seems to me that isn't really 
our goal, it is not to add value; it is to turn out students 
that are prepared to live in the world as it exists and get 
jobs and support their families----
    Mr. Nelson. Absolutely.
    Mr. Porter [continuing]. And continue their process of 
learning. So I would hope that we stay with absolute standards 
and not simply talk about an alternative or alternative data 
without keeping our eye on the absolute need to meet goals like 
the ones that were established by President Bush.
    Mr. Nelson. Well, that is absolutely our conviction too. We 
say it in the same breath, the absolute has to remain there and 
we are honoring that. Some policymakers are saying we might be 
able to help them more or in addition if we gave some value 
added.

                          improving the goals

    Mr. Porter. I can see the value of it, Mr. Nelson. I just 
don't want us to lose sight of the bottom line. This may not be 
a fair question, although you may be able to give us some 
guidance since you deal with the data at least, and also with 
the education people in the States, you can tell us what your 
budget ought to be.
    Can you tell us where we ought to be doing better in 
providing support for programs that aim to help achieve some of 
these goals with Federal dollars?
    Mr. Nelson. I would love to answer that question.
    Mr. Porter. I know it is not a proper question. You may 
choose not to answer it obviously.
    Mr. Nelson. Well, obviously, I would love to answer it. I 
would love to try although perhaps not so much here. I think 
last year with your Porter-Obey initiative that was very 
thoughtful and research based, and focusing in on the 
improvements, proven models, I think is very effective.
    We believe the very good use of data and a lot of States 
are struggling with this because of the advent of technology. 
They know that the classroom teacher--we have always said--that 
the data is more powerful the closer it gets to the student. 
And if the teacher or the parent best knows how well that 
student is achieving, then they can next day do something about 
it. So that the data has to be sort of aligned up and down the 
system from the capital to the classroom, we say.
    We have a project that is underway. We just had a very fine 
meeting last Friday where we had convened people from 
throughout the country on putting together what we call the 
accountability reports. We don't know how it will end up, what 
the title will be, but it is how we can better use data for 
decisionmaking, State and local levels, on education 
improvement. The report we heard on Friday from some several 
States is they are gathering all kinds of data, a lot of which 
they don't use. But they are reluctant not to gather it, 
because they have always gathered it, but with technology they 
can focus the gathering process.
    We call it collecting, managing and reporting on data. And 
so I believe that Texas and North Carolina demonstrate a good 
use of data, particularly Texas, where it has broken its 
achievement down into subgroup categories. Frequently when 
schools directly report, they will report the aggregate, but 
Texas breaks it down by every minority group, major minority 
groups, and if there are problems there, then they can hold the 
school directly accountable.
    So I would like to come back and try to answer your 
question. We did have a meeting with Congressman Goodling, in 
fact a staff person that I have used to work with Congressman 
Goodling, and we went in and met with him obviously because we 
are up for reauthorization before his committee. He does serve 
on the panel, but posed to him in that NCES is up for 
reauthorization, NAGB is up for reauthorization, Goals Panel is 
up for reauthorization, it might be a good time for Congress to 
look at what is the role of data collection and how can it best 
be used for educational improvements, sort of a parallel to 
your more comprehensive question.
    But we have got some ideas on that. I am sure other people 
do, but it might be a good time for Congress to look anew, if 
you will, especially with the advent of technology as it is and 
I do believe, among the Governors and the state policymakers, 
far more appreciation for data than they everhad before.

                             media support

    Mr. Porter. I know that the data you gather is very useful 
to the chief educational officers and the Governors of the 
States, and you are obviously doing an excellent job in 
providing that kind of data. What I wonder is how much interest 
there is in the media in helping get out the message about 
achieving national goals? Maybe it is a question you can't 
answer, because maybe there is a focus at the Governors level 
or another level, but I would think you would know about that.
    What can we do to get the media involved in putting this 
before the American people and keeping their sights up and 
emphasizing its importance to parents? After all, if they are 
enthusiastic about school and student achievement and classroom 
performance, that can make a tremendous difference.
    Mr. Nelson. That is a tough one that we have struggled 
with, too, because I guess the bottom line for us is what 
appeals to the self-interest. And the parent's self-interest is 
a child doing well in school and getting a decent job, and so 
we try to go back to that.
    I think the private sector, the business community, 
National Alliance of Business does quite well at that, as well 
as anybody does. It says you really do have a self-interest 
here; if your child isn't doing well, they are not going to do 
well in the future. So it is that appeal. We don't have the 
wherewithal, and I am not sure even if we did it would be wise 
expenditures to try to sell the goals to the country.
    The way the goals are created was a good process from a top 
down. It has not been a bottom up as well as we would have 
liked. In some communities it is. I think Omaha, Nebraska took 
it very seriously and they developed and worked around goals 
since 1990. There are examples of that, but there are not as 
many as, of course, we would like.
    So we don't have a clear-cut answer to that. I wish we did. 
We are targeting, as I said, customer groups at the state 
level, policymaker level in hopes that they in turn permeate 
their policies and programs in States with high academic 
standards and these goal level expectations. Some States, the 
NGA, the National Governors' Association, does report every 
year on how respective States report on their goal achievement. 
But there has been a diminishing engagement of respective 
States too. There is a whole new list of governors. Only 
Governor Tommy Thompson still is a governor that was at the 
original summit.
    So there has been a diminishing interest there. So I am 
sorry I don't have a clear-cut answer for that.
    Mr. Porter. It seems that at least we ought to be able to 
make some progress, although this is not where it is most 
needed, through public television. The CPB was just before us, 
as you know, and I say this in respect to a lot of the things 
that come before the subcommittee that the American media 
disgracefully dumbs down our society and spends all of its time 
on Monica Lewinsky instead of looking at the things that are 
important to our country and working to get into the minds of 
our people, what they can do to help achieve goals that are 
important to their children and their families.
    I just think all of us ought to get back on the media and 
start saying how poorly they are providing leadership in our 
society, and how much they simply put their finger in the wind 
and look at the marketing results of what they put on, and the 
only thing they seem to care about is the dollars that 
marketing produces. I think it is underselling our people and 
the things that bind us together as a nation.
    Mr. Nelson. Yes, yes.

                           closing statements

    Mr. Porter. There, you got a dose of my philosophy. You are 
doing a fine job there, Mr. Nelson. We appreciate everything 
that you are doing and, obviously, we want to do our best to 
provide the resources that you need.
    Mr. Nelson. Thank you very much, Mr. Chairman.
    Mr. Porter. And that was very good timing, because there is 
a vote. The subcommittee will stand in recess until 10:00 a.m. 
tomorrow.
    [The following questions were submitted to be answered for 
the record:]

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                                         Wednesday, March 24, 1999.

                    CORPORATION FOR NATIONAL SERVICE

                               WITNESSES

HARRIS WOFFORD, CHIEF EXECUTIVE OFFICER
TOM ENDRES, DIRECTOR, NATIONAL SENIOR SERVICE CORPS
DIANA LONDON, DIRECTOR, AMERICORPS VISTA
WENDY ZENKER, CHIEF OPERATING OFFICER
    Mr. Porter.  The Subcommittee will come to order.
    We continue our hearings on the Appropriation for 
Independent Agencies with the Corporation for National Service.
    We are pleased to welcome Senator Harris Wofford, the Chief 
Executive Officer, this morning. It is good to see you, 
Senator.

                           Opening Statement

    Mr. Wofford.  Mr. Chairman, it is good to be back with you 
and your Subcommittee. Joining me are Tom Endres, Director of 
the National Senior Service Corps; Diana London, the Director 
of AmeriCorps VISTA; and Wendy Zenker, our Chief Operating 
Officer of the Corporation.
    If I may, in about 5 minutes, I will distill some key 
points from my written testimony, which you have in ample 
measure.
    First, I want to thank the Subcommittee for its long-time 
support of the Senior Corps Programs and VISTA, and for the 
increased appropriations you provided last year. Those funds 
permitted these very successful programs to continue their long 
tradition of involvement in our communities.
    They improve the education and health of children, promote 
independent living and economic self-sufficiency, and harness 
the constructive power of volunteers in America. With your 
guidance and encouragement, we continue to focus these programs 
on sustainability, impacts, and outcomes.
    We have already reported that nearly 70 percent of VISTA 
supported programs continue to operate 5 years after the VISTA 
resources are withdrawn. This year the whole Senior Corps has 
been implementing Programming for Impact on a national scale.
    The first accomplishment reports for RSVP, Foster 
Grandparents, and Senior Companions demonstrate that the Senior 
Corps' outcome-based approach is producing solid results in 
communities throughout the Country.
    Programming for Impact, as we have discussed with you 
before, is a key part of our effort to meet the requirements of 
the Government Performance and Results Act. Our fiscal year 
2000 GPRA Performance Plan strengthens training and evaluation. 
It also details our plan of action to improve financial 
management, relying in part on the additional program 
administration funds that you made possible last year.
    Our evaluation activities continue to confirm that VISTA 
and the Senior Corps programs are indeed getting things done 
and are cost effective.
    A recent study of the role of Foster Grandparents in Head 
Start centers shows significant contributions to the children's 
skills and well-being.
    Preliminary results from a study of our Seniors For School 
Initiative now underway in nine communities around the country 
show that 80 percent of students gained in reading skills.
    Those studies have been made or will be made available to 
the Subcommittee. Because Federal funds are scarce, and the 
demand for these programs is so high, we seek to make the most 
of every Federal dollar. Since 1994, we have almost doubled the 
use of the VISTA Cost Share Model.
    Under this arrangement, project sponsors leverage local 
resources using AmeriCorps VISTA funds. The local sponsors pay 
most of the cost of VISTA members, while the Corporation 
provides little more than the Education Award and some 
training.
    More than 200 organizations contribute more than $10 
million to support 1,000 VISTA members. The Senior Corps 
framework now includes $99 million in non-Federal cash and in-
kind contributions.
    At the same time, both the Senior Corps and VISTA have 
substantially increased their collaborations, not only with 
each other in very effective ways, but with National, State and 
Local community organizations. VISTA currently collaborates 
closely with nearly 30 national organizations, including Big 
Brothers, Big Sisters, Habitat for Humanity, YMCA, and United 
Way.
    The Senior Corps' national organization initiative recently 
selected six organizations, including Lutheran Services and 
Volunteers of America, to promote senior service and support 
new projects.
    The record shows that VISTA and Senior Corps programs are 
successful investments. For fiscal year 2000 we ask that you 
continue the growth of these programs.
    For VISTA we are requesting an increase of $8 million to 
add 500 new members. We are emphasizing two key initiatives--
Welfare to Work Programs and Technology Access.
    As time limits on public assistance payments are reached, 
VISTA members in 200 economic development projects are 
providing access to employment for thousands of people seeking 
self-sufficiency.
    With a new Century about to begin, VISTA members across the 
Nation are bridging the digital divide separating low income 
communities from those with substantial resources.
    For the Senior Corps we are requesting an increase of $11.1 
million to provide new volunteer opportunities, respond to 
vital administrative needs, and expand important 
demonstrations.
    Our successful first year Seniors for Schools Initiative, 
which focused on child literacy, will be continued.
    The newly launched Experience Corps for Independent Living, 
which develops and tests innovative and cost-saving approaches 
to serving the frail elderly, enabling them to live 
independently at home, will be extended and expanded. We plan 
to start our first RSVP-specific initiative to mobilize a 
significant portion of the senior population in three to five 
localities to show what they can do if they really focus on 
solving community-wide problems.
    On the vital front of improving the Corporation's financial 
management, I can report that after we submitted my written 
testimony, Wendy Zenker, Chief Operating Officer, and I were 
briefed yesterday on the results of the fiscal year 1998 
financial statements audit.
    The Inspector General expects to issue the opinion within 
the next 3 weeks. We expect it to show that the Corporation is 
making continued progress, but still has important work to do.
    We are requesting an additional $4.4 million to continue 
that work in financial and grants management, to correct 
reported material weaknesses, and to significantly increase our 
use of technology as a means to manage the expanding workload.
    Mr. Chairman, VISTA is completing its 34th year of helping 
low income people become self-sufficient and helping America 
meet its goal of eliminating poverty amidst plenty.
    The Senior Corps, also begun 34 years ago with the Foster 
Grandparents Program, is providing opportunities for the 
elderly to serve their communities on an increasing scale. With 
the impending retirement of 76 million baby boomers, itis 
uniquely positioned to tap the talents, energies, and enthusiasm of the 
growing older population to make them a vital force in meeting the 
needs of America.
    So, Mr. Chairman, national service is a proven tool for 
getting things done that need to be done and an essential 
resource for the future.
    Thank you.
    [The prepared statement follows:]

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    Mr. Porter.  Thank you, Senator.
    Let me begin by saying I am very pleased with the progress 
your agency has made in developing your performance plan for 
fiscal year 2000. I see that you have a number of evaluations, 
as you mentioned, planned or underway, which should provide you 
with some good data to examine the outcomes of your programs.
    We have been asking other agencies under our jurisdiction 
to include their performance measures within their budget 
justification.
    Can you tell me if you will be incorporating your measures 
for each program and activity within the structure of your 
budget justification next year?
    Mr. Wofford.  Yes, we will next year.

                            financial audit

    Mr. Porter.  You mentioned your financial audit. In fiscal 
year 1997 the Corporation received a qualified opinion in its 
financial audit. The auditors noted six material weaknesses.
    Perhaps you want to clarify. I understand that your fiscal 
year 1998 financial statements may have eight or more material 
weaknesses. If that is so, can you explain to us why the number 
of material weaknesses will have increased?
    You have just said that you have made some progress. Can 
you describe in a little more detail what progress you have 
made and whether you expect to rectify these problems?
    Mr. Wofford.  Yes. I would also ask Wendy Zenker to 
amplify. We expect to receive in a few weeks an unqualified 
opinion this year on our balance sheet, on our Statement of 
Financial Position, which will enable us to use that closing 
balance as the base for an all out effort to get an unqualified 
opinion on the other two statements.
    We will not achieve that this year. We are on the way to 
achieving it. Wendy Zenker, I think, may help add a few 
details. Of course, we have supplied to you and will continue 
to supply every 60 days a detailed amplification of what we are 
doing under the Action Plan that has been presented to 
Congress.
    The additional two material weaknesses, in large part, 
reflects the in-depth audit that we had this year, which we 
have not had before. When I arrived a few years ago, nothing 
was audited, like many Federal agencies moving into the 
generally accepted accounting principles that are applicable to 
the Federal Government.
    I arrived at the moment we got the report that there was no 
audit possible. We, in that next year, had some hundred 
findings and recommendations by the auditors of what had to be 
done.
    We have been working very hard to implement those 
recommendations. A majority of them have been cleared up. The 
two additional material weaknesses will be incorporated in our 
Action Plan and be reported on every 60 days. Wendy, is there 
anything that you would like to say?
    Ms. Zenker.  As Senator Wofford said, we have serious 
problems that we are addressing at the Corporation. There were 
six weaknesses identified last year. We expect there will be 
two additional ones identified this year.
    It is largely a fuller scope audit that is identifying 
these problems. In addition, one of the items that was a 
qualification on last year's statement is now a material 
weakness, which is in its own way an improvement. We have been 
able to remove it as a qualification, but it still exists as a 
material weakness.

                         program administration

    Mr. Porter.  Well, it sounds like you are making good 
progress on all of this. We just want to keep tracking it with 
you and make sure that is in fact occurring.
    Senator, you are kind of unique among agencies because you 
are split between two subcommittees in the House of 
Representatives. A lot of your budget is over in VA, HUD. You 
requested $4.3 million for an increase in program 
administration to our Subcommittee.
    How much have you requested from VA, HUD for program 
administration? Will these funds be used basically for the same 
purposes?
    Mr. Wofford.  I would like Wendy to comment on the precise 
figures.
    Ms. Zenker.  We requested a similar amount from VA-HUD for 
program administration. I would like to remind you that 40 
percent of that goes to our State Commissions under the 
AmeriCorps Program.
    So, though it appears to be the same amount of money, 40 
percent is given out in grants. Of the other funds, again, it 
is approximately $2 million. [Clerk's note: Later corrected to 
$2.8 million.]
    We will be using those funds also for financial management 
improvements, as well as improvements to the National Service 
Trust and other technology improvements, but related primarily 
to the AmeriCorps and Learn and Serve programs that are funded 
out of that budget.
    Certain activities for the Senior Corps programs and VISTA 
will be funded out of the program administration that we 
receive from you.

                              budget split

    Mr. Porter.  Let me ask you generally, Senator. Is there a 
problem, except for the fact of testifying and watching two 
different subcommittees, is there a problem with having your 
budget split the way it is?
    Mr. Wofford.  There is both a problem and there is an 
advantage. The problem is the need to carefully allocate, 
report, and account for the funds according to the 
appropriations of the two different committees. That is a 
challenge.
    Some things are very integral, such as the recruitingeffort 
of all of the programs. The advantage is that you have here before you 
in a Subcommittee that has followed with care three outstanding 
programs that have been tested on the Senior Corps front and you have 
VISTA, which has an extraordinary tradition of achievement too.
    We are finding that the collaboration of the senior 
volunteers, of VISTA as capacity builders and generators of 
volunteers, and the new AmeriCorps grant programs through State 
Commissions are coming together very effectively in the field, 
cooperating, and multiplying their power.
    I have just come back from the University of Utah. I was 
with 1,000 college students from around the Country. I renewed 
my information in meeting with the people that are in the 
elementary literacy programs of Utah.
    It is an extraordinarily effective program in which several 
hundred work study students are enlisted by VISTA members 
through colleges and universities, not only the University of 
Utah, but approximately a dozen others.
    Those VISTA members recruit volunteers and work study 
students for the elementary literacy program, where there is an 
AmeriCorps grant program which is helping to organize and run 
the literacy program.
    A year ago when I visited the elementary schools, I found 
that the combination of these Corporation resources is having 
an enormously successful impact. So, I think though you can 
have administrative efficiency experts say it ought to be 
combined into one bill, you might find that a challenging 
prospect to combine it into one bill.
    We are operating very successfully. We are bringing the two 
streams of service together into a pretty strong river.
    Mr. Porter.  Thank you, Senator. Ms. Pelosi.

                              partnerships

    Ms. Pelosi.  Thank you, Mr. Chairman.
    Welcome Senator. Thank you for your wonderful leadership 
for our country in so many different capacities. I know in 
hearing your testimony and in talking with you otherwise that 
you love your job. The young people of our Country fully 
benefit from your enthusiasm. We all do.
    Senator, could you discuss a little bit, in your testimony 
you state that according to a recent accomplishment study, your 
VISTA volunteers generate significant additional financial and 
in-kind resources and local volunteers to their projects.
    For each dollar Congress appropriates, these resources 
total approximately $3.33. Please describe your gains in 
securing State, local, and private investment for your programs 
and also any significant partnerships you have developed, 
including faith-based organizations and non-profit 
organizations.
    Mr. Wofford.  Well, let me work back from the end of the 
question. Thank you for your kind words. I love working. In the 
other Body, I enjoyed spending a high proportion of my time 
with members of this Body. But I have never liked nor found 
more challenging any job in my life than the one I have now. 
So, no complaints.
    The whole of National Service's connection with faith-based 
organizations is an extraordinary development of the last few 
years, though VISTA has had that tradition on a small scale for 
a long time.
    In all of AmeriCorps, including VISTA, we now have more 
than 6,000 of the 40,000 positions in faith-based 
organizations. You might be interested to know I am supplying 
you the list by religious denominations and ecumenical 
programs.
    [The information follows:]

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    Mr. Wofford. That is not including some 600 Habitat for 
Humanity AmeriCorps positions of whom I think about 200 are 
VISTAs. Habitat for Humanity is indeed a faith-based 
organization.
    Diana London may want to speak to that. Also, on the Senior 
Corps front, there has been a long tradition of operating 
through religious groups including Catholic Charities and 
Lutheran Services.
    They are now increasingly becoming sponsors of VISTA 
programs locally. Maybe Diana London would like to comment on 
the resources.
    Ms. London.  We completed an accomplishment study by an 
outside evaluation firm about a year ago. It focused on dollars 
generated, in-kind resources generated, and also local 
volunteers recruited and coordinated by the VISTAs.
    It found that about $82 million in cash and in-kind 
resources were mobilized; that about 140,000 local volunteers 
were recruited around the Country.
    When we looked at the average per VISTA member, they 
mobilized about $24,000 worth of cash and in-kind resources, 
and about $16,000 worth of local volunteer time that was 
devoted to their projects. That is how we came up with the 3:1 
ratio.

                    individual development accounts

    Ms. Pelosi.  What VISTA achieved in Oakland is impressive. 
At an East Bay Asian local development corporation, a VISTA 
member raised $190,000 in matches for individual development 
accounts.
    These funds assist low income Americans pay for education, 
tuition, develop small business, or purchase a first home.
    The San Francisco Projects, Mr. Chairman, are too numerable 
to mention. It includes partnerships with Bay Area Lisc, 
California Royal Legal Assistance, San Francisco State 
University, and more.
    Please describe the work on individual development accounts 
and other innovative efforts that address our national 
priorities to improve educational opportunities, create jobs, 
and make housing affordable.
    Mr. Wofford.  That is the core part of the emphasis we have 
on helping with the Welfare to Work Program. It is also a part 
of our challenge in recruiting because we have opportunities 
for VISTAs to play really key roles in micro-enterprise 
development, women in business, women coming off Welfare 
starting small businesses.
    Diana may, again, want to comment on the IDAs, which is a 
growing field. One of the challenges in recruiting for us is to 
get people out of business schools and out of schools with 
experience in micro-enterprise and investment.
    The projects we have appear to be extraordinarily 
successful and we want to expand them. Diana, would you give an 
expansion on that.
    Ms. London.  You may be aware, the IDAs are dedicated 
savings accounts. The recent welfare reform legislation allows 
States to use a part of the TANF Block Grant Funds to put 
monies into these savings accounts for low income people.
    It can be used for home purchases, further education, job 
training, or micro-enterprise businesses. We have now about 50 
to 60 VISTAs around the Country supporting IDA Programs, 
generating the outside matches, and also providing home 
ownership counseling and budget counseling to low income 
people.
    I think the potential for this program is enormous. That is 
one of the reasons we are looking for some additional resources 
in the coming year.
    Mr. Wofford. VISTA also has an ever increasing challenge to 
get members who have skills to do high capacity building jobs. 
On the technology front, the story is the same. We may get into 
that today.
    It poses a challenge to our recruiting efforts. I think 
both young and old people are rising to the occasion and are 
available to be tapped in VISTA and in AmeriCorps.
    On an increasing scale, the 450,000-some RSVP volunteers 
are being challenged by the goals of, for example, seeing that 
every young American by the end of grade 3 learns to read.
    That is challenging a whole range of senior talent to rise 
to the occasion. VISTAs on a large scale are involved in it--as 
many as 30 or 40 percent.
    VISTAs are involved in children's literacy efforts broadly 
defined, including Head Start, Even Start, and other programs 
they are helping to run.
    We are finding that it is the other side of your interest 
in outcomes and ours in impact programming that having goals, 
having measurable achievements that you know you have 
accomplished and that get recorded challenges a higher level of 
skill and dedication from volunteers.
    A school principal from New Jersey down in Florida was 
telling me that all his life as a principal in an elementary 
school, he dreamed of organizing an after school program that 
would really help the teachers.
    Now, as a volunteer in Florida, he organized one such 
program. He thought he was only going to do about 10 hours a 
week. Now, he finds he is doing about 25 hours a week. It 
brings people to life when there are goals galvanized.
    Whether it is Welfare to Work or getting technology to non-
profits that are not technologically up-to-date, or schools, 
not only wiring the school, but in helping the teachers in the 
schools make use of the technology, challenges like that 
galvanize.
    That is why it has been a very good year for VISTA and the 
Senior programs.
    Ms. Pelosi.  I congratulate you on that.
    I know my time is up. Just in closing I want to say I know 
we are interested in results, outcomes, and the rest. I do not 
know how you quantify the enthusiasm that you have just 
described about that person.
    I know we see it every day in our area with the RSVP 
volunteers. Those challenges they welcome and are energized by 
them. So, I thank you for that opportunity. I hope that our 
Subcommittee will appropriately fund all of this.
    Thank you, Mr. Chairman.
    Mr. Porter.  Thank you Ms. Pelosi. Mr. Hoyer.

                    enthusiasm for national service

    Mr. Hoyer.  Senator, welcome. I am glad to see you. Thank 
you for your continuing involvement in this effort. I want to 
ask you a general question.
    One of the things that I think many of us think about when 
we think of public service is President Kennedy, whom you quote 
in your opening statement and who is famous for his statement 
``Ask not what your Country can do you for you, but what you 
can do for your Country.''
    In this day and age, you can put the words community and 
neighbors in place of Country and it would have a similar 
meaning. A lot of young people feel disconnected from their 
Government. There is no draft anymore to involve young people 
in the Services, which I think one could argue either way on if 
that is a good thing.
    When I was coming out of college, the Peace Corps was 
extraordinarily popular and perceived by young people as a 
great opportunity. Congresswoman Pelosi mentioned some of the 
energy and focus of some extraordinary people who are making a 
difference. Tell me. What do you see on a broad level, in terms 
of the enthusiasm for these kinds of programs? You, of course, 
deal with people who are at the beginning stage of their lives 
and I am as you say at the end. I am there. I am little more 
there than you are.
    And I must say there is a there, there. That is the good 
news. The question is what do you see in terms of the energy 
and enthusiasm of young people, as well as seniors?
    Both of these programs are such incredible resources for 
our country. What do you see? Is it stagnant? Is it declining? 
We know they are not boding. We talk an awful lot about how 
people are turned off by the Government. What is your sense?
    Mr. Wofford.  I think there is a readiness to respond that 
we are successfully tapping. When the Peace Corps was proposed, 
and when Kennedy issued the mantra of ``Ask what you can do for 
your Country,'' if you will recall as I do, for 2, 3, 4 years, 
the conventional wisdom in all of the media--Life Magazine 
Special Issue on the silent generation was on the late 1950s 
generation--it was a do nothing generation, a silent, a turned 
off generation. It focused on very good things, their families 
and the rest, but was not ready for any challenges of public 
service or of promoting a public common good.
    Kennedy asked one young volunteer, he said, ``Why did you 
respond when they sent the first Peace Corps volunteers out?'' 
Why did you, this silent, do-nothing generation respond by the 
hundreds of thousands to an agency before it even was created?
    He said, nobody had ever asked me to do anything patriotic, 
unselfish, or for the common good before Kennedy asked. All of 
the studies show, I do not know how much the fluctuation is, 
but over the years, Independent Sector studies show that the 
number one thing that results in people responding and in 
volunteering is being asked, effectively asked.
    We are now launching a campaign to help all of these 600 
non-profits--more than 1,000, including the VISTA non-profits--
the 600 new grants programs of AmeriCorps, help them recruit 
50,000 AmeriCorps members, VISTAs and AmeriCorps members, next 
year.
    I have taken it to Mississippi, Utah, Maryland and to other 
places. I am going to about 20 different campuses and 
communities. I have just come back from visiting with 1,000 
college students from around the country at Utah.
    I think they are ready. Now, I do not think they are ready 
to say we like politics or we like what we hear in Washington, 
informed or uninformed. What they are ready for is the new 
patriotism of serving in their own communities.
    I may submit for the record Stephen Ambrose's piece, and an 
interesting piece by David Gergen on the new patriots of 
National Service who are responding not to the idea of going to 
Washington to work, or to enter political parties, or even to 
vote, unfortunately.
    [The information follows:]

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    Mr. Wofford. They are responding to neighborhood challenges 
and programs like the ones that we are connected with and 
serving; whether it is Habitat for Humanity or Notre Dame's 
Alliance for Catholic Education Programs.
    AmeriCorps reaches into Catholic schools that are hard-
pressed in minority areas in the South. The Notre Dame program 
has applicants for every spot from all over the country. And 10 
percent-plus of Notre Dame's graduating class applies to that 
one program.
    Not all programs are that successful, but there is a little 
market principle going. The word gets out like a guide to 
colleges as to which really are hot and good. The programs that 
are challenging and demanding are getting an extraordinary 
response from young people.
    So, I think you, we, and all of us have a challenge to see 
that the politics of service includes the recognition that good 
citizenship involves voting and being responsible for 
Government at all levels.
    I think a restoration, an ending of the cynicism can well 
come by engaging people in work, hard work, in their 
communities. Out of that, they learn what the problems are.
    Out of that first-hand experience, whether in VISTA or the 
Senior programs, or in other parts of AmeriCorps, with problems 
like homelessness, or the problem of AIDS, or 40 percent of the 
kids not being able to read effectively enough to learn when 
they enter the 4th grade, they become interested in what every 
level of Government will do about those problems. So, I am 
optimistic by nature, too.
    Mr. Hoyer.  By nature your optimism is infectious and I 
think, that can be very exciting. I do not want to get into a 
debate on it, but when we talk about cutting taxes all of the 
time, when we, frankly have such great needs in terms of 
hunger, homelessness, health, and education, it is to some 
degree an expression that we are not prepared to ask what we 
can do for our country in the sort of global sense that we are 
discussing today.

                         collaborative efforts

    In any event, let me ask you another question on something 
that I am very interested in. You talk about collaborative 
efforts in your statement. You also talked about Head Start, 
Even Start, and some other programs.
    Senator, I have been for many, many years on this 
Subcommittee sort of a Johnny One Note on the need to have 
among the various different service organizations, the private 
sector, and the public, in particular, federal agencies and 
programs like Head Start and Even Start, and HHS, Education, 
HUD, Transportation and Agriculture, Food Nutrition Programs, 
collaborate, cooperate, and facilitate local government's 
ability to access services in a coordinated way.
    Some Head Start centers, as you know, are in schools and 
some are not. Let me ask you, what has been the experience of 
your staff with wanting to deliver services to local agencies 
and the ability of these federal agencies to work together?
    It seems to me that they may have a unique perspective 
coming in trying to achieve an objective and seeing whether or 
not they can make the system work for the people they want to 
help.
    Mr. Wofford.  May I make two points? One, a major 
assignment by the law to VISTA is to help local organizations 
in the community get capacity to expand and solve the problems.
    That includes direct assignments in trying for VISTAs to 
help locate the resources. VISTA is attached to Habitat. They 
do work when there is a blitz build--they may go and build 
houses along side of Speaker Gingrich and the Democratic 
members who launched the Houses That Congress Built.
    The VISTAs focus on getting those resources. A part of the 
skill that they develop is how you leverage resources, both 
non-Governmental resources from corporations and other non-
Government support for the local programs. They also try to 
leverage public resources at every level.
    So, a lot of these VISTAs have experience in helping an 
organization find out what the Reading Excellence Act funds are 
for and how they can get access to them.
    So, VISTAs are very much in the business at the local level 
of trying to case the whole field, even if those organizations 
have not collaborated nationally to find out how to get those 
resources to the local areas.
    The other point that I think is crucial to understand is 
why we are wholeheartedly behind General Powell's campaign for 
America's Promise. As you know, all of the Presidents attended 
a summit for youth convened by President Clinton and President 
Bush in Philadelphia two years ago.
    They are asking for Federal, State, and other Government 
entities to work together to see that we turn the tide for 15 
million young people that are heading to disaster.
    It is at the local level where it is working--that 
America's Promise effort is bringing Government, corporations, 
non-profits, and National Service resources together in an 
overall strategy.
    We are finding, whether it is VISTA or other AmeriCorps 
members, or the senior programs, that communities are really 
responding to that campaign, to coordinate and have a strategy 
to turn the tide for children and youth.
    The five specific goals of America's Promise, of mentoring, 
and after school programs, and healthy start, and an effective 
education, and then asking all young people themselves to 
serve, is producing collaborations in many parts of this 
country that have not been seen before.
    So, I would keep your eye on what General Powell is doing. 
It has been a major source of strength for us to be a part of a 
larger campaign in which national service resources, all of 
them represented here, are playing very valuable roles in 
advancing the goals of the Summit at Philadelphia.
    Mr. Hoyer.  Thank you.
    Thank you, Mr. Chairman.
    Mr. Porter.  Thank you, Mr. Hoyer.
    Senator, I could not agree more that the hallmark of the 
1990s is bringing together collaborations of Federal, State, 
and Local Governments, private industry, foundations and other 
charitable organizations in solving problems together.
    I think you are right at the heart of that. What you do is 
extremely important in accomplishing those kinds of goals 
because you are dealing with people that really need the help.
    Mr. Wofford.  Mr. Chairman, I just wanted to add to what 
you just said that the work of these programs represented here 
and all of the rest of our National Service programs is a kind 
of signal of what I think Government ought more to do than it 
does.
    We very clearly stress and emphasize in action and in 
practice that we are the junior partners. We are not calling 
the signals in the non-profit world.
    We are supplying resources to help the civic sector get 
things done. A lot of your colleagues on both sides of the 
aisle here are saying that Government has to be a part of it. I 
think we are very close to the right formula for the way much 
of Government ought to operate.

                            reauthorization

    Mr. Porter.  All right. That leads into another question. 
You're unauthorized for the last 3 years--is there a 
reauthorization proposal before the Education and the Workforce 
Committee?
    Mr. Wofford.  As you will recall, last year a bipartisan 
bill was introduced in the House. I understand another one is 
ready to go very shortly. Last year we tried, together with the 
organizations that are a part of National Service, to think of 
almost anything we could think of that would improve the act.
    It became a relatively complicated reauthorization bill. 
This year, we feel that the two acts together, the National 
Service system, are very workable for what we want to get done.
    The improvements might or might not have been valuable. 
Getting properly reauthorized is more important than trying to 
make every improvement that we can.
    Therefore, the bill that has been developed by Senator 
Kennedy and others in the committee in the Senate and which is 
agreed to by a number of people on both sides of the aisle here 
in the House, we expect to be introduced soon. It will be a 
very simple bill that essentially reauthorizes the program as 
it is presently structured.
    Mr. Porter.  How sanguine are you that the Senate will take 
that up and move it forward? The reason I ask that is that I 
sense in the House that nothing is likely to occur and that the 
initiative probably would have to come from the Senate. Am I 
correct in that?
    Mr. Wofford.  That is my guess. It is an assumption we are 
operating on. It will not go through the House or the Senate 
unless it is a truly bipartisan bill. This is not going to be a 
year to have a hard debate on this.
    Secondly, it is very important that when this is 
reauthorized that truly it be a non-partisan bill. I think we 
have the ingredients for that. We have had a considerable 
growth of bipartisan support this year.
    I am going to do everything I can to see to that. More 
importantly, the key people in the Senate are going to do what 
they can to get it moved through that Body, at which point you 
will have a different situation to respond to.

                  testimony before other subcommittees

    Mr. Porter.  Have you testified before Congressman Walsh's 
subcommittee yet?
    Mr. Wofford.  Tomorrow morning.
    Mr. Porter.  Tomorrow morning, all right. If I can 
editorialize here a little bit. I think that you have a bit of 
a problem that a lot of Members of Congress, particularlythe 
newer ones, do not really know what you do. They need kind of an 
education.
    That includes, I think, members of the authorizing 
committee. That might be a high priority. I think it is not 
healthy, and this certainly does not apply just to the programs 
under your jurisdiction, but I think it is not healthy to have 
programs that are not authorized going year-by-year, as we have 
done so much in the past.
    Appropriators are really trying to lean on the authorizing 
committees to do their work, get bills out, and provide the 
authorization that ought to be there, rather than to go year-
by-year. I know you already know this. I think it is important 
that the message get out as to what you do and why you are an 
effective organization.
    Mr. Wofford.  I agree with you on both points. Properly, we 
should be reauthorized. I intend to do anything I can to bring 
that about.
    The other point is the challenge that I have spent a lot of 
time working on, with delight in some cases.
    The problem is that, as with many things that get announced 
with fanfare and great immediate media coverage, people never 
really understand what the structure is.
    I find that on both sides of the aisle, there are an 
incredible number of people that think that VISTA, AmeriCorps, 
and National Service is like the Peace Corps or the Marine 
Corps. It is Washington run. We select them. We parachute them 
in.
    People do not understand that there is only one program, 
our National Civilian Community Corps in the other bill, which 
was started under President Bush's Administration with my 
participation in the other Body, and which was supported by 
Senator Dole, with under 1,000 people, which we do run and 
select the members. The other 39,000 AmeriCorps members, 
including the VISTAs, are essentially selected, recruited, and 
operated locally.
    We want a VISTA pool so that local organizations can have 
not only their local community to draw on, but others. Your 
colleague, John Kasich, tells the story that he visited this 
wonderful program in Harlem, the Rheedlen Centers, which is a 
chapter in his book, Courage is Contagious.
    He came away at the end of the morning saying this is the 
best program I have seen to turn the lives around of kids in a 
number of Harlem schools through after school programs and 
other things.
    At the door he said, why can't AmeriCorps ever do something 
like this? The head of it, Geoff Canada said, oh, I did not 
tell you. This is AmeriCorps. The 50 people that are doing all 
of this are AmeriCorps members. That is how we get it done.
    That had significant influence and helped change the view 
of Congressman Kasich, who I noticed out at Iowa said he had 
changed his mind on AmeriCorps. We have talked, of course, a 
lot. That happens time and time again, including Democratic 
colleagues on my trips around the country who are with me. They 
go to the project and they say, well I did not know this was 
National Service.
    There is a wonderful article I want to put in the record 
from the New York Times on the Senior Experience Corps: Seniors 
and Schools, which appeared last Sunday.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Wofford. It does talk about the Senior Corps. But there 
is no reference to the Corporation for National Service. I can 
say that they got the initiative from us.
    Mr. Porter.  You need a publicist on your administration--
--
    Mr. Wofford.  We hope you will come visit local programs. 
And other Members of Congress.
    Mr. Porter.  We are operating in round two under the 5-
minute rule. Mr. Hoyer.
    Mr. Hoyer.  I do not have any further questions.
    Mr. Chairman, if you have additional questions, why don't 
you ask them.

                          year 2000 compliance

    Mr. Porter.  I do. Can we talk a minute, Senator, about 
year 2000 compliance and mission critical systems? Are all of 
them compliant?
    Mr. Wofford.  I want Wendy to give you a detailed answer. 
We are on the road to being compliant. All are compliant, I 
believe is an accurate statement, except the new financial 
management system that we are just putting in. In fact, it will 
be soon. Wendy, would you expand on that?
    Ms. Zenker.  That is correct. With the exception of our 
financial management system, our mission critical systems are 
Y2K compliant.
    We are doing an independent verification of that fact 
within the next several months to have another set of eyes look 
at our systems to make sure that the assessment we have made 
that they are compliant is indeed the correct assessment.
    As noted, we are implementing a new accounting system. Our 
current system is not Y2K compliant. The new system will be.
    Mr. Porter.  Are there any funds requested for fiscal year 
2000 for Y2K?
    Ms. Zenker.  No, sir. We are using monies that were 
provided in the Treasury Postal Bill For 1999 for our Y2K work. 
We expect that will be sufficient.
    Mr. Porter.  Have you established a Year 2000 Steering 
Committee to oversee conversion efforts as the Inspector 
General recommended or was that not necessary?
    Ms. Zenker.  Yes, we did, sir. We have a Steering Committee 
and also a Users' Group that is a broaderparticipant level 
throughout the Corporation.

                         tutoring and literacy

    Mr. Porter.  One of the initiatives you folks define is 
tutoring children in reading. How many children do you estimate 
will receive reading tutoring from VISTA volunteers in fiscal 
year 2000? How will this compare with the number of children 
served in 1998 and 1999?
    Mr. Wofford.  Diana, can you help him out? It is in here, 
but it is not in my head.
    Ms. London.  Well, I actually would like to put a little 
different perspective on it.
    Mr. Porter.  All right.
    Ms. London.  The VISTA volunteers themselves do minimal 
direct tutoring. What they are really out there to do is to 
recruit, train, and coordinate other volunteer tutors.
    When we did that accomplishment survey about a year and a 
half ago in the area of children's education, they had 
recruited about 40,000 to 50,000 tutors.
    We expect that when we do an accomplishment survey 
reflecting fiscal year 1999, that number will probably go up. 
So, they are really causing a multiplier effect by recruiting 
other people to tutor.
    Mr. Porter.  That is wonderful. Do we know whether these 
tutors are getting results for children? The number of tutors 
is impressive. What we really are looking at is the bottom 
line. Are kids being helped to read?
    Ms. London.  What we are doing is collecting data on a 
project-by-project basis that will show that reading scores 
have improved. We have not done any kind of national evaluation 
to reflect that. Our projects are reporting improvements in 
reading scores.
    Mr. Porter.  So, is there a performance guideline under 
GPRA that you include for the children or do you just include 
it for the number of volunteers recruited? How do you measure 
this?
    Ms. London.  We are using the number of volunteers 
recruited.
    Mr. Porter.  I do not think that is really what we want to 
measure though. I think you should look at that again.
    Mr. Wofford.  May I submit to you shortly afterwards an 
account of all of our efforts in literacy? We are accumulating 
on the AmeriCorps non-VISTA side, and with the Senior Corps, an 
increasing number of actual studies of the reading level grades 
improvement and the test scores from the tutoring.
    I think we could rapidly give you a report that would be 
informative and I think encouraging. The Senior programs are 
very significantly involved in literacy efforts. Tom Endres, do 
you want to comment on this?
    Mr. Endres.  Yes and thank you. Mr. Porter, we have had a 
long history in working in literacy and tutoring. It has only 
been the last couple of years since we began seriously looking 
at outcomes in response to community needs that we really have 
clear data on this. Today I can tell you that 148,000, just 
over 148,000, children in all 50 States are being tutored by 
Senior Corps volunteers.
    That represents about 9,500, just under 9,500, Foster 
Grandparents and over 30,500 RSVP volunteers working as tutors, 
reading coaches, and literacy helpers. The Senior Corps has 
operated these programs in such a way that the programs are 
really tailored to meet the community needs.
    The way in which the volunteers are assigned to these 
literacy efforts is in conjunction with local school districts. 
The advantage we have is that we are able to mobilize the 
resource and then train the resource to use the local 
techniques that are working, that have been selected, and are 
working in those particular districts.
    Obviously, that creates some problems with the 
measurability of the direct results that we have. One of the 
advantages of our demonstration programs, particularly the 
Seniors for Schools Program in the nine sites, is we have 
tailored evaluation results specifically to measure the 
outcomes in those nine sites.
    We are receiving tremendous information about that--in 
terms of how the administrators are reacting, teachers are 
reacting, what the impacts on the students are, and how 
communities are involved in the school.
    So, we have very definitive information that we would be 
happy to provide you on the outcomes when we tailor the results 
and have an evaluation specific design at the local level. We 
hope to replicate that design throughout the whole Senior Corps 
programs.
    Mr. Porter.  Why don't you put some of that in the record 
for us?
    Mr. Endres.  I will be happy to do that.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Porter.  That would be helpful.

                        questions for the record

    Senator, you have answered all of our questions. I have a 
lot more for the record that we also ask that you answer.
    Mr. Porter.  As I said earlier, I think you really are at 
the heart of getting at some of the important problems that 
face our country and its citizens.
    Obviously we want to do what we can to help you do your 
job.
    Mr. Wofford.  Thank you very much.
    Mr. Porter.  Thank you for coming here to testify. Thank 
you for the fine job that you are doing.
    Mr. Wofford.  Thank you.
    Mr. Porter.  This Subcommittee will stand briefly in 
recess.
    [The following questions were submitted to be answered for 
the record:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                         Wednesday, March 24, 1999.

                        NATIONAL MEDIATION BOARD

                               WITNESSES

MAGDALENA G. JACOBSEN, CHAIRWOMAN
STEPHEN E. CRABLE, CHIEF OF STAFF
JUNE D.W. KING, CHIEF FINANCIAL OFFICER
    Mr. Porter.  The Subcommittee will come to order.
    We thank Ms. Jacobsen from the National Mediation Board for 
being here.
    Ms. Jacobsen.  Good morning, Mr. Chairman.
    Mr. Porter.  Good having you.

                       Introduction of Witnesses

    Ms. Jacobsen.  I am pleased to be here with you today. I am 
accompanied by Mr. Stephen Crable, Chief of Staff; and Ms. June 
King, Chief Financial Officer.

                           Statement Summary

    Today, we are here to present our fiscal year 2000 budget 
for the National Mediation Board. In my commentary this 
morning, I would like to familiarize you with the functions of 
the Board, give you a brief look at what we anticipate for FY 
2000, tell you about our accomplishments, and describe 
initiatives we have underway to improve labor management 
relationships, enhance the skills and abilities of negotiators 
which we believe will reduce the reliance on Government 
resources.
    The NMB serves the Nation by preventing disruptions to 
interstate commerce involving the railroad and airline 
industries. It does so through the prompt and orderly 
settlements of disputes which may arise as the result of an 
impasse in the negotiating of new and amendable collective 
bargaining agreements, the interpretation or application of 
existing agreements, or the exercise of employees' rights to 
self-organization and association.
    The Law under which we operate is the Railway Labor Act, 
which is a unique law in the annals of labor history because 
actually it was negotiated between labor and management 
starting in 1924. It is also the oldest labor law on the books.
    The NMB statutory authority as national mediator for the 
railroad and airline industries is critical to protecting 
interstate commerce. Strikes and other disruptions to commerce 
and transportation services in these industries lawfully may 
occur, but only after the Board has determined that its 
mediation efforts have been exhausted.
    Rarely do railroad or airline collective bargaining 
disputes escalate into interruptions of commerce. Our records 
show that 14 Congressional interventions occurred since 1934. 
That is a pretty long history of success.
    About 98 percent of the cases presented before the NMB are 
resolved without any disruptions. The President's fiscal year 
2000 budget requests $9.1 million for our agency. We believe 
our performance, our initiatives and our customer support for 
the agency, and the program needs provide strong justification.
    Parenthetically, we might add that our services are a real 
bargain. With fewer than 50 employees, the agency contributes 
sustainability in industries which employ more than one million 
people and impact millions of dollars in the private sector of 
taxpayers' money. We anticipate a continued high level of 
activity in the year 2000 in the rail industry starting with 
opening proposals this November of 1999.
    The carriers and unions will commence the renegotiation of 
national rail freight agreements which will involve the 
Nation's Class I railroads which there are 8 and 13 individual 
rail unions representing dozens of crafts and classes of 
employees and tens of thousands of employees in the industry.
    Mediation during this coming round of national bargaining 
may be viewed against the backdrop of the previous rounds. 
Based on past experience achieving national settlements between 
rail labor and the National Carriers Conference may require the 
utilization of all of our dispute resolution processes.
    That includes mediation which is mandatory, voluntary 
binding arbitration, presidential emergency boards, which is 
usually followed up by intense mediation by Board members.
    Some regional, short lines, steel roads, and commuter roads 
will also be up towards the end of 1999 and into 2000. I 
brought a chart today which might help to explain the 
complexity of the industry. Often, Congress may hear from their 
constituents that it takes an awfully long time to get 
negotiated settlements in the rail industry, and it frequently 
does.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Ms. Jacobsen. This graphic is an iceberg. This is the water 
level. Above the iceberg, we have the 8 major carriers. Conrail 
is still included because it has not been completely absorbed, 
but I think it will happen in June. They will just drop below 
the water line.
    You see all of the railroads that actually over the last 6 
[Clerk's note.--Later corrected to 60] years have been merged 
into the majors. However, because of the way the railroads 
evolved, predeccessor roads and unions still have bargaining 
relationship.
    So, we end up bargaining on the national agreements. Then 
there is the filtering system. We end up having to deal with 
disputes on the local level as well. I thought this chart would 
help offer a good explanation of complexity.
    Those would only be the freight railroads. We also have 
commuter railroads. We have about 500 short lines. Short lines 
are created when the majors sell off pieces of their track. 
They are purchased by entrepreneurs or organizations.
    We have 25-plus rail unions that deal in the major areas. 
If you count all of the unions in-house organizations, we have 
about 40 organizations that actually do business with us on the 
labor side.
    The major airline negotiations the Board faces in the 
remainder of 1999 and for 2000 include United Airlines, 
American, TransWorld, U.S. Air, Continental, and Southwest. 
Also up are some of the national and regional carriers.
    Also, I have a little chart here just to show you what that 
looks like. We have 13 major airlines. That would be the 
Uniteds, Deltas. Then we have 33 national airlines. That would 
be like Aloha.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Ms. Jacobsen. Then we have the regional airlines. That 
would be like Business Express. We also have authority, where 
interstate commerce is impacted, over about 1,000 different 
entities such as air taxies, ambulance services, small freight 
operations; anything that goes across State lines comes under 
our Federal jurisdiction.
    So, there are all kinds of possibilities for activity. One 
of the difficulties in anticipating things is until the parties 
reach an impasse, generally we do not know when the activity 
will start.
    Although, we are doing a better job of monitoring. One of 
the things we are trying is to change the dynamics of 
bargaining by being proactive about changing the cultures in 
both the airline and railroad industries.
    Expectations draw out processes. It is our considered 
opinion that until the parties change the way they approach 
collective bargaining, it will be very difficult to expedite 
handling, and improve the quality of settlements, and reverse 
the growing trend of contract rejections.
    Our statistics show that since 1996, among major airline 
carriers, almost 40 percent of the settlements have been 
rejected when they were voted upon by the rank-and-file.
    What this translates into is additional mediation. The 
traditional confrontational approach to collective bargaining 
with the rhetoric and the actions which generally alienate the 
participants at the table cause very anxious constituents and 
destroy meaningful problem solving, create a setting in which 
final offers are looked at with skepticism by employees.
    They also make employers reluctant to put out their best 
offer because they feel if it is going to be rejected, they may 
have to go back to the table. In these circumstances, mediation 
processes really are a challenge to prevent or minimize strike 
threats.
    This problem of strike threats is particularly vexing in 
the airline industry. Just this recent threat on America West 
saw a substantial loss of passenger bookings within the first 
48 hours of the threat of the strike.
    That happens across the board on all of the airlines. Our 
initiatives include orientation and training in interest-based 
bargaining, the use of facilitation prior to thedocketing of 
the case through mediation, and grievance mediation.
    Training in interest-based bargaining can offer the parties 
a structured process which focuses on understanding, reasoning, 
finding compatible standards to judge solutions to problems, 
rather than just the use of power and political clout to 
prevail.
    As you well-know, that is often utilized when we get down 
to the potential meltdowns in both of our industries because 
everyone goes to Congress to see if they can garner.

               CONGRESSIONAL SUPPORT FOR THEIR POSITIONS

    This process can offer an opportunity to really communicate 
the underlying problems brought to the bargaining table, rather 
than battling over unilateral solutions. It is a process which 
seasoned negotiators actually use instinctively.
    However, it is not yet institutionalized in our industries. 
FMCS has been working hard in this area for many years. I was 
with FMCS from 1976 to 1992. They have been working very hard 
to change the approaches to bargaining in the industries where 
they are responsible.
    However, we have not gone as far in our industries yet. 
Traditionalists on both sides of the table in our industries 
are so accustomed to the power struggles and the political 
approaches that they feel these approaches are the best way to 
try to battle over the industrial pie. Now, success in the IBB 
process requires candor, listening, leadership, and trust. 
Trust is one of the big problems, it is not in great supply.
    The Board is offering facilitation at a point early in the 
talks as a way to provide help in overcoming obstacles related 
to process or a stumbling block to negotiations. Timing is 
determined by the parties without having to officially declare 
an impasse or docket a case to mediation.
    One of the problems with formal docketing is generally it 
sets off this impression that the talks have failed and parties 
start turning up the heat. There is a sense in the industry 
that the expectations start getting lowered and that a peaceful 
settlement is not going to be achieved.
    The role of the facilitator is more of a process manager 
stepping in when there is an obstacle. The dynamics are 
different because the role of the person is different. 
Remember, when we get into a case as mediators, we control when 
the parties are then released.
    That kind of creates a whole different dynamic in the 
talks, as well as a different reaction to the mediator in the 
process.
    Now, grievance mediation workshops are designed to improve 
problem solving techniques. We believe we can help the parties 
find ways to compromise early in the grievance process and 
avoid polarization, which means hardening of positions. This is 
another area where your constituents complain that grievances 
have been languishing for 2 and 3 years.
    So, we are trying to work at that by going to the level 
where the problems initiate. The cost of minor disputes are 
substantial, not only to the parties, but also the Government 
as it pays for arbitration in the railroad industry.
    So, that is one of the things we are trying to attack. 
Languishing grievances create problems for productivity, 
morale, and create cynicism among workers. In fact, we believe 
that a part of the reason we get so many rejections in the rail 
industry with labor agreements is that the employees are very 
cynical because they do not see problems ever getting finally 
solved.
    The problems that they bring to their unions and their 
carriers which end up eventually in arbitration are not solved 
in a timely way. So, they believe that the systems are broken 
down; peace making systems.
    We also think that if we use grievance mediation well, and 
the idea is to actually train people with mediation skills so 
that they can, at their lowest levels, at the local chairman's 
level and the employees's level, supervisor's level actually 
try to develop those skills and work with each other to solve 
problems. We think also that we can identify language issues in 
the collective bargaining agreements which can be solved 
through the mediation process. The next time the contract is 
amendable, we can make changes which will then have the effect 
of eliminating those grievances being repeated.
    There are a lot of repetitious cases that we have observed. 
We are doing a close job of tracking those. So, on this 
training, we have conducted about 60 sessions so far.
    In about \1/3\ of our current mediation cases in the 
airline industry, and a few in the railroad industry and 
smaller carriers, we are using the alternative dispute 
resolution approaches.
    I wanted to give you a couple of examples where it has 
really worked. They were recognized in press releases. One 
example of the approach was used with DHL and the airline 
pilots.
    The parties worked with the Board. We did a one week 
training session using the IBB processes. It is a week-long 
program in structured problem solving. We help them establish 
their ground rules and a process for selecting the order of 
issues that they were going to bargain over.
    After that, we facilitated meetings for a short period of 
time. The parties met and reached an agreement without ever 
calling upon mediation. They just got it ratified by 93 percent 
of the pilot group, with all but 3 pilots voting, which is very 
remarkable.
    One of the best parts of the whole process is both parties 
said that their labor management relationship has been 
enhanced. I think this is good for the carrier and for the 
employees in the future.
    In the rail industry, we have been using interest-based 
problem solving in our Labor Management Committee with the 
United Transportation Union and the National Carriers 
Conference for the last 2 years.
    That includes all of the Class I railroad labor relations 
Vice Presidents. This committee referred to the National Wage 
and Rule Panel and was recently joined by the Brotherhood of 
Locomotive Engineers, which is part of the operating craft.
    So, all of the operating crafts are essentially under this 
umbrella now. These talks are intended to address issues which 
were not successfully resolved the last time around.
    You may not remember, but the last time around we did get 
an agreement with UTU when they took it out to their 
membership. It was rejected, but they agreed to binding 
arbitration.
    So, we did not have to go through the PEB process. At the 
end of that process, we discovered that the unions, the 
carriers, and the Board, still had a lot of issues that were 
festering out there that had not been addressed.
    The purpose of this panel is to look at those issues and 
try to resolve them during the interim period. One of the 
things we just completed was a document which deals with work, 
rest, fatigue issues.
    It has allowed us to setup a process where the parties are 
going to work through problems related to work/rest/fatigue on 
each property. The statement made by this effort, which was 
successful, is that the parties would rather work things out 
themselves than have Government intervention or legislation 
imposed upon them.
    Now, that is not universal. We do not have all of the labor 
organizations buying into this process yet. We are trying. We 
have just sent a request out to all of the rail chiefs to 
please join us in a training conference on grievance mediation 
and interest-based approaches to bargaining.
    We have gotten one response already. Although we only sent 
that invitation out 2 weeks ago. It is difficult to change the 
habits of people. I do not have to explain to anyone in 
Congress how difficult it is from a union standpoint because it 
is their constituents they are trying to please--not always 
easy.
    Until you can demonstrate to your constituents that you can 
accomplish something, it is hard to change the practices that 
people have experience with over many years, even though they 
have not worked out very well. One of the things that prompted 
us to start being very aggressive was the report from the 
commission, if you will recall, the Future of Worker Management 
Relations Commission, that Mr. Dunlop headed.
    There were two things that he asked us to do. One is to try 
to find some new methods or institutions which would enhance 
work place productivity through labor management cooperation 
and employee participation.
    The other one was increase the extent to which work place 
problems are directly resolved by the parties themselves, 
rather than through recourse to State and Federal courts and 
Government regulatory bodies.
    In terms of our internal organization, and in accordance 
with the Administration, and Congressional mandates, we 
continue to reevaluate our mission, our structure, and our 
policies. Our redesigned mediatory and arbitration functions 
have improved accountability, control and effectiveness, work 
design, and flow.
    We continue to work towards bringing professional staff up 
to necessary levels. We are three people short just on the 
mediation side. Although we have very much improved 
productivity and efficiency with the mediators.
    You know, we lost 60 percent of our mediator staff when we 
moved our folks back to Washington. Almost all of those people 
retired. The good news is that mediation representation 
closings are up 21 percent in 1998. That follows a 25 percent 
improvement in the prior year.
    Of course, we cannot expect a net reduction in all costs, 
during this period while we are trying to invest in 
preventative measures. However, with roughly 50 employees, I 
think the Government gets a pretty good bang for the buck.
    Every one of our staff members, plus our Board members have 
been running very hard and working very hard. I think the pay-
off will be when our preventative measures work and show a 
reduction in grievances, the amount of time mediators spend 
with the parties, and the number of disputes that require 
Government pay or arbitral services.
    We continue to contract with other Government agencies, 
such as the GSA, for some of our personnel work and Department 
of Agriculture for training on computers. We also utilize some 
of our very talented people at FMCS to do some training for our 
own people in our agency who were not familiar with the 
techniques of IBB.
    Our Financial Officer has improved our cost controls 
reporting and fiscal administrative planning so that we are 
managing our resources better. Our information services have 
evolved well.
    We have upgraded our computer network so that mediators in 
the field can communicate more efficiently. Our case tracking 
and core financial systems are being upgraded. Section 3, which 
is the grievance (minor dispute) piece, we are trying to 
consolidate issues which are similar in content and can be 
identified easily using the Internet.We are encouraging the 
parties to reexamine their pending case load.
    In fact, we started an audit in November of all cases on 
the carriers. We believe that we are going to see significant, 
possibly up to 20 percent, reduction in our backlog. A part of 
the reason that our numbers may not be accurate is that 
arbitrators send their decisions to the parties.
    Only after they are signed are they valid decisions. That 
is when we get them. If they are sitting at a carrier's 
location, we do not have that information. So, we started that 
audit in November. We are getting results back that look 
promising.
    The Board has also created a Web site which includes 
information about structure and operation of the Board, its 
policies. Our Web page provides forms, the mediation and 
arbitration requests which our customers can print out saving 
paper and mail costs of ours.
    We publish key decisions on representation cases which 
should give our customers some guidance as to where the Board's 
thinking is on matters of organization. Our customer service 
plan gives our customers an ongoing status report of our 
objectives and achievements.
    We are getting much more timely feed back. We are reducing 
our paper work. Last year, we conducted 91 representational 
elections which required the mailing out collection and 
tabulation of thousands of ballots. We are striving to use our 
computer system to expedite these processes for the parties, 
and reduce the staff time in handling, and reduce the chance of 
errors.
    Since the Board appear before you last year, the agency has 
made significant progress in addressing the short comings of 
the railroad adjustment of grievances. As I mentioned, we do 
not have direct control over the number of cases submitted.
    We have responsibility for administration and fiscal 
management of the different tribunals. Nevertheless, both labor 
and management are working with us to try to make things more 
cost effective.
    We hold quarterly meetings with the Rail Chiefs and the 
carrier representatives. A number of improvements have been 
implemented. One carrier agreed to try grievance mediation 
which wiped out 30,000 cases that were backlogged. Some of them 
5 years, through grievance mediation and the use of precedent-
setting boards in which we will take a lead case and use that 
decision as precedent for all like cases. Then it would apply 
to all of the other cases.
    We have proposed a change in the way we pay arbitrators to 
provide more incentives to neutrals and the parties to handle a 
greater number of cases more quickly. Right now, the system is 
based on day's work. We pay arbitrators for the days they work.
    What we are proposing is a system to pay the arbitrations 
on the number of cases they resolve instead. At our last 
meeting with the Chiefs and the rail carriers, the parties 
pointed out a number of problems that might occur with this new 
pay system that might even increase the backlogs given the 
funds available under Section 3.
    So, what they are doing is they are trying some pilots out 
to see whether the intended results can be achieved. Our 
railroad neutrals represent a unique cadre of individuals who 
are familiar with railroad work, relationships between labor 
and management, and much of the arcane and esoteric language 
and practice in the rail industry.
    They are cooperating with us fully and giving advice on how 
to improve all programs. So, in closing, we at the NMB and 
those we serve value the law under which we operate and believe 
it has served our Nation well for over 70 years.
    Labor and management have responded to our entreaties to 
change the way we collectively operate so as to meet the 
mandates of the Administration and Congress.
    In any human activity in any organization and with any law, 
the dynamic of change is a continuum and requires vigilance and 
creativity.
    To make Government work lean, more effectively, 
efficiently, and responsibly is our daily bread. We continue to 
strive to deserve what we receive.
    I thank you very much. I will answer any questions.
    [The prepared statement follows:]

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                           railway labor act

    Mr. Porter. Ms. Jacobsen, you have given me a real 
education here. I have to say you have also answered most of 
our questions.
    Let me ask a few things. First of all, I assume you are 
permanently authorized. Is that correct?
    Ms. Jacobsen.  Yes.
    Mr. Porter.  You do not have to worry about being 
reauthorized because you are a part of the Railway Labor Act.
    Ms. Jacobsen.  No.
    Mr. Porter.  As you have served on the Board and Chaired 
the Board, have you seen any need for any changes in the law? 
In other words, do you have all of the authority you need and 
the flexibility you need to address your mission?
    Ms. Jacobsen.  Well, often times either in disputes, major 
disputes or minor disputes, I have felt very strongly that we 
need to change the law in some minor respect.
    However, when I have talked to the parties for whom we work 
and whom we serve, they have felt very strongly that the act 
has survived all of these years with as few disputes as we have 
had because it has a lot of gray area.
    It has a lot of flexibility. Really, the parties dictate 
how well the act works. In fact, when I suggested this to the 
parties collectively were willing and enthusiastic about 
suggesting ways to correct some of the problems. Obviously, one 
of the problems is that funding for arbitration is limited and 
we have thousands of cases backlogged, which is very upsetting 
to employees and carriers.
    Backlogs affect productivity and morale. So, as I said, 
some of the initiatives we made, grievance mediation, trying 
IBB, to change things, we are getting positive responses. I 
feel, personally, that if we were to initiate changes in the 
law, we would affect the parties' rapport with us, the parties' 
support for us, and the parties' trust in us.
    When you mediate, as you know, because I think people in 
Congress mediate all of the time with their constituents 
between them and other interests, you need the trust of the 
parties.
    The parties cannot perceive that you are there and you are 
going to do anything to harm them nor would we wish to do so. 
So, we are trying suddenly to make changes in practices and in 
the way they operate within our procedures.
    If that does not succeed, then I might change my opinion. 
We are making progress as you can see from the improvements we 
have made in dispute resolution and the grievances.

                          arbitration backlog

    Mr. Porter.  Looking at the backlog you just mentioned, you 
said you made a lot of progress in reducing that recently. Is 
that correct?
    Ms. Jacobsen.  Yes.
    Mr. Porter.  How old would the oldest case be?
    Ms. Jacobsen.  Let me ask Mr. Crable because he is closer.
    [Pause.]
    Ms. Jacobsen. Steve says that we do not have that specific 
detail available now. We will provide that in our written 
comments.
    Mr. Porter.  How many cases would there be? Do you have any 
idea about that?
    Ms. Jacobsen.  Around 8,000.
    Mr. Porter.  I would assume that is a problem.
    Ms. Jacobsen.  It is a major problem.
    Mr. Porter.  A major problem.
    Ms. Jacobsen.  The unions will say it is a problem. The 
carriers will say it is a problem.
    Mr. Porter.  Is it a problem with resources? Do you not 
have sufficient personnel to get to these cases? Tell me why 
that seems like a large backlog.
    Ms. Jacobsen.  It is a large backlog. Number one, we do not 
control the in-take.
    Mr. Porter.  No, I understand.
    Ms. Jacobsen.  The grievances are the result of problems or 
perceived problems on the property. I think if we made changes 
in the labor agreements we could eliminate some of the 
repetitive grievances, provisions that are out-dated. That is 
one of the things the Wage and Rule Panel has been working on.
    We got an additional $500,000 for fiscal year 1999. So far, 
in the first 5 months, we have gotten a 17 percent increase in 
the numbers of cases that we are able to handle. So, certainly 
monetary resources are needed. We have the necessary 
arbitrators available on our list.

                          arbitrators' salary

    Mr. Porter.  You said you are going to pay arbitrators on 
the basis of cases completed rather than hours worked.
    Ms. Jacobsen.  Rather than days worked.
    Mr. Porter.  That sounds to me like a very good incentive 
for getting the backlog cleaned up.
    Ms. Jacobsen.  Well, that is what we were hoping for. The 
glitches that were pointed out by the parties, we hope will 
clear up the identification so the new procedure will work as 
intended.
    Remember, this is something that the parties have to buy 
into. We cannot mandate it because they really control the 
process up to the point where we have to pay the arbitrators. 
We are trying to work on the in-take on the front end of the 
funnel.

                   america west and american airlines

    Mr. Porter.  Did you have any role in the--you mentioned 
the America West and America Airlines--the sick-out that 
occurred in February I guess it was? Were you involved at all 
in resolving that? Was it resolved short of any action by the 
Board?
    Ms. Jacobsen.  We were not involved. We did mediate the 
dispute, the actually collective bargaining agreement 2 years 
ago with American Airlines. That was one where we had gotten a 
tentative agreement with the committee.
    It had been taken out. It had been rejected. That is one of 
the 40 percent of the rejected contracts. At that point in 
time, the bargaining team was rejected. The leadership was 
rejected.
    A new group came in. We had a PEB on that case. There was a 
24-minute strike on American Airlines.

                      presidential emergency board

    Mr. Porter.  Excuse me, but I do not know what a PEB is.
    Ms. Jacobsen.  A Presidential Emergency Board. I am sorry, 
that is one of the things I deleted from my prepared statement.
    We do direct mediation. When we feel we have exhausted the 
mediation process, we then release the parties. After 30 days 
if it looks like any region of the Country or the national 
economy would be affected, then the President can appoint, at 
our recommendation, a Presidential Emergency Board.

                           mediation process

    Mr. Porter.  The parties must seek mediation; must they 
not?
    Ms. Jacobson.  Yes, they must. Frankly, that is one of the 
reasons why it takes this long. Recently, I was at an American 
Bar Association Conference. I was told by Labor and Management 
attorneys the Mediation Board keeps them inthe process too 
long.
    When I pointed out to them all of the railroads, and all of 
the airlines we have, and all of the unions that have labor 
agreements, I said if we released everybody each time they 
asked, we would not have a transportation system left in this 
Country. So, we have tried to manage the cases in a way that we 
do not have major disruptions.
    Mr. Porter.  I think you said there are only 14 that have 
ever gone to Congress. I know one of them was maybe 4 or 5 
years ago with the Chicago Commuter Lines that I was interested 
in obviously.
    It seems to me in listening, and I do appreciate the 
education that you gave me, that any one of these disputes, 
even small ones, that can be prevented or headed off or 
resolved, more than pays for your budget many times over.
    I mean, a major disruption in transportation services, in 
the rail, or airline industry in the United States, I think the 
sick-out, if I recall correctly, just the sick-out itself cost 
American Airlines $500 million, if I recall what they said.
    So, with a $9 million investment, your agency is paid for. 
It is probably one of the most effective, efficient ways we 
spend money in the whole Government.
    Ms. Jacobsen.  Well, I appreciate that. By the way, on the 
American situation, one of the problems with imposed 
settlements is that people do not get the sense of ownership. 
They feel that they have their processes taken away from them.
    That is one of the reasons we are trying so hard to change 
the culture so we do not get there. In fact, American Airlines 
is working very hard now with their flight attendants.
    They have been using the IBB process throughout. They are 
doing a good job, from what I understand from both the flight 
attendants, as well as the Company. That is what we need.
    Somehow we need to resolve the hard feelings between the 
American pilots. We are not at that stage yet. That dispute is 
being handled as, in effect, a minor dispute. That is 
arbitration.

                           DISPUTE RESOLUTION

    Mr. Porter.  Let me ask, do you feel like we are making 
some progress in dispute resolution or are things getting 
worse? Does that depend upon the state of the economy?
    Ms. Jacobsen.  I think the economy has an influence over 
employees' expectations; especially, as you know recently the 
airlines have been doing very well.
    The railroads as well had been making greater profits. So, 
what happens is when the contract comes up, there are 
expectations that those profits will be shared.
    One of the difficulties is both in the railroads and the 
airlines, they have huge infrastructure costs just maintaining. 
In the airline industry, airplanes are expensive.
    When there are necessary corrections made to defects or 
problems that are viewed as problems by the FAA, that creates a 
lot of expenditure within the carriers.
    On the railroads the same thing. I think one locomotive is 
like $2 million. One of the things that I have been saying to 
carriers is you need to do a better job of communicating with 
your union and employees so they have better context when they 
come to bargain.
    One of the problems is until you get to the bargaining 
process and suddenly people see an offer, they do not hear 
anything. Labor and management have to do a better job, of 
communication.
    People do not believe it when the annual report says 
everything is going swimmingly. When they get to the bargaining 
table, the carriers say, gee, I am sorry, but we need most of 
our money for infrastructure.
    That has to be represented on a continual basis so that 
there is credibility. Credibility is the key thing.

                           EMPLOYEE OWNERSHIP

    Mr. Porter.  One would think it would help, as in the case 
of American Airlines, if the employees own the airline. Does it 
help?
    Ms. Jacobsen.  Well, I think we are going to see that the 
next time the United contract is up.
    Mr. Porter.  It has not been up recently.
    Ms. Jacobsen.  They are in talks right now. They are 
working very hard. Bill Hopgood who is now the Vice President 
of the People Department at United I knew when he was a Federal 
mediator many, many years ago.
    He is trying to structure his department there and reorient 
his people to a more peaceful approach to bargaining. From what 
I have heard from the pilots as well as the company, talks are 
going okay.
    At the end of the day, a lot of factors, again, involved in 
people's perceptions of whether they got their proper piece of 
the pie. We will have to see.
    Mr. Porter.  It will be interesting.
    Well, thank you very much. I do have a number of questions 
that I would ask that you answer for the record.
    We appreciate the fine job you are doing and your 
appearance here this morning.
    Ms. Jacobsen.  Thank you very much.
    [The following questions were submitted to be answered for 
the record:]

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                                         Wednesday, March 24, 1999.

               FEDERAL MEDIATION AND CONCILIATION SERVICE

                               WITNESSES

C. RICHARD BARNES, DIRECTOR
VELLA TRAYNHAM, DEPUTY DIRECTOR, NATIONAL OFFICE OPERATIONS
FRAN LEONARD, BUDGET DIRECTOR
TOM O'BRIEN, DEPUTY DIRECTOR, FIELD OFFICE OPERATIONS
    Mr. Porter.  The Subcommittee will come to order.
    We continue our hearings with the Federal Mediation and 
Conciliation Service. We are delighted to welcome the new 
Director Designee, C. Richard Barnes, who has been with the 
Service for quite some time and has not yet been selected as 
the new Director.
    When will you no longer have the ``Designee'' in front of 
your name?
    Mr. Barnes.  My understanding is just as soon as the Senate 
can get to it, Mr. Chairman. I do not think they have done 
that.
    Mr. Porter. Congratulations. We are delighted to see you. 
Why don't you introduce the people you have brought with you 
and then proceed with your statement.

                       Introduction of Witnesses

    Mr. Barnes.  I will do that.
    To my right is Ms. Vella Traynham. Vella is our Deputy 
Director for National Office Operations. Vella has been in her 
position for a couple of years at this point. She is a 
tremendous and trusted confidant of mine.
    To my left is Fran Leonard. Fran is our Budget Director. 
You have seen her at our hearings before. To my far left is Tom 
O'Brien. Tom is our Deputy Director for Field Office 
Operations.
    We are very much appreciative of the opportunity to come 
and talk to you and your Staff this morning. We will proceed 
when you are ready, sir.
    I would like to submit the written testimony that we have 
provided to you for the record and then perhaps summarize some 
key points for you and this Subcommittee.

                          Introductory Remarks

    This is my first visit to this Subcommittee in the Director 
capacity. I have been here with Director Wells for the past 2 
years as his Deputy Director for Field Operations. We are in a 
changing environment at FMCS as Dr. Wells talked to you about 
over the last 4 years.
    My focus in the future will be to build on that strategic 
redirection of FMCS. I was very fortunate to be a part of that 
redirection. My job would be to continue to institutionalize 
some of these changes that we have started over the past couple 
of years.
    I think we can tell you about the new and exciting 
initiatives that are underway at FMCS and how our work force is 
responding to the challenges that we have laid down.

                           MEDIATION ACTIVITY

    First of all, I would like to talk to you about our core 
business, which is dispute mediation and preventive mediation 
in the private sector and the federal sector. In 1998, FMCS 
mediators were involved in 14,529 collective bargaining 
interventions.
    That is either in the dispute mediation phase or in the 
preventive mediation phase. That, Mr. Chairman, would represent 
a 2 percent growth in our dispute mediation, a 12 percent 
growth in our preventive mediation activity, and a 6 percent 
growth in our education and outreach activities. Of the 5,784 
contract negotiations in which our mediators were active, we 
can boast this year, and it is very surprising to us, and we 
are absolutely delighted with the results, 85.6 percent 
resulted in contract agreements. We have that kind of success 
rate among our negotiations this year. Notable among these was 
Caterpillar, which Dr. Wells reported last year in which 13,000 
members of the United Auto Workers were involved in a 7-year 
dispute.
    One that I was personally involved in was the Kaiser 
Foundation Hospitals in the Bay area. These were one-day 
strikes that were impacting some 54 hospitals in the Bay area. 
We were able to get this dispute settled last year.
    One of the things I think that will tell you about the 
productivity of our agency is the 190 mediators that we had on 
board, average last year, held nearly 36,000 meetings during 
fiscal year 1998.
    Approximately 189.5 meetings per mediator in a 220-day work 
year. So, we are very pleased with the productivity of our 
mediators.
    I would like to start with some of the initiatives that we 
are involved in, the first one which is our customer feed back.

                           CUSTOMER FEEDBACK

    The Customer Feed Back Initiative that we have pretty much 
leads the way for the rest of theinitiatives that I will tell 
you about. Almost everything that we have done this year has been based 
on this initiative. Our Biennial National Customer Survey, which was 
first done in 1966, produced phenomenal results for us.
    It gave us a tremendous amount of information from our 
customers. We surveyed some 1,500 [Clerk's note. Later 
corrected to 1,300] labor and management pairs in 1996, asking 
them a variety of questions about how FMCS could redirect 
itself with the future.
    How could we make ourselves more value added to our 
customers? When we received the information from MIT and the 
University of Massachusetts which conducted this survey, we 
then set out to have five regional focus groups where we met 
with labor and management practitioners from around the country 
and shared the data from our survey.
    From that, we were able to get more information about what 
our customers would like to see us do. These regional focus 
groups have proven to be a valuable tool for us. In addition to 
that, we now have our Regional Directors providing us with 
monthly customer feed back reports, both to Ms. Traynham and to 
Deputy Director O'Brien.
    We review these each month to get some idea of the changes 
that are taking place. Also, we have convened this year an 
arbitration focus group. We have brought in practitioners from 
labor and management, as well as our arbitrators to see if we 
could enhance the service that we are providing and make it 
more usable among our labor and management customers.
    This year, our two additional initiatives would be to 
establish an FMCS Customer Council nationwide to pick out some 
of our best users, our most frequent users, I should say, both 
from labor and from management, from our arbitrators, from our 
private sector consultants, to deal with us and to help us stay 
abreast of current issues in bargaining so we can make the 
transitions that we need to make as an agency.
    Also, we are implementing a process to randomly sample our 
customers after our alternative dispute mediation initiatives 
and after our preventive mediation initiatives.
    Let them grade us on how we are doing. Then our plan is not 
just to take that information and file it away. It is to meet 
with this Customer Council on a routine basis, share this 
information with them, and let them know how we are going to 
operate this agency.
    Tremendously important with regard to our staffing, is our 
educational offerings that we make to our mediators to keep 
them abreast of current issues and trends. One other major 
factor in this communication is the mediator partnership that 
we have created with our own internal work force. We are now 
meeting quarterly with our mediators who are elected 
representatives from our mediator work force.
    I think it is another form of management. You soon discover 
when you begin to listen to the people who actually deliver the 
service or produce a product that they often times have much 
better ideas than the people sitting at the top of the 
organizations.
    In this sense, I am tremendously pleased with the work of 
our mediators in this partnership activity. It has been one of 
the most positive things that we have done as an agency.

                          performance planning

    The second initiative I would like to talk with you about 
is our mediator performance planning. We are just on the verge 
of making a dramatic shift from an historical practice in the 
federal government.
    In the past, we have asked people to meet certain 
standards. At the end of the fiscal year we would go in and 
evaluate their conduct and their work over the year. Often 
times, we did not use or seize the opportunity to talk with 
people about setting goals and reaching goals.
    We would determine what the goal had to be and then tell 
them they must conform. In doing so, that limits the creativity 
of people. We are going to shift this agency pretty 
dramatically beginning in July, from rewarding conformity, to 
rewarding creativity. We will start a new pre-year performance 
planning system, rather than a post-year performance appraisal 
system.
    This will require all of our mediators who we have in the 
past talked about becoming 360-degree mediators, to sit down 
with their managers, and actually plan what their performance 
will be in their area for the year.
    Once they do that, then they will be responsible for 
developing their own geographical business plan of how they are 
going to service their customers. That will feed up to our 
regional plans, which will feed up actually to our national 
performance plans and our strategic planning.
    In 1996, we did our own internal survey of our mediators to 
see which ones had reached the 360-degree performance level. We 
had 63 percent. In 1997, that figure had risen to 68 percent. 
Now, in excess of 70 percent of our work force have reached all 
of the core competencies and have gotten to the 360-degree 
level.
    Consider that approximately 26 percent of our total work 
force are still new mediators; we have hired approximately 28 
percent of our staff in the last 3 years. They have not had the 
opportunity to make the full circle accomplishments of the core 
competencies.
    This mediator performance planning will be the first step 
in our strategic planning for the future; a real bottom 
upapproach, rather than a top down strategic planning where we mandate 
the changes.
    We see this as something vital to get our employees to buy 
into this, to give them some opportunity to express their 
creativity.

                             fmcs institute

    The third initiative that I would like to talk with you 
about is in direct response to the customer feed back, both the 
focus groups, as well as the national survey done at University 
of Massachusetts and MIT.
    Our customers were asking us to make some immediate 
changes. The first one was in our arbitration services, to 
improve our arbitration services, to expand the skills of our 
arbitrators, both in ethics and case management.
    Then to take a look at facilitating more minority 
participation among our arbitrators. When we began to spend 
more time with our customers trying to determine anything else 
that we could do as an agency, they asked us for more 
accessible skills training.
    One of the problems that we run into in our appropriated 
Preventive Mediation Program is that often times companies 
cannot afford to shut down their operations because of 
production requirements or to send 30 people to a training 
session for 3 to 4 days.
    They asked us to present this in a different environment. 
Perhaps we could do a program and have people from all over the 
country come to us. So, one company could send 2 or 3 people, 
rather than to shut down the operation to send 30.
    That is just something we did not have the ability to do 2 
years ago. We just did not have the structure to do that. Also, 
moving training away from the worksite minimizes the 
communication barriers and the artificial status of supervisory 
employee and joint training initiatives.
    We are this year implementing what we call the FMCS 
Institute. The FMCS Institute will be a reimbursable program, 
totally funded by participant fees.
    We are going to provide four offerings in fiscal year 1999 
from our current authorization under special training 
initiatives. One will be designed to train arbitrators in 
ethics, in case management, and in evidentiary matters.
    We will teach them over a 5-day period and then consider 
them for our roster. Once they are placed on the panels we will 
assign a mentor to this arbitrator.
    The mentoring program will stay with them for the first 
five cases they hear. We are confident that this will improve 
the arbitrator panels that we can provide to our labor and 
management customers. Additionally, another offering will 
prepare us for some of the EEO backlog that is happening in a 
lot of federal agencies.
    EEOC approached us approximately a year ago. They had over 
90,000 backlogged cases at the time they approached us, asking 
us if we could provide some mediation service. We certainly can 
on a reimbursable basis.
    We most recently did another $150,000 contract with the 
EEOC to handle some of that backlog. There are many other 
vendors that will be doing so. We could not handle that volume 
of work. We will become but one vendor out of many trying to 
help get that backlog of cases down.
    We do the same thing in our ADR Department, for the 
Department of Agriculture. I could cover them a little bit 
later as we get into our ADR. The four classes we will offer 
this year will be an arbitration training, interest-based 
bargaining techniques, facilitation, and the EEO mediation 
skills. We will do these through our specialized training.

                             best practices

    In our Fiscal Year 1999 budget--as our next initiative--the 
Administration and this Subcommittee approved funding for us to 
establish the FMCS Best Practices Clearing House. We have 
assembled a group of researchers from Northeastern University. 
We have completed the terms of the contract with them. They 
will begin their work next month looking at some of our 
nation's best practices in labor and management cooperation, 
both in partnership at the enterprise level and studying some 
of our foreign models where we are looking at social 
partnerships, as in England.
    What is the difference in the comparisons that we do? After 
they do that study, they will develop models for our mediators 
to take to the field to use in trying to create effective 
partnerships between labor and management at the enterprise 
level.
    We are convinced that if we do not target the enterprise 
level first, any partnership will be unsuccessful.

                             new curricula

    Curriculum development. With your support in fiscal year 
1999 we have formalized two curricula this year.
    One is on Work Place Diversity and one on Youth Peer 
``School Yard'' Mediation. Both of those curricula have been 
designed. They are in place. We will identify five pilot 
programs that we will use this year in the ``School Yard'' 
Mediation Program under the appropriations given to us by this 
Subcommittee.
    After that, it will become a part of our ADR Program and 
will be offered on a reimbursable basis. We are not receiving 
additional funding for the School Yard Mediation Program.
    The diversity training is now a part of the preventive 
mediation range of services we offer to management and labor to 
help improve the work place relationship.
    We will be working with private sector experts to improve 
our training curriculum in contract administration, which is an 
essential component of successful labor management relations.

                         adr and international

    Finally, I would like to talk to you briefly about our ADR 
and international services. For many years now, we have offered 
a variety of conflict resolution services, both in the federal 
sector and public sector.
    We provided some ADR services in the private sector as well 
in consultation with other private groups. We provide 
briefings, training, technical assistance, systems design, both 
domestically and internationally.
    This year, in response to an increasing number of requests 
from other countries for conflict resolution services and 
training outside the traditional labor relations field, we have 
consolidated our alternative dispute resolution and 
international departments into one department.
    Both of these are reimbursable operations. We now have 
domestic alternative dispute resolution, international 
alternative dispute resolution, and international labor 
relations housed in one department.
    Our case work this year in domestic ADR has increased by 84 
percent over the previous year, largely due to the EEOC 
contract and EEO mediation contracts with other federal 
agencies. In addition to this, we are now working with the 
Postal Service under their Redress Program as a provider of 
mediation services under Redress.
    Our ADR work took us this year into five regulatory 
negotiations. We anticipate we will have six before the end of 
this year. Our Postal Summits with the unions and the 
leadership of the U.S. Postal Service continue on a quarterly 
basis in an attempt to improve their labor relations.
    Our international dispute resolution services are still 
being developed. A lot of design work is still being developed 
this year.
    In Bosnia, we are involved in the facilitation of multi-
lateral sessions addressing economic development and 
privatization issues and we have sent a mediator there twice to 
help facilitate discussions about their utility infrastructure.
    In Panama, we transition the Canal back to the Panamanian 
Government at the end of this year and we are currently 
designing the complete system, actually a turn key operation 
for their labor relations on the Canal, post-2000.
    Rich Giacolone, who is my Special Assistant, has trained 
over 6,000 employees on the Canal. He has now trained 12 
mediators for the Republic of Panama to be in place after the 
first of next year.
    We are doing the systems design in Panama as we speak. 
Governmental and academic representatives from the Balkan 
States, Turkish and Greek Cypriots, and members of the Swedish 
Army's International Peacekeeping Forces are also receiving 
conflict resolution training though our international ADR 
program.
    The United States Institute of Peace. For 2 years when I 
sat here as the Deputy Director, you have asked us about 
programs with USIP. I can report to you that we in fact have a 
program that we are going to do with them in July of this year.
    We have some funding issues that we have to work out on 
that. The design of the system, the design of the program is 
currently underway. We are going to do that in July of this 
year, provided we can work out some of our funding.
    I will tell you about some international work and the 
growth of our international work. I returned from Europe on 
Sunday of this week, visiting with our counterparts in English-
speaking mediation services in a meeting in London.
    I met with the Irish Republic and Labor Relations 
Commission, the Labor Relations Agency from Northern Ireland, 
ACAS, which is the Arbitration, Conciliation and Advisory 
Service of Great Britain, to talk about different issues 
emerging in the mediation field.
    The demand for international ADR is great. None of our 
sister agencies are performing the work that we do in 
International ADR. We are now entering a cooperative agreement 
with the Irish Labor Relations Commission. They will be sending 
two of their senior mediators here for a 2-week period for us 
to train them. They have asked us to do the same--to send two 
mediators there, so we can also take some of our information 
right into the Labor Relations Commission of Ireland.
    Northern Ireland has asked to do the same thing. We have 
not worked an agreement out with ACAS at this point in Great 
Britain. We look very favorably on doing that, and exchanging 
these mediators for a period of 10 days.
    We have so many common multi-national corporations moving 
through these different countries, that we need to share 
information with each other. One of the most dramatic things 
that occurred on our recent trip was with the European 
Commission.
    I met with the Director General of the DG-5 operation at 
the EC. They are asking us to provide them with the same 
regulatory negotiation models that we use in this country.
    The conflict resolutions skills at the EC need some 
dramatic help. I think it was witnessed on Monday of last week 
when the entire commission resigned. We went in on Wednesday of 
that week to meet with the Director General. We can provide 
services both on a reimbursable basis in our ADR endeavor, and 
our international endeavor, and we can also provide different 
models to assist them.
    It is to our benefit. Talking with our ambassador in 
Belgium, the ambassador's staff with the EC, and most of the 
ambassador's staff in NATO it is very important to the United 
States that we be a favorable trading partner among the EU.

                             budget request

    Mr. Chairman, we are asking for $36 million [Clerk's 
note.--Later corrected to $36.834 million] in appropriated 
funds this year. We are committed to GPRA. We are committed to 
seeing that the GPRA Initiative work. The outcomes that we 
have, rather than the outputs historically measured are being 
changed this year.
    We are going to begin bottom up strategic planning among 
our mediators. The $36 million [Clerk's note.--Later corrected 
to $36.834 million] we are asking for in appropriated funds 
includes $1,500,000 for grants, and total FTEs of 292; 6 of 
which are funded through reimbursable revenue.
    Our payroll-related cost for our work force accounts for 74 
percent of our agency's total budget. Of our current work 
force, I am proud to say that the percentage of mediators to 
overall employees has increased from 62 percent in 1994 to 68 
percent.
    Hopefully, in the year 2000 it will top 70 percent. We are 
also proud to report to you that our EEO status shows FMCS 
currently with a work force comprising 25 percent minority and 
34 percent female.
    That will be my presentation. I certainly will try to 
answer any questions you might have.
    [The prepared statement follows:]

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                     Remarks by Congressman Porter

    Mr. Porter.  Well, Mr. Barnes, thank you for your 
presentation. You have covered a lot of the areas where we had 
questions.
    I would say in respect to your budget request that, like I 
said to Ms. Jacobsen, that you probably pay for yourself in 
terms of savings in the economy many times over. It is very 
efficient spending.
    Obviously we are great fans of your agency. We think you 
are in many ways a model agency. For example, the GPRA 
Standards that you have adopted, we think you have handled this 
entire matter very well.
    You probably are the good example that ought to go out and 
show other agencies how it is done. So, we commend you on that. 
Now, your idea of individual performance plans and changing the 
culture of the agency in terms of bringing your performance 
standards up from the employee level to the top is also, I 
think, another kind of model.
    I am going to ask you some short questions because our time 
is very limited now. Are you aware of other agencies that have 
done this same approach?
    Mr. Barnes.  No, sir, I am not.
    Mr. Porter.  You are not, all right.

                             authorization

    Let me just for my own edification ask a few questions. Are 
you permanently authorized as well, or do you have to be 
authorized periodically?
    Mr. Barnes.  We are permanently authorized.
    Mr. Porter.  I thought you were. What was your request to 
OMB? Was it the same as the figure that you have presented to 
us?
    Mr. Barnes.  Yes.
    Mr. Porter.  Your Financial Officer is telling me yes.

                              recruitment

    I also assumed that would be so. In a good economy, 
Government employment is not competitive. Tell me if you are 
experiencing problems in recruiting the kinds of quality people 
that the agency requires in this economy.
    Obviously in the military, we are having problems. Are you 
having those kinds of problems too?
    Mr. Barnes.  We do see some problem areas. The competition 
with salary rates among people from their completion of college 
until their retirement age, we do not tend to compete there.
    We can often times attract people directly out of college 
who have certain skills and process skills. We certainly can 
attract many people who retire from their corporations or from 
their unions early.
    I do not know what our average age is right now. I would 
have to provide that for you. I know that at one time, 52 to 53 
years of age has been our average age. We now have a little bit 
younger work force than we had traditionally.
    We have trouble at times recruiting management people 
because the salary structure is so much higher than the GS-14 
rate. Our starting rate is GS-12. There is a 2-year period to 
get to the GS-14 grade. That is a disincentive for someone to 
leave a corporation and come to work for us.
    It is a disincentive for many union officials to leave and 
come to FMCS. Very candidly, we need to bring people in from 
the collective bargaining arena that have expertise, content 
expertise, in collective bargaining.
    We teach them process skills. We have also experimented 
with bringing in people with process skills and teaching them 
the content of collective bargaining. We have had success with 
that when we have picked dynamic aggressive people.
    For those people who do not have those kinds of attributes, 
we have not had great success in bringing in people with 
process skills and teaching them content knowledge.
    So, we have had to review that internally with our hiring. 
To answer your question, yes. We have experienced some 
resistance to joining us among quality people that we would 
have liked to have hired.

                                economy

    Mr. Porter. What is the effect of the economy on your work 
load. Does the work load go up when the economy is good or does 
it go down?
    Mr. Barnes.  Well, I would say that it remains pretty much 
stable. That is an honest answer. When the economy tends to be 
growing, often times we will have more demands at the 
bargaining table for higher wage rates.
    Companies are making money. Unions want to share in that. 
When the economic times are hard, companies are demanding 
concessions. The unions are resisting.
    So whether it is a good economy or a bad economy, it 
depends on whose ox is being gored as to what we are seeing at 
the bargaining table; either concessions or demands for sharing 
of the wealth.
    Looking at it from that sense, I do not see any major 
shifts in our work.

                         mediation intervention

    Mr. Porter.  Am I correct that unlike the National 
Mediation Board where the parties are required to seek 
mediation, both sides have to come to your agency and ask for 
your intervention. Is that correct?
    Mr. Barnes.  We can enter a negotiation on our own motion.
    Mr. Porter.  Do you do that?
    Mr. Barnes.  We try not to do that because mediation is a 
voluntary process. If we are injecting ourselves into the 
negotiations, one side, who may not want us there--there is no 
cooperation. There is no sense in us being there.
    Mr. Porter.  So, you do not do that often?
    Mr. Barnes.  Very infrequently do we do that.
    Mr. Porter.  Very rarely.
    Mr. Barnes.  Very rarely.
    Mr. Porter.  Do you have any idea of what percentage of the 
disputes parties seek your help to resolve? Is that a noble 
figure?
    Mr. Barnes.  I could not give you current figures. I could 
tell you probably last year. We were involved in roughly 18 
percent.
    Mr. Porter.  About 18 percent.
    Mr. Barnes.  Yes. Those tend to be the toughest cases.
    Mr. Porter.  I was going to say, are those the largest 
cases where the most is at stake, or does there tend to be 
minor disputes?
    Mr. Barnes.  It is the major disputes of our strategic 
industries. That is what we see. The minor disputes, the 
parties normally settle those without many problems.

                           Concluding Remarks

    Mr. Porter.  Well, Mr. Barnes, as I said a minute ago we 
think that your agency is, in many ways, a model of how an 
agency ought to be run efficiently.
    We commend you for the fine job you are doing. I am very 
interested in the fact that you are doing a lot of 
international work and showing the rest of the world how things 
ought to be done. They need you over in Kosovo right now.
    Mr. Barnes.  I've got some folks behind me that might want 
to go, too, Mr. Porter.
    Mr. Porter.  Some day the world will learn to resolve 
disputes short of violence. The skills will be broadly shared. 
People will support doing that. We obviously have a long way to 
go.
    I think the kind of work you are doing obviously is a model 
for others. I think it is wonderful that you are sharing that 
with the nations we do a lot of trade with and share similar 
systems.
    I think that some ideas from there are also very useful as 
well. I am glad to see that you are doing the same with the 
Peace Institute which, after all, is a much newer agency, but 
attempts to find ways to resolve disputes short of violence or 
other untoward affects on society.
    I think you have a lot in common and they can learn from 
you as others are. So, thank you for the fine job you are 
doing. We appreciate it. We appreciate your testimony this 
morning.
    Mr. Barnes.  Thank you very much, sir.
    Mr. Porter.  Thank you. This 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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                                         Wednesday, March 24, 1999.

                    UNITED STATES INSTITUTE OF PEACE

                               WITNESSES

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

                       Introduction of Witnesses

    Mr. Porter.  The Subcommittee will come to order.
    We continue our hearings on Independent Agencies under our 
jurisdiction with the United States Institute of Peace. I am 
pleased to welcome Dr. Richard H. Solomon, the President of 
USIP.
    Although I know them well, if you would introduce the 
people who are with you for the record and then proceed with 
your statement please, Dr. Solomon.
    Mr. Solomon.  Thank you, Mr. Chairman.
    As always, it is a privilege to have this opportunity to 
testify before you and other members of the Subcommittee who 
may be available to participate in these hearings.
    I am pleased to have with me Dr. Harriet Hentges, our 
Executive Vice President; Charles Nelson, Esquire, our Vice 
President for Management and Finance. Apart from their 
administrative duties, they are both heavily involved in our 
substantive work.
    Dr. Hentges has been taking the lead on our Bosnia 
activities that I will be commenting on. Chick Nelson is very 
interested in and active in our work in Latin America. So, they 
will be joining me on a range of issues.

                           Opening Statement

    Mr. Chairman, I think you know that our request for fiscal 
year 2000 is $13 million, which is $800,000 more than our 
fiscal year 1999 appropriation. Of this $800,000 increase, 
$300,000 is designated to support increases in our practitioner 
training activity, and $500,000 to support expansion of our 
Bosnia work, of which a good element is training on the ground 
as well.
    In describing the reasons for requesting this increase, I 
will not read our formal presentation which was tabled some 
days ago to provide more opportunity for questions.

                    growth of practitioner training

    What I would like to do in this oral summary is stress two 
areas of growth in our work, and particularly to respond to the 
challenge you raised with us last year that was to highlight 
your concern, which is something we certainly share, about the 
importance of practical, hands-on aspects of our work; 
particularly, those focused on practitioner training.
    Having said that practitioner training is one of the things 
I want to focus on in my presentation, let me also say that I, 
personally, as the Chief Executive Officer of this 
organization, am very proud of what our folks have done over 
the past year as we build the training component of our work.
    In the past year, we have hired a new director of training, 
an outstanding individual who combines diplomatic and military 
experience, and has a very clear grasp of what practitioners on 
the ground will need in the way of an understanding of conflict 
management and resolution skills, and the best ways of 
delivering those skills through our training programs.
    We have doubled the number of courses that we have 
presented in various training environments over the past year. 
We have just about tripled the number of individuals who have 
participated in this training activity.
    Indeed it is fair to say that virtually all elements of our 
organization are now focused in one way or another on our 
training work; whether it is our education or our fellows 
programs, our grant work, and our research activities, and 
indeed the efforts of those of us in the front office who are 
leading the organization. We all are in a variety of ways 
contributing to this focus on our training activity.
    Our programs now reach out to virtually all continents in 
this world. Over the past year, we trained personnel from six 
continents. I am told only Antarctica escaped our grasp--and we 
are looking at training penguins in the new year [laughter].
    Organizationally, we have expanded our network of 
partnerships and now have training partners that include the 
United Nations and the U.N. High Commission For Refugees; the 
Hellenic Foundation in the Balkans; ASEAN, the Association of 
Southeast Asian Nations, in East and Southeast Asia; the 
African Conflict Response Initiative in Africa; and the OAS and 
the Inter-American Defense College in Latin America.
    I should say that all of the participants in our training 
programs are practitioners. They are officials who are involved 
in a very direct way in dealing with conflicts and their 
particular areas. Between the beginning of fiscal year 1997 and 
the end of fiscal year 2000 we estimate that we will train over 
5,000 practitioners with grant funds; mostly those coming from 
conflict zones.
    In that sense, the people who will benefit from these 
training programs, either from our work directly or through our 
grant-supported training programs, will be people very much 
involved in real-time conflicts.
    Almost every training program now includes some element of 
cost sharing, whether it is logistics--covering travel and room 
fees--or staff support. So, except in areas where we are 
dealing, let say, with the Kosovars, as we did last summer, 
people who do not have a budget and the basis for cost sharing, 
we are now leveraging our activities in this collaborative way.
    In short, I think it is fair to say that the Institute has 
become a preeminent practitioner training institution, 
especially in view of the fact that this new area of activity 
is something that, as you know, we began only 5 years ago.
    Now it is expanding into a high demand kind of activity. 
Our training programs have become a model for others doing this 
kind of training. We are supporting other organizations in 
their conflict resolution work, particularly through our grant 
program. I think we are helping to define this highly complex, 
ever changing field, identifying best practices and the most 
appropriate means to deal with a given conflict in a certain 
area.
    We intend to continue expanding this training program into 
the coming fiscal year. If the resources are available to us, 
we plan to double our training staff, and intend to focus, in 
particular, on training younger leaders in conflict zones such 
as South Asia, and continue to work with our partners, key 
institutions around the world who are themselves involved in 
dealing with conflicts in their regions.
    So, I want to stress again that the emphasis that you 
placed last year on this activity is something that we share 
with you. It is our priority. We feel that we are building the 
kind of program that we hope you will feel as proud of as we 
do.

                expanded focus on bosnia and the balkans

    Secondly, let me focus a bit on our work in Bosnia and the 
Balkans. I think there is probably no better example of how we 
have taken the mandate that Congress established for us back in 
the 1984-1985 period and are adapting it to the very different 
world that we now live in with the Cold War over--but with the 
kinds of conflicts around the world that we are living with 
day-by-day, whether they be the nuclear stand-off and the 
confrontation on the Korean Peninsula, proliferation in South 
Asia, the Iraq problem or Bosnia.
    In the case of Bosnia and the Balkans, our objective and 
the program that Dr. Hentges has taken the lead in building 
over these past 4 [Clerk's note.--Later corrected to 2] years 
is to support implementation of the Dayton Accords, and to 
reinforce the multi-billion dollar investment of our Government 
and the NATO countries with a rather modest added investment of 
several hundred thousands of dollars of work on the part of the 
United States Institute of Peace. Our efforts are designed to 
help stabilize this investment in a critical region in terms of 
NATO's interest and stability in a part of the world that, as 
you know, has been a flash point of the two major World Wars of 
this Century.
    What are we doing in the case of Bosnia and the Balkans? We 
are supporting the development of civilian organizations that 
are involved in implementing the peace accords--whether it is 
developing a rule of law capacity, war crimes accountability, 
training police under the United Nations or local authorities 
who will stabilize the security environment that the people in 
this conflict-ridden region are living in and hope to have as a 
more secure environment.
    We are promoting conflict resolution training programs, not 
only for the police, but for the non-Governmental organizations 
in the region and even for the media so that they see their 
role in the peace process.
    We are working with the religious communities, trying to 
promote a dialogue among them so that they become a part of the 
solution and not a part of the ongoing tensions that led to the 
conflict in the first place. We are playing, I think, a major 
role in bringing together through our Balkans Working Group, 
the agencies of the U.S. Government with international agencies 
and private sector organizations who work on the ground.
    One of the characteristics of foreign affairs in the post-
Cold War world is that it is not just the preserve of 
governments. Particularly, with major cutbacks in foreign 
affairs spending, our Government has to rely on the 
contributions of NGOs.
    Our military has to work with new partners in a 
peacekeeping environment that they were not used to working 
with during the Cold War. Our Balkans Working Group brings 
these unfamiliar bed-fellows together and gets them to look at 
the way each views their separate responsibilities and make 
more effective the coordination of their efforts.
    So, we have asked for additional funding because, one, we 
are asked to do more in the case of Bosnia and the Balkan 
Region. Secondly, because the need is so obviously great. And 
thirdly, the issues are extremely time sensitive.
    We can go into a good more detail about our work in the 
Balkans, as well as our training program. What I want to stress 
in closing in these abbreviated overview remarks, Mr. Chairman, 
is that I believe we have established over the pastdecade and 
more, a very strong practical record of accomplishments in supporting 
policy makers, training today's practitioners, as well as the leaders 
of tomorrow.

               outstanding examples of institute support

    To give you, in a very human dimension, examples of the 
impact of our work, I want to identify six individuals, 
graduates of our programs who, in some cases, have paid a very 
great price because of the work that we have encouraged them 
and helped train them to do.
    First, I want to mention Galina Starovoitova, an Institute 
Fellow, who came to us as one of President Boris Yeltsin's key 
advisors on issues of ethnic conflict. Galina Starovoitova 
returned to Russia, particularly to the St. Petersburg area, to 
become a practical politician. She advocated democratization. 
She became a strong voice critical of corruption. Because of 
her advocacy, she was assassinated in November of last year.
    I want to mention Colonel Jim Warner, who served with us 
for a year as a Military Fellow. As you know, we work with the 
U.S. Army War College's Peacekeeping Institute. Jim Warner was 
their designee 2 years ago. Jim moved on to command the U.S. 
Brigade in Tuzla, Bosnia.
    Vesna Pesic, also a Fellow in the Jennings-Randolph Fellows 
Program, returned to Belgrade after her year with us to become 
a leader of the Serbian Democratic Opposition. She has played a 
key role in organizing demonstrations in opposition to the 
dictatorial Milosevic Regime.
    Adnan Abu-Odeh was a Fellow with us 2 years ago. He worked 
on issues of Palestinian-Jordanian relations. Adnan has just 
been named as the principal Foreign Policy Political Advisor to 
the new King of Jordan.
    I want to mention two unnamed Albanian Kosovars who were 
trained by Dr. Hentges and others last summer in a training 
program on negotiating skills that we ran prior to the 
negotiation that developed during the fall between the Kosovars 
and the Serbs. Two of the individuals in that training program 
were representatives of the Kosovo side at the recent 
Rambouillet talks. I am not sure I want to claim credit that 
the outcome is something we can directly tag to our efforts. 
Here you had a people who were trying to negotiate their 
future. They represented a province of Yugoslavia. They did not 
have a foreign ministry. They did not have formal training in 
negotiating skills. They did not come out of a diplomatic 
environment. We provided training in the negotiating skills, 
and we think we made a difference.
    Finally, let me mention something that I just learned about 
today, and that is Mr. Veran Matic who was the Director of 
Radio B-92 in Belgrade. Veran Matic, in his dramatic efforts to 
develop a free media in the former Yugoslavia, has been an 
active participant in our work on virtual diplomacy which is 
our analysis of the impact of the information revolution on 
international affairs and politics.
    Matic was the first to show the way that you could use the 
Internet to get a message out of a country when the dictatorial 
leadership was trying to suppress it. I guess it was Voice of 
America which would then rebroadcast his message back into 
Yugoslavia.
    Radio B-92 played a key role in keeping the Democratic 
opposition to Mr. Milosevic alive. I have just learned that 
Veran Matic has just been arrested.
    The point of these six examples, Mr. Chairman, is to give 
you in a very human sense the fact that our training programs 
and the individuals we bring together from both our own country 
and round the world are out on the front lines. Some of them 
have paid the ultimate price or a very serious personal price 
in terms of their efforts to promote democratization.
    We believe our contribution in working with these people, 
as well as all of the other things that we do through our grant 
activities, our policy development work, our public education, 
is having a very positive impact.
    It is for that reason that we respectfully request that the 
Subcommittee approve our full request for FY2000 of $13 
million.
    Thank you very much.
    [The prepared statement follows:]

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                           institute history

    Mr. Porter.  Dr. Solomon, thank you very much for your 
statement. How old is the Institute of Peace now?
    Mr. Solomon.  We began operating in the 1985-1986 fiscal 
year.
    Mr. Porter.  When did your budget pass $5 million?
    Mr. Nelson.  1988-89. There is an appropriation table on 
the front end of our budget.

                      signs of institute's success

    Mr. Porter.  Dr. Solomon, what you said last about the 
people you have sent out seems to me to define, in a very 
graphic way, the success you are having there. We are very 
proud of what you are doing and the progress that has been 
made.
    I think the United States is standing out in working toward 
conflict resolution in a way that hopefully can avoid the kind 
of violence that is apparently going to start in Serbia today.
    I do not imagine we have trained any part of the Milosevic 
Government. It would be nice if we had.
    Mr. Solomon.  Well, we did offer. At the time we trained 
the Kosovars, we did offer to train them.
    Mr. Porter.  No takers then.
    Mr. Solomon.  No takers.
    Ms. Hentges.  It did allow us to engage with them. There 
are some ongoing discussions. That is a tough door to knock on.
    Mr. Porter.  Somehow, the world makes some progress and you 
are at the heart of that progress in terms of conflict 
resolution. The lives you touch in other societies and the 
insights and understanding you give to people, it seems to me, 
are very important and well-worth the investment, the modest 
investment, that we are providing for the Institute.

                  status of institute's authorization

    Now, I have got to ask you all of the tough questions. Are 
you permanently authorized?
    Mr. Solomon.  No. We have been reauthorized.
    Mr. Nelson. We were just reauthorized this past year. We 
are a part of the Higher Education Act Authorization. So, we 
are covered through 2003.
    Mr. Porter.  It is a 5-year authorization?
    Mr. Nelson.  There is a swing year added on.

                 government performance and results act

    Mr. Porter.  Are you subject to GPRA, the Government 
Performance and Results Act?
    Mr. Solomon.  Chick, will you handle that?
    Mr. Nelson.  We are very dedicated to the principles of 
GPRA. As on many questions, because of our independent nature, 
our technical position is that we are not required, but, as a 
matter of Institute policy, we follow many Federal policies 
that we are not technically subject to.
    In October 1997 we presented to the Congress and to the 
Executive Branch our strategic planning presentation in 
response to GPRA. This is a document which was given very 
careful attention by our Board. It is a careful treatment of a 
mission statement, goals, and objectives. At the level of 
annual performance plans, and performance measures when you are 
dealing with situations like Kosovo, it is very difficult to do 
any quantification. We are in consultation with OMB and other 
foreign affairs agencies as they are developing their own 
approach. I am trying to follow what others are doing with a 
very difficult intellectual challenge.
    At another end of the spectrum on consumer satisfaction and 
our relationships with our constituency in the United States, 
we conduct an annual satisfaction survey. We can give 
measurements on that. Our most recent survey shows that 90 
percent of the responses regarding how we treat the public are 
affirmative.
    Mr. Solomon.  I should add that the 10 percent or so who 
were unhappy generally seemed to be people who applied for but 
did not receive grants or fellowships. We just don't have the 
resources to respond to them all.
    Mr. Porter.  I am sure the staff would appreciate your 
adopting a GPRA-like approach, which you are already doing and 
including GPRA indicators and goals in your budget 
justification, even though you are not subject to it. That is, 
of course, a decision for you to make.
    Mr. Nelson.  Our presentation keys into the GPRA context in 
its opening pages. We refer to the mission statement and build 
on that.

                    nature of institute's endowment

    Mr. Porter.  I have a number of questions that are 
basically short answer type questions that I want to ask. 
First, you can transfer Federal funds to an endowment, correct?
    Mr. Solomon.  The funds that we get from the Treasury do go 
into an endowment, yes. They can be transferred.
    Mr. Porter.  How much money is in the endowment currently?
    Mr. Nelson.  I do not have that number. I do have the 
numbers for the end of last year.
    Mr. Porter.  That is fine.
    Mr. Nelson.  The cash balance at the end of 1998 was about 
$3.6 million, which covers unpaid obligations, like grants and 
fellowships, we signed during the year. They are commitments 
against that cash and reservations for planned activities that 
are not yet obligated but have been developed in the preceding 
year.
    Mr. Porter.  In a sense then, it is not really an 
endowment. It is an investment fund of some type.
    Mr. Nelson.  It is not a capital fund. We transfer a 
portion of our funds that we receive from the Treasury into the 
endowment. The amount for the last 2 years happens to be almost 
identical. It is $4.6 million. That is used for our grant 
program, our fellowship program, and a number of activities 
which have been run through the endowment, rather than through 
the Institute.
    We also then, to the extent that there is a cash flow 
involved, invest the difference in T-Bills and then benefit 
from the interest on those accounts.
    Mr. Porter.  Let me see if I understand it correctly. The 
only investment you are making is in T-Bills.
    Mr. Nelson.  Correct.
    Mr. Porter.  Who manages that investment? I guess there is 
not much management to it.
    Mr. Nelson.  The Board has established a very conservative 
investment policy. Any investment must be in a security that is 
guaranteed by the full faith and credit of the U.S. and must 
have maturity of not more than one year. So, there is not a 
great deal of leeway.

                    plans for headquarters facility

    Mr. Porter.  You also, of course, receive private 
contributions. Where are you in respect to your new permanent 
Headquarters?
    Mr. Solomon.  Over the past year, Mr. Chairman, we have 
received approximately $1 million in donations. Most was from 
two private sector foundations. One was a significant challenge 
grant from a private individual. With those resources we have 
now built within our organization a capitalcampaign mechanism 
to do the research and do the management required to raise the 
additional money. We are beginning now the process of designing the 
facility.
    Mr. Porter.  You have purchased the site though?
    Mr. Solomon.  No.
    Mr. Porter.  No?
    Mr. Solomon.  The site was transferred free of charge by 
the Federal Government through a piece of legislation.
    Mr. Porter.  I am sorry. I knew that, yes. Now that you 
remind me, I did know that. But you have a site. You are now in 
a planning process.
    Mr. Solomon.  Correct.
    Mr. Porter.  How long do you think it will take before you 
can actually break ground and complete construction? Do you 
have any time line for it?
    Mr. Solomon.  I say to myself each night as I kneel down 
and pray, that within 5 to 7 years we will have that. Again a 
footnote; I do not want to drag this out. Father Hesburgh on 
our Board had me out to Notre Dame for a little tutorial on 
fund raising. I could see he had two assets that I do not have. 
One is an alumni association; the other is a football team. His 
alumni come to the football games during the fall and they are 
all jazzed up about their alma mater. Without those assets, we 
do not have what the professionals call a funding base. For us 
to raise the money is taking a good deal of time to cultivate 
specific support from individuals who believe in peace, but 
have to get to know us as an organization.
    Mr. Porter.  What is your budget for that? How much money 
do you need to raise?
    Mr. Solomon.  We have done some preliminary work with 
architects. We believe $50 million will enable us to build a 
building and have enough of an endowment to cover operation and 
maintenance costs, and perhaps a small endowment for program-
related hospitality.
    Those are very preliminary figures. As we get into the 
detailed architectural work, I would not be surprised if that 
figure changes.

            increased funding for special balkans initiative

    Mr. Porter.  Most of the increase you are requesting for 
the next fiscal year is in your special Balkans initiative, 
$500,000 which would almost double what you spent in the 
current fiscal year which was $665,000.
    You described a lot of what you are doing there. Tell me 
about the reference to ``on-the-ground.'' Give me a little more 
detail as to what you are doing directly in the ``on-the-
ground'' part of the effort.
    Mr. Solomon.  Since Dr. Hentges has spent time on-the-
ground and I have not, I would like her to respond to that 
please.
    Ms. Hentges.  ``On-the-ground'' means that we are 
supporting efforts on the ground to build the culture of peace 
and reconciliation. We have limited our help in that regard to 
areas that are areas of strength for the Institute--rule of 
law, transitional justice, war crimes accountability, working 
with religious leaders in order to foster their cooperation to 
enable them to make a contribution to reconciliation, and 
training for the media. We do this through Institute staff who 
are available either to advise or develop options that can be 
implemented on the ground. We also do it through grant funding 
of others.
    In that regard, we have supported some related efforts. I 
will give you an example in the area of rule of law and working 
with the justice officials. The human rights architecture of 
Dayton created channels for the peaceful redress of abuses. 
Yet, the capability to use that architecture did not exist 
among justice, officials, the lawyers, and the court systems. 
We became aware of that need through some of the work that we 
had done with them and provided funding to the International 
Human Rights Law Group to provide training so that local 
lawyers could use the advocacy provisions of Dayton.
    So, you have new institutions that we are able to breathe 
life into by increasing the capability on the ground. We also 
work with the religious leaders who are struggling to find 
their voice and to create some opportunities for cooperation. 
This very much relates to the return of refugees. Trying to 
give religious leaders the information and in some cases, even 
the moral support, to be able to address these issues.
    In the case of the media, we have provided information 
through a list serve so that they have more information to work 
with when they are reporting on the post-conflict situation. 
Those would be some examples of what we are doing there.
    Of course, we bring Fellows here. This year, we will be 
bringing them from the region to work on some projects that 
they can then go back and implement. In this case, not just 
Bosnia, but Serbia as well.
    Mr. Porter.  What people and organizations would you work 
through in Bosnia? Would you work through our ambassador there? 
Would you work through the Dayton process people there? Would 
you work with our military there?
    Ms. Hentges.  All of them.
    Mr. Porter.  All of them.
    Ms. Hentges.  We work closely with the Office of the High 
Representative. Of course we keep the U.S. embassy advised, as 
we do the State Department here.
    On the military, we are in close consultation on what their 
needs are, not so much in terms of military provisions, but 
issues of either the preparation and training or capturing some 
of the information out of the experience they are having.
    For instance, we have Colonel Olson with us this year who 
is from the U.S. Army. He is doing a study on strategic 
leadership in peace operations. He has now gone in and 
interviewed all of the generals who have been involved in 
Dayton implementation to understand and be able to translate 
this for the Army in their ongoing training.
    Of course, we are doing training, including for the 
military, as part of the conflict resolution training that we 
are doing. We also work with indigenous NGOs. In our grant 
funding this year, we put a very high priority in trying to 
identify people in the region to be able to transfer funds to 
them and build capability.
    The Inter-Religious Council is an organization we helped 
create of the top four leaders of the major religious groups on 
Bosnia. This had a certain symbolic value, but it also has some 
ongoing projects as well.
    Mr. Porter.  I took a Congressional delegation to Bosnia 
about a year and a half ago. We went all over the country from 
Sarajevo to Tuzla to Banja Luka to Drvar to Srebrenica--to most 
of the major cities and spent more time, we were told, in 
Bosnia than any other delegation of Members of Congress had 
ever spent there before.
    One of the things that impressed us the most was the 
professionalism of the military there and the example they gave 
to people as how they can live together in peace with tolerance 
and understanding of one another.
    I wonder, do you do any direct training of military 
personnel or is it training of personnel who then train 
military personnel?
    Ms. Hentges.  The program that we have collaborated with 
the Peacekeeping Institute at Carlisle has involved the 
training of military. We have not done any training of military 
on-site because their duties are quite focused on peacekeeping.
    We have trained people before they have gone to Bosnia and 
after they have been involved there. We do, on a regular basis, 
bring in military to address various groups that we convene.
    We just had Colonel Warner, who headed the U.S. Bridgade in 
Tuzlast to come and share his experiences. This is an important 
cross-fertilization between the different segments that are 
working in Bosnia--for the military to understand the NGOs to 
understand the military and the civilian implementers as well.
    So, I think the consensus is that the military story there 
is a very impressive one. There are the resources there and 
there is the experience that needs to be shared with the 
civilian side.
    Mr. Porter.  One of the things I noted when I was there and 
have noted since that time also is that often the difference 
between societies that can resolve their conflicts peaceably 
and those societies that cannot is a presence of non-
Governmental organizations, what we call civil society.
    Non-Governmental organizations seem to be missing in a lot 
of places, particularly in the former Communist world where 
everything was run by the State. There were no private entities 
that could exist, except with the permission of the State.
    In some very repressive societies, there are no similar 
organizations allowed to exist. China comes to mind as an 
example. So, I thought you said or Dr. Solomon said you had 
also worked to train people in the NGO community. You said a 
minute ago to set up a religious group, in effect an NGO of a 
certain type.
    Ms. Hentges.  The training of the NGOs was one of the first 
programs that we did in Bosnia, when we went there following 
the signing of the Dayton Accords. We tried to identify gaps in 
the implementation, where there were special needs that fit 
with our capability.
    One of the messages that came through loud and clear from 
the NGO community was--``we came here to deliver services, but 
we are getting caught in the cross-fire of a number of 
conflicts, not just the ethnic conflict, but the conflicts 
between local groups, between government levels, between the 
military and the NGOs.''
    So, we immediately put together, in May and June of 1996, a 
program that trained 80 NGO members on consensus building and 
basic conflict resolution skills. We could have stayed there 
for the rest of the summer. There was such a need and welcome 
for training.
    We then provided, as a follow-up, training of trainers so 
that there would be individuals on the ground who would pick-up 
that training and travel around the country.
    I think that has been very effective. We are working with 
the Tuzla Citizens Alternative Parliament, and the mayor up 
there to provide training, in some cases, through grants.
    Also, on the Truth and Reconciliation Commission, we are 
providing the media support to be the vehicle for communicating 
the role of such a Commission. So, it is an important element, 
I think, in building a culture of peace.

                        institute staffing level

    Mr. Porter.  Dr. Solomon, how many FTEs are there in the 
Institute?
    Mr. Nelson.  We are running at about 59. Our projection for 
the next period is on page 17 of the budget request. And 59 has 
been our standard planning level for several years. There has 
been some short-fall reaching that because of turnover and time 
required for recruitment. There have been three increases to 
that level. One in our rule of law activity where we are adding 
two positions. Another for the Balkans Initiative where we are 
adding three. Then one for training during the coming year when 
we plan to add three more positions.

                     response to training inquiries

    Mr. Porter.  When we talked a year ago, you had a need to 
turn away a lot of people who wanted training. Are you dealing 
better with that problem?
    Mr. Solomon.  Let me make two comments. It is a bit of a 
misconception to say we were ``turning away'' people. Some 
``requests'' were very casual inquiries. The short answer is 
that we, as part of our heightened focus on this activity, are 
making sure we are not turning away people.
    Over the past year, we have not turned down serious, what 
my staff likes to call, ``mature'' requests where there is a 
real capability to work with us. So, yes, we are responding to 
your concerns and doing all we can to make sure that we do 
respond where there is a need and where there is a capability 
to partner with another organization.

                       cost sharing for training

    Mr. Porter.  Do you provide training for a partnering 
organization at no cost or is there always a cost for 
participation?
    Mr. Solomon.  We do not charge a fee for service. As I said 
in my earlier remarks, there is increasing cost sharing where 
the organization we work with will pay for the travel or the 
on-site hotel and other costs of their participants so that in 
effect this is a shared cost arrangement in most cases.
    Ms. Hentges.  Some of the notable examples where we do not, 
of course, would be the training we did at the Kosovo-
Albanians; if we do training of police in Birchko.
    Mr. Solomon.  They do not have a budget.
    Mr. Porter.  How well I know that, yes.
    Mr. Solomon.  Another example is the training that we will 
have in April for the ASEAN regional forum. It is being 
organized in response to a request from the Department of 
State. State will pay for all of the cost of the participants, 
travel support, facilities, et cetera. We will still cover the 
cost of our own people that we are providing for training. But 
that is a substantial contribution.

                        use of institute website

    Mr. Porter.  Let me ask you about your Web site. How long 
has that been up and running? What is your experience with 
interest in the Web site?
    Mr. Solomon.  We began, I believe, in 1993, just as I was 
coming on board. Our Chief Information Officer, Bob Schmitt, 
has played a terrific role in helping us build a capability 
that has now become a primary form of outreach for the 
Institute. We now have something like 10,000 ``hits'' or 
inquiries on our website every month. We have just most 
recently begun something called ``Web casting.'' Web casting is 
a vehicle by which through our Web site, we are able to send 
out a television image, a video, and audio of a program that we 
run. We had a long seminar on our virtual diplomacy project 
that is assessing the telecommunications revolution. In this 
case, we were looking at the issue of how multiple sources of 
information can confuse or make more difficult decision making 
for Government agencies. This program included Under Secretary 
of State Tom Pickering and a number of very senior people, and 
it was Web cast all around the world. My kids happen to be 
journalists; one is in Jakarta; one in Singapore. They could 
watch this program over the Internet! In sum, in terms of 
numbers, we are finding that our Web site is becoming a major 
outreach vehicle, particularly for the younger generation.
    We are also developing Website-based research resources. 
For example, we are developing on our Web site an inventory of 
all peace agreements. Thus, kids doing term papers can dial up 
and get access to information relevant to our work.
    We get hundreds of inquiries every month for information 
relevant to our activities. The Web is clearly the wave of the 
future; and we are on the crest of that wave. It will leverage 
several thousand fold the outreach of whatever our existing 
programming would do just from going beyond face-to-face 
contact.
    Mr. Porter.  I certainly see that in all of our education 
areas that the use of information technology in distance 
learning, if you want to call it that, and training is going to 
allow you to do a lot more. You are already working very hard 
to develop that aspect of the Institute.
    Mr. Solomon.  Well, let me give you one other example of 
how there will be a tremendous multiplier effect in our 
programming. As you know, every year we run a high school essay 
contest that reaches now 7,000 or 8,000 kids around the 
country. We are now starting to work with at least one state 
that has wired up its classrooms. So, we will be able to 
provide the content for classroom training orienting sessions 
for this essay contest.
    This use of the Internet will multiply by many thousands 
the number of school kids that we will be able to reach. It 
will make the Institute, a small organization of around 60 
people, able to reach millions and millions of people all 
around the world.
    It is going to be a truly remarkable way of giving outreach 
to what we do, and of course what all sorts of other folks do.

                        focus on younger people

    Mr. Porter.  There is a school of thought in health care 
that says we can save a great deal of health care costs by 
changing lifestyle, diet, exercise, use of tobacco and drugs 
and the like.
    We should give up on current generations because they are 
never going to make it anyway and concentrate all of our 
efforts on children because if we can train our children to 
have a proper lifestyle, they will experience those savings and 
live longer and healthier lives.
    This may be applicable to conflict resolution as well. 
Maybe we can never train the adult Serbs, but maybe we can 
reach the kids. What efforts beyond the Peace Essay Contest do 
you focus on younger people in our society and across the 
world?
    Mr. Solomon. Well, let me go back to your question about 
where we stand in terms of our building program. The site for 
our facility is right across the way from the Lincoln Memorial, 
the Korean War Memorial, the Vietnam Veterans Memorial at the 
corner of 23rd Street and Constitution Avenue.
    It is about a 20-minute walk from our site to the Holocaust 
Museum. One of the things we will design into this permanent 
facility is a way of drawing in the kids. There are hundreds of 
thousands who come to Washington every spring to see their 
Nation's Capital. Programming we are working on will make their 
visit to Washington not just a tour, but something with some 
real content to it.
    We will be able, through the Internet and through our essay 
contests, and other programs, to have working relations with 
schools all around the Country. I envision a facility with an 
auditorium where we will probably have a movie on a war and 
peace theme, much as the Air and Space Museum has an attractive 
film.
    We will design a walking tour of the war memorials designed 
to get kids thinking about conflict resolution and ways of 
dealing with the world that draw on our varied programs.
    I think one of the major ways that our work will change 
with this permanent facility is this kind of educational 
outreach that will particularly focus, I think, on the younger 
generations, since visits to Washington are so much a part of 
the educational experience of our high school kids.
    Ms. Hentges.  If I could just add a word on what we are 
doing in the Balkans. One of the grants that we are very 
pleased to have supported was for a young woman in her late 20s 
who had had the experience of being exposed to conflict 
resolution training and devised some programs for teenagers in 
high school. She brought them together and provided them with 
basic conflict resolution skills that they could then use in 
their own situation. She discovered that what happened when 
they went back to their communities was that they were 
isolated.So, she then built a network of connections, some of 
them through phone, some of them through the Internet, in order to 
strengthen the skills that they had.
    I met with some of those young people and their stories of 
how they used the training in their day-to-day lives were quite 
compelling. We have as one of the themes in the Balkans 
Initiative in the coming year the identification of emerging 
leaders and providing them with training.
    Mr. Nelson.  One other thing that we might mention is I 
think one of the most interesting aspects of our education 
program is that we are working at high school, 4-year under 
graduate, and graduate levels.
    We have the high school Peace Essay Contest. We also have a 
summer institute in which we are working with high school 
teachers combining treatment of current conflicts, the 
substance of the conflicts, with how you teach issues relating 
to conflict management.
    We have similar programs for undergraduate assistant and 
associate professors. Then at the graduate level, we have 
dissertation support. So, there is a graduated approach to the 
range of young people that we are talking about.
    Mr. Solomon.  Mr. Chairman, let me just briefly mention one 
other program that we support through our grant activities that 
I find a very interesting example of educating the younger 
generation with the Internet.
    There is an organization called Seeds of Peace, which you 
may or may not have heard of, organized by a former journalist, 
John Wallach. He has developed a program that brings Israeli 
and Palestinian kids to Maine at a summer camp where for 
several weeks they have specialized programming designed to get 
out their hostilities, their stereotypes, and to learn to work 
together in a camp environment.
    Then they go back home. Of course, they go back into 
communities that have not had that experience. One of the 
things we have encouraged Mr. Wallach to develop is the use of 
the Internet. So now, when these kids go home, they maintain 
what in the lingo of our times is called a ``virtual or a cyber 
community'' via the Internet. So, they communicate with each 
other when there is a bombing, when there is a political 
development.
    In that fashion, they maintain the sense of cooperation and 
of community that they have developed in this very unusual 
summer camp. That is just another example of how the technology 
and the training is producing some I think very promising 
developments.

                larger appropriation requested from omb

    Mr. Porter.  As I have said before, I think every life you 
touch in a positive way makes a difference somewhere along the 
line. They touch others. It ripples. You requested to OMB more 
than the amount of money that was put in the President's 
budget. I think we have a figure of $395,000. What would that 
have been for?
    Mr. Solomon.  That was for work on democratization and our 
Bosnia work.
    Mr. Porter.  You are going to have to forego that if you do 
not have that additional money?
    Mr. Solomon.  Right.
    Mr. Nelson. That would have included some training.

                  reduced funding for religion program

    Mr. Porter.  There is a decrease in funding for the program 
on religion, ethics, and human rights in the next fiscal year. 
Will this affect any of the work that you are doing on these 
issues throughout the world or is that simply the end of a 
portion of that work?
    Mr. Solomon. Well, this partly reflects the retirement of 
our long-time colleague, David Little. This is a program that 
we intend to maintain.
    Ms. Hentges.  It also reflects changes in that program of 
religion, ethics, and human rights. Human rights implementation 
now has a big focus within the Research and Studies Program.
    Also, the work in religion is being incorporated with the 
work we are doing in the Balkans. That was a major part of what 
David Little has been working on. So, we will continue to 
support efforts in that area, as well as keep the ties with a 
number of religious communities in the U.S. who are keenly 
interested in what we do and who were a part of the initial 
effort to have the Institute established.

              bosnian truth and reconciliation commission

    Mr. Porter.  As a part of the Rule of Law Program, you have 
been asked to assist in the creation of a single, concise 
history of the conflict in Bosnia. Why is this important? It 
strikes me as a very daunting task, considering how people see 
history differently.
    Ms. Hentges.  This work grew out of work with Justice 
officials, trying to identify some of the supports that they 
saw necessary in order to establish a rule of law and to be 
able to address the abuses of the period of the conflict. In 
the meetings that we had with them, there were the three heads 
of the three War Crimes Commission, as well as lawyers, law 
professors, and judges. In the course of talking about how 
other societies had dealt with their abuses, we laid out for 
them some of the mechanisms that had been used.
    We exposed them to the idea of the Truth Commissions that 
had been used. One of the things that they felt very keenly is 
that they are in the process of creating three different 
histories. These were their exact words.
    ``We are creating three different histories about this 
conflict. If we do not reach a consensus on this period, in 25 
years our children will be fighting about which history is 
true. No, in fact, it will be sooner than 25 years because 
there are young men who were 10 and 14 years old at the time of 
the conflict who would be ready to bear arms before that. It is 
a daunting task, but there is a lot of experience from other 
commissions as to what worked, what did not, what are the 
features that are peculiar to each conflict?
    There is a great deal of analysis and research that has 
been done. One of the roles that we have played is being able 
to convene people together to look at the specific situation in 
Bosnia.
    We also find that on the ground, it struck a very positive 
cord; not just among the Justice officials, but political, 
community, and religious leaders, as well as some of these 
indigenous NGOs.
    Some of them had begun to grope for a mechanism like that. 
They turned to us and said, lend us your expertise on this. So, 
we have been in the role of developing it and advising them on 
it.
    Unfortunately, the recent political fall-out from the 
decision in Brcko and the Republic of Sprska has meant that the 
agreement that the three Presidents of the collective 
Presidency, all supported that idea of the Commission has 
faltered.
    One of the presidents has resigned. So, I think it may put 
the decision on the commission down the road a bit. There is 
still a very strong belief that this would provide a forum for 
victims and the development about the consensus about the 
history. More importantly, it can address some of the 
recommendations of how thiscould be prevented from happening 
again.
    Mr. Porter.  Is the President who resigned, the President 
of the Republic of Sprska?
    Ms. Hentges.  Yes, sir.

                     process for selecting fellows

    Mr. Porter.  Well, he was really forced out of office by 
the Dayton authorities. Last question, through the Jennings-
Randolph Fellowship Program, the Institute is planning to bring 
in 27 experts to do research on peace studies.
    You have competition for these awards, but you also do some 
recruitment. What percentage of the Fellows and the scholars 
does the Institute recruit each year? How much does the 
Institute spend annually on recruitment?
    Mr. Solomon.  All of our Fellows, as with all of our peace 
scholars, and all of our grants are subject to a rigorous 
recruitment and evaluation process. We use peer review.
    We have a staff that is very professional in evaluating the 
effectiveness of the people who have requested this support to 
carry out their programs. I would say 95 or more percent of the 
individuals who apply for these fellowships or grants are self-
initiated.
    There are, upon occasion, instances where we will encourage 
a distinguished individual to join with us or somebody who has 
some special skills, but even there they still go through a 
regular process with our Board making the final determination 
about who will be brought on.
    Ms. Hentges.  The recruitment process includes trying to 
advertise as broadly as we can, including the distribution of 
printed materials.
    Mr. Solomon.  And on the Web. The Web has been a major 
vehicle.
    Ms. Hentges.  The Web has been a great tool.
    Mr. Porter.  It is not really a recruitment process. It is 
just information providing opportunity.
    Ms. Hentges.  It is an application, not a review process.
    Mr. Porter.  I see.
    Ms. Hentges.  There is an external panel which reviews the 
applications before the Board looks at them. So, it is multi-
tiered process, bringing in outside experts to look at the 
pool.
    Mr. Solomon.  Remember, Mr. Chairman, we do not have a 
permanent research staff. Our researchers are the Fellows, the 
scholars who we fund that work in our own building or through 
our grant activity.
    Most of our permanent staff that we have talked about is a 
professional staff that spends its time processing the 
applications for the fellowships and the grants. This takes up 
a better part of half of our budget, running the fellowship and 
grant programs.

                      age variations among fellows

    Mr. Porter.  How young is the youngest Jennings-Randolph 
Fellow ever admitted and how old is the oldest? I am just 
curious about the age variations. Does anybody remember that?
    Ms. Hentges.  Well, I was a part of the review process 2 
years ago when we had somebody who was 33 or 35. People 
remarked that, that was pretty young and unusual. Generally, we 
are bringing in people who have developed some expertise.
    This happened to be an individual who had finished a 
doctorate program at a very early age, had done some extensive 
research of a very high quality, and was interested in pursuing 
a specific aspect of a topic that interested us. I am not sure 
that person actually ever came on board, but we did not 
discriminate against him because of his youth.
    Mr. Solomon.  The older side would be in their 60s.
    Mr. Porter.  Somebody who might have had a career and even 
retired.
    Mr. Solomon.  I was thinking about Adnan Abu-Odeh. I would 
guess he is in his late 60s.
    Ms. Hentges.  Late 60s.
    Mr. Nelson.  Well, Louis Sohn was a Fellow. Do you know 
him?
    Mr. Porter.  No.
    Mr. Solomon.  Professor Louis Sohn was from the Harvard Law 
School. He is like the Energizer Bunny. He just goes on 
forever.
    Mr. Porter.  Dr. Solomon, Dr. Hentges, and Mr. Nelson thank 
you very much for the fine job you are doing there. We 
appreciate you coming here to testify this afternoon.
    We think that the role of the Institute of Peace is a 
terribly important one, and that we should provide you with the 
resources you need to continue to do the fine job that you are 
doing.
    So, we will do the best, under very trying circumstances, 
this year. Thank you very much.
    Mr. Solomon.  Thank you for your support and your 
encouragement.
    Mr. Porter.  Thank you.
    We will stand briefly in recess.
    [The following questions were submitted to be answered for 
the record:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                         Wednesday, March 24, 1999.

            FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

                               WITNESSES

MARY LU JORDAN, CHAIRMAN
RICHARD BAKER, EXECUTIVE DIRECTOR
NORMAN GLEICHMAN, GENERAL COUNSEL
    Mr. Porter.  The Subcommittee will come to order.
    We continue our hearings with the Federal Mine Safety and 
Health Review Commission. We are pleased to welcome Ms. Mary Lu 
Jordan, the Chairman.
    It is nice to see you again. Although I have met them, 
would you please introduce the people who are with you for the 
record and then proceed with your statement.

                       Introduction of Witnesses

    Ms. Jordan.  Yes, Mr. Chairman, I will be happy to.
    On my left is General Counsel, Normal Gleichman. On my 
right is the Commission's Executive Director, Richard Baker.

                           Opening Statement

    Mr. Chairman, it is a pleasure to appear before this 
Subcommittee and to discuss with you the Federal Mine Safety 
and Health Review Commission's fiscal year 2000 budget request, 
its accomplishments, and its ongoing activities.
    The Federal Mine Safety and Health Review Commission is an 
independent adjudicative agency that provides administrative 
trial, and appellate review of legal disputes arising under the 
Federal Mine Safety and Health Act of 1977. Most cases deal 
with civil penalties assessed by the Department of Labor's Mine 
Safety and Health Administration against mine operators. They 
address whether the alleged violations occurred, as well as the 
appropriateness of proposed penalties. Other types of cases 
address mine closure orders, miners' complaints of safety 
related discrimination, and miners' requests for compensation 
after having been idle by a closure order.
    The Commission's Administrative Law Judges decide cases at 
the trial level. The five member Commission provides 
administrative appellate review. The Commission reviews 
decisions made by its ALJ's, rules on petitions for 
discretionary review, and may on its own initiative direct 
cases for review that may be contrary to law, or policy, or 
that present novel questions of policy.
    An ALJ's decision that is not directed for review become a 
final, non-precedential order of the Commission. The 
Commission's decisions are precedential and many involve issues 
of first impression under the Mine Act. Appeals from the 
Commission's decisions are to the U.S. Court of Appeals.
    Currently, the Commission has its full complement of five 
members. The term appointments for two members will expire on 
August 30, 2000.
    The budget request for fiscal year 2000 totals $6,159,000, 
an increase of $99,000 over fiscal year 1999. It contains 
funding for 51 FTEs; a reduction of 3 FTEs below the fiscal 
year 1999 level. Funding from the FTE reduction will be used 
mainly to offset the added cost associated with Federal pay 
increases.
    Since fiscal year 1997, the Commission has experienced an 
upward trend in new case filings at the trial level.
    That year, the Commission received 1,799 new cases; the 
fewest number of new case filings since fiscal year 1987. In 
fiscal year 1998, the Commission experienced an 18 percent 
increase in new cases, when 2,117 cases were received.
    Current filings indicate that the estimate of 2,300 new 
cases for fiscal year 1999 is on target. Calendar year 1998 
also recorded an increase in the contest rate of citations 
issued by the Department of Labor, from 5.4 percent to 6.2 
percent, which impacts our trial workload.
    Despite this anticipated increase, we feel that our 
resources are adequate and that our fiscal year 2000 request 
will enable the Commission to achieve its planned objectives.
    Mr. Chairman, I am happy to report to you that the dust 
cases are over. The dust cases arose in fiscal year 1991 when 
the Secretary of Labor issued thousands of citations to 
operators alleging tampering with dust filter samples.
    At the trial level, the cases were combined under a master 
docket and the case was tried in two parts; common issues 
proceedings and a mine-specific case involving the Keystone 
Coal Mining Corporation. Thousands of related mine-specific 
cases were stayed. The ALJ, affirmed by a Commission majority, 
decided that the Secretary failed to establish that an abnormal 
white center on a dust sample in and of itself warranted a 
presumption that tampering of the sample had taken place.
    In the mine-specific trial, the ALJ, affirmed by a 
Commission majority, found that the Secretary had failed to 
establish that the Keystone Coal Mining Corporation had 
intentionally tampered with its samples.
    In December 1995, the Secretary appealed the Commission's 
decision to the D.C. Circuit. On August 21, 1998, the D.C. 
Circuit affirmed the Commission's decision in all respects.
    The large reduction in the end-of-year inventory and high 
disposition of cases in fiscal year 1999 is the result of the 
Court's decision in this case. On November 9, 1998, the 
Secretary of Labor issued notices to vacate all pending dust 
cases under the master docket. As a result, the Commission 
disposed of 13 appellate cases, and 3,865 trial cases during 
the first quarter of fiscal year 1999.
    As of February 28, 1999, the Commission had a trial docket 
of 1,554 undecided cases; having received 932 cases and decided 
854 additional non-dust cases this fiscal year.
    At the trial level, 2,300 new cases are anticipated for 
fiscal year 1999 and 2,400 are expected in fiscal year 2000. In 
fiscal year 1998, the Commission's Judges received 2,117 new 
cases and disposed of 1,804.
    Dispositions exclusive of the dust cases are expected to 
total 2,310 in fiscal year 1999 and 2,500 dispositions are 
anticipated in fiscal year 2000. The Commission anticipates 
reducing its inventory of undecided cases to 1,366 by September 
30, 2000.
    At the review level, the Commission has a current docket as 
of February 28th, of 26 cases, having received 14 cases and 
disposed of an additional 18 non-dust cases so far this fiscal 
year.
    The average age of the 26 cases pending is 10 months. The 
Commission anticipates ending its fiscal year 1999 with 22 
undecided cases on hand. In fiscal year 2000 it anticipates 
receiving 55 new appeals and issuing 63 decisions. Thus having 
only 14 cases undecided at the end of the year.
    The results under our fiscal year 1998 GPRA Performance 
Plan reflect continued improvement. Fiscal year 1999 [Clerk's 
note.--Later corrected to 1997] was the initial year of our 
GPRA strategic plan. I am proud of our accomplishments to-date.
    At the Commission level, we decided 5 out of 6 cases that 
reached more than 24 months of age during the fiscal year. We 
reduced the number of undecided cases that were between 18 and 
23 months of age from 5 to 2.
    We reduced the number of briefed but unassigned cases to 4. 
We reduced the average age of substantive decisions issued from 
17.9 to 17.0 months, and achieved a fiscal year 1998 affirmance 
rate of 85 percent, compared to a 10-year cumulative affirmance 
rate of about 80 percent.
    At the trial level, we reduced the number of days between 
receipt of a case to its assignment to an ALJ from 70 days to 
60 days.
    Our judges approved 99 percent of the settlements within 30 
days of receipt of the settlement motion, compared to 93 
percent in fiscal year 1997. And they disposed of 81 percent of 
the cases within 6 months of receipt and 98 percent within one 
year of receipt.
    Although we did not meet our objectives in every area, we 
are determined to make significant improvements this year and 
next year as well. We have set ambitious goals for ourselves in 
fiscal years 1999 and 2000. We will do our best to achieve 
those goals with the resources provided.
    Thank you for the opportunity to present this budget 
summary. I will be pleased to respond to any questions that you 
may have.
    [The prepared statement follows:]

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                   impact of respirable dust program

    Mr. Porter.  Thank you Ms. Jordan.
    As you said in your statement, the dust cases that have 
plagued the agency for almost a decade are over. In fiscal year 
2000 MSHA is requesting additional funding in FTE for their 
Respirable Dust Program, in particular to expand Federal 
monitoring of dust exposure.
    They are working to develop a person-wearable dust monitor. 
Do you anticipate receiving cases similar to the recent dust 
cases if this is funded and becomes a part of MSHA's approach 
to these kinds of matters?
    Ms. Jordan.  That is really a different issue. I mean, the 
dust case that was before us had to do with a widespread 
allegation of tampering. I believe MSHA's new approach would 
change the way that the dust sampling is monitored.
    Inspectors might take over more of it. I think there is 
some hope they may be able to have a machine that has a 
continuous read out of dust levels. In other words, changing 
the approach.
    Operators already are required to measure their dust levels 
under the act. They do send those samples in and they get 
citations issued if the samples are over 2 milligrams per cubic 
feet of air. It is hard to tell whether having the MSHA 
inspectors there and changing to a single shift will increase 
or decrease the number of results that come out that are over 2 
milligrams or less than 2 milligrams.
    In fact, that has been the subject of some dispute that 
went up to the Court of Appeals I think with their rulemaking 
when they changed to their single shift approach. Because it 
was challenged directly as a rule that was issued, it did not 
come to our agency as an enforcement action.
    Mr. Porter.  Apparently, MSHA believes that even though 
those cases were resolved against the Secretary of Labor, that 
there is significant reason to believe that the sampling is not 
accurate.
    Ms. Jordan.  Yes.
    Mr. Porter.  And that they want to do it themselves to make 
sure that they have proper data.
    Ms. Jordan.  In that case, one might anticipate that more 
citations would be issued.
    Mr. Porter.  It would not necessarily raise your case load.
    Ms. Jordan.  If the citations increased significantly, if 
MSHA found that there were a lot more instances where operators 
were above the standard dust level, they issued citations for 
those and that was a significant increase in citations, you 
would have to then have the operators decide to challenge those 
citations.
    How they would challenge them might be questionable; if it 
is a readout or if it is a measured level, what basis they 
would find to challenge it. They may challenge the amount of 
penalty that is assessed for this citation.
    Mr. Porter.  In either case, you would receive a case.
    Ms. Jordan.  We would receive some extra cases, yes.

                    BASELINES FOR PERFORMANCE GOALS

    Mr. Porter.  As we discussed last year, we feel the 
Commission has done a great job with establishing performance 
goals and quantitative measures. They really do help us assess 
how the Commission is accomplishing its goals.
    There is always room for improvement. You have base lines 
established. I was wondering if you could put the base line 
information along with your expectations for 1999 and 2000 in 
table format. If so, could you give that to us for the record?
    Ms. Jordan.  I would be happy to, Mr. Chairman.
    [The information follows:]

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                      APPELLATE PERFORMANCE GOALS

    Mr. Porter.  On some of your specific performance goals, in 
2000 for objective number one, reduce appellate case backlog, 
one performance goal is to reduce to a minimum the number of 
cases in the inventory that are over 12 months of age. How do 
you define ``minimum?'' Is that really a performance goal that 
is quantifiable?
    Ms. Jordan.  Well, admittedly it is not as quantifiable as 
our other goals were. When we drafted the plan, of course, we 
were looking at measuring progress. So, our first measurement 
was in 1998, let us try and get rid of all cases that are over 
2 years old.
    Then we said, let us, for this year, get rid of all cases 
in our inventory that are over 18 months old. When we looked 
ahead drafting the plan to think about getting to how many 
cases could we accept that were more than 12 months old, at 
this particular time, it was a little more difficult to 
quantify.
    We took the approach to get rid of 2 years and take a 50 
percent cut of the next oldest group. We worked backward that 
way. That was sort of the best way we felt we could describe 
our goals to ourselves at that point.
    Mr. Porter. If I understand correctly, the dust cases have 
skewed all of your statistics. I mean your backlog rate went 
way up because there was 3,800 trial cases; was there not?
    Ms. Jordan.  That is right.

                              appeal rates

    Mr. Porter.  If you removed those cases from your data, has 
your appeals rate gone up or down?
    Ms. Jordan.  Appeals rate from decision to the Court of 
Appeals?
    Mr. Porter.  No. The appeals rate from trial to the 
Commission.
    Ms. Jordan.  We only recently started actually taking count 
of that data. There was never an attempt. Our General Counsel 
will have that figure.
    Mr. Gleichman.  Last year, fiscal year 1998, was the first 
year that we actually tracked the appeal rate from the Judges 
to the Commission. That number for fiscal year 1998 was 33 
percent.
    Our cumulative appeal rate from the Commission to the 
courts for fiscal years 1993 to 1997, by way of comparison, not 
a direct comparison, but it is as close as we can get, was 26 
percent.
    That was also the exact appeal rate that we experienced at 
the review level in fiscal year 1998. The 33 percent figure 
that I quoted you does not contain dust. So, it is not a 
distorted number; it is an actual number.
    Of course, the dust cases had long since been appealed to 
the Commission. Similarly, the cumulative 1993 to 1997 figure 
of 26 percent does not include dust. By then, there was only 
one dust appeals case in the Court of Appeals anyway. So, that 
was just counted as one case.

                            ALJ COMPENSATION

    Mr. Porter.  How are Administrative Law Judges paid? Are 
they paid by the day? Do they have a salary? How are they 
compensated?
    Ms. Jordan.  They have an annual salary.
    Mr. Porter.  They have an annual salary. So, it does not 
matter how many cases they actually handle or dispose of, they 
get compensated the same regardless. Is that correct?
    Ms. Jordan.  That is correct.

                        INVENTORY OF TRIAL CASES

    Mr. Porter.  You estimate that there will be 1,366 
undecided cases at the end of the year 2000. Do these include 
cases before the Commission or are these trial cases?
    Ms. Jordan.  Trial cases.
    Mr. Porter.  This is not necessarily called a backlog. 
These are probably pretty close to the number of cases being 
filed on an annual basis. I think you said 1,700 or 2,100 for 
the last few years.
    Mr. Baker.  Those cases, Mr. Chairman, will represent three 
separate categories of cases. First, as we have indicated, it 
takes 60-plus days for a case to be ready to be assigned to an 
Administrative Law Judge from the time it is filed.
    That is because the issues have not been joined. So, 
approximately 400 to 500 of those cases would be unassigned 
cases that are in process awaiting initial responses.
    There are also several hundred cases at a particular point 
in time that are on stay because of other cases being in the 
Court of Appeals or cases that are at the Commission for 
review.
    Then the third category are active cases that the Judges 
are working on, on their individual dockets. So, that 
combination of cases would compose the approximately 1,366 
cases.
    Mr. Porter.  That would be normal.
    Mr. Baker.  That would be normal.
    Mr. Porter.  Ms. Jordan, I do have additional questions for 
the record. You have answered the ones that I wanted to ask you 
orally. We think you are doing a fine job there. Continue to do 
the fine job in the future. I think everything will be fine.
    Ms. Jordan.  Thank you, Mr. Chairman.
    Mr. Porter.  Thank you for appearing.
    This Subcommittee stands in recess until 10:00 a.m.
    [The following questions were submitted to be answered for 
the record:]

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                                          Thursday, March 25, 1999.

                     NATIONAL COUNCIL ON DISABILITY

                               WITNESSES

AUDREY McCRIMON, CHAIRPERSON, COMMITTEE ON FINANCE
JOHN KEMP, CHAIRPERSON, CIVIL RIGHTS COMMITTEE
ETHEL BRIGGS, EXECUTIVE DIRECTOR

                       Introduction of Witnesses

    Mr. Porter. The subcommittee will come to order.
    We continue our hearings on the independent agencies under 
our jurisdiction, and we are pleased to welcome this morning, 
Ms. Audrey McCrimon, from the National Council on Disability 
who happens to be a Chicagoan. [Laughter.]
    I wish Ms. Pelosi was here so we could rub it in a little 
bit. [Laughter.]
    Why don't you introduce the people you brought with you and 
then proceed with your statement, please.

                           Opening Statement

    Ms. McCrimon. Good morning, Mr. Chairman and members of the 
committee. With me today are Ethel Briggs who is Executive 
Director of the National Council on Disability and John Kemp 
who is Chairperson of our Civil Rights Committee. I bring you 
greetings from Illinois, I am the Chairperson of the National 
Council's Finance Committee.
    One of the things that we look forward to is the 
opportunity this morning to share with you some of our 
accomplishments and goals relative to the Fiscal Year 2000 
budget proposal. A formal testimony has been submitted for the 
record, and I would like to hit on just a few key points if 
that pleases the chairman.

           unique role of the national council on disability

    First of all, I want to remind the committee of the role of 
the Council given its membership of 15 individuals appointed by 
the President and confirmed by the Senate. It spans from the 
Atlantic to the Pacific coast. It includes individuals from 
rural as well as urban areas who bring a particular cross-
disability representation and perspective to the issues that we 
identify for deliberation as well as the policies that we 
recommend to the administration and to the President. As you 
know, the Council was established in statute in the late 
seventies and was made an independent body in 1984. It was 
created as a reflection of the need for this group to provide 
to the President, to the administration, and to the Congress, 
the issues and comment specifically on how our public policy 
can better improve the quality of life for individuals across 
this country, not any one disability group but all disability 
groups, regardless of age, regardless of nature of disability, 
and regardless of severity of disability.
    This makes the National Council unique in the information 
it brings to not only the President but also the Congress and 
the administration on issues that affect people with 
disabilities across this country. We are talking about 54 
million people who have varying issues, whether it is 
education; whether it is work; whether it is how they travel 
across our country. As an incubator of ideas and policy 
development, one of the most recent acts that the Council 
undertook was its Disability Civil Rights Monitoring Program. 
This program sought to look at how the laws, present on the 
books today, truly affect people with disabilities. As a result 
of a summit we held in 1996 where some 300 people with 
disabilities who were leaders of various associations and 
groups in their home communities came together and told us that 
basically no matter what the program or the policy, they 
couldn't access those programs, and they really did not know 
their rights.

               disability civil rights monitoring project

    One of the things that resulted from that constituent focus 
group was our Disability Civil Rights Monitoring Project, which 
John Kemp chairs. One of our first reports from the project was 
released last week on access to air carriers. This report 
represents how the Council works in a unique fashion to pull 
together the issues of constituents across the country and work 
with the administration as happened with the Department of 
Transportation. Secretary Slater worked with us in the review 
process. He began to make changes even before the report was 
printed that allowed for rules and processes that involved air 
travel to be looked at from the perspective of what happened 
when a person from Illinois who uses a wheelchair wants to come 
to D.C., and they have to board at O'Hare at a particular gate, 
and there is no lift. These issues extend beyond what we 
mighttypically think of as discomforts we have all experienced when 
traveling by air but really looking at how we signal a message to 
constituents and the market of people with disabilities who wish to 
take advantage of air travel.
    This is but one example of how the Council has worked 
through the years to ensure that the issues it looks at and the 
items that it pushes forward through a policy recommendation 
process are grounded in the constituency that is impacted as 
well as in the administration and the intent within the laws 
that we are bound to serve under.
    As you know from a number of years, our process of policy 
development has ensured that we look at access issues that 
include how information is made available to people with 
disabilities. One of our recent ventures included a hearing as 
well as a quarterly meeting in Louisville, Kentucky where we 
were able to make a tour of the American Printing House for the 
Blind and look at how their resources could help us in ensuring 
that the reports and paper products that we produce are 
accessible to all of our readership.

                            budget increase

    As you look at our Fiscal Year 2000 budget request, you 
will notice that it is a modest increase from our Fiscal Year 
1999 budget proposal. We are talking about a $56,000 increase 
that mainly covers cost of living as well as rent payment. 
That, however, does not reflect the increase in activities that 
the Council is involved in. As a result of the feedback we have 
received through our various constituent groups, we have 
focused our efforts on examining civil rights laws and how they 
are impacting or not impacting the constituencies we serve as 
well as how to develop and provide a voice for youth with 
disabilities at the Federal policy table. We are launching a 
Youth Fellowship Program that looks at young and emerging 
leaders in the disability community, and provides them the 
opportunity to gain experience in the policy debate.

                               technology

    Additionally, we are completing a congressionally mandated 
study of technology and how it is impacting people with 
disabilities. This relates particularly to section 508 of the 
Rehab Act and the requirement that Government look at how it 
provides and secures technology to conduct its business and how 
its vendors do that in a way that ensures that a workforce that 
includes people with disabilities have an opportunity to use 
equipment and allows them to show their potential.

                      minority and rural outreach

    In addition to those activities, we also plan to continue 
our efforts to reach out to national organizations of people of 
color with disabilities as well as rural organizations, because 
these are areas that we found often are overlooked in terms of 
service needs as well as opportunities to participate in 
various programs and services meant to benefit them.

                  liaison with other federal agencies

    One of the things that we are very, very proud of has been 
our work on a number of liaison activities with other Federal 
agencies. As you know, there is a President's Committee on 
Employment with People with Disabilities as well as the 
Rehabilitation Services Administration, the Office of Special 
Education and Rehabilitative Services, The National Institute 
of Disability Research and Rehabilitation, and a number of 
other Federal entities with whom we share work product relative 
to how the research we have done through our contractual means 
impacts the services that they are to provide, as is our 
mandate in our Federal statute.
    Our intent in coming before you today is to stress the need 
to examine what is coming before us with the new millennium. 
The ever-changing needs of people with disabilities, the 
families in which they live, the communities in which they 
reside, demand that we continue to press forward with the 
promise of ADA and make it a reality for all citizens with 
disabilities across the State and across the Nation. We must 
also look at how technology, how return to work barriers for 
youth with disabilities, and how individuals on the Social 
Security rolls are faring. All of these have been efforts that 
have begun from the ground swell of individuals coming to the 
Council and making their wishes as well as the barriers known 
to us. I certainly welcome the opportunity to present to you 
today; a formal written testimony has been provided. I tried to 
provide a summary, because my colleague from Illinois has a 
noon plane to southern Illinois, and I don't want her to miss 
it. I know how difficult it is to get to Carbondale and beyond. 
But I do appreciate this opportunity. I and my colleagues are 
available to take any of your questions.
    [The prepared statement follows:]

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    Mr. Porter. Ms. McCrimon, you do us Chicagoans proud; that 
was the most articulate testimony that we have had all year, 
and you hardly looked at a note, so we are very impressed with 
it.

                              ncd website

    Your website--5,000 hits a month--tell us who you think you 
are reaching. What kind of message do you get across through 
the website and do you also provide your monthly newsletter to 
individuals and organizations on-line as well as through the 
mail?
    Ms. McCrimon. Our communications officer as well as our 
executive director can provide more detail, but I can tell you 
from my own limited experience that we reach a variety of 
audiences that ever amazes me. We get questions from a local 
service level all the way to issues of policy; people seeking 
copies of the law, asking us questions about the Americans with 
Disabilities Act; asking us questions about ideas. We have a 
variety of publications such as our report on the air carrier 
access that we make available in alternative format for the 
various audiences we serve. In addition to our monthly 
newsletter that goes out and I dare say from own experience in 
Illinois, State government gets copied and distributed down the 
line to a multiple site usage. Ethel, is there something you 
would add to that?
    Ms. Briggs. I would just say that we also get calls or 
contacts on our web from other countries wanting to know about 
the Americans with Disabilities Act as well as other disability 
laws within this country, and in addition to sending out all of 
our monthly bulletins via print, it is also posted on the web, 
and we also send it out via e-mail.

                       ada and idea town meetings

    Mr. Porter. In the year 2000, the National Council on 
Disability is marking the anniversary of two important pieces 
of legislation--the 10th anniversary of the ADA and the 25th 
anniversary of IDEA. The Council will conduct town meetings to 
gather from people around the country their opinions on these 
two acts. Where will these town meetings be held? Do you have 
any of them scheduled already? How many will you have? Will 
this be an open forum for anyone interested to attend?
    Ms. McCrimon. All of our meetings are governed by Federal 
law that requires that they be open meetings. These will be in 
public. I can assure you all, though, the locations aren't 
specific at this point, we will take a regional approach to get 
us across the country. We also look at central areas that are 
easy for a variety of folk to access. They will be held in 
accessible locations. All support that is needed will be 
provided, and we will try to do a mix of rural as well as urban 
sites to ensure that we get varying perspectives in the town 
meetings.
    The final details are being worked out in terms of which 
sites--we go to. What we try to do in the interest of cost-
efficiency is pare activities, so that, for example, some of 
the town meetings might match-up with our regularly scheduled 
quarterly meeting. Therefore, we would host our quarterly 
meeting and that town meeting in the same site. If one of our 
other Federal partners may be hosting a regional hearing or 
some other activity that too would allow us to pare. So, the 
specific sites aren't identified, but often, Illinois is not 
picked given the chairperson of the Council is from Illinois 
and two of our other members, Shirley Ryan and myself are from 
Chicago. So we don't want to seem like we are kind of clouting 
the Council and making them come to Chicago.
    Mr. Porter. Oh, I don't know why not. [Laughter.]

                           fellowship program

    In 2000, the National Council on Disability is planning a 
program for public policy fellows that will target new leaders. 
Will this be nationally competitive and could you explain for 
us what you envision the fellows role in your organization 
would be?
    Ms. McCrimon. This is one of the most exciting things we 
have done. It holds so much promise in terms of the 
opportunities it can provide. We have been working through 
George Washington University. After we have looked at models of 
fellowship programs across the country, I am sorry to say, even 
California, but in terms of the youth project that was 
developed there, that has great potential for our program.
    We have also looked at some of the Senate and other 
fellowship programs to model this program in terms of providing 
the participants an opportunity not only to learn techniques 
and strategies, but also to have some hands on practical 
experience and to be placed in various places across Federal 
Government to allow them exposure to policy development 
activities. They also will have, of course, indoctrination and 
orientation from National Council on Disability, but we want to 
give them as diverse an experience as possible by placing them 
in various entities of Federal Government.
    Did I leave anything, John?
    Mr. Kemp. No, you are fine. This has some interface with 
our youth leadership development conference. Do you want to 
explain that?

                  youth leadership development program

    Ms. McCrimon. Today is a day here when we see a lot of 
young people coming to visit the Capitol. Our youth conference 
evolved, again, out of the summit we held in 1996 that was very 
unique, because we had two tracks. We had an adult track, and 
we had a youth track. As a part of that, the young people who 
attended that conference, mainly to talk about education, told 
us they needed a way as young people with disabilities to 
gather annually and to have continuous contact with people with 
disabilities who were already in the workforce or pursuing 
their various careers and goals. That has now grown into a 
competitive opportunity that allows young people from across 
the Nation to apply to attend our annual program that is held 
here D.C.
    They can bring support people with them if so needed in 
terms of their activities of daily living, but they have a 
youth steering committee that is made up of individuals with 
disabilities and post-secondary settings who plan the agenda. 
We act as the support people to them in providing the necessary 
speakers, space, support items they may need. They really plan 
the process. This has been a learning activity for us as well 
as a generational bridge that I think is very important for us 
to be a part of in terms of understanding what the children who 
were born since the passage of IDEA have to say about their 
expectations and their contributions and what they want to be 
able to do. The date, I think, has been set this year for June.
    Ms. Briggs. Twenty-third through 26th.

                      national voter registration

    Mr. Porter. The NCD had a pilot study done to assess 
compliance with the National Voter Registration Act, and can 
you tell us what the results of this pilot were and is this a 
viable method for politically empowering people with 
disabilities?
    Ms. McCrimon. I am going to ask the Chair of our Civil 
Rights Committee, John Kemp, who overseas our Disability Rights 
Compliance Monitoring Project, to respond, if I may.
    Mr. Kemp. The project that you are describing is not 
complete; it is being done in conjunction with the George 
Washington University group, and we are looking at whether the 
motor-voter aspect of that has been really effective. What we 
know is that the provisions are powerful, but the delivery of 
the opportunity to register to vote has sometimes been 
neglected especially by service providers out there. We are 
looking at vocational rehabilitation agencies and then the 
service providers who have the obligation under law to offer 
the opportunity to register to vote. We think that there is a 
breakdown there, and we are checking with it, and we are going 
to assess that in the very near future.
    Mr. Porter. Thank you. Mr. Jackson.
    Mr. Jackson. Thank you, Mr. Chairman. I just have two 
questions. I want to welcome Mrs. McCrimon and thank you for 
your testimony. I shared the chairman's observation that it was 
the most thorough presentation without notes that we have had 
since we have been hearing testimony during the course of this 
cycle, which is a true tribute to your knowledge about the 
issues that confront the Council.
    I was interested in hearing more about your efforts to 
reach out to minority and rural residents. I am happy to see 
that you held a roundtable in Atlanta, two public hearings in 
New Orleans, and San Francisco, I believe, to discuss these 
issues. I am wondering what exactly did you learn at these 
hearings; how has this information shaped your policies 
regarding minorities and rural residents? Thank you very much.

                      minority and rural outreach

    Ms. McCrimon. Thank you, Representative. This has been an 
area that the Council has deliberated over in terms of how to 
address the spectrum of people of color with disabilities and 
their issues relative to accessibility and whether even they 
knew what rights they had; what resources they had.
    Each of the hearings that we conducted has been uniquely 
different. In Atlanta, we heard about issues relative to rural 
distance learning issues, breakdowns in terms of geography 
relative to access to programs. In New Orleans, we heard about 
post-secondary opportunities as well as access issues for 
individuals who are blind and visually impaired, and I am 
talking of people of color with disabilities as well as rural 
residents in both settings.
    In San Francisco, we had one of the most unique experiences 
I have ever seen. We had a number of individuals come to us 
from various communities and provided translation services in 
about 10 [Clerk's note.--Later corrected to 3] different 
languages? Three, including sign language and we also had to 
address cultural issues relative to service programs and 
barriers that might exist in living situations as well as 
educational settings.
    What we are doing with the results of those hearings is 
combining the information to identify constant themes and 
patterns which at our first reading tend to be access to 
information, knowledge of rights, empowerment to exercise those 
rights, assistance to exercise those rights, and then 
aspirations.
    Often, in my personal opinion, when reviewing the 
testimony, aspirations were very low. However, people were so 
touched by the fact that we as Federal entities were there in 
their home community listening to what they had to say that I 
think for many of us we made pen pals right now in terms of a 
continuous relationship.
    Judge Hughey Walker out of North Carolina is chairing that 
effort as the subcommittee Chair of the Civil RightsCommittee. 
One of the things that we are looking at in addition to the outreach 
that we have done in the NAACP, LaRaza, and others, is how we can work 
to ensure that those organizations are more aware of what exists for 
people with disabilities who are of color, making sure they have our 
documents; making sure they know how to plan a meeting to ensure that 
their membership who may use a wheelchair, who may be blind, who may be 
deaf, can fully participate in their activities as well.
    I think what we basically see is no big surprise. It is not 
achieving or accessing resources or not having resources being 
developed in a way that is cognizant of their issues or that 
might be in terms of locally available; that might be in terms 
of linkage with existing community groups; that might be in 
terms of a language or format that is easily understood by the 
constituency.
    Mr. Jackson. Thank you very much, Mrs. McCrimon.

                                closing

    Mr. Porter. Thank you, Mr. Jackson. Mrs. McCrimon, you have 
answered all of our questions beautifully as well. We really 
thank you for your appearance here today. I think the Council 
is doing a wonderful job, and, obviously, we want to provide 
the resources you need to do it even better. Thank you very 
much.
    Ms. McCrimon. Thank you, Mr. Chairman.
    Mr. Porter. The subcommittee will stand briefly in recess.
    [The following questions were submitted to be answered for 
the record:]

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                                          Thursday, March 25, 1999.

 UNITED STATES NATIONAL COMMISSION ON LIBRARIES AND INFORMATION SCIENCE

                               WITNESSES

JEANNE HURLEY SIMON, CHAIRPERSON
ROBERT S. WILLARD, EXECUTIVE DIRECTOR
JUDY RUSSELL, DEPUTY DIRECTOR

                        Introducion of Witnesses

    Mr. Porter [presiding]. The subcommittee will come to 
order.
    Next, we have the U.S. National Commission on Libraries and 
Information Science, and we are pleased to welcome Mrs. Jeanne 
Hurley Simon, once a Chicagoan, always an Illinoisan. 
[Laughter.]
    This is Illinois day here. Jeanne, it is wonderful to see 
you.
    Ms. Simon. Thank you, Mr. Chairman. It is a pleasure to be 
here.
    Mr. Porter. And we welcome, also, the Executive Director, 
Robert Willard, and, Jeanne, why don't you proceed with your 
statement.

                           Opening Statement

    Ms. Simon. I will proceed, but let me first remark that I 
will not be as articulate as my predecessor here; she was 
great, and the compliment you paid her was certainly in 
keeping.
    Well, thank you for allowing us to schedule this hearing 
this morning, and I am going to summarize my testimony and ask 
that my full statement be included in the record, Mr. Chairman. 
This is my sixth appearance; I am getting to be an old hand 
here with you, and I enjoy it every time. I am deeply honored 
that the President has appointed me to a second five-year term 
and asked me to continue to lead this agency.
    Bob Willard is our Executive Director and is accompanying 
me here today. Bob was appointed to the Commission by President 
Clinton in 1994, but last summer, his fellow members selected 
him as our Executive Director, and he provides the day-to-day 
direction needed for our agency and our staff.
    The President's budget for Fiscal Year 2000 includes $1.3 
million for our agency which is 30 percent above the amount 
appropriated by the 105th Congress for the current fiscal year, 
and I know this is a quantum leap. I recognize that 30 percent 
is a significant increase even in a period of budget surplus, 
but I strongly believe it is necessary.
    In 1970, when the Commission was created, Congress 
authorized an annual expenditure of $750,000. If the 
Commission's initial authorization merely kept pace with the 
average annual inflation as measured by the CPI, the Fiscal 
Year 1999 Commission authorization level would have exceeded $3 
million. I know that appropriation levels rarely reach 
authorization levels, but as you can see in the attached graph 
that Judy Russell just put up, the Commission's appropriation 
increasingly lags its authorization, and this is a time when 
the need for the work for the Commission has never been 
greater.
    So, I welcome this annual opportunity to discuss in a 
formal way the past activities of the Commission and our future 
plans. And, as I said before, (I think every time I come here I 
say) this period is exciting. It has always been exciting for 
us, but it is complex as well. The problems that we face in the 
library and information world today are not easily solved. 
There is a great need for a policy body like the NCLIS.
    Let me remind you briefly of the function of our very small 
agency. Congress established the Commission in 1970 with Public 
Law 91-345, a permanent independent agency, affirming that 
library and information services adequate to meet the needs of 
the people of the United States are essential in order to 
achieve national goals and utilize effectively the Nation's 
educational resources. We accomplish this mission by holding 
open forums, conducting studies and surveys, sponsoring and 
promoting research and development activities, conducting 
hearings, and publishing our reports and findings.
    Regarding our staff, I reported to you last year that we 
experienced a turnover in all four professional staff 
decisions; it was not an easy year in many respects, but I am 
happy to let you know that we have taken great strides to 
rebuild our staff capability. I mentioned Bob Willard's 
appointment as Executive Director, and he appointed as Deputy 
Director, Judy Russell who's career as a librarian and 
information service specialist included a period when she 
headed up the FederalDepository Library Program at the 
Government Printing Office. She was responsible for leading the effort 
to make Government publications available electronically to the public. 
You can see how important she is.
    I also want to let you know that the two remaining 
professional positions are very close to being filled. But more 
than that, the Commissioners appointed by President Clinton are 
enthusiastic, dedicated, and hardworking, and they use every 
opportunity--and many times at their own expense--to promote 
libraries as they travel throughout the country.

                          past accomplishments

    In the past year, we have worked quite effectively in 
support of our mission. I am very proud of the accomplishments, 
and I could describe them at great length, and I know you don't 
know want to hear that; let me be as brief as I can. We 
directed a study of Government publishing practices with the 
focus on mediums and format standards as agencies move from 
print on paper to electronic means of information 
dissemination. We advised on a legislative initiative to update 
Title 44 of the U.S. Code that deals with Government printing.
    We looked at the thorny issue of access by children to 
inappropriate material on the Internet, especially in public 
and school libraries. The Commission held a hearing on Kids and 
the Internet: the Promise and the Perils, in November of 1998, 
and strongly endorsed the concept that it is the job of local 
governing bodies to choose how we address this issue.
    We published a brochure which has been sent out in great 
quantities, and we are having a second printing of this. The 
brochure is designed to assist local authorities in 
understanding the policy issues and then evaluating the 
potential solutions. It has been a very useful brochure.
    As part of our involvement in the White House Millennium 
Council's Program, we have begun a Sister Libraries Program to 
help public and school libraries in the United States pair with 
others worldwide. We have constituted a working group on issues 
of journal pricing, publishing, and copyright to examine the 
rising costs of scholarly journals. We have provided advice on 
Federal grant programs to libraries to the Institute of Museum 
and Library Services, IMLS. We are also working with the IMLS 
director to recognize excellence in library and information 
service by establishing the National Award for Library Services 
to be presented for the first time in Fiscal Year 2000.
    Especially sensitive to the need for accurate information 
on which to base our policy recommendations, the Commission 
continued and strengthened its role in the Library Statistics 
Program working with the National Center for Education 
Statistics, NCES.
    In partnership with the American Library Association, the 
Commission engaged two prominent researchers to determine the 
state of Internet access in public library outlets. While we 
were encouraged by the growing availability of such access, we 
began to take a closer look at the quality of access and 
concluded that additional effort is required to ensure that 
library users receive effective Internet access.
    We continue to work with the State Department to support 
international library and archival initiatives by distributing 
small grants. We have also begun the first ever effort to 
collect data on U.S. NGO organizations and individual 
participation in international library and information and 
science activities.
    You can see that we are addressing a whole bunch of 
activities that affect the library and information needs of the 
public, and our plans for next year build on these activities, 
but they also address issues that we strongly believe deserve 
our attention. Most notably, these issues include intellectual 
property protection and telecommunications policy. While the 
funding at $1,300,000 level will not enable us to engage these 
issues fully, we will nonetheless begin to incorporate these 
topics into our Commission's agenda.
    The Fiscal Year 2000 budget request contains specific 
program descriptions and objectives that are on pages 22 
through 28 in our extended testimony. It is my expectation that 
the document will be included in the record of this hearing. 
The four topic clusters that we used for presentation last year 
on our various programs and projects have been joined by a new 
topic cluster. These clusters are: one, Federal information 
policy; two, library and information services and their users 
in a global network environment; three, Federal financial 
support for libraries; four, collection and analysis of data 
and statistics, and, in Fiscal Year 2000, intellectual property 
protection.

                   program areas for fiscal year 2000

    I would be pleased to discuss any of these programs and 
projects contained in that document in response to questions 
from members of the committee, but for the time I have 
remaining, I would like to focus on three areas of activity. 
Number one, the study of Government publication standards will 
provide us with the raw material for the next phase of this 
inquiry; that is the policy implications regarding public 
access to Government information in a wired world. 
Significantly, this effort brings together strands from a 
number of other Commission activities I have referred to. How 
can libraries be equipped to provide effective access to 
Government information in electronic form? What are the 
implications of having information funded in whole or in part 
by the Federal Government appear in scholarly journals whose 
prices continue to rise? How can alternative distribution 
channels be motivated to deliver Government information in 
formats and mediums appropriate to diverse audiences? What must 
be done to assure permanent public access and prevent 
technological obsolescence of currently available electronic 
publications?
    Two, the Commission's involvement in library stats provides 
the means for answering one of the most fundamental questions 
faced by policymakers: Did this policy make a difference?
    The Federal Government along with government at other 
levels directs significant funds to library and information 
services. Federal funding under the Library Services and 
Technology Act, LSTA, and the Universal Services Fund under the 
Telecommunications Act of 1996 are the two most important 
examples. At the same time, private philanthropy, such as the 
Gates Learning Foundation, is adding to the resources available 
to libraries with a special emphasis on technology 
applications. The effectiveness of these resources should be 
assessed, and the Commission is well positioned through its 
long-time partnership with the NCES to participate in this 
assessment.
    Number three, perhaps, like no other advance in library and 
information services, the Internet has made clear the global 
nature of library and information services. With great 
foresight, Congress recognized the importance of 
theinternational perspective when it modified the responsibilities of 
our Commission in 1991. In the coming year, the Commission will build 
upon its activities in the international area. Our flagship activity 
will be the Sister Libraries Program that I described earlier. And we 
are happy and delighted that Hillary Rodham Clinton is supporting this 
initiative as our Honorary Chair. The program will reflect well on the 
Commission in various international activities and especially as we 
welcome library professionals from around the world attending the 
International Federation of Library Associations in Boston in August, 
2001.
    I hope by our testimony and our budget request document 
that I have given you some understanding of the depth and the 
breadth of the activities of this very small agency. We have 
been able to accomplish important tasks that contribute to the 
ability of our citizens to use and enjoy library and 
information services, but a lot more remains to be done. With 
sufficient funding, we can take on these challenges. I urge you 
to support the President's request for the National Commission 
on Libraries and Information Science. My colleagues, Bob 
Willard and Judy Russell, will be happy to respond to any 
questions you may have, Mr. Chairman, and I thank you.
    [The prepared statement follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Porter. You are doing a lot with the money you have; 
you really are. It is amazing, but now we have the tough 
questions. Let me ask about the $300,000 increase which is a 30 
percent increase. Much of this is going to be used to hire a 
new research fellow, is that correct?
    Ms. Simon. A part of it certainly will.
    Mr. Porter. Part of it?
    Ms. Simon. Yes, and this is a professional that is coming 
on board in the near future to devote most of his or her time.
    Mr. Willard. No, this is next year.
    Ms. Simon. The Fellow Program, I am sorry; I was thinking 
of the professional staff person which is coming up----
    Mr. Porter. The Fellow for the new fiscal year, yes.
    Mr. Willard. In the new fiscal year, it is our hope to have 
on board an additional professional staffer who has expertise 
in intellectual property issues.
    Mr. Porter. And that would bring the staff to how many?
    Mr. Willard. Our head count right now is 9; one of those 
positions is used to represent the Commissioners, so it would 
go from 9 to 10.
    Mr. Porter. Nine to 10. There is also a substantial 
increase in your budget for equipment. You are replacing your 
computer software and hardware. Is this a one-time-only cost?
    Mr. Willard. Yes, sir. One of the things we really hoped to 
do was create a well-equipped conference room that our 
commissioners can actually meet in our own location instead of 
having to rent hotel space for meetings when we meet in 
Washington. But more importantly, we plan to let that resource 
be used by library and other information entities when they 
need space in Washington.
    Mr. Porter. Percentages are often misleading, but there is 
an 88 percent increase in the classification ``other 
services.'' What does that refer to?
    Ms. Simon. I am not sure.
    Mr. Willard. I think the----
    [Pause.]
    Mr. Porter. Let us see, other services, this object class 
covers items such as repair and maintenance of equipment, 
maintenance of computers and local area network and memberships 
in the National Information Standards Organization, the 
International Federation of Library Associations and 
Institutions, and the American Society for Information Science.
    Mr. Willard. Right, that is growing from $16,000 to 
$30,000. If it is okay with you, sir, we would answer that for 
the record.
    Mr. Porter. Certainly, that is fine.
    [The information follows:]

    The 88% increase in the category ``Other Services'' results 
principally from a timing matter.
    We were able to secure some telecommunications, computer 
maintenance and web hosting services through a multi-year 
agreement executed in Fiscal Year 1998. This meant that those 
expenses do not appear in our current (FY 1999) budget, and 
indeed that category reflected a decrease of 41% from FY98 to 
FY99.
    We know that these expenses will continue to occur in FY 
2000, and therefore have projected them at the appropriate 
annual running rate.

    Mr. Porter. Why is it the Sister Libraries Program rather 
than the Brother Libraries Program? [Laughter.]
    You know, I have often thought, Jeanne, that our language 
lacks--we have these gender things, chairman and chairperson 
and Chair, and we have such a problem with that. Even Fellow 
Library Program doesn't work.
    Ms. Simon. No, I wish I had a good answer for you, 
Chairman.
    Mr. Porter. Well, there is no answer, I know, but----
    Ms. Simon. Just try saying Brother Libraries, it doesn't 
sound right.
    Mr. Porter. Yes, it doesn't sound right to me either, I 
don't know.
    When will the program start?
    Ms. Simon. It started already.
    Mr. Porter. It started already.
    Ms. Simon. We are working with the American Library 
Association and with the Millennium Council, and Sister Cities 
is also part of this. So, we have a lot of strands out there 
that we are pulling together. One of our Commissioners, Joan 
Challinor, is particularly interested in this and is devoting a 
lot of time to it.
    Mr. Porter. What is the ultimate bottom-line goal of this 
program?
    Ms. Simon. We are hoping to emphasize children and young 
people on the Internet, getting them involved and helping them 
to learn the cultural advantages of other nations--customs, 
languages, particularly; it can't help but aid all of us.
    Mr. Porter. What is the status of public and school 
libraries connections to the Internet? Are they close to 100 
percent?
    Ms. Simon. They are getting close to 100 percent, but the 
fact that they are 100 percent doesn't mean that there is 
effective use of the Internet.
    Mr. Porter. You mentioned quality of access, and I have to 
admit I am not sufficiently competent in computer technology to 
understand what you mean.
    Ms. Simon. There may be one computer which is ordinarily 
used only by the librarian or maybe there are two computers, 
one for the adults and one for the children. It is frequently a 
question of the time that they have to spend. Would you care to 
elaborate on that, Bob?
    Mr. Willard. Well, really, Mr. Chairman, there are two 
parts to the question: public libraries and school libraries. 
We have done a study for a number of years now, since 1994, on 
public libraries. The first time we did it, we saw about a 20 
percent availability of Internet to not just the public but to 
the library staff, in 1994. That number, in 1998, last year or 
last spring when we did the survey, 83.6 percent of public 
libraries were connected to the Internet, and 73.3 percent of 
them actually afforded public access; patrons could use it. But 
we started looking inside those numbers and found out that only 
68 percent had a graphical terminal, so that you could take 
advantage of the images that appear on the World Wide Web, and 
then when you start thinking about the speed with which that 
signal is delivered, only 45.3 percent were receiving the 
signal at 56K, 56 baud, and we determined that is sort of the 
baseline. So, less than half of the public libraries in the 
country are receiving what we call effective Internet access.
    More significantly, when you ask that question about the 
school libraries, we just have to shrug our shoulders and say 
we don't know, and that is an area we should know, because the 
President has made a commitment that by the year 2000 all 
schools and libraries will be connected. We would like to be 
the entity that helps measure that, and that is part of our 
plan.
    Mr. Porter. And are there sufficient funds in the budget to 
do that?
    Mr. Willard. It will be tight, but, yes, it is something we 
are definitely going to try to do.
    Ms. Simon. We will do our best.
    Mr. Porter. You have new ADP equipment that is going to be 
installed before the end of calendar year 1999. Is that 
correct?
    Mr. Willard. We----
    Mr. Porter. Oh, it is in the 2000 request.
    Mr. Willard. Right, we do believe that--obviously, the 
amount of equipment we need for nine staffers is not very much, 
but it is important that we maintain state-of-the-art--try to 
maintain state-of-the-art----
    Mr. Porter. Absolutely.
    Mr. Willard. Because we are dealing with policy issues 
affecting that particular art, and we also do make available to 
those commissioners who do not have their own equipment--
although most of them do--but those commissioners who don't 
have their own equipment, we place it in their homes, because 
they are Federal employees when they are doing Commission work, 
so they get Federal equipment.
    Mr. Porter. We ask everybody this, but I assume there is no 
Y2K problem in the Commission?
    Ms. Simon. Well, I think the Department of Education will 
help us out if there is a problem. We are not aware of one yet.
    Mr. Porter. They need help. They may have a problem. I 
would assume you don't have a problem.
    I was interested in something you said, Jeanne, about 
scholarly journals becoming so expensive, and we find the same 
thing in respect to the National Library of Medicine that, of 
course, keeps track of all the medical journals in the same 
way. This is a question unrelated to the Commission, but do you 
think these types of journals are so expensive to print, they 
will end up being available only through the Internet at some 
point?
    Ms. Simon. I fear that that might be the way, and then it 
will be so difficult for people who want to use those journals 
to have access without paying for them.
    Mr. Porter. Yes.
    Ms. Simon. It is going to be a fee for access. It is a very 
difficult position that we are in looking at these. The prices 
are going off the chart.
    Mr. Porter. Yes.
    Ms. Simon. We have talked to the publishers, Elsevier, the 
largest publisher, and we are seeing increases of 150 percent 
in 10 years in some of the journals. What this does to research 
libraries such as Southern Illinois University in Carbondale, 
Illinois is very sad, and this is why part of our resources are 
being devoted to journal pricing problems with copyright and so 
on. One of our Commissioners is Jose Marie Griffith who is 
fascinating, very up-to--I am trying to think of the right 
adjective now--an information officer at the University of 
Michigan, and she is guiding us in trying to come to some 
understanding of journal pricing and the effectsit is having.
    Mr. Porter. Is there anybody besides you looking at this 
issue and trying to address it?
    Mr. Willard. Not that we are aware of.
    Ms. Simon. Well, not that we are aware of. I wish there 
were.
    Mr. Porter. Maybe the National Library of Medicine since 
they are certainly aware of it.
    Ms. Simon. They are aware of it, right, but as far as 
trying to come to some grips with the problem, no, but we will 
continue to work on it.
    Mr. Porter. I think that the other few questions, you can 
answer for the record. You have done a wonderful job, and this 
is beginning your sixth year, I guess, now.
    Ms. Simon. Sixth year.
    Mr. Porter. Yes, it seems like yesterday to me, but times 
flies when you are having fun. [Laughter.]
    Ms. Simon. It is such a pleasure to come back and be in 
D.C. again.
    Mr. Porter. Well, we want to help you have the resources 
you need. I would give you my sermon on where we are on the 
budget, but it is too long, and I think we will eventually get 
where we want to go, but it is going to be an up and down 
process. It is going to be very difficult this year, and we 
will just have to see how we can work it all out.
    Ms. Simon. You have been very good to us in the past; we 
hope that will continue.
    Mr. Porter. Well, we will do our very best to meet your 
expectations. Thank you for appearing today----
    Ms. Simon. Thank you, Mr. Chairman.
    Mr. Porter [continuing]. And please send my best regards to 
Paul as well.
    Ms. Simon. I will, thank you.
    Mr. Porter. Thank you. The subcommittee will stand briefly 
in recess.
    [The following questions were submitted to be answered for 
the record:]

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                                          Thursday, March 25, 1999.

                      ARMED FORCES RETIREMENT HOME

                               WITNESSES

DAVID F. LACY, CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD
MAJOR GENERAL DONALD HILBERT, U.S. ARMY, RETIRED, DIRECTOR OF THE 
    UNITED STATES SOLDIERS' AND AIRMEN'S HOME
COMMANDER JOHN W. ZINK, UNITED STATES NAVY, DEPUTY DIRECTOR, UNITED 
    STATES NAVAL HOME, GULFPORT, MISSISSIPPI
    Mr. Porter. The subcommittee will come to order.
    We continue our hearings on the independent agencies under 
the subcommittee's jurisdiction with the Armed Forces 
Retirement Home. And we're very pleased to welcome David F. 
Lacy, the CEO and Chairman of the Board. Mr. Lacy, if you would 
introduce the people who are with you and then proceed with 
your statement.

                       Introduction of Witnesses

    Mr. Lacy. Thank you, sir. I'm accompanied today by Major 
General Donald Hilbert, U.S. Army, Retired, who is the Director 
of the United States Soldiers' and Airmen's Home. And to my 
left is Commander John W. Zink with the United States Navy. He 
is the newly-appointed Deputy Director of the United States 
Naval Home in Gulfport, Mississippi. Captain Jesse Vasquez has 
been appointed as the Director of the Naval Home, but he was 
not able to be with us today.

                           Opening Statement

    Mr. Chairman, I'm pleased to appear before you today to 
testify on behalf of Armed Forces Retirement Home. Today 
represents my second opportunity to appear before you, and I 
continue to ask for your support for our multi-year capital 
projects. In Fiscal Year 1995, the Armed Forces Retirement Home 
began a path of downsizing due to the decreasing trust fund 
which supports us. In Fiscal Year 1998, we also began 
incrementally increasing the monthly fees of our residents.
    In order to improve the quality of life for that smaller 
population, to condense our facilities into more efficiently 
operating structures requiring smaller staff, and to retain 
that target population, we began improvements in living 
conditions. The Sheridan dormitory renovations at the United 
States Soldiers' and Airmen's Home began last year and are on 
track, and we are 35 percent complete in the design phase of 
the United States Naval Home Health Care Center. These capital 
projects are vital for the quality of life of our distinguished 
veterans, and we seek your continued support to complete them.
    We continue to urge and encourage members to visit our 
facilities to visualize the services and needs of our 
residents. You gain a much better understanding of our mission 
and the need for our existence when chatting with residents who 
survived the Bataan Death March; experienced the Japanese 
attacks on Pearl Harbor, Midway, and Guadalcanal; liberated 
Nazi death camps; spent years as U.S. POWs in Japan, Germany, 
and Korea; flew helicopter combat missions in Vietnam; served 
as renowned Buffalo Soldiers; and served in all-Black and 
Puerto Rican infantry units during World War II and Korea.
    Last year, the committee focused on our delay in obtaining 
a financial audit. We had been in the difficult position of 
anticipating Secretary of Defense approval of the Naval Audit 
Service as our audit agency on a non-reimbursable basis, and 
had not budgeted for additional audit funds. When our request 
was disapproved, we were without other plans at that time. 
Today, I am happy to report, however, that Brown and Company is 
in the final stages of our Fiscal Year 1997 financial audit, 
and we expect the results within 60 days. The contract with 
this firm also provides an option to conduct a subsequent 
audit.
    Our Operation and Maintenance budget request before you is 
essentially level with our Fiscal Year 1999 request, and it is 
below the Fiscal Year 1999 level when adjusted for inflation. 
Our capital request is primarily for the continuation of our 
ongoing projects. We have been forced to reprogram 
approximately $1.8 million of our appropriated Fiscal Year 1999 
capital funds to complete repairs to the United States Naval 
Home caused when Hurricane Georges hit that facility in 
September of 1998. However, this will not cause delays in the 
progress of these projects. We are indeed lucky that the storm 
caused no harm to residents or staff.
    We continue to seek additional venues of funding. I 
reported to you last year on the progress of our Armed Forces 
Retirement Home Foundation, which was listed in the National 
Capitol Region Combined Federal Campaign this past year. The 
exact dollar amount we will receive is still unknown. We hope 
for further exposure next campaign.
    The newly-expanded retiree voluntary allotment programhas 
provided us steadily increasing contributions, and we could realize 
$100,000 by the end of this year.
    The disposition of a 49 acre parcel of land at the United 
States Soldiers' and Airmen's Home has generated much recent 
interest. The National Defense Authorization Act for Fiscal 
Year 1999 revised earlier legislation regarding disposition of 
the property, and requires a non-competitive sale to a single 
buyer, the Archdiocese of Washington, D.C.
    Due to Veteran Service Organizations and media concern, the 
House Armed Services Committee, Subcommittee on Military 
Readiness, held a hearing on this issue on March 17, 1999. We 
have an extensive business plan which demonstrates that the 
best and highest economic value of that land could more 
effectively be realized through long-term ground leasing and 
retention of the land itself for the future use by the Armed 
Forces Retirement Home. We are continuing dialogue with 
Congress and the Church, and we are in the process of securing 
an independent appraisal of the land, as required by current 
public law.
    We also continue to urge the Department of Defense to 
implement the congressionally authorized increase in active 
duty pay assessment from 50 cents to one dollar. The Department 
of Defense has indicated that they are actively considering 
this at this time as part of a total solvency solution for the 
Home.
    The difficult truth is that our funding stream, tied to the 
active duty force size, has decreased significantly. And absent 
other than present funding avenues, the trust fund that 
supports us will be insolvent in the year 2004-2005 time frame. 
If that were to happen, it would be a tragedy of epic 
proportions because the population of elderly veterans we serve 
sorely needs and certainly deserves the housing, care, and 
services we provide.
    Most of our distinguished veteran residents have few, if 
any, other options. We are heartened and encouraged by the 
broad expressions of support best evidenced last week by the 
Readiness Subcommittee of the House Armed Services Committee, 
in which every member present expressed or associated himself 
with the statement that the Congress cannot and will not allow 
the Home to close.
    Mr. Chairman, I ask that the comments I had submitted 
earlier be placed in the record. And we will be happy to 
respond to your questions and look forward to your supporting 
completion of our capital projects.
    Thank you.
    [The prepared statement follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                           AFRH PROPERTY SALE

    Mr. Porter. Thank you, Mr. Lacy. My recollection is that 
Senator Santorum attempted to place something in one of the 
bills on the Senate side that would have forced the Home to 
sell the 49 acres, is that what happened? I can't really 
remember.
    Mr. Lacy. That is the current status of law. Yes, sir.
    Mr. Porter. And that was not adopted, was it?
    Mr. Lacy. Yes.
    Mr. Porter. It was?
    Mr. Lacy. Yes. The law now requires that the land be sold 
to--there's language in the bill about a nonprofit neighbor 
having been in existence for more than 100 years. But that is 
the Catholic Church.
    Mr. Porter. And does it say anything about the value?
    Mr. Lacy. It says at highest and best economic value.
    Mr. Porter. At fair market value?
    Mr. Lacy. Yes.
    Mr. Porter. And so that's going to proceed then?
    Mr. Lacy. Unless the law were changed----
    Mr. Porter. Unless the law were changed.
    Mr. Lacy. We are seeking an appraisal of the property in 
order to be in compliance with the law.
    Mr. Porter. But you would rather not sell it, is that 
correct?
    Mr. Lacy. That would be our preference. Our preference 
would be for the Board to be able to consider options other 
than just sale, one of those being the potential of ground 
leases, which we think could bring the highest economic use 
over time.
    Mr. Porter. And the 49 acres is adjacent to properties 
owned by the Archdiocese?
    Mr. Lacy. Yes, sir.
    Mr. Porter. Are there any buildings on it? Is it vacant 
property?
    MG. Hilbert. Yes, sir, we have two sets of quarters, but 
they are old quarters. That's the only thing that is located 
right on the property at this present time.
    Mr. Porter. They're unused?
    MG. Hilbert. I presently have one of them being used.
    Mr. Porter. One of the two?
    MG. Hilbert. Yes, sir.
    Mr. Porter. All right. I had gone to the then Chairman of 
the Armed Services Appropriations Committee and tried to head 
that effort by Senator Santorum off and, obviously, didn't 
succeed in that. It seemed to me that the decision as to 
whether it ought to be sold or not is a decision for you to 
make, not a decision for Congress to make. It seemed to me very 
high-handed for the Congress to simply slip that into the bill, 
but apparently it was done that way.

                       afrh trust fund insolvency

    How much does the trust fund contribute to your budget?
    Mr. Lacy. The trust fund supports our entire budget.
    Mr. Porter. Okay. Well, then why are you saying it's going 
to be exhausted by 2004?
    Mr. Lacy. Because the funds that come into the trust fund 
have been decreasing with the downsizing of the military 
services over time, both the amount that comes from the 
enlisted active duty pay deduction, 50 cents per month, and the 
amount that comes from fines and forfeitures.
    Mr. Porter. So we assume that your prediction is accurate, 
that it will run out fairly recently or fairly soon, I should 
say. And you will then need to have appropriated funds to make 
that up or some other source?
    Mr. Lacy. Well, we're looking at all kinds of alternatives. 
That's one of the reasons we're looking at alternative uses of 
the land. We have also consistently been requesting the 
Department of Defense to put into place an additional 50 cents 
of deduction from enlisted personnel pay that, thanks to 
Congress, was authorized in 1995 but has not yet been 
implemented. We are following up on that as well.
    Mr. Porter. You mean it was made permissible in the sense 
of authorized?
    Mr. Lacy. Yes.
    Mr. Porter. Not directed?
    Mr. Lacy. It was made permissible. It gave the Secretary of 
Defense authorization to implement.
    Mr. Porter. The Department of Defense has chosen, up to 
this point at least, not to do it?
    Mr. Lacy. That's right. Now, I will say that it has reached 
the highest levels within the Department. We believe it's at 
the highest level now that it has been in the past, and they 
are currently actively working on this as part of a total 
solution. That total solution could be met with the increase of 
the 50 cents and sufficient economic return on the land. So the 
combination of those two elements could help us solve the 
solvency problem and extend the period of solvency 
substantially.

                 afrh alignment with dod/armed services

    Mr. Porter. There are some programs that are intimately 
connected with the military that this subcommittee has 
jurisdiction over, one is Impact Aid for the schools where 
military and other Federal employees send their children, and 
another is your Home. The difficulty is that you really ought 
to be under the Armed Services Committee where the 
responsibility that one would think the Department of Defense 
has in these matters would be directed very forcefully. We do 
take our responsibility for the Home very seriously, but it 
seems to me that it's the kind of thing that ought to be taken 
by the Department itself. I agree with the statement that we 
are simply not going to allow--whatever is done--we're not 
going to allow the Homes to not be funded. They have to be 
funded. That's our responsibility to the people who have 
defended our country, and we're going to meet it whatever it 
takes. But it seems to us that the Department itself ought to 
take a little more interest in the outcome. And I can't imagine 
why, if the offset was 50 cents a month, that seems not much to 
ask of people to provide some ongoing stream of funding that 
you obviously need.

                     omb passback on fy2000 budget

    Tell me what your request to OMB was? Is it the same figure 
as the President put in this budget?
    Mr. Lacy. No, there was a slight reduction in the capital 
amount. There was a reduction of $3 million in the capital 
amount.
    Mr. Porter. That OMB reduced by $3 million?
    Mr. Lacy. Yes. The O&M was the same.
    Mr. Porter. Because it seems to me that with the hurricane 
and other problems that the Home is facing, plus the depletion 
of the trust fund, that the President's budget has plused up a 
lot of different accounts but this isn't one of them for some 
reason, which we find a little strange. I suppose you do also?
    Mr. Lacy. Well, we do. We certainly----
    Mr. Porter. You can tell us what your feelings are, it's 
all right. [Laughter.]
    Mr. Lacy. Well, if the staff can help me here on why OMB 
made the changes in the capital?
    Mr. Porter. I think you're going to have to come up and 
speak into the microphone so they can record what we're saying 
here.
    Mr. Hennessee. The reductions were really a re-phasing of a 
capital project. Rather than being completed or mostly 
completed in the year 2000, that project is now to be completed 
in its totality in the year 2001. So that assuming that our 
request in 2001 is supported at the level we envision, it is 
not a reduction but rather a re-phasing over time.
    Mr. Porter. I see, okay. That makes sense to me.
    Mr. Lacy. OMB has been supportive of these capital projects 
consistently, and they are long-term capital projects that span 
multiple years.

                       closure of afrh facilities

    Mr. Porter. Are you considering closing one of your two 
sites?
    Mr. Lacy. No, we're not actively considering that.
    Mr. Porter. You're not?
    Mr. Lacy. No.
    Mr. Porter. I didn't think you were.
    Mr. Cunningham, let me call on you and ask you take the 
Chair. I have to go to my other subcommittee hearing across the 
hall.
    Thank you very much.
    Mr. Lacy. Thank you.

                            afrh land issue

    Mr. Cunningham [presiding]. You know I'm really sad and I'm 
sad because Rick Santorum is a good friend of mine. He was one 
of my classmates that used to be in the House and went up to 
the Senate. And I think I'm going to beat that boy about the 
head and shoulders. You don't have to print that. [Laughter.]
    But I was not aware of this situation. As a matter of fact, 
I've asked Duncan Hunter, Congressman Hunter to come up. Duncan 
got me involved in the Old Soldiers' Home to see what good that 
you all do out there. I tell you what, this is one member that 
will fight tooth, and nail to make sure that that land isn't 
sold, that it's preserved for the purposes that it's used for.

                          afrh operating costs

    What are the little black squirrels going to do out there 
for food? But what is, for the Old Soldiers' Home here in 
Washington, what kind of budget are you looking at?
    MG. Hilbert. Forty-two million dollars a year. We have a 
combined budget now. So the combined O&M budget of the two 
homes is $58 million, [Clerk's note.--Later corrected to $56 
million] with a total budget of $68 million.
    Mr. Cunningham. Now that's a lot of money.
    MG. Hilbert. Well, we run a continuing care facility, which 
is independent living, assisted living, and we also have over 
250 folks that are full-time health care at our nursing home. 
And the cost of nursing care is quite high.
    Mr. Cunningham. For 250, okay. That's where most of the 
cost is, not the property?
    MG. Hilbert. Yes, sir, and the property.
    Mr. Cunningham. Okay. I mean $42 million, I would like to 
see a budget break-out as far as where these costs are, $42 
million for 250 people. I can understand someone that hadn't 
been in the military, doesn't understand the situation, could 
say, ``Hey, $42 million for 250 people, that's a lot of money. 
We could do a lot better.''
    Mr. Lacy. We have significantly more residents than that--
go ahead, General Hilbert.
    MG. Hilbert. I have actually 1,100 residents there, of 
which 250 are full-time patients.
    Mr. Lacy. In health care.
    MG. Hilbert. In health care.
    Mr. Lacy. The homes combined have about 1,600 residents.
    Mr. Cunningham. Okay. Well, I see the budget right here. I 
think you understand what I'm saying though. When you look at 
$42 million and even 1,100 people, someone that doesn't know 
the history behind the Old Soldiers' Home and that these are 
veterans, can say that, ``Oh, we can take better care of them 
for $42 million than we can by keeping the Old Soldiers' Home 
out there.''
    MG. Hilbert. I think if we do some investigation, we 
actually beat the State homes in cost, per individual.
    Mr. Cunningham. Is that right?
    MG. Hilbert. And the VA.
    Mr. Cunningham. That's good.
    MG. Hilbert. Yes, sir. We're a long-term care facility. We 
have an out-patient clinic and we have quite a set-up 
medically. I think we do very well. We've compared ourselves to 
the Veterans, VA, and we've compared ourselves to State 
organizations.

                   congressional support of the afrh

    Mr. Cunningham. I think that's good. I think if you could 
give Duncan Hunter and me, that ammunition, it would help. I'm 
asking these questions because I'm thinking as if I was someone 
who would want to sell this place. If you could give me that 
kind of information, I think it would really help. You'll find 
this Member very, very supportive. I've asked Duncan to come 
up. We'vesponsored a golf tournament for you to raise some 
money.
    MG. Hilbert. Yes, sir, we really appreciate that.
    Mr. Cunningham. And anything that we can do, that I can do, 
you can even increase my dues if you want out there because I 
am a member. I will be happy to do that.
    Is there anything else that you would like to cover? Keep 
us smart. Let us know anything we can do to help in this area, 
and I'll be happy to work with you.
    Mr. Lacy. We certainly appreciate your support.
    Mr. Cunningham. I think what you do is important. I was 
opposed to going into Kosovo because I know what our military 
goes through. I've flown in war, and I've been shot down in 
war, and I know that I see enlisted personnel on food stamps. 
One resistance, I would say would be among low-paid personnel. 
Did you ever go to school, and get charged in your student fees 
for the student union? I remember I used to be hopping mad. I 
said, ``Student union? I've got to pay?'' I imagine your 
enlisted may look at that and may say, ``Why am I paying this, 
I probably won't ever use it?'' But I think it's a worthwhile--
costing me 12 bucks a year. I'll give you 12 bucks a year out 
of my salary. I think it would be well worth it.
    Mr. Lacy. We certainly appreciate your words of support and 
your act of support as well. And we also hope that we can 
continue to finish these multi-phase construction projects 
which are really important to the quality of life of our 
residents, but also to our ability, capacity to downsize and 
become more efficient as well.
    Mr. Cunningham. Thank you.
    Mr. Lacy. Thank you very much.
    Mr. Cunningham. Oh, you're not through? Commander? 
Shuffling the papers, that usually means I've got something to 
say.
    CDR. Zink. Sir, that's up to you.
    Mr. Cunningham. No, go ahead.

                            U.S. Naval Home

    CDR. Zink. No, sir. I would only choose to invite you to 
come to the U.S. Naval Home in Gulfport, Mississippi. We, too, 
have an organization and a facility very similar to what they 
have here at the Soldiers' and Airmen's Home, though we're not 
as large. But we do provide the same level of care there as 
well. So I would invite you to come.
    Mr. Cunningham. Whose district is that?
    CDR. Zink. Congressman Gene Taylor.
    Mr. Cunningham. Gene Taylor?
    CDR. Zink. Yes, sir.
    Mr. Cunningham. I just started to say is that my friend 
Gene Taylor, that rascal.
    [Laughter.]
    CDR. Zink. Yes, sir.
    Mr. Cunningham. If he has some White Tails down there, then 
I may do that.
    [Laughter.]
    CDR. Zink. I'm sure we can arrange for a golf tournament.
    Mr. Cunningham. Deer hunters, they know what that is.
    CDR. Zink. Fishing and hunting.
    Mr. Cunningham. I'll talk to Gene about that.
    CDR. Zink. Yes, sir.
    Mr. Cunningham. We may want to do that on a little trip. I 
wonder how long it takes to fly there. I've never been there, 
Carolina, Mississippi. How long by plane does it take to get 
down there?
    CDR. Zink. I would say probably in time-wise, three-and-a-
half, four hours with stops along the way. But if you flew non-
stop----
    MG Hilbert. Two hours, non-stop.
    CDR. Zink. Two hours non-stop.
    Mr. Cunningham. Because I went through pilot training in 
Meridian in that area.
    CDR. Zink. I'm used to flying commercial and sitting in 
airports.
    Mr. Cunningham. Do you have anything else you all would 
like to say?
    MG Hilbert. Thank you very much.
    Mr. Cunningham. Thank you.
    Mr. Lacy. Thank you.
    Mr. Cunningham. We'll give you what support we can. And 
I'll talk to Gene. As a matter of fact, I'll see him on the 
floor right now.
    CDR. Zink. Tell him I said, ``Hello.''
    Mr. Cunningham. I will do that.
    CDR. Zink. Thank you.
    [The following questions were submitted to be answered for 
the record:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                          Thursday, March 25, 1999.

                  MEDICARE PAYMENT ADVISORY COMMISSION

                               WITNESSES

GAIL WILENSKY, CHAIR, MEDICARE PAYMENT ADVISORY COMMISSION
MURRAY ROSS, EXECUTIVE DIRECTOR, MEDICARE PAYMENT ADVISORY COMMISSION

                       Introduction of Witnesses

    Mr. Porter. The subcommittee will come to order.
    We continue our hearings on the independent agencies under 
this subcommittee's jurisdiction with the Medicare Payment 
Advisory Commission chaired by Dr. Gail Wilensky and 
accompanied by Dr. Murray Ross, the Executive Director. And, 
Gail, it's really good to see you.
    I apologize to you, and I apologize to Mr. Jackson for the 
delay in starting the hearing. You probably appreciate that I 
had to have some biopsies done. I'm getting to Medicare age and 
it delayed me a little bit.
    Welcome. Why don't you just proceed with your statement and 
then we'll go to questions.

                           Opening Statement

    Ms. Wilensky. Thank you. Thank you, Mr. Chairman, and 
members of your committee. I'm here to talk about the 
appropriations request for the Medicare Payment Advisory 
Commission. In brief, we are requesting the same level of 
funding that we asked for last year, a little bit over $7 
million. And what I would like to do is just spend a few 
minutes talking about what our mandate is, what we did this 
last year, how the budget would be used slightly differently, 
and then talk about any issues that you would be interested in 
discussing.
    As I've indicated, we believe that the level of funding 
that we have had is adequate to carry out the mandated tasks 
that we have. Our primary legislative mandate is to advise the 
Congress through a series of mandated reports. We have one 
March 1st every year on Medicare payments. That report was sent 
over to the Congress on March 1st in which we commented about 
either existing, statutorily defined payments under Medicare, 
as they've resulted from the Balanced Budget Act, or made 
recommendations about what we think are appropriate rates in 
areas that are not otherwise covered by current statute.
    In addition, we have a June 1st report that is a broader 
area of focus. It looks at issues of access, financial 
liability for seniors, and also the general question of the 
relationship of Medicare to the rest of the health care system 
and vice versa.
    This year, we have a third report that is due to the 
Congress in August on Graduate Medical Education. We are one of 
three groups asked to advise the Congress on that subject. The 
second was the Bipartisan Commission, although, as you know, 
they have not come to formal agreement on most of their 
recommendations under the 11 votes that they needed as part of 
their charter. And also the Department of Health and Human 
Services is to advise the Congress.
    We have noticed an increased interest in this area as a 
result of the difficulties that the Bipartisan Commission has 
had.
    We also do a number of testimonies during the year, both on 
what we are recommending to the Congress with regard to payment 
changes and other issues under Medicare and sometimes on 
broader issues of what is going on with the health care system 
as it relates to seniors.
    With regard to the appropriations request, I just wanted to 
point out that what we are doing now is moving back to what we 
think will be the allocation of resources that we will have in 
the future. Last year was a difficult first year. We're very 
pleased we got our reports out in time. They were well 
received. We relied a little bit more on contract research 
because we were in the middle of staffing up. We had put, as 
you know, the two predecessor commissions, PROPAC and Physician 
Payment Review Commission together. There was some staff 
turnover, not surprisingly. Murray Ross, the executive 
director, came on last spring and has been doing some hiring, 
and so we think that as we go forward, we will use the money 
more for our own staff, still some data collection done on the 
outside, but that the overall level will stay, at least for the 
near term, about where it is.
    This is a busy year for Medicare issues because of all of 
the change that was included in the Balanced Budget Act, some 
of which is playing out, as anticipated. But because so much 
change occurred as part of the Balanced Budget Act, there are 
not surprisingly some unanticipated or unintended consequences 
and so there is a lot of interest on what will happen as we go 
forward to the so-called ``risk plans,'' whether or not the 
payments for them are adequate, whether the risk adjustment 
that is being considered is appropriate, whether home care 
agencies and the skilled nursing facilities are having 
appropriate payments under the new payment systems, and a whole 
variety of other issues. So I anticipate that we will continue 
to be very busy in the future. Someday, but probably not in the 
immediate future, we will also have to deal with some of the 
longer term issues of financing and restructuring Medicare for 
the baby-boomer generation, and we will try to be useful in 
responding to questions on that as well.
    Let me stop here and see if there are any questions I can 
answer?
    [The prepared statement follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                        academic health centers

    Mr. Porter. Yes, thank you for your testimony. I do have a 
lot of questions regarding the Commission, but I, with your 
permission, would rather take the time and discuss the broader 
issues of dealing with Medicare. One of which, you're going to 
be bringing out a report, which you mentioned, on what we do 
regarding teaching institutions basically.
    Ms. Wilensky. Yes.
    Mr. Porter. There's also another effect going on there and 
they tend to be the same institutions, but research 
institutions are feeling--because they tend to be higher cost 
institutions--tend to feel the crunch of a changed Medicare 
system more than others. And the thinking is that clinical 
research gets underfunded or not funded in some of our 
institutions even though we are raising the support for 
biomedical research dramatically. Many institutions are 
believing that they won't be able to afford to do the things 
that they've done in the research area for those reasons. And I 
wonder if you would just comment upon that whole subject a 
little bit and give us some insights if you can?
    Ms. Wilensky. I have also heard from a number of hospitals, 
but particularly from some of the academic health centers and 
research centers that in the last six months, they have felt 
substantially more pressure than they had felt previously. And 
I think a couple of different things are happening that I would 
like to share with you. One thing that is happening is that, as 
a result of the Balanced Budget Act, some of the maneuvering 
room that many hospitals, and particularly most of the academic 
health centers, engaged in are being circumscribed. Many of the 
institutions had found home care and skilled nursing facilities 
and out-patient activities substantially more financially 
rewarding than in-patient hospital care. Those were signals we 
sent with the Medicare payment system. They are all coming 
under change and it is in part that the several avenues of 
flexibility that institutions had available to them are getting 
hit at the same time.
    But I think there's something else going on for the 
research centers. And I want to explain it to you because I 
think when it goes to making changes or responding, you need to 
keep in mind this is what's happening and think about how best 
to change them. Some of the biomedical and clinical research 
that the research institutions had been doing had been funded 
implicitly by payers who didn't really know they were funding 
them, both in the private sector and Medicare. What has 
happened in this decade is that as the private purchasers, 
frequently with managed care, but with other health care plans 
that weren't the traditional managed care plans, have become 
more aggressive in their purchasing at the same time that 
Medicare reimbursement has flowed down, it has been very hard 
to implicitly finance anything. And this has meant that the 
institutions that were doing above and beyond their 
commercially contracted research and above and beyond their NIH 
funded research are finding themselves less able to do so.
    It is particularly a problem because at the same time we 
have had some increase in the number of uninsured, not a lot, 
but some. And not evenly distributed. And many of these same 
research institutions also provide some indigent care. And I 
think it's all of these coming together: shutting down some of 
their flexibility in terms of funding under Medicare; limiting 
through competitive pressures what they can fund without payers 
knowing they're paying for it; and some increase in the number 
of uninsured.
    Although, as you said, there have actually been increased 
amounts of explicitly funded biomedical research. Personally, I 
think that's the better direction to go. We ought to be honest 
what we're willing to fund and then we ought to fund it--what 
we want, what we think is appropriate. And it is better to have 
the competitive environment because that will slow spending, 
but we have to be very clear and understand that what we don't 
fund explicitly is not going to get done or it will get done at 
much lower levels than it used to. And that will be true for 
the biomedical and clinical research. And it will be true of 
some of the charity care as well.

                            home health care

    Mr. Porter. Thank you. One other question, you mentioned 
home health care, that part of the hospitals' and others' 
work--that is not under the DRG system?
    Ms. Wilensky. Yes.
    Mr. Porter. And we are not in a transition where home 
health care units, whether they're hospital loaned or 
otherwise, are feeling a great crunch and we hear from them all 
the time. But it's probably going to be in a certain sense even 
worse when we go to a prospective pay system because that is 
what follows this transition. What would you tell people about 
home health care? Obviously, it's something we want to 
encourage. If we can treat people outside of an institution 
setting, it seems to me to be more cost-effective and 
preferable. But people seem to be under a real gun here.
    Ms. Wilensky. There was good reason to change how we 
reimbursed home health care. You may remember that in the early 
1990's, we saw extraordinary growth, 45, 48 percent growth 
rates in some years. The number of people being served doubled. 
The number of services that each person who received any 
services received doubled. Just extraordinary growth.
    One of the real problems we've had is that we don't have 
very good information about what goes on in a home health care 
visit and it makes it really hard to design a sensible system 
if you don't know the medical classification system that you 
would like to use and you have a lot of difficulty in designing 
one if you don't actually know very much about what is going 
on.
    And the struggle is that right now we're in this interim 
payment system where we put caps in place, either on the number 
of visits or on the amount that is spent. They're quite 
arbitrary because we don't know what goes on in the visit. HCFA 
is proposing some ways to do prospective payment, although it's 
not clear they're going to have all the information that they 
need. It's not clear they have a very good classification 
system to use. And it's not clear they're going to get it done 
in time based on what we've seen to date. So there's a lot of 
uncertainty. It would be better to have a prospective payment 
system either at per diem, a daily rate, or if you could figure 
out how to do it right for an episode.
    The issue about whether it's cost-effective is that it 
really depends. Sometimes it is and sometimes it isn't. The 
same for skilled nursing facilities. It's sometimes cheaper to 
keep people in their homes and out of an institution. But it's 
not always so. It is almost always preferable to the 
individual, and so I think it's something we need to explore.
    If we need one thing, it's to get more information so wecan 
design a better system. We're really flying in the dark. I have made 
this plea before other committees of the House. I will make it again to 
you. It's going to be very hard to get a good payment system if we 
don't have more information about what goes on in the visits.
    Mr. Porter. Gail, thank you. I suspect you're sitting there 
saying, ``I'm no longer responsible for HCFA. Why are you 
asking me these questions?''
    Ms. Wilensky. No.
    Mr. Porter. But we know your expertise and the fine job 
that you did while you were at HCFA. And I always want to get 
the chance to ask you those kind of back row questions.
    Mr. Jackson.
    Mr. Jackson. Thank you, Mr. Chairman. And thank you, Dr. 
Wilensky. And thank you for your testimony.
    Ms. Wilensky. You're welcome.

               prescription drugs for low-income seniors

    Mr. Jackson. An area of concern for me has been the poor 
and the under-served. Looking at the number of poor people who 
have had to make decisions between paying their rent or paying 
their utilities is quite startlingly. Even more shocking is the 
examination of the number of poor seniors who have had to 
decide between food and prescription drugs. As you know, there 
are several legislative proposals that have been introduced to 
include a prescription drug benefit in Medicare. Even the 
President recently has announced his support and the fact that 
he wants to do this. I'm wondering what is your opinion on this 
issue? And do you have a particular opinion about some of the 
proposals that might be before the Congress?
    Ms. Wilensky. Ultimately, when we reform Medicare, I have 
little doubt in my mind that we will, and no doubt that we 
should, include out-patient prescription drugs as a part of the 
Medicare benefit package. It's really a question of what we do 
and in what order we do it. What we do now and in what order we 
make these changes.
    Right now, there are several ways to try to assist low-
income seniors, partly through the expansions of the low-income 
support programs that Congress introduced in the 1990's, the 
so-called QMBs and SLMBs where Medicaid provided at least some 
support to the co-insurance and in premiums to help out that 
part of Medicare that is not otherwise paid for, and in areas 
where there are managed care HMOs available. Most of the plans 
include some, although not unlimited coverage of prescription 
drugs.
    I think it's difficult now to add a Medicare benefit that 
is paid for by the Medicare program because we know we have an 
unstable program. We need to reform Medicare to make it viable 
for the baby-boomers. We need to decide how we're going to do 
it, whether it will be premium support or an extension of what 
we have or something else that we haven't yet decided. As I've 
said, I have no doubt it will and should include out-patient 
prescription drugs. But we have a program that is going broke 
in terms of its trust fund in a decade, and I don't think it is 
appropriate to add to Medicare's cost now. I have heard some 
discussions about making available a premium-supported 
prescription drug plan that might make use of some of the 
private sector strategies, like PBM or group purchasing to try 
to lower the costs beyond which exists the Medigap plans. And I 
think if there are ways to support that in the interim, they 
ought to be explored.
    As I said, I was disappointed about what happened with the 
Bipartisan Commission, but I don't see how we can add to the 
Medicare liabilities in a program that is in fragile fiscal 
health. So I agree we need to do it. I just think we need to 
make that restructuring decision.
    Mr. Jackson. Dr. Wilensky, let me ask one other question. 
Many drug companies that have been in my office claim that 
Medicare coverage of prescription drugs could create price 
ceilings. And the answer to the problem is to look at their 
indigent drug programs. I'm wondering do you think that 
pharmaceutical companies' indigent drug programs would be able 
to adequately address this need?
    Ms. Wilensky. I honestly don't know, but I don't think that 
is the way we ought to ultimately do this program. I think this 
is appropriately a Medicare-covered benefit, and we ought to 
redesign the program so we have a fiscally viable program that 
makes sense for the 21st century. That's probably the most 
obvious missing benefit, but Medicare doesn't really provide 
catastrophic insurance. I don't know whether you recall the 
difficulties of the 1980's attempt to add catastrophic coverage 
to the Medicare program. It's also another big missing piece of 
the Medicare program and that needs to be fixed. So I think the 
pharmaceutical companies, to the extent they are able to 
provide some assistance, that that's good. But ultimately we 
ought not to be relying on that to resolve the problem for low-
income people.
    Mr. Jackson. Thank you, Dr. Wilensky. Thank you, Mr. 
Chairman.
    Mr. Porter. Thank you, Mr. Jackson. Mrs. Northup.

                             long term care

    Mrs. Northup. Thank you. Welcome, Dr. Wilensky. I'm always 
so eager to have the evaluations that come from MedPAC. I think 
there are a couple of things that when the chairman asked about 
home health, it reminded me that whether we call it 
catastrophic, also long-term care is a huge issue. And that 
long-term care, whether we like it or not, has not been part of 
Medicare's responsibility. But because there is no private 
insurance markets where you see widespread coverage of long-
term care, obviously, we need everybody to have long-term care 
so that those people that don't need it end up paying for those 
people who do. Just like how all other insurance works. And 
until we do that, the majority of Americans have no preparation 
and then when this tidal wave of expense hits them, they're 
staggering. And so to the extent that they can help offset 
those costs by accessing long-term care, therapists and so 
forth, that help them not because of an incidental need, but 
for it to sustain them, they try to access Medicare.
    And it seems to me that it may be true that it's cheaper to 
be cared for in-home with home health instead of nursing homes, 
but there's a huge difference and this is who pays. If it's 
actually part of your long-term care strategy, then it is the 
personal responsibility. And if you go into a nursing home, 
that expense is incurred by the families today that incur it. 
And at each stage of needed supporting care, if we had long-
term care insurance to help offset that, then there wouldn't be 
this tremendous effort to draw down out of Medicare and 
Medicaid so much of the money that it puts a strain on all the 
other reimbursement systems. Would you say that's fair?
    Ms. Wilensky. It is undoubtedly an issue we're going to 
have to deal with. We have 78 million baby boomers who are 
going to start retiring at the end of the next decade. Wehave a 
major change in the role of women and their involvement in the labor 
force. They have been traditionally the providers of long-term care and 
much long-term care, about 75 percent of it, is provided by family and 
informally outside of formal structures. The change in the demographics 
of our population and the change in the role of women is going to 
impact how we deliver and how we finance long-term care.
    Let me repeat a little bit of the theme that I just used 
for Mr. Jackson and to say that we have probably three major 
areas in health care that we're going to have to resolve: what 
we're going to do about providing Medicare, or whatever we want 
to call it for the baby boomers, the acute care portion of 
care. What we're going to do about the uninsured or the 
dislocations with employer-sponsored insurance in the economy 
of the 21st century and how it relates to what we do for poor 
people, is the second big issue. And the third big issue is 
long-term care, which is a mix of medical services and social 
services. It is certainly some medical. There are multiple 
dependencies that people have as they age, some people have as 
they age, but there's a lot of social support issues in terms 
of home and food and chronic care support.
    My personal belief is that we're going to solve them in the 
order I just gave them to you, although it's possible we'll 
look at the issues of the under 65, employer-sponsored and 
indigent care first and then Medicare, although it looked for a 
brief moment as though we might reverse those. Each of those 
are easier to resolve than long-term care because long-care 
involves both medical care and social support, the proper role 
for Government has been very hard for this country to resolve 
for medical care, but it's even harder for those social support 
services.
    In the interim, there are some things that we're doing to 
try to at least make long-term care insurance available by 
encouraging its availability through the tax law, by allowing 
some movement between long-term care and acute care. There are 
some demonstrations that HCFA has supported and one of them, 
the PACE program is now a permanent part for low-income people.
    I don't disagree with the need. I just think it's going to 
be a hard issue.
    Mrs. Northup. Well, I agree. I guess my question got to 
sort of a different point and that is that as badly as we need 
these things, Medicare clearly doesn't have the financial 
capacity----
    Ms. Wilensky. Clearly.
    Mrs. Northup [continuing]. To meet those needs.
    Ms. Wilensky. Clearly.
    Mrs. Northup. And that unless we devise some new revenue 
streams to pay for those. For example, long-term care insurance 
that provides some range of services or at least sort of helps 
provide a floor of what the costs will be, that what we do is 
we create tremendous pull-downs on our Medicare and Medicaid.
    Ms. Wilensky. Yes.
    Mrs. Northup. We also create the dynamic where we start 
reimbursing everybody less money than what it costs to provide 
the service, which we may have done in the BBA, in the Balanced 
Budget Amendment, and then we also decrease the quality of the 
care, not just the availability of it. And so my question was 
more about that Medicare is simply in no position to assume any 
of these responsibilities?
    Ms. Wilensky. I agree. And I think that some of the growth 
in home care is precisely what you have described. It has been 
a way that the States, instead of sharing their half through 
Medicaid, found a way to get Medicare to pick up some of the 
chronic support of home care and skilled nursing facilities 
that used to come under Medicaid and was partly responsible for 
the very fast growth in these services. And, as you pointed 
out, Medicare is in no position to do that financing.
    Mrs. Northup. I have lots more questions, Mr. Chairman, but 
I think I heard the bell.
    Mr. Porter. I'm afraid you did. Thank you, Mrs. Northup. 
Mr. Istook.
    Mr. Istook. Mr. Chairman, I don't have any questions, and 
I'll give the balance of my time to Mrs. Northup.

                           effects of the bba

    Mrs. Northup. I would like to ask you then a couple of the 
questions regarding the Balanced Budget Act. It seems to me, 
and I guess I would like your take on it and then what we do to 
resolve it, that when the Balanced Budget Act attempted to fix 
Medicare, that it gave some pretty extensive latitude to HCFA 
to make payment decisions, specifically to the skilled nursing 
care but in a number of other areas and that their decisions 
have been particularly austere and actually saved more money 
than was anticipated. And while all of us are concerned about 
fraud and abuse and waste and overpayments, that we do have a 
responsibility to meet these fair repayment levels. And I just 
wondered if you could, number one, comment on that?
    Ms. Wilensky. The slow down in spending has been greater 
than was predicted. That is the case. To try and understand 
what happened is a little harder. I think it's a combination of 
responses by institutions of a ``deer in the headlights'' 
phenomenon. A lot of change hit them. There clearly is an 
intended increased emphasis on fraud and abuse that has stopped 
some institutions. And the savings have been greater than were 
anticipated. The budget rules don't allow you actually to put 
some of that back in without scoring additional spending. 
That's a problem the Congress will have to deal with I think at 
some other point.
    With regard to what HCFA has done with their rules, I am 
concerned about some of the interpretation, although I don't 
know how much of it has been an attempt to slow down spending 
more than was intended. I think there's some indication that 
the payments were high-acuity patients in skilled nursing 
facilities, the ones that have a lot of illnesses that require 
ventilators or that have infusion therapy needs, are under-
reimbursed. And I think this is an issue that Congress is going 
to have to look at if it isn't changed, and I'm not sure it's 
going to be changed in a budget neutral way. I think it may be 
a resource issue.
    There's some questions being raised for the risk adjustment 
for HMOs and whether the level of payment that was in the 
Balanced Budget Act, which has a 2 percent growth rate for the 
areas where many of the seniors are in managed care plans is 
reasonable. That's a very low rate of growth of spending off of 
reduced space.
    But I'm actually not sure it was HCFA's misinterpretation 
of the Balanced Budget Act that caused that to happen. There 
are other areas where we have not as a commission agreed with 
everything HCFA has done. We comment on some of their 
regulations, major regulations, and make that available. But I 
think more what has happened is that there have been 
someunintended consequences and unintended occurrences in the Balanced 
Budget Act, some of which may have been exacerbated, but many of which 
it may have been just that there was so much change, it was hard to 
anticipate what happened. And there are some institutions that are 
reporting getting hit very hard.
    The out-patient payment is really going to bite on the 
hospitals and these high activity nursing home patients are 
having problems or will have problems getting appropriate 
payments for them in the nursing homes. And some of the risk 
plans in the high expenditure areas are going to find 
themselves unwilling to continue to participate unless there's 
some change made. So I think there definitely is going to be 
work for the Congress to do in looking at these issues.
    Mrs. Northup. Okay. Mr. Chairman, I've had my share of the 
time and I yield back.
    Mr. Porter. Thank you, Mrs. Northup. Mr. Hoyer.

                             payment policy

    Mr. Hoyer. Doctor, thank you very much. In light of what 
you have just had, and you may have already said this, and if 
you did, just tell me, what recommendations has the Commission 
made with reference to either changes in law or in changes in 
policy with in dealing with providers and to the sustainability 
of existing and expansion of providers in light of present 
payments?
    Ms. Wilensky. I actually had not made--I have not answered 
that question. Let me try to summarize the recommendations as 
they relate to providers continued participation in Medicare.
    We're concerned about what is going on with the hospitals, 
but we don't have enough information to make a changed 
recommendation from the BBA. What we are suggesting is that 
there be no additional reductions, which are implied in the 
freeze that has been at least suggested and proposed by the 
administration. And the reason is because we know that 
hospitals are getting hit in lots of different directions from 
Medicare: slow down in in-patients; the reduction in out-
patient because of the Balanced Budget Act move to prospective 
payment; and the changes in home care and skilled nursing 
facilities that some hospitals have become involved in. And 
that it may be there will be a need for additional money to 
come in. We are not in a position to say that yet because we 
don't have enough data, but we feel comfortable saying there 
should be no additional reductions over what is already in 
there.
    With regard to the payments for the risk plans, we're again 
in a little bit of the position of saying we can't see enough 
yet about what's happening to make a specific payment change 
recommendation, but we think there are things that HCFA can do 
to lower the administrative burden on these plans and maybe in 
the interim, that will give them a little really--for example, 
the Balanced Budget Act, required the risk plans to tell HCFA 
in May what the benefit-premium combination would be offered to 
seniors the following January. It used to be they didn't have 
to say until November. That caught a lot of plans last year 
making a recommendation that when it came to August or 
September, they decided they really couldn't sustain. And HCFA 
could have provided some administrative flexibility. It chose 
not to. They are now considering, and I think it will require 
statutory language, to move that date out a little. This would 
provide, without it adding money, a little regulatory relief.
    The data collection that HCFA has required, some of which 
was mandated, some of which is their own doing, in terms of the 
data assessed from home health, from skilled nursing 
facilities, and something called QISMC that they put on the 
managed care companies, is burdensome and costly and needs to 
be reviewed very carefully as to whether or not there's any way 
to lower the administrative burden on these institutions.
    You need to get the right information. Having been at the 
HCFA and having been a researcher, I understand the pressures 
to try to provide a lot of information that might help a 
variety of players understand better health care delivery, but 
I think given the slow down in payments that is going on under 
Medicare, we have to be very careful that we don't ask 
institutions to do more than they have to in order for the 
Government to make sure they're providing quality services to 
seniors.
    I think the Congress needs to give a little clearer 
guideline to who they want to have eligible for home care. It 
has been very difficult for HCFA and probably for the seniors 
to understand exactly who is eligible. It has ended up in the 
courts a lot. That has substantially expanded the coverage. It 
may be what the Congress intended, but I think it would be 
helpful if they were clearer.
    MedPAC has suggested the use of a very modest co-payment 
for home care, excluding all low-income individuals who are 
identified as having been eligible for any of the programs that 
Congress has put in place, the so-called QMB, SLMB population, 
takes it up to about 150 percent of the poverty line. But for 
other people to have a modest co-payment for the first 60 
visits of about $5 is what we were thinking about. When you hit 
that level, to have an independent review of home health care 
needs by a geriatrician or expert in that area to try to map 
out any further health care, home care plans, to try to relieve 
some of the pressure on the physicians to sign off on something 
they don't pay for and that seniors don't pay for.
    And so we think there are a variety of ways to try to make 
sure that we're getting the payments right. As I mentioned, 
there seems to be a general belief that the payments for 
skilled nursing facilities for the sickest patients is 
inadequate. It's probably hitting the nursing homes right now. 
I don't think they're backing up in the hospitals yet, but I 
think that's likely, either that you're going to put some of 
the nursing homes that take care of very sick patients out of 
business or you're going to see them backing up patients in the 
hospitals, in which case you'll hear the screams from the 
hospitals. You've got to get the payments right for the sickest 
patients. And those are areas where I suspect it's going to 
require a little more money. The Congress put in a little more 
money for home care last year.
    One of the problems is the slow down in spending that 
occurred under Medicare isn't captured under current budget 
rules. Nobody anticipated quite the slow down we've seen. I 
don't think it will continue, but it happened this year. 
There's no way to get that back in without scoring a new 
expenditure and that, obviously, raises a whole set of issues.
    So I think clearly things happened this year, some of which 
will continue to happen, some of which may be done this year, 
that the Congress will likely have to deal with.
    Mr. Hoyer. Thank you, Doctor. Thank you, Mr. Chairman.
    Mr. Porter. Dr. Wilensky, you haven't had one question on 
the Commission. That's what I call finesse. [Laughter.]
    We will submit all the questions on the Commission. It is 
really very important for us to be able to talk over the policy 
questions that you're so familiar with, and we really 
appreciate hearing from you in that regard. And we ask that you 
do answer the Commission questions for the record.
    Thank you very much for appearing today.
    Ms. Wilensky. Thank you. We will, of course, be glad to 
deal with any of the questions you submit, either in writing or 
if there are any staff questions, to make sure that they're 
answered.
    Mr. Porter. Thank you so much.
    Ms. Wilensky. Thank you.
    Mr. Porter. The subcommittee will briefly stand in recess.
    [The following questions were submitted to be answered for 
the record:]

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                                          Thursday, March 25, 1999.

                     NATIONAL LABOR RELATIONS BOARD

                               WITNESSES

JOHN TRUESDALE, CHAIRMAN, NATIONAL LABOR RELATIONS BOARD
FRED FEINSTEIN, GENERAL COUNSEL
HARDING DARDEN, BUDGET OFFICER

                       Introduction of Witnesses

    Mr. Porter. Now then the subcommittee will come to order.
    We continue our hearings on independent agencies with the 
National Labor Relations Board, and we're pleased to welcome 
the new Chairman, John Truesdale, who has had a very long 
history with NLRB and several terms on the Board and brings a 
wealth of experience to his new position. And we're delighted 
that you have ascended to the chairmanship, and we look forward 
to working very closely with you.
    Even though we know them well, would you introduce the 
individuals who are with you and then proceed with your 
statement?
    Mr. Truesdale. Thank you, Mr. Chairman. Yes, I would like 
to introduce Fred Feinstein, who is the NLRB General Counsel. 
And on my right, Harding Darden, whose wisdom and experience 
guides us through the intricacies of the appropriations process 
as the agency's Budget Officer.
    I appreciate, with the Chairman's permission, I would like 
to give about a five-minute summary of my statement and then 
introduce, with your permission, introduce the statement for 
the record.

                           Opening Statement

    I appreciate this opportunity to appear before you for the 
first time as Chairman of the NLRB to testify in support of the 
agency's budget request for Fiscal Year 2000. The Fiscal Year 
2000 budget now before you requests an appropriation of $210.2 
million so the NLRB can fulfill its duty to protect the rights 
and enforce the responsibilities of employees, employers, and 
unions under the National Labor Relations Act. This request 
will provide the necessary resources to enable the agency to 
meet its statutory responsibilities by, one, diminishing the 
current case backlog; two, maintaining standards of quality in 
investigations and case handlings; three, finally completing 
the implementation of our new information technology system, 
which will enable our staff to operate in the 21st century; 
and, four, better training our staff to ensure consistent and 
fair adjudications of cases.

                          board case backlogs

    When I arrived back at the Board in December of 1998, the 
case backlog had reached over 650 cases. Although that number 
is far from the historic high of over 1,600 cases in the mid-
1980's, it is still much higher than it should be. For example, 
in November, 1995, just three years before, the backlog was 341 
cases, almost half of what it is today. Even more disturbing is 
the overall age of the cases in the current backlog. For 
example, in November, 1995, there were 48 unfair labor practice 
cases that had been pending at the Board for two years or more. 
In contrast, as of January of this year, there were over 100 
such cases. Again, more than double the number in November, 
1995.
    If I have an agenda as Chairman, it is to get these cases 
out. That, after all, is the primary function of the five 
member Board. I have always viewed the Board as kind of an 
administrative court, with the Board members being like judges 
and having a professional rather than a political mission. The 
Board's purpose is to decide cases and otherwise implement the 
national labor policy within the parameters set by Congress in 
the statute.
    I look forward to working with my colleagues in the coming 
months to get the Board's caseload on a current basis as would 
befit an efficient, professional, adjudicatory organization.
    With few exceptions, the Board has historically resisted or 
shied away from becoming involved in the political process by 
proposing or commenting on substantive legislation and for good 
reason in my view. It seems to me that once the Board starts 
getting involved in the legislative process, its status as an 
independent decider of labor disputes would very soon be lost 
altogether. During my tenure as Chairman, be assured that I 
will not be looking for opportunities to comment on legislation 
or making policy pronouncements on what the law should be 
rather than what it is. As indicated, the opportunities I will 
be looking for will be ways to get the cases out.
    This year, the Board has committed itself to reduce its 
backlog significantly. More particularly, it has establishedas 
performance measures in our Fiscal 1999 performance plan to have no 
unfair labor practice case pending before the Board more than three 
years and no representation case pending more than two years by the end 
of the fiscal year. I must say that strikes me as being a rather sad 
state of affairs, but it's a fact that we are met with and that is our 
goal.
    To meet this goal, we have committed to issuing at least 55 
cases a month, of which at least 15 will be cases that are over 
two years old. Since our current pending caseload includes 100 
in this category, this goal will require an extraordinary 
effort at all levels of the Board and adequate staffing levels 
will be crucial to that effort.
    Most of the NLRB's budget is dedicated to personnel costs, 
77 percent, and rental payments to the General Services 
Administration, 11 percent. The Fiscal 2000 budget request of 
$210.2 million would represent a 14 percent increase over that 
of the previous year. The additional $25.7 million we seek for 
Fiscal 2000 would cover mandatory adjustments in employee 
compensation, make the Case Activity Tracking System 
operational in all field locations, support training in case 
handling and use of new technology, and provide an additional 
122 full-time equivalent employees over the Fiscal 1999 budget 
FTE level of 1,880. That would enable the agency to diminish 
the current case backlog. Like any conscientious, responsive, 
professional organization, we want to get back to doing our job 
well. We want once again to be writing timely decisions, not 
epitaphs.

                        annual performance plan

    The NLRB has established in its performance plan the 
following performance measures and indicators to evaluate our 
success in achieving our strategic goals during Fiscal 2000:
    At least 60 percent of all elections will be held within 42 
days of the filing of petitions;
    The percentage of unexcused, over-aged, Category 3 cases, 
allegations most central to the NLRB's mission and/or affecting 
significant numbers of employees, will be reduced from 13 
percent to 10 percent;
    The Board will seek to issue all representation cases that 
have been pending at the Board more than 20 months and all 
unfair labor practice cases pending more than 30 months;
    And the Board will seek to reduce the age of representation 
and unfair labor practice cases pending at the Board by 5 
percent each year.
    Our budget request would enable the NLRB to meet and exceed 
these performance goals.
    Mr. Chairman, this concludes my statement. When the General 
Counsel has completed his statement, my colleagues and I 
welcome the opportunity to answer any questions you may have.
    [The prepared statement follows:]

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                    statement of the general counsel

    Mr. Feinstein. Thank you, Mr. Chairman. I have also 
submitted a statement for the record, and at this point would 
just simply want to endorse the Chairman's remarks and say how 
pleased we are that he is now Chairman of the agency. His style 
of quiet, balanced, and wise leadership is very welcome and 
very much appreciated. It has helped us all to focus on the 
important mission of the agency, which is to resolve charges 
filed with the agency as quickly and as accurately as we 
possibly can. It has, indeed, been a pleasure to work with him 
on these shared objectives.
    Thank you.
    [The prepared statement follows:]

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    Mr. Porter. Thank you, Mr. Feinstein.
    Chairman Truesdale, for the benefit of Mr. Dickey, who 
wasn't here when you gave your opening statement, would you 
give the part dealing with not having a philosophy--I want him 
to hear this?
    Mr. Truesdale. I would be delighted.
    Mr. Porter. Because I think it was right on the money.
    Mr. Dickey. The word is agenda.
    Mr. Porter. All right, agenda.

                           chairman's agenda

    Mr. Truesdale. If I have an agenda as Chairman, it is to 
get these old cases out. I had talked about the number of very 
ancient cases that I found arriving back at the Board. That, 
after all, is the primary function of the five member Board. I 
have always viewed the Board as kind of an administrative court 
with the Board members being like judges and having a 
professional rather than a political mission. The Board's 
purpose is to decide cases and otherwise implement the national 
labor policy within the parameters set by Congress in the 
statute.
    I look forward to working with my colleagues in the coming 
months to get the Board's caseload on a current basis. With few 
exceptions, the Board has historically resisted or shied away 
from becoming involved in the political process by proposing or 
commenting on substantive legislation and for good reason in my 
view. It seems to me that once the Board starts getting 
involved in the legislative process, its status as an 
independent decider of labor disputes would very soon be lost 
altogether. During my tenure as Chairman, be assured that I 
will not be looking for opportunities to comment on legislation 
or making policy pronouncements on what the law should be 
rather than on what it is. As indicated, the opportunities I 
will be looking for will be ways to get the cases out.
    Mr. Porter. Chairman Truesdale, I don't know about anyone 
else, but I want to jump up and applaud when I hear that. I 
think that is exactly what we are looking for. What you're 
telling us is that--and this is not a criticism of your 
predecessor, but what you're telling us is your vision of your 
work is to be a good manager and someone working with all the 
people who come before the Board to getting the job or the work 
of the Board done in an efficient, timely, effective way, and I 
think that's exactly what we're looking for in a Chairman. And, 
in fact, that's what we're looking for in the Speaker in the 
House, and we think we found one here as well. So let me 
applaud your statement. I think you're right on the money, and 
we, as I said, look forward to working with you.
    I am going to ask you to comment upon one legislative----
    Mr. Hoyer. Is it correct, Mr. Chairman, that the Speaker 
has no political agenda?
    Mr. Porter. That's right. [Laughter.]
    Those of you on the other side of the aisle couldn't 
possibly recognize that. [Laughter.]
    Mr. Hoyer. I will keep that in mind, however, during the 
coming days and months.

                       jurisdictional thresholds

    Mr. Porter. There is legislation that has been introduced 
in the Congress that affects NLRB jurisdictional thresholds to 
adjust them for inflation, what is your feeling about that 
legislation? Do you favor it or oppose it? And how would it 
impact your workload and the mission that you see NLRB having?
    Mr. Truesdale. Well, as I said, I feel quite strongly that 
the Board's historical policy of not proposing or commenting on 
pending legislation is a proper one. And that's not just a 
procedural question. There are varying views in the labor 
management community about that proposal. I understand that 
some, or maybe many, I don't know, employers are opposed to it. 
I know that the advisory panel that advised the Board during a 
period when I wasn't there, was opposed to that. It may be that 
some unions are not opposed to that because they would like to 
go back to a system where secondary boycotts were not illegal. 
It may be that some small employers would not favor that 
because they would be put into a patchwork system whereby some 
States have no statute at all, others have statutes that 
provide unfair labor practices for employers, but not for 
unions, as in New York State, for example. But these are 
concerns that I have heard expressed by employers and by 
unions. And I really feel I must be consistent in taking the 
position that it's for the Congress to decide what the law 
should be and not for the Board.
    Mr. Porter. Well, I respect that. Could you tell us though 
if you have looked into how it would effect your workload?
    Mr. Truesdale. We just don't know how it would affect our 
workload because typically, when we send out our commerce 
questionnaire, an employer will just stipulate that his sales 
across State lines, for example, exceed such and such a level 
for or coming from. And I know that employers have told me in 
many years, or the lawyers have told me, in many years of 
appearing before the Board, they have never cited specific 
figures because they don't want to say what their sales are.
    So we just don't have those figures in our commerce 
questionnaire. I think there might even be some legal question 
if we were to collect such figures when it's not necessary to 
our administration of the statute under the Paperwork Reduction 
Act, for example.
    Mr. Porter. And nobody in recent memory has raised this as 
a defense in saying that the NLRB doesn't have jurisdiction 
because there isn't a substantial enough interstate commerce 
effect, is that correct?
    Mr. Truesdale. Oh, definitely, they do raise that.
    Mr. Porter. They do raise it?
    Mr. Truesdale. And if there is an objection, then we 
investigate. In 1959, Congress approved the standards that the 
Board is following. The law gives very, very broad jurisdiction 
to the NLRB, and I suppose that an employer who ships a tin of 
shoe polish across State lines would be said to be involved in 
interstate commerce. But many years ago, the Board set forth 
certain standards. For example, that it would assert 
jurisdiction over an employer that shipped $50,000 worth of 
goods across State lines or received $50,000. Congress approved 
those standards. And that was a reaction by Congress to the 
whole question of the no man's land and certain Supreme Court 
decisions. Congress approved those standards but admonished the 
Board that it could not decline to assert jurisdiction over any 
employer over which it would assert jurisdiction under those 
standards. So without legislative change, we couldn't increase 
those thresholds.
    Our commerce questionnaire asks do you ship more than 
$50,000 worth of goods? If the employer says no, and there's no 
reason to doubt that, I mean I just don't happen to be familiar 
right at this minute with such a case, but if an employer--if 
there was no reason to doubt that then maybe we would accept 
that. But if there's any challenge to that, then we have to 
investigate whether or not the employer does meet our 
jurisdictional standards. So it is conceivable that if the 
threshold were raised, I think Mr. Istook's proposal would 
raise it to $275,000 approximately, it is possible that if 
someone said that they did not ship $275,000 worth of goods and 
there was a challenge to that, that we would have to 
investigate that. So it is conceivable. I just don't happen to 
know, but it is conceivable that raising those jurisdictional 
thresholds would create much more of an investigative problem 
for the Board than it currently has.

                             y2k compliance

    Mr. Porter. Let me ask the Y2K question. Is there any Y2K 
problem that you haven't addressed for mission-critical 
systems?
    Mr. Truesdale. No, we will be Y2K compliant--did I get that 
right?
    Mr. Porter. Yes, you did. I didn't.
    Mr. Truesdale. Y2K compliant for all our field offices by 
Fiscal 2000. As a matter of fact, I think it will be by the end 
of March.
    Mr. Porter. By the end of March?
    Mr. Truesdale. By the end of March, in a few days from now, 
five days from now.

                  case activity tracking system (cats)

    Mr. Porter. All right. Last year's budget justification 
indicated that the NLRB would use about $10 million of the 
requested increase for information technology upgrades. We 
approved your request and I'm interested in an update of how 
this project is progressing? Is the CATS project, which is your 
case processing initiative, operational in headquarters and 
regional offices yet? And what is the projected time frame for 
bringing all regional offices online with the CATS project?
    Mr. Truesdale. I stand to correction on this, but my 
understanding is that our CATS project will be, for all field 
offices, will be online by the end of Fiscal 2000. And for 
headquarters, in the early stages of Fiscal 2001.
    Mr. Porter. How much money is in the 2000 budget for 
information technology upgrades?
    Mr. Truesdale. $11.8 million.
    Mr. Porter. $11.8 million. Thank you, Mr. Chairman. Mr. 
Jackson?
    Mr. Jackson. Thank you, Mr. Chairman. Mr. Chairman, if I 
may just ask a question about the rules. Since we all were here 
seated at the beginning of this hearing, under the rules, does 
it go in order of seniority now?
    Mr. Porter. When we determine who was here at the beginning 
of the hearing, it is the 2 o'clock start of the entire hearing 
that we use as the baseline.
    Mr. Jackson. Thank you, Mr. Chairman.
    Mr. Hoyer. I'm pleased to yield to you.

                        impact of case backlogs

    Mr. Jackson. Thank you, Mr. Hoyer. I want to welcome 
Chairman Truesdale and General Counsel Feinstein and Mr. 
Darden. I also want to thank Chairman Truesdale for your 
testimony today.
    If you could for us describe the impact of the backlogs, 
which you did in some degree of your testimony, and case delays 
on the effective enforcement of the act itself?
    Mr. Truesdale. Well, it's very important in investigating a 
case to get on it promptly, when memories are fresh, and to 
resolve the dispute as quickly as possible. A festering dispute 
causes many problems in a particular facility. So that if you 
can't get started on investigating the case until later, until 
perhaps after it has gotten stale, then it's harder to resolve 
that dispute. It also drives up the costs to both sides. And in 
addition to that, a backlog of cases makes it harder to 
establish an effective remedy.

                        agency employee training

    Mr. Jackson. I'm also concerned about the constraints that 
have been placed on the agency's training budget, some of the 
problems that those constraints have produced, again, mainly in 
terms of service to the public?
    Mr. Truesdale. Well, training is important to any 
operation. To any employer, any company there is a constant, 
ongoing need for the training of its employees and its staff. 
The NLRB has had to forego training by and large in the last 
four or five years. In the last couple of years, we've had 
practically no training at all. So this is a very pressing need 
for the NLRB. We have a graying of the Board staff. We need not 
only to train the people who are here, but as the people come 
in, to be able to train them. We need to train our existing 
staff in new technology and in new developments in the law. So 
training is very important to us.

                          case intake per fte

    Mr. Jackson. One final question. I'm interested in what 
your workload is for FTE and how does it compare with 1990?
    Mr. Truesdale. Our workload for FTE?
    Mr. Jackson. Yes, sir? And if you don't have it----
    Mr. Truesdale. Well, we have it, but it's just not at the 
tip of my tongue.
    Mr. Jackson. That's not a problem, sir. I can take it at 
the conclusion.
    Mr. Truesdale. Well, the intake for FTE in 1998----
    Mr. Jackson. 1990?
    Mr. Truesdale. 1990 was 18.49 per FTE.
    Mr. Jackson. And in 1998?
    Mr. Truesdale. 20.39 [Clerk's note.--Later corrected to 
19.5] per FTE.
    Mr. Jackson. Thank you very much. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Jackson. Mrs. Northup?
    Mrs. Northup. Thank you. I also want to welcome you today 
before this committee and say it's probably a testament to how 
little controversy has surrounded you in the fact that there's 
a seat that is even empty in this room. Every year I've been on 
this committee beforehand, there has not even been standing 
room. So I thank you for that.
    I also just have to say, Mr. Chairman, for next year when 
all the budget requests come in that I'm sure are going to be 
so much lower because every single testimony I've heard, the 
justification for increases is to get us into the 21st century. 
[Laughter.] And since we'll be there next year, I figure we 
will have crossed that bridge and we won't have to continue 
paying that price.

                            regional offices

    In any event, I wanted to ask the number of regions and the 
management of those regions? Maybe Mr. Feinstein would want to 
answer some of these questions because I directed them to him 
last year. Please address the appropriate administration of the 
regional offices, whether or not they are all efficiently 
conducting the business of the Board and what sort of actions 
are taken in those regions where maybe there is some belief 
that a director has weaker standards is less efficiently able 
to manage them?
    Mr. Truesdale. Well, let me start off by answering that and 
then I'll pass it off to Mr. Feinstein later on. We have a 
number of regional offices, sub-regional offices. One thing, 
and I'm sure you know this, all the members of the committee 
know it, but I just want to say so as to be sure that it's 
clearly understood. Those regional offices are out there in 
order to better and more quickly serve the public. I've read 
through some of the transcripts from prior years, and I know 
that there have been statements made that somehow some people 
may think that having offices out there is in order to drum up 
business or something like that. I can't think of a single 
instance, a single way in which that either could be done or 
has been done. I began my career with the NLRB as a field 
investigator in Buffalo in 1948, God help us. But, in any 
event, I'm familiar with the regional offices. They're 
extremely dedicated people who are really working very hard to 
administer the statute and to be fair and even-handed. And I 
think that that is what they do.
    Now, I know----
    Mrs. Northup. And let me just say whatever sort of hints I 
may have given--that was a new idea that you just gave to me. 
That wasn't the purpose of my question in any way.
    Mr. Truesdale. No, I think that reference may have come 
before you were a member of this committee, and I did not mean 
to imply that that was coming from you. But the fact is that 
the whole purpose of having offices in particular areas of the 
country depends on the caseload, it depends on the number of 
cases, it depends on the geography of the area, and so on. And 
I do know that the Operations Management Division of the 
General Counsel's staff rides very tough herd on the regional 
offices, evaluating the directors, their work and what they do. 
But I'll turn to Mr. Feinstein?
    Mr. Feinstein. I think you've adequately answered it. I 
will be happy to respond to anything in addition?

                        regional office staffing

    Mrs. Northup. Yes. Well, I think it is more--I guess my 
concern, and it goes back to your original answer to an earlier 
question, is that is that the quicker these cases are resolved, 
the better it is for the workplace. And I noticed that the 
backlog in some districts is 100 and one was 500. My question 
is, relative to the wait that people have before their cases 
are heard, does that mean we need to change around the number 
of people that are assigned to different offices in order to 
equalize the response time?
    Mr. Truesdale. Well, I know that Operations Management has 
a formula for how many professional employees are needed for a 
particular level of cases. But in recent budget crunch years, 
they have been unable to do the kind of things that they have 
done in past years. For example, if one region was understaffed 
but a number had a larger backlog, they would transfer people 
into that region temporarily or permanently as the need arose. 
But that is so expensive. The travel costs, the per diem costs, 
or even to move a person under Federal law, it costs about 
$50,000 to actually transfer a person permanently.
    So in recent budget crunch years, all intra or interoffice 
details have had to be abandoned. All transfers, permanent 
transfers of people have had to be abandoned. What they have 
done is to have one office, for example, the Phoenix office 
handle cases for Seattle. I cannot tell you the number of 
cases, but a very large number of cases for understaffed 
Seattle was handled by Phoenix. But they did those 
investigations by telephone. Now, that is not quality 
investigation. It does not allow face to face connect, looking 
at the witness, and trying to reach--you cannot make a credible 
resolution without a hearing, but you get some form, some 
impression in your mind as to who is telling you the truth and 
who is not. And telephone investigations, that way of meeting 
the backlog is just not very successful.
    Mrs. Northup. Okay. Mr. Chairman, I will yield back the 
rest of my time.
    Mr. Porter. Ms. Northup, I think the answer to your first 
statement is that next year all the agencies under our 
jurisdiction will tell us correctly that the beginning of the 
21st century is the year 2001.
    Mrs. Northup. Oh. [Laughter.]
    Mr. Porter. Mr. Istook.
    Mr. Istook. Thank you, Mr. Chairman, and your question 
reminds me--you know there is also a trick question about what 
is the outer most planet in the solar system. Just like the 
21st century does not start until 2001, Pluto is not always the 
outermost planet. Okay. So, as long as we are going to be 
talking about little gotcha-type questions, remember that one, 
too.
    Mr. Hoyer. Even more shocking, Mr. Istook, is we are told 
now that Pluto is not a planet. So all of us who----
    Mr. Istook. What I am really fearing is they are going to 
start saying that Pluto is not really a dog, either. 
[Laughter.]

                        categorization of cases

    Gentlemen, I appreciate you taking the time together, and I 
certainly wanted to pursue some things that the Chairman talked 
about, and Mr. Truesdale had the chance to discuss with you the 
other day. It seems that more and more of the workload of the 
NLRB is on things that are of less and less significance. I 
realize you, for example, categorize even your cases--Category 
1, Category 2, Category 3, trying to make sure that you 
recognize that not all cases are equal in importance. Many of 
them affect a vast, vastly larger number of people than others 
do. And when the dollar amount of jurisdiction has not been 
adjusted since 1959 that makes me think, you know, just like 
the Federal courts found that their workload kept increasing 
and kept increasing because the dollar amount for Federal court 
jurisdiction had not been adjusted until ultimately it was. 
Because, otherwise, they were finding they just did not have 
the people to do the job. And I see a huge analogy, with the 
NLRB. You say you want to reduce the backlog, but I have not 
seen a proposal that says, ``let us stop so much from coming in 
that consumes a lot of resources but is not the same level of 
work as was originally intended.''
    Let me start on that first. I notice in some of your 
submissions that you indicate that you call the lowest priority 
cases Category 1; and that Category 1 cases typically involve 
only one person, and or they are limited as to the available 
relief. But typically, these are cases that only involve one 
person. Can you tell us how much it costs in dollars and 
manpower and resources for the NLRB to handle each Category 1 
case, and how many there are in the system?
    Mr. Truesdale. Congressman Istook, I cannot do that. But I 
would think that we probably can and will be glad to submit 
that for the record.
    [The information follows:]

    An Average Category I case is a one or two telephone 
affidavit case. Each telephone affidavit takes approximately 
one hour to prepare. There are an additional two hours for file 
work, to review affidavits when they are returned, prepare the 
file memo, and draft a dismissal letter. The combined 
supervisor and Regional Director review time is less than one 
hour. The total cost of this initial processing stage is $190.
    It takes one Agent day (6.5 hours) to discuss settlement 
with the parties on a merit case, prepare a complaint and 
proposed settlement agreement, including calculation of 
backpay. There is one hour of supervisory review. The cost for 
this merit determination and settlement stage is $220.
    The trial of a merit case is likely to be much more 
expensive, although Category I cases are not often meritorious 
and merit cases usually settle. Assuming a one-day trial, there 
are three days of GS-13 time for preparation, pretrial and 
trial. Assuming this will be a bench decision, there are four 
days for transcript review and briefing to the Board. The cost 
of a trial before an Administrative Law Judge is $4,900. The 
total cost of a Category I case from the time a charge is filed 
through completion of the trial is therefore $5,310.

    Mr. Istook. I think it would be very useful to be able to 
see, you know, how much does the typical Category 1 case cost, 
and what sort of relief is really being sought, and yet how 
much do the taxpayers have to pay to handle those lower level 
cases and how many of them there are.
    Mr. Truesdale. I think I must point out that that case 
involving one person, that person might be an employee of a 
very large corporation.
    Mr. Istook. I agree the person might be the employee of a 
very large corporation----
    Mr. Truesdale. And Congress made the judgement when it 
passed the National Labor Relations Act and accorded rights to 
employees whether large or small.

                       effort to reduce caseload

    Mr. Istook. Well, you see, Mr. Truesdale, that is the type 
of comment that convinces me that the NLRB just wants to build 
its empire by getting more and more people rather than taking 
any effort to say, look, why do we have so many cases coming in 
when our jurisdiction has not been adjusted. It is based upon 
dollar volume of sales, which have been so dramatically 
inflated since 1959. And it is assertions such as that that 
make me question whether the NLRB is really making any good 
faith effort to control its budgeting and its expenditure of 
taxpayers' money. Because the issue is when the threshold was 
set, they said it depends upon how big of a company you are--
based upon your volume, your dollar volume of sales. And we are 
still using 1959 figures on that. But I would like that 
information regarding the category one cases.
    I also notice, you know, when you say, well, we stipulate 
the jurisdiction. Perhaps we need to say that no funds 
appropriated should be used to stipulate to the dollar amount 
jurisdiction until such time as the party has made a good faith 
representation of what the actual dollar amounts that justify 
jurisdiction are in its case. It certainly does not involve any 
convoluted procedures such as a subpoena. But I do not see the 
NLRB doing anything to try to get to the root problem of why it 
is having problems handling the caseload. You just say, ``give 
us more money and give us more people'' rather than recognizing 
that things are being considered a Federal case that were never 
intended to be in the realm of a Federal case.
    So I want to work with you on these things. But I still 
feel that I am having an attitude by the NLRB that it just does 
not care. We have always done it this way, and rather than 
taking a common-sense approach of adjusting jurisdiction, it 
just wants to be in more control of more things. And I am very 
greatly concerned about that.

                               beck cases

    I did want to--as far as getting some further information, 
I notice that there was an order, Mr. Feinstein, that was 
issued in February of this year. This particular case was 17-
CB-4957. But it seems to assert a policy. In handling cases, 
especially Beck decision cases, that says once there was just 
an overall representation of categories of expenses, you do not 
want to assist the employee who says that they have been 
overcharged on their dues. You do not want to help them look to 
see whether chargeable expenses are, indeed, chargeable. You 
accept very broad categories and stifle the ability of someone 
in a Beck case to go farther. And, of course, that may be only 
one individual, as Chairman Truesdale said. But it seems that 
in other cases, you are concerned about the rights of the 
individual, but when it comes to Beck decision cases, there is 
an absence of concern with just helping people to develop the 
information to find out if the cost of representation is 
actually what is being reflected in their dues.
    So I wanted to ask you, Mr. Feinstein, is there any change 
afoot in that. I recognize I think your term expired in March 
of last year. Might we expect that you going on someplace else, 
and there might be another General Counsel who might have a 
different attitude. Are you staying on? Or is there anything on 
the horizon that might enable people to start having their 
rights protected under Beck?
    Mr. Feinstein. Congressman, we treat Beck cases how we 
treat any case. When charges are filed, there is a requirement 
that the person filing the charge come forward with sufficient 
evidence to allow us to proceed----
    Mr. Istook. And the Supreme Court ruled that they are 
supposed to be able to have an audit from the union as opposed 
to just a categorical assertion of this money was expended for 
these broad categories. And you are stifling them from looking 
beyond that assertion.
    Mr. Feinstein. We certainly do not intend to be doing that. 
The way that we have approached these cases is there are two 
stages to the process. One is an obligation on the part of the 
union to provide information about what the expenditures are, 
and that information has to be sufficient to allow an 
individual to be able to decide whether or not they wish to 
make a challenge. And if they do so, then they are at stage two 
in the challenge. We simply require them to come forward with 
sufficient information consistent with how we would treat any 
case----

                   appointment of new general counsel

    Mr. Istook. But what you ordered is them from developing 
information that you say they, therefore, must come forward 
with, which is a Catch-22. But I wanted to ask, are you 
intending to stay on longer since your term expired. Is an 
appointment pending or what?
    Mr. Feinstein. There is an appointment pending. The 
Administration has sent up a name to be confirmed, and I am 
certainly very hopeful and would love for the Senate to proceed 
in the confirmation, and I will be gone just as soon as that 
occurs.
    Mr. Istook. Okay. I will follow up, Mr. Chairman, with the 
record with some questions to flesh these things out. But I 
would certainly hope--I would really like, gentlemen, to work 
together on resolving these things. But when all we have is 
just requests for more money and more people, and not 
cooperation to get to the heart of the problem, it is very 
frustrating for us. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Istook. Mr. Hoyer.

                   impact of $10.5 million reduction

    Mr. Hoyer. Thank you very much, Mr. Chairman. I do not know 
whether my facts are accurate. I do not know whether you know 
them. Perhaps one of my Republican colleagues can help me. But 
as I understand it, the Republican resolution that is on the 
floor today proposes a $10.5 million reduction in your budget, 
which I presume is from the $184.45 million, Fiscal Year 1999. 
And then, thereafter, from 2001--that is, the beginning of the 
21st century--to 2008, a cut of another$29.8 million--excuse 
me, $22.8 million decrease each year, from 2001 to 2008.
    Mr. Porter. If the gentleman will yield?
    Mr. Hoyer. Is that correct?
    Mr. Porter. We are appropriators. We do not pay any 
attention to what the Budget Committee suggests we do. 
[Laughter.]
    Mr. Hoyer. The wisdom of our Chairman always impresses me. 
[Laughter.]
    But if that is correct, Mr. Chairman, presumably what that 
will do is by 2008 that will do away with the NLRB. Now, I do 
not know--that is the information I have from the information 
that we have, and I have not looked at the budget specifically. 
Does anybody know, on the panel, that?
    Okay. Let us assume that a $10.5 million decrease is either 
proposed, as has been done in the past, when we have had 25 
percent proposed reductions. What impact will that have on 
either the handling of the backlog or on the enforcement of the 
NLRA?
    Mr. Truesdale. Well, I guess I would like to give a very 
short answer to that question, and then ask your permission to 
submit perhaps a more detailed answer for the record. But my 
short answer would be----
    Mr. Hoyer. That would be fine.
    Mr. Truesdale. But my short answer would be, I think that 
it would be devastating.
    [The information follows:]

    A $10 million cut from the FY 1999 budget of $184,451,000 
would reduce the FY 2000 budget to $174,451,000 which is 
practically the real dollar equivalent of the Agency's FY 1998 
funding.
    Under such a funding scenario, we could only afford 1,649 
FTE in FY 2000. The Agency would be forced to absorb the 
projected 4.4% Federal pay raise that the President has 
projected in his FY 2000 budget and other cost increases such 
as the inflationary adjustment for space rent. The much-desired 
and anticipated increases for training would continue to be 
suspended for another year.
    Most significantly, the core objectives of the Act would be 
compromised, as lack of staffing would lead to 5,500 fewer 
dispositions in FY 2000. Backlogs would more than double. The 
public would have long waits before the Agency could begin 
investigating newly filed charges. Elections could not be held 
on a timely basis. The NLRB would have to continue short term 
funding restrictions for casehandling purposes, such as 
requiring parties to come into the regional offices at their 
own expense to interview witnesses, meet with regional staff 
and conduct business, rather than having agents available to 
travel and meet with parties. Telephonic investigation would 
have to continue as well. The Agency's investment in 
information technology would again suffer significant delays in 
completion.

                     breakdown of backlogged cases

    Mr. Hoyer. Looking at the budget request, you are asking 
for a--you are looking for an increase in the budget of 122 
FTEs.
    Mr. Truesdale. That is right.
    Mr. Hoyer. I presume that is based upon your needs to 
resolve the backlogs?
    Mr. Truesdale. Right.
    Mr. Hoyer. How many of the cases that are backlogged are 
grievances either of unions or individual workers as opposed to 
grievances of employers? Do you have that breakdown?
    Mr. Truesdale. I do not have that at my fingertips, but 
that would be the--that information is available. Maybe the 
General Counsel has it?
    Mr. Feinstein. Yes, I would just say that in approximately 
80 percent of our cases an employer is a respondent, and in 20 
percent, if I am not mistaken, the union is the respondent. And 
we do not have specific figures on it, but we could see if we 
could pin down whether the backlog would reflect that breakdown 
as well.
    Mr. Truesdale. And you did mention individual workers who 
sometimes file charges against employers and sometimes against 
unions.
    Mr. Hoyer. I would be interested in that breakdown for the 
record, because I am sure we are going to consider your budget 
in that framework.
    [The information follows:]

    Approximately 84.6% of unfair labor practice charges 
pending at all levels of the NLRB have been filed by individual 
employees or unions against employers. The remaining 15.4% have 
been filed by individual employees or employers against unions. 
The Agency does not collect statistics on charges filed solely 
by individuals.

    Mr. Hoyer. You obviously have a pretty long experience at 
the NLRB. I do not have those figures in front of me, but, in 
terms of the backlog, we have reduced from 1984, when you had a 
complement of 2,736 people--as a matter of fact, during the 
Clinton years, you have had a much lower FTE than you had 
during the Reagan years--and Bush years, for that matter. To 
what extent does the backlog relate to that reduction? And to 
what extent--and you may have to answer this for the record--
the point that Mr. Istook made, which is valid from a certain 
perspective, that if you do not have an escalator for 
thresholds, and your inflation pushes up the value or decreases 
the value of the dollar threshold, in effect, you will, 
therefore, have more cases that are available within your 
jurisdiction. Can you comment on the backlog to the extent that 
it relates to FTEs, lack of budget, lack of ability to solve 
cases, or to the increased number of cases because of the, in 
effect, jurisdiction creep, I will call it.

               impact of agency staffing on case backlogs

    Mr. Truesdale. Well, there are two different areas involved 
here. One is the backlog of cases in the field. And I think 
that would be very directly related to the number of FTE 
available to handle those cases and, to some extent, I think we 
are unable to tell you what the percentage of those cases in 
the field are because of the threshold not having been raised.
    At the Board level, the backlog is also very directly 
related to the turnover of Board Members. At the peak of the 
Board's backlog, in the middle 1980s, when it was something 
like 1,647 cases pending at the board level, it was very 
directly related to the fact of constant turnover of Board 
Members, vacancies that existed went unfilled. I remember at 
one point, I think from 1979 to 1989, there were like 19 
different people who served on the Board. It is very difficult 
to get cases out when, before you can get a case ready to 
issue, the people who have voted on it are gone.
    But also involved in the backlog at the Board is the 
shortage of staff to work on them. So it is those two factors.
    Mr. Hoyer. If you could please reference the latter point, 
jurisdictional creep. It is a point that will, I am sure, be 
raised at mark up. We ought to have some answers for it. Thank 
you.
    [The information follows:]

    ``Jurisdictional creep''--that is, the impact of inflation 
of the Agency's standards for the discretionary assertion of 
its statutory jurisdiction and what if anything to do about 
it--is a matter that deserves careful study and consideration. 
It is uncertain whether changes to the jurisdictional 
thresholds to take account of inflation would reduce or 
increase the Agency's workload. On the one hand the number of 
charges brought before the Agency may decrease but on the other 
hand it is possible that there would be a need to investigate 
jurisdiction and possibly litigate this issue in more cases. 
The impact of such a reduction on the legal protections 
available to employers and employees is likewise uncertain. Any 
efforts to address this issue should include careful study of 
the nature and extent of the problem and the likely 
consequences of any solutions.

    Mr. Porter. Thank you, Mr. Hoyer. Mr. Dickey.

                            agency staffing

    Mr. Dickey. Chairman Truesdale, is it Truesdale? And it is 
Feinstein? All right. How many staff members do you have right 
now?
    Mr. Truesdale. At the board?
    Mr. Dickey. The whole thing.
    Mr. Truesdale. Eighteen hundred and eighty.
    Mr. Dickey. How many in Washington? Mr. Feinstein, how many 
counsels do you have? How many lawyers do you have under your 
jurisdiction?
    Mr. Feinstein. How many lawyers specifically? I do not know 
that number off hand. I would think that it is--Harding, do you 
have that breakdown? I believe it is here. What I have is there 
are approximately 630 attorneys in the combined field and 
headquarters offices of the General Counsel.
    Mr. Dickey. Okay, how many under the Board?
    Mr. Truesdale. As of February 28, 1999, there were 149 
attorneys on the Board side of the agency, including five Board 
Members, 61 administrative law judges, 67 Board Member staff 
attorneys, 10 attorneys in the Office of Representation 
Appeals, 2 in the Office of the Solicitor, 2 in the Office of 
the Executive Secretary, and 2 in the Office of the Inspector 
General.
    Mr. Dickey. What does that total come to?
    Mr. Truesdale. One hundred and forty-nine.
    Mr. Feinstein. I think some of those were included--general 
counsels, I know.
    Mr. Truesdale. On the General Counsel side of the agency, 
there are 630 attorneys in the field offices and headquarters.
    Mr. Dickey. So if we add 630 and 148, we would get the 
total?
    Mr. Feinstein. That would be 149 and 630 would be 779 out 
of 1,080 [Clerk's note.--Later corrected to 1,880].
    Mr. Dickey. What is the average salary of the attorneys? Do 
you all know?
    Mr. Truesdale. I would be able to supply that for the 
record.
    [The information follows:]

    The average salary for our attorneys is $86,778.

                         previous year caseload

    Mr. Dickey. That is okay. That is fine. And the case load 
is going down or is staying the same or going up?
    Mr. Truesdale. Case load last year went down by about seven 
percent, I believe. As of this year, I think we do not have the 
figures yet which show what it is this year. But seven percent 
down last year.
    Mr. Dickey. Do you have the figures on how many cases have 
been dismissed because of lack of merit?
    Mr. Truesdale. Traditionally--we can supply the exact 
figures--but traditionally, year in and year out, throughout 
the entire history of the Board, about two-thirds of the cases 
are withdrawn or dismissed for lack of merit. About one-third 
are found to have merit; and of those, about 95 percent are 
settled. A very small percentage of cases actually get to the 
Board.

                        number of field offices

    Mr. Dickey. How many regional offices do you have?
    Mr. Truesdale. Thirty-three.
    Mr. Dickey. Is that right?
    Mr. Feinstein. Are you talking about field offices?
    Mr. Truesdale. Regional, yes. Field offices I think it is 
51.
    Mr. Dickey. Okay, so it is 33----
    Mr. Truesdale. Thirty-three regional offices, and then 
there are subregions and resident offices.
    Mr. Dickey. So 51 takes in all offices?
    Mr. Truesdale. Right.
    Mr. Dickey. It has been 50--it was 52 in 1998, it looks 
like. Do you have any plans to close any of those offices?
    Mr. Truesdale. Well, a study was done of the field 
structure, using a formula involving the number of cases filed, 
geographical requirements, and some other factors I cannot 
repeat right off hand. And a recommendation was made to the 
Board by the General Counsel with respect to some restructuring 
of field offices, which we are now considering and also have 
distributed internally for comment. And we will plan before any 
decision is made to get the views of the stakeholders in this 
operation--the labor management bar and so forth.
    Mr. Dickey. Do you think timing wise that that would be 
before we would consider the appropriations?
    Mr. Truesdale. I must say, I do not know what time period 
is that?
    Mr. Dickey. We do not know. What is our time line?
    Mr. Porter. You mean before we mark up?
    Mr. Dickey. Right.
    Mr. Porter. We will probably mark up third or fourth week 
in May.
    Mr. Dickey. Could you have that before then? I mean, that 
recommendation?
    Mr. Truesdale. It could be. I just do not know.

                 multiple offices in metropolitan areas

    Mr. Dickey. You have--I think, as I recall or my 
recollection, you have three field offices in Los Angeles.
    Mr. Truesdale. Two.
    Mr. Dickey. Two.
    Mr. Truesdale. Two with a resident office in San Diego. Two 
in Los Angeles.
    Mr. Dickey. Do you think that would be--you do not have two 
in any other city, do you?
    Mr. Truesdale. There are two in the San Francisco 
metropolitan area; one in San Francisco, and one in Oakland. 
There are three in the New York metropolitan area; one in 
Manhattan, one in Brooklyn, and one in Newark. What governsthat 
is what can a regional director of that office, how many cases can that 
management structure handle efficiently and still provide good service 
to the public. The two Los Angeles offices are very large, as is San 
Francisco and Oakland, as are the three New York offices.
    To combine them would, well--no decision has been made, but 
to combine them might well create a very unwieldy structure.

                impact of chairman's agenda on caseload

    Mr. Dickey. Mr. Feinstein, you heard the--you heard 
Chairman Truesdale's agenda statement. That is quite different 
than what has been before, is that correct? Do you agree with 
that?
    Mr. Feinstein. Yes, it is.
    Mr. Dickey. Is it going to require any different actions on 
your part?
    Mr. Feinstein. I am not sure what you mean. I do not know 
if you were here when I said that the approach that the 
Chairman has articulated is very welcome. It is one that I 
wholeheartedly endorse. And it is one that we are very 
appreciative of.
    Mr. Dickey. Can I have one more question. Will that take 
less--if we follow that approach, and judges are judges and not 
activists, will that take away from the case load?
    Mr. Feinstein. I am not sure.
    Mr. Dickey. Okay, that is all the questions I have. Thank 
you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Dickey. Ms. DeLauro.
    Ms. DeLauro. Thank you very much, Mr. Chairman, and welcome 
Chairman Truesdale. Welcome to all of you.

              impact of raising jurisdictional thresholds

    For the last several years in markups on the floor, we have 
been deliberating a proposal to exempt many small businesses 
from NLRB jurisdiction. Let me just ask you some basic 
questions regarding this proposal, which, over the last several 
years of debate on the proposal, I do not think have been 
answered. I am not looking for lengthy answers here. If there 
is more stuff to put into the record, we can do that. But let 
me just run down some questions if I might.
    Would such a proposal necessarily free up NLRB resources as 
the proponents claim on these thresholds, jurisdictional 
thresholds?
    Mr. Truesdale. Well, I do not know if you were here when we 
were discussing this with Congressman Istook. I do not know 
that that question can be answered.
    Ms. DeLauro. Would this represent a cost shifting to States 
without additional resources, if you will, an unfunded mandate 
of sorts?
    Mr. Truesdale. I think we just do not know the answer to 
that.
    Ms. DeLauro. Do you know the number and types of businesses 
and the number of employees that would be affected by this 
proposal?
    Mr. Truesdale. No.
    Ms. DeLauro. How many states do not have similar labor laws 
to protect workers against unfair labor practices?
    Mr. Truesdale. There is an organization called the 
Association of Labor Relations Agencies, which is exactly what 
it sounds like, an association of all State, Federal labor 
relations agencies in the United States and Canada. They have a 
report which shows the statutes of the various member agencies 
of ALRA, and we would be glad to furnish that for the record.
    [The information follows:]

    The Association of Labor Relations Agencies' report, ``A 
Summary of U.S. and Canadian Collective Bargaining Laws'' 
(1997) is provided. The association plans to issue a more 
complete summary later this year.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Ms. DeLauro. Do you know how the protections of workers in 
exempted businesses in each of the 50 States would be 
potentially diminished under State laws in each of the 50 
States?
    Mr. Truesdale. No.
    Ms. DeLauro. How would raising the jurisdictional 
thresholds affect businesses with locations in more than one 
State?
    Mr. Truesdale. Well, I would be reluctant to try to answer 
that question off the top of my head.
    Ms. DeLauro. I understand that when this issue of changing 
the jurisdictional thresholds was first raised as an 
appropriations rider in 1996, the NLRB's advisory panel of 
25management attorneys cited concerns about the potential adverse 
impacts of such a proposal, such as unfair pickets against small 
employers, and recommended the need for further research before such a 
proposal is enacted, is that correct?
    Mr. Truesdale. That is my understanding but that occurred 
during a time when I was in retirement, so I can only tell you 
what I have heard. It is hearsay.
    Mr. Feinstein. I was there and that does reflect what was 
said.
    Ms. DeLauro. Thank you. Let me ask a couple more questions 
of different issues.

                    impact of closing field offices

    There obviously is always room for additional savings, but 
can you tell us if after all of the efforts--and let me just 
clarify in terms of savings for a moment--that you have taken 
steps to reduce office space, close unneeded field offices. You 
have got some employees working out of their homes in areas 
where an office may not be needed. I think we all commend those 
efforts, and believe that there are a lot of other agencies 
ought to--that ought to emulate that kind of effort.
    As I say, I am sure there is always room for more savings. 
Can you tell us if after all of these efforts, it is possible 
to close any more offices or reduce staff without further 
impeding the ability to carry out the NLRB's mission?
    Mr. Truesdale. Well that raises again the subject that 
Congressman Dickey posed with respect to field restructuring, 
which the Board has a proposal now which it is considering. As 
to whether it saves money, there are many different factors 
involved in that.

                  training and information technology

    Ms. DeLauro. What kind of training would you be able to do 
in terms of--or are you able to do the kind of training you 
think that needs to get done in order to have people do the job 
that is needed, and can do the proper kinds of investigation. 
What are--what do you view as your ability to improve the 
technology, again, to help to carry out the mission of the NLRB 
given the current cutbacks, et cetera.
    Mr. Truesdale. Well, this appropriation that is requested 
would enable us to resume training, which has been practically 
non-existent in recent years and also to complete our case 
activity tracking system, which has been delayed for perhaps 
two and a half years. It would have been done by now, and, as I 
expressed to Chairman Porter earlier, would enable us to 
complete that by Fiscal Year 2000.
    Mr. Feinstein. If I may simply add, the kinds of training 
we would like to do, and we have been able to do in the past, 
but not recently, would include trial training, investigatory 
training, training of our investigators about new developments 
in the law and new investigative techniques, supervisory 
training--how to supervise, how to manage. We have a whole 
corps of new supervisors and managers who have hardly had any 
training at all in how to perform that role. Of course, 
technology is a big element in training. As we move into more 
electronically oriented case tracking systems, we cannot do 
that without extensive training--and training in case 
developments. So there is a whole host of training which we 
would like to develop, which we have people eagerly 
anticipating the ability to develop in the future. And would 
greatly enhance the quality of the work that the agency does.
    Ms. DeLauro. In addition to the quality of the work, would 
that enhance the ability to deal with the backlog?
    Mr. Feinstein. I think it would certainly help us in that 
regard as well.
    Ms. DeLauro. And then in being able to deal with both 
training and technology and efforts in reducing the backlog, 
would, in fact, allow you to do what the NLRB was supposed to 
do in terms of its mission, to be able to----
    Mr. Truesdale. It would improve our timely processing of 
cases and service to the public.
    Ms. DeLauro. And to allow you to make sure that, in fact, 
American men and women, American workers are protected in 
these--in having their rights respected in terms of what the 
mission of the NLRB is?
    Mr. Truesdale. Well, it would enable us to enforce the 
rights and responsibilities of employees, employers, and 
unions.
    Ms. DeLauro. Okay. Thank you very much, Mr. Chairman. Thank 
you, Mr. Truesdale.
    Mr. Porter. Thank you, Ms. DeLauro. Ms. Lowey.
    Mrs. Lowey. I thank you, Mr. Chairman. And thank Mr.--
Chairman Truesdale. I am delighted to join my colleagues in 
welcoming you to the committee, and I hope this committee will 
give you the resources that you need because I know that you 
are working hard to moving cases to conclusion. And it is 
certainly very welcomed to this member.
    In your testimony, Chairman Truesdale, you state that 
clearing the backlog--and I know there has been a lot of 
discussion of that, of pending labor practices and 
representation case load, before the Board will take 
extraordinary effort.

               effect of case delays on parties involved

    I would like you to do two things. First, can you elaborate 
on how you intend to handle these pending cases? And secondly, 
can you explain to us what effect this backlog has on the 
companies waiting for the resolution of disputes?
    Mr. Truesdale. Well, we have a number of very old cases 
pending before the Board, as I indicated earlier in response to 
other members of the committee. And I know that myself, I 
cringe when I see the age of some of these cases that we are 
issuing. And if I were an employee, an employer, or union on 
the receiving end of one of these very old cases, we are not 
doing them any service unless we can get more prompt decisions 
out. As I said earlier, we need to be writing decisions, not 
epitaphs.
    Mrs. Lowey. Thank you. I am also impressed with the use of 
your Website and information officers to make judgements about 
the appropriateness of complaints as they enter the NLRB 
system. Can you share with us a sense of the money saved as you 
move these efforts forward?

                       efforts to reduce caseload

    Mr. Truesdale. There is a very elaborate information office 
program in the field, which is geared to try to reduce the 
filing of charges which, of course, are those that do not 
involve our statute at all, or those which seem to be only 
tangentially involved with respect to our statute. Perhaps they 
are more likely a Wage and Hour or EEOC or something so that 
people coming to the regional offices can be sent to the proper 
place. We think that has reduced the number of cases coming to 
the Board in very large part.
    The General Counsel negotiated an agreement with the Postal 
Service and the Postal Service unions, which has reduced the 
number of cases by about a thousand; to have them handle the 
cases themselves through a procedure that was negotiated rather 
than by coming to the Board.

                             agency website

    The Website has gotten high marks. I was at a meeting 
recently where I was told by both management and union lawyers 
that they consider the NLRB Website to be one of the very best 
government websites they have seen. And I know that because 
people can come on to NLRB's Website and get information at a 
Help icon, for example, that tells them where to go if their 
problem is not one that can be handled by the Board. So the 
Website, I think, is very helpful to the public in getting 
service from the Board.

                 improvements in information technology

    Mrs. Lowey. You also, Chairman Truesdale, referred in your 
testimony to improving information technology to enable the 
staff to operate in the 21st century. I just wonder if you did 
not really mean the 20th century? Based upon information, we 
have been receiving these years, the NLRB staff has been 
struggling with its very limited resources to get updated 
hardware and software for about half of your employees to date. 
How will your requests for information technology help to 
improve the productivity of your staff?
    Mr. Truesdale. Well, our Case Activity Tracking System has 
been delayed about two and a half years through lack of funds. 
But the funds included in this appropriation request will 
enable us to install that in all the regional offices by Fiscal 
Year 2000, and in headquarters offices by the beginning of 
2001.
    Also, it enables our staff, both in the field and in 
Washington, to conduct their legal research online in a much 
more efficient way.
    Mrs. Lowey. I have to tell you, Chairman Truesdale, since I 
got onto this committee--actually, since I have been a member 
of Congress, it had always been beyond my belief that within 
the same agency, the computers do not talk to each other, and 
various programs cannot communicate with each other. I find it 
absolutely extraordinary. So I would be interested in hearing 
as you update your technology and become Y2K compliant, are you 
assuring that your employees across the nation can communicate 
effectively with their colleagues?
    Mr. Truesdale. I believe they can do that now. They can 
share documents. I can, at my computer, and I have done this--
sent an e-mail to anybody at the NLRB. You can send one to me 
at [email protected], and----
    Mrs. Lowey. That is impressive, Mr. Chairman. I wonder how 
many agencies can say they can do that?
    Mr. Porter. Are you suggesting they do not need any money 
for new technology?
    Mrs. Lowey. No, they do. [Laughter.]
    Mr. Feinstein. I would just add to that--we do have e-mail, 
but it does break down, and it is over capacity, and that is 
one of the things that we hope to be able to do----

                             budget request

    Mrs. Lowey. Well, just to end on a very positive note, 
because we want to support all your good work--what level of 
funding would you need to reduce your current backlog and to 
prevent future backlogs, because we want to be as helpful as we 
can, knowing of your very important work.
    Mr. Truesdale. Two hundred and ten point two million.
    Mrs. Lowey. Well, I think that is a good note to close on. 
I thank you, Chairman Truesdale, and I am sure our Chairman has 
paid a good attention to your----
    Mr. Porter. That is the note we started on also, I might 
add. Chairman Truesdale, we--as I said, I think that it is 
wonderful that you have come back out of retirement to take 
this position. I think it will put the Board on exactly the 
right course for the future. I think it will end a lot of the 
divisiveness that we have seen between this subcommittee and 
the Board. And we are just delighted that you are fulfilling 
this position, and we wish you well. I am certainly anxious to 
give you the resources you need to do your job even better.
    Mr. Truesdale. Thank you and let me tell that it is an 
honor for us to appear before you, Chairman Porter. I know that 
you have had a long and distinguished career in the House. I 
think I mentioned when I met with you earlier that we have 
mutual--I do not know if you can say friends, but at least 
mutual acquaintances in your district in Illinois. And I have 
looked forward to appearing today. Thank you very much.
    Mr. Porter. Thank you very much, sir. The subcommittee 
stands in recess until Tuesday, April 13, at 10:00 a.m.
    [The following questions were submitted to be answered for 
the record:]

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                                           Tuesday, April 27, 1999.

                     SOCIAL SECURITY ADMINISTRATION

                               WITNESSES

KENNETH S. APFEL, COMMISSIONER OF SOCIAL SECURITY
YVETTE S. JACKSON, DEPUTY COMMISSIONER FOR FINANCE, ASSESSMENT AND 
    MANAGEMENT, SOCIAL SECURITY ADMINISTRATION

                       Introduction of Witnesses

    Mr. Miller [presiding]. Good morning. Mr. Porter is running 
late, but he will be here shortly. He has asked if we will go 
ahead and proceed.
    Mr. Apfel, if you would introduce Ms. Jackson and make your 
opening statement. We will proceed, and I think Mr. Porter will 
be along shortly.

                           Opening Statement

    Mr. Apfel. I am pleased to be here today, Mr. Miller, and I 
look forward to seeing the Chairman, and Mr. Obey as well, to 
present the President's budget request for the Social Security 
Administration.
    I am accompanied today by Yvette Jackson, Deputy 
Commissioner for Finance, Assessment, and Management.
    As you know, of our total fiscal year 2000 budget of $441 
billion, more than 90 percent is permanently appropriated for 
benefit payments. The budget requests before you today cover 
our program administration costs and our general fund-financed 
programs.
    A budget is as much about values and priorities as it is 
about numbers. The Social Security Administration's fiscal year 
2000 budget is about providing financial security for older 
Americans and for American families after the death or 
disability of a wage-earner. And it is about providing quality 
service each and every workday to millions of claimants and 
beneficiaries.
    Let me briefly outline three specific areas of emphasis in 
the administrative budget request now before you: Ensuring 
retirement security for future generations; strengthening 
agency management; and improving the administration of the 
disability programs.
    I believe one of our highest priorities should be to 
strengthen and preserve Social Security for future generations. 
The demographic challenges that we face are real, and early 
action is the responsible course.
    We believe that meaningful progress can and should be made 
this year towards resolving the long-range solvency issue, and 
the Social Security Administration welcomes the opportunity to 
work closely with the Congress in this effort.
    Let me also say that because the Administration and 
Congress should have the best information available to craft 
policy, I have made improving research capability a top 
priority. SSA's 2000 budget provides $30 million to research 
and evaluate long-range financing proposals. As part of this 
effort, many of the Nation's top social insurance scholars are 
working in a research consortium we have established under 
cooperative arrangements with Boston College and the University 
of Michigan.
    We are also working to increase the public's awareness of 
Social Security's importance in their lives and of the need to 
strengthen and preserve this program. The Social Security 
Administration has conducted well over 5,000 public events and 
media opportunities on this issue and held many bipartisan 
forums with Members of Congress on both sides of the aisle. And 
in fiscal year 2000, a Social Security statement will for the 
first time go to every worker over age 25. This statement 
provides both a record of earnings and an estimate of future 
Social Security benefits, and it is a proven tool for 
increasing public knowledge about the program.
    I will now turn to administrative and management concerns. 
Our fiscal year 2000 budget request recognizes the need, and 
provides for, improved program management. Several significant 
initiatives are outlined in my written testimony. I will cite 
just two here: anti-fraud initiatives and improved SSI 
management.
    The public rightfully expects us to be careful stewards of 
its tax dollars. SSA understands this obligation. Over the last 
4 years, thanks to the support of Congress, we have doubled the 
investigative staff of our Office of Inspector General (OIG). 
The fiscal year 2000 budget supports further anti-fraud efforts 
by OIG and our offices across the country. For example, we want 
to enhance on-line access to State records, expand residency 
verification for Supplemental Security Income (SSI) applicants 
and recipients in our border offices, and improve our systems 
security measures.
    The SSI program is an irreplaceable safety net for millions 
of our most needy citizens, but the program can be better 
managed. Last October, after a comprehensive review of the SSI 
program, we issued a report that outlined steps we will take to 
improve our overall payment accuracy, increase the number of 
CDRs, continuing disability reviews, and improve our debt 
collection efforts. Our 2000 budget requests include resources 
to enable the agency to process 2.2 million SSI nondisability 
redeterminations of income. This will help ensure that people 
receiving SSI payments meet eligibility requirements and 
receive the right payment amount.
    Another area of emphasis in our 2000 budget request is 
improved administration of our disability programs. This is a 
long-standing agency challenge and a critical one, and I know 
the committee shares this opinion. Our budget supports a plan 
for meeting four primary goals: improving the disability 
adjudication process, creating more opportunities for 
beneficiaries to return to work, safeguarding the integrity of 
the disability programs, and creating a knowledge base for the 
next century. In this larger area, just as we have done in the 
retirement policy area, we are working with researchers across 
the country to better understand the disability program issues 
and craft policy initiatives.
    In conclusion, let me say that the 2000 budget request of 
$6.7 billion [Clerk's note.--Later corrected to $6.706 billion] 
for the Limitation on Administrative Expenses account (LAE) now 
before this committee isfiscally prudent, reflecting an 
increase of $20 million [Clerk's note.--Later corrected to $280 
million] over 1999. This budget request will support not only vital 
agency initiatives such as I have just outlined, but our day-to-day 
operating expenses as well, including: paying benefits to more than 49 
million people each and every month, taking 6 million new benefit 
claims, answering 60 million calls to our toll-free 800 number, issuing 
more than 16 million new and replacement Social Security cards, and 
posting 59 million [Clerk's note.--Later corrected to 259 million] 
annual earnings items for covered workers.
    To continue providing these vital services to the American 
public, we are proposing that staffing be maintained at current 
levels. I think this is very important. We are an agency under 
some stress given our workloads, and I think continuing our 
current staffing levels is essentially important. With your 
approval of the budget request now before you, we will be able 
to prepare for the challenges in the next century by building 
on a solid record of accomplishment over the past year.
    I take special note of the fact that last year the Maxwell 
School of Citizenship and Public Affairs at Syracuse University 
conducted one of the most comprehensive studies of government 
ever. SSA received the highest marks among 15 Federal agencies 
surveyed. I believe that is a tribute to the dedication and the 
professionalism of my agency's work force. And to help us 
maintain a stable level of staffing despite increasing 
workloads, the administration is proposing to redirect up to 
$100 million from the Automation Investment Fund to base 
workload operations.
    As I noted when I began my statement, the budget reflects 
values and priorities. The Social Security Administration's 
2000 budget reflects our continuing commitment to ensure a 
foundation of economic security for working Americans and our 
continuing efforts to provide the best public service possible.
    With your approval, I will submit for the record full 
written testimony discussing the appropriations requests in 
greater detail. Thank you, sir.
    Mr. Miller. Thank you for the statement, and hopefully 
other Members will be joining us soon, and we appreciate it.
    [The prepared statement follows:]

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                       erroneous report of death

    Mr. Miller. Let me ask a few questions. I will start with a 
situation in my home area, Sarasota, Florida, Bradenton 
Florida, which is down on the Gulf of Mexico side.
    Mr. Apfel. South of St. Pete.
    Mr. Miller. Yes, immediately south of there. There was a 
lady declared dead by Social Security and caused a problem, 
there is an editorial in the Sarasota paper this morning about 
it, and it has been corrected. The Social Security office 
locally has been very helpful and appreciative and moving to 
resolve it. However, it happened. Does that happen very often?
    This is a Regina Redman of Ellington. There has been a 
number of articles in the local paper. She has been resurrected 
from dead 4 months after the Social Security Administration and 
other agencies got her into this bureaucratic nightmare. And 
they mention in this editorial about another case of an 84-
year-old man in Connecticut. Does that happen occasionally?
    Mr. Apfel. It does happen occasionally, and part of it is--
we have to rely upon State and local death records to help us 
determine eligibility and when payments should be stopped. It 
is one of the things we are trying to do----
    Mr. Miller. There is no death record on this lady.
    Mr. Apfel. What happened here is clearly because of 
inaccurate information we received on a death. One of the areas 
that we are working towards is the whole area of better 
computer matches with States and localities to deal with 
earnings; also with banks to deal with assets, and States and 
localities to deal with child support payments, work, and death 
reports; also prisoner records. The whole area of integrity of 
our programs is strengthened to the extent that we can do 
better data matches to more accurately capture, as soon as 
possible, the status of individuals and their changes as they 
take place.
    Clearly there are errors. We are relying to some extent on 
information coming into the agency from other sources, and what 
we have to be able to do is a better job using an automated 
system to capture the best data possible.
    On this particular case, I think that our field offices go 
overboard when there are situations like this to try to help 
resolve the issue. If you, sir, have a problem that you 
confront, let us know immediately, and we will do everything we 
can to resolve it.
    Mr. Miller. I have had a very positive relationship with 
the local office, and I have got as many seniors as anybody 
else in the country. In fact, this editorial says, to its 
credit, the Sarasota Manatee Regional Office of Social Security 
Administration helped Redman clear up the problem with other 
Federal agencies. You are given credit. Of course, they still 
make light of the fact she was declared dead. Apparently they 
seized a bank account, and it got messy, but it got resolved.

                      year 2000 systems compliance

    Because of the computers, it brings up the Y2K. You all got 
rated fairly high on that. It is such a huge agency. Just about 
everybody in America has to be in your computer system. Briefly 
tell me how you were successful in being rated so successful on 
Y2K and being, to me, one of the largest, most complex agencies 
to do that. Are you fairly far along technology-wise?
    Mr. Apfel. We are compliant on Y2K within Social Security. 
I would like to take full credit for this within Social 
Security, but the Social Security Administration started these 
endeavors nearly a decade ago. Because we are a long-vision 
agency, nearly a decade ago someone realized that we had to be 
worrying about benefit payments that were spread out over a 
lifetime and that triggered beyond the year 2000. So some of 
the young staffers in the organization said, hey, we have a 
long-term problem out there, so we got on it roughly 10 years 
ago. That has taken millions of computer lines to be rechecked. 
We have been certified now--the Social Security Administration 
is fully Y2K-compliant in all of its systems.
    We have also worked with the Treasury Department since the 
checks are actually cut through theTreasury Department and the 
Federal Reserve Bank to assure that the entire Federal community is now 
complete and certified independently, and is ready for the Y2K 
challenge.
    We have also established--which is, again, ahead of the 
curve for most Federal agencies--contingency plans so if there 
are problems in an area, how would we try to resolve that; if 
there were a problem with, say, a particular bank that had 
trouble getting an electronic transaction, what would we do to 
resolve that. We have done a lot of work and spent millions of 
dollars. I think, Yvette, we are up to $40 to $50 million spent 
on this endeavor, and we are a leader in this at the Federal 
level.
    I think it says a lot about our automation systems and the 
commitment of our people to stay one step ahead of the curve, 
and this is another area where this is the case.

                         field office security

    Mr. Miller. I was visiting the office in Bradenton a few 
months ago. You have ended up having a full-time security 
person, you know, an off-duty police officer that stays there 
in the lobby. Is that common?
    Mr. Apfel. It is common. About three-quarters of our staff 
are now protected with security employees, and that is a major 
commitment, about a doubling at least of our resources in 
this--just over the last 2 and 3 years. We have heard from our 
employees, and they have said, we would like protection here, 
and we do deal with individuals with mental impairments in 
cases, so we have significantly increased our security 
structure for the agency. And I think it is the right thing to 
do. It costs money, there is no doubt, but I think it is the 
right thing to do.
    Yvette, I don't know, will you have details on the actual 
resources we have spent on security?
    Mr. Miller. Is that increasing--has that increased over the 
past few years?
    Ms. Jackson. We have more than doubled our spending on 
uniformed security guards since 1995. In 1995, we were spending 
approximately $33 million per year on security guards. We are 
now spending over $70 million; $72 million anticipated for the 
year 2000, and that is in addition to other security measures 
that we have put into place to protect both our employees and 
the public coming into our field offices.

                        need for level staffing

    Mr. Miller. With the aging of America, the big growth comes 
in year 2010, I guess it is starting to build up then. What are 
you gearing up for to do that? You are asking for fairly flat 
funding this year; is that right?
    Mr. Apfel. We are.
    Mr. Miller. Is that a realistic flat funding?
    Mr. Apfel. We are asking not for flat funding. We are 
asking for flat staffing. I think that right now we should not 
be downsizing our staff. I think that we have staffs that are 
basically feeling like they are being very challenged by the 
amount of work that is coming in the door.
    If we look 10 years in the future and 15 years in the 
future and then 20 years in the future, and a doubling of the 
number of older Americans, our workloads are going to 
significantly explode in the outyears. It is true not only for 
our retirement cases, but also for some of the disability 
cases. Given the onset of disability in one's 50s, as the baby 
boomers start moving into their 50s, we may see as well, and 
there are projections of this, increases in disability cases 
moving towards the next decade as well.
    So we do face some very large workload pressures in the 
course of the next decade ahead. Our request for resources is 
predicated on the fact that I don't think we can downsize staff 
at all because of the pressures that we are under.
    It is also essentially important, sir, that our automation 
endeavors continue. If we look at the retirement system and the 
process for retirement--that will increasingly become 
automated, and that will free up resources over time to focus 
on other activities. But one of the reasons why we have got to 
continue to focus on automation is that it is the only way we 
are going to be able to deal with anything like the workload 
increases that we expect in the future.
    I would also point out that this is an organization that in 
1980 had about 15,000 more staff than exists today. There was a 
significant downsizing of about 15,000 staff during the 1980s, 
and there have been commensurate increases in workloads that 
took place since then. It has been the long-term vision that 
goes well beyond me as Commissioner, to the organization as a 
whole, towards commitment to automation that has enabled us to 
deal with the workload pressures in the past. It is going to be 
the key to dealing with it in the future. But given the 
workload increases, I don't see how it is possible for us to 
reduce in the short term or even in the medium term our staff 
resources now given those workloads that are coming in.

                         internet availability

    Mr. Miller. One final question. Can people get into your 
system--can I get into my account in the computer through the 
Internet, what is available there and what is going to be 
available there?
    Mr. Apfel. There were many in the organization and many 
around the country that thought we shouldn't have had an 800 
number 15 or 20 years ago because that was some new technology. 
It moves away from face-to-face service. The Internet is 
clearly where we need to move next, and electronic commerce and 
electronic interface--we are moving increasingly in the 
direction of a greater electronic interface, whether it is wage 
reporting done electronically, or a lot of other activities. 
You can request an earnings and benefits statement through the 
Internet. You can make the request through the Internet. We 
will mail you the form.
    We did pull back on some of our Internet activities about a 
year ago, year and a half ago, because of concerns about 
privacy, being able to come in through the Internet, access 
your own earnings records, and then have that information 
provided through the Internet. And there were security concerns 
that were raised, and I think it made sense to shut that down 
until we can balance security and privacy with access.
    But it is not a question of whether we are going to be 
doing more Internet connection. It is a question of how quickly 
and when. If we are going to stay up with the technological 
changes in the future, we are going to have to rely 
increasingly on the Internet. That is where our customers are 
going to want us to move.
    Peter Drucker for years talked about the need to reach out 
to your customers to determine what your work should be and how 
you want to serve your customers. Lately I just read an article 
about Peter Drucker where he said to really be a vital 
organization, you have to reach beyond your customers. If you 
really want to increase your market base, you have to be 
finding out where your future customers are and finding out 
what they want.
    What we have tried to do is to reach out to not only our 
beneficiaries, but to reach out to the public and determine 
what form they want to contact us in. That is increasingly the 
phone, and I believe increasingly it will be the Internet. So 
we have to be there for them in the future.
    Mr. Miller. Mr. Chairman, you want to take it? Thank you.
    Mr. Apfel. And, Mr. Miller, I am going to be contacting the 
office and congratulating them for their work they did on 
behalf of this case and about your kind comments on their work.
    Mr. Miller. Thank you.
    Mr. Porter [presiding]. Mr. Commissioner, I apologize to 
you for being late. I was delayed this morning, and I want to 
express my appreciation to Mr. Miller for taking the chair, and 
as always, he always does a very fine job.
    Mr. Jackson.
    Mr. Jackson. Mr. Chairman, I have two questions that I want 
to submit for the record, and let me thank the Commissioner for 
being here today.

                           internet security

    My questions that I have prepared are actually unrelated to 
the ones I actually want to ask as a result of something I just 
heard the Commissioner say.
    The technology is there, in fact, for security on the 
Internet, including requiring an individual to use their Social 
Security number, their date of birth, their address, and any 
other indicators, including a driver's license, identification 
number. Any such variable and/or combination of numbers could 
come together to allow an individual access to their particular 
information, including but not limited to some kind of Internal 
Revenue Service identification number, which I am sure is 
specific to the individuals. And I am wondering, is the Social 
Security Administration aggressively pursuing the creation of 
such security systems so that access to the Internet might be 
more timely?
    Mr. Apfel. We are. We had required five or six different 
pieces of information for an individual to access the Internet, 
and the question is whether that would be sufficient to be able 
to provide the information now. There was a concern by some in 
the privacy world that that was still too little--some of that 
information could be gleaned through other sources and that we 
would be opening the door to individuals receiving information 
on other people's earnings through the Internet. So that is why 
we stopped that process.
    We are exploring different encryption mechanisms and other 
mechanisms to establish the right balance, and then what we 
have to do is determine what the cost is going to be.
    One of the things I think over time that we are going to 
have to be able to do is to figure out a way to deal with this 
issue of the Internet not only as one agency, but 
governmentwide, so that we can start sharing some of the costs, 
and I would say that is one of the areas I would like to 
explore heavily with the IRS. Much more contact is made with 
Americans through the IRS on an annual basis. If we can find a 
way to determine the right encryption and the right technology 
to enable information and then share those costs throughout 
government, I think we can move one step closer on this issue.
    I also should say we will be holding a conference in the 
near future with a half dozen countries from around the world 
to talk about the whole issue of balancing costs and privacy 
with access to the Internet. Again, all the countries want to 
figure out ways, and their governments want to figure out ways, 
to use the Internet for the sake of reduced costs and the sake 
of what individuals are going to want. But we are still a ways 
away from final decisions on several fronts.
    I don't know, Yvette, if you wanted to go on and say 
anything else?

              governmentwide approach to internet security

    Ms. Jackson. The only thing I can add is that we are 
working closely on the project with the General Services 
Administration in trying to develop ways of developing the key 
infrastructure that will allow us to ensure that we know who is 
receiving information on the receiving end to guarantee 
privacy, and we are very encouraged that this project that we 
are involved in with General Services Administration will go a 
long way in developing that governmentwide approach that the 
Commissioner talked about.
    And, again, we are simply trying to find ways to minimize 
the costs involved in ensuring that privacy concerns are 
realized and still give the American public the benefit of 
accessing information in the way that they would like to do.

                         internet domain names

    Mr. Jackson. Let me thank you very much for your response. 
I raised the question completely unrelated to the ones I 
prepared, Mr. Chairman, in part because just the other day I 
was typing in House of Representatives.com and .org only to 
find out that our domain name is owned by a private citizen 
because private citizens can purchase any names that they think 
might be for sale one day on the open market, and it is 
becoming increasingly clear that many of our government 
agencies and entities are behind in terms of where the vast 
majority of people are on the Internet.
    And the tragic fact is Social Security is a critical 
component of our system guaranteeing millions of Americans with 
economic security, and by the time these millions of Americans, 
i.e., baby boomers, are actually in need of their benefits and 
begin to pursue their benefits a lot more aggressively, making 
sure Social Security is leading the way in terms of access is 
going to be obviously critical or there will be a tremendous 
amount of frustration amongst people when it comes to accessing 
those benefits. So I would imagine an agency like Social 
Security should be on the cutting edge of going on-line and 
making some of these services readily available.

                             ssa's webpage

    Mr. Apfel. And I should say that we are on the cutting edge 
within the government on it now. We have a great Web page, if 
you are interested in accessing our Web page. There is 
information, public education material, and sources of 
information for kids through our Web page. It is a very 
consumer-friendly Web page, with accesses and links to other 
sources.
    We took the lead throughout government to create a seniors' 
Web page that interfaced with other parts of the Federal 
Government that deal with older Americans' issues such as the 
Veterans Administration and others to try to increase that 
information.
    So I think we are known to be the leaders. We have still a 
ways to go. To me, this has an unlimited potential. It is not a 
question again of whether; it is a question of how quickly we 
can do this.
    Mr. Jackson. Thank you very much, Commissioner.
    Thank you very much, Mr. Chairman.

                       misuse of government names

    Mr. Porter. Thank you, Mr. Jackson.
    If I can comment just for a second on what you just raised. 
It seems to me that the government ought to pass a law to say 
you can't use a government address that would, first of all, 
mislead people; and secondly, if we don't allow them to, for 
example, to use the word ``Social Security Administration'' on 
a return address on an envelope, why should we allow them to 
use it on the Internet? It seems to me we ought to reverse that 
with legislation, and we ought to require whoever they paid for 
that privilege to give them back the money.
    Mr. Jackson. I think you may be on to something, Mr. 
Chairman.
    Mr. Porter. You put in the legislation, and I will 
cosponsor with you.
    Mr. Jackson. I appreciate that. I will do some research. 
Thank you, sir.

                     comptroller general's comments

    Mr. Porter. Well, Mr. Commissioner, I am delighted you are 
here, and we have access to you for an hour and a half more. We 
have got a lot of good questions.
    Mr. Apfel. Thank you, Mr. Chairman.
    Mr. Porter. The new Comptroller General David Walker, in 
testimony before the Senate Budget Committee, indicated in part 
that the President's proposals for Social Security do not have 
any effect on the projected cash flow and balances in the 
Social Security program's taxes or benefits which begin in 
2014; and secondly, do not represent a Social Security reform 
plan and do not come close to, quote, saving Social Security, 
closed quote.
    First, can you comment on Comptroller General Walker's 
statement?
    Mr. Apfel. I listened very carefully to the Controller 
General's entire statement. I actually believe it was a very 
balanced statement that addressed a whole series of issues. He 
did point out that the President's proposal deals with 
financing reform, but not the structural reform, and by the 
inclusion of added resources and investments in equities, does 
extend the 2034 date out into the future, but the structural 
changes, he believed, were absent and needed to be made for the 
sake of the long term.
    And we agree. I think that there is a need to come together 
on a bipartisan basis with the Members of Congress to determine 
the right balance of financing and structural changes that are 
necessary for the system to be there for the long term.
    There were certainly sentences that made me wince a little 
bit in the Comptroller General's statements, but all in all, I 
think he presented a balanced assessment of both the strengths 
in terms of financing and the need for further steps that had 
to be taken.
    I would point out that in the President's framework, the 
2014 date is an important date. I think it is one of two 
different, very important dates. The 2034 date is also very 
important. I think both are important. We have got to focus on 
both of those as we look to reforming this system in the long 
term.

                       Social Security Financing

    Mr. Porter. Further on in his testimony, the Comptroller 
General identifies a critical change that is being proposed by 
the President but to date has received little attention. The 
President's--this is a quote--the President's proposal 
represents a fundamental shift in the way the Social Security 
program is funded. It moves away from payroll financing toward 
a formal commitment of future general fund resources for the 
program.
    This is unprecedented. What is the justification for using 
general funds to offset and shore up Social Security, and why 
should we ask our children and grandchildren to foot this bill 
without first fundamentally funding the program?
    Mr. Apfel. I don't know if ``first'' is the right word. I 
think it should be a part, though. If we look at future 
generations, outlays for Social Security increase very 
substantially in Gross Domestic Product (GDP) terms by about 50 
percent in the next 30 to 40 years. Revenues coming into the 
Social Security System actually decline by about 10 percent in 
GDP terms over the next several decades. So we have both a 
revenue side reduction as well as an outlay side increase. That 
creates a sizable hole, and we know it is a sizable hole, and 
it is a real hole. It is going to take some serious endeavors 
to fix that long-term hole.
    The Comptroller General correctly points out that this 
would be a significant change in financing for the Social 
Security system. There have been examples in the past where 
other sources of resources have been used for Social Security. 
The taxation of Social Security benefits and that money being 
channeled back into Social Security is one. Two, the redemption 
of interest-bearing bonds is another. So there is a past 
practice here that has been done.
    But given the demographic challenges that we face in the 
future, which are so real, we think it is important that we 
move towards other financing. What the President has said is, 
let's pay down the publicly-held debt. We can reduce the 
Federal Government spending if we pay down the publicly-held 
debt over the next 15 to 20 years by about 2 percent of GDP and 
use those resources to strengthen Social Security so that the 
interest paid to Social Security and interest the publicly-held 
debt, combining those two expenditures, ought to be at about 
the same level 10 to 30 or 40 years from now as they are now.
    So it gives the United States Government a remarkable 
opportunity to do something that I think is right, which is to 
pay down publicly-held debt and also overall, between debt and 
Social Security, start to finance those future baby boom 
changes that are out there.
    Now, I don't think that is the only thing that is needed. I 
think we have got to work hard and figure out how to make some 
serious structural changes to assure young people that this is 
going to be a system that is going to be as strong for them as 
it was for our grandparents. But I think it is an important 
component of a long-term solution. I would strongly endorse the 
President's proposal to have those surpluses be used for Social 
Security.

              Paying Down Publicly-Held Debt With Surplus

    Mr. Porter. Mr. Apfel, is it true that the only proposal 
formally on the table at this point in time is that we take the 
so-called surplus and use it to pay down debt? That is all that 
is there, right?
    Mr. Apfel. It is certainly a key to several of the 
proposals that are bubbling.
    I think that if we look at the last year, one of the things 
that there seems to be a growing consensus on, which I think is 
good now that we are moving into the surplus arena, is rather 
than having those surpluses get drained away, that we reserve 
them pending Social Security reform. I think there is a 
bipartisan consensus on this.
    Mr. Porter. We are not reserving them. We are paying off 
debt.
    Mr. Apfel. Which ultimately is paying off debt.
    Mr. Porter. When we start going into serious deficit, we 
are going to have to borrow.
    Mr. Apfel. You mean, 30, 25 years from now in the future?
    Mr. Porter. No, I mean in 2014 when there is no money in 
the Trust Fund. It is just debt. It is just obligation, IOUs. 
And when we hit 2014, we are going to have to start borrowing 
big time to start paying benefits, because there is not going 
to be any other way to pay them.
    Mr. Apfel. We are going to have to start redeeming bonds.
    Mr. Porter. That is borrowing.
    Mr. Apfel. It is one of the issues 3 and 4 years ago which 
made it so hard when we looked to the future, the redemption of 
those bonds. When I looked 3 and 4 and 5 years ago at those 
tremendous deficit projections that were out there, the ability 
of the government to be able to redeem those bonds was very 
much at risk.
    Mr. Porter. It is still a risk. When we reach the point of 
2014, we have to start redeeming the bonds because we have gone 
into greater expenditures than revenues. We are either going to 
have to raise taxes, or we are going to have to cut benefits, 
or we are going to have to borrow money or one of the three.
    Mr. Apfel. There is a fourth, which is to lower surpluses, 
and given surplus projections, it would mean lower----

                  Social Security Tax Changes in 1983

    Mr. Porter. That would put the date off perhaps.
    Let me ask one other question, and this question was asked 
at the President's Conference on Social Security to one of the 
panels. In 1977 and 1983, I think it was, we raised Social 
Security taxes higher than we needed to in order to build a 
reserve so that when we reached this point--when the baby 
boomers begin to retire--we would have the money available for 
their retirement. The reserve was supposed to reach $3 trillion 
in terms of 1990 dollars, I think it was, and that would be 
available. The question that I asked then, which was never 
answered, is what mechanism was thought about and decided upon 
to actually make that money available? In other words, did 
anybody decide they were going to put it in the stock market? 
Did they decide they were going to put it in bank accounts all 
over the world? What were they thinking of when they said, 
let's raise the taxes and build a reserve, and then we will be 
in position to pay those benefits? Nobody has an answer to 
that.
    Mr. Apfel. Under law, all of those excess receipts are in 
special government securities, and only in special government 
securities.
    Mr. Porter. Exactly.
    Mr. Apfel. And the projections back in 1983, if I remember 
right, were a large buildup in resources and then a large 
drawdown, so that over the 75-year period, the trust fund would 
then be back to zero again. Under current projections, instead 
of 75 years from 1983, it is now 50 years from 1983. Since 
1983, we have lost in terms of different economic changes and 
different demographics and other changes that have been made to 
the system. The 1983 changes basically had the same curve--
balances go up and then come down over 50 years rather than 75 
years.
    Mr. Porter. You weren't there, and I wasn't there, so we 
can't blame you and I.
    Mr. Apfel. Actually you can blame me. I worked for the 
United States Senate for a young Senator, Senator Bill Bradley, 
at that point in time.
    Mr. Porter. Didn't anybody realize that if you give 
Congress that kind of money, it is going to be spent as it was? 
Every bit of it has been spent. We spent it on other things. As 
the Social Security excess revenues came in, we have used them, 
every bit of them. Now we have got a crisis on our hands 
because we are going to have to go back and borrow huge amounts 
of money to pay the benefits or raise taxes or cut benefits or 
do something else, and we are at least 10 years behind when 
this discussion should have taken place. We are now 10 years 
out, and we keep saying, well, it is still a few years off, but 
it has gotten closer and closer and closer, and the crisis is 
really upon us.

                       Opportune Time for Changes

    Mr. Apfel. It has gotten closer and closer. I point out 
that back in the 1980s, we were not in a fiscal position to 
even think about this issue, I believe. One of the things that 
concerned me during that time about American social policy, and 
budget policy as well was, how were we going to prepare for 
this major demographic change happening with the large Federal 
budget deficits that were out there.
    That is why I think it is so remarkably important that we 
don't blow this opportunity; that right now, with large 
surpluses projected far into the future, it does give us an 
opportunity to try to resolve this issue for the sake of future 
generations. It is a time that could not have happened even 3 
and 4 years ago when deficit projections were still 
outstanding, and not insignificant, as you know. So I think we 
do have a rare opportunity right now that we didn't have 3 and 
4 years ago to confront this issue. I think it would have been 
impossible to confront it really 3 and 4 years ago.
    Mr. Porter. Government does a terrible job of looking ahead 
more than a year or two. It is appalling how bad it is. Nobody 
looks to the long term. Everybody looks to the immediate, and 
it is a disaster.
    Ms. Lowey.

                  Women's Issues in Solvency Proposals

    Mrs. Lowey. Thank you, Mr. Chairman. And welcome, 
Commissioner Apfel.
    In talking about looking ahead, I think I have been talking 
about the issue of women and Social Security since at least the 
1970s, Mr. Chairman, and I don't think anything has been done 
as yet to restructure it, and I certainly hope that during this 
process when we are trying to think constructively about how we 
structurally fix it for the long run, we can pay some attention 
to the inequities.
    For example, monthly retirement benefits for women, as you 
know, average about 25 percent less than men. And even though 
women's labor force participation has grown dramatically, they 
still take out more time for child-rearing and to care for 
elderly parents much more commonly than men, and their wages 
are also on the average much lower than men.
    I remember working for the State in 1975, and we did the 
feminization of poverty hearings all around New York State, and 
these issues are pointed out over and over again. So, again, 
this is not a new phenomenon. In, fact the GAO did a report in 
February that examined women and their benefits under Social 
Security and concluded that under reform proposals, women will 
be disadvantaged because of these factors. Could you respond?
    Mr. Apfel. I think it is possible that women could be 
disadvantaged, but it doesn't have to be. I think one of the 
things that we need to be able to look at through the whole 
reform endeavor is--as changes are made both on the structural 
side and other ways--that we have got to be able to examine how 
they affect different groups, women, minorities, lower-income 
workers, middle-income workers, and to determine how to create 
the appropriate balance of any changes that are made that would 
have a desirable distributional effect. So that is why we have 
been working on distributional information to help to provide 
information to the Congress to help in that process.
    Social Security provides a remarkably important foundation 
of support for women, through the COLA each year, given life 
expectancy for women and the number of women who outlive their 
spouses, through auxiliary benefits, the survivor benefits and 
in other ways. But we ought to take advantage of this time when 
reforms are done to take steps to fill in some of what I 
believe are still holes in the system, and I think one of the 
largest ones has to do with single women. Poverty rates in this 
country, in no smallpart due to Social Security, have dropped 
from 1959, from 35 percent, now down to 11 percent for older Americans. 
For single women, still about 20 percent of older single women are 
living in poverty. So how do we--as part of the overall reform 
endeavors--how do we find ways to strengthen some of the pieces of the 
foundation to provide adequate support?
    I would also point out that some of the issues revolve 
around individual accounts, and many people point out that an 
individual account, if it is based upon what a person has paid 
in, could have a detrimental effect on women because of their 
lower earnings, more dropout years, et cetera. One of the 
questions is, can structures be put in place that are not based 
precisely on earnings, but are more progressive benefit 
structures as well?
    I use the words ``individual accounts.'' I could use the 
words ``individual savings accounts.'' The President has 
proposed a progressive-based savings system for future 
generations that would provide retirement savings on a 
progressive basis to complement our current Individual 
Retirement Account (IRA) system.
    I know that there is a lot of controversy over Social 
Security reform, and there should be. It is a very important 
issue. But there are times that I think in this debate that the 
world is not realizing that there is a consensus out there on 
some key points. One, do we need a strong foundational system? 
I think the answer nearly universally is yes, we do. Second 
question is do we need stronger retirement savings, and I think 
the answer to that is also yes. I think that has grown to 
become part of the consensus. We need a strong retirement 
savings component, and we need a strong foundation.

                           retirement savings

    There may be very significant differences about whether the 
Social Security benefit should be reduced somewhat to provide 
for the increase in retirement savings, or whether it should be 
on top. There is a lot of disagreement out there for sure. But 
I think if you surveyed most Americans and most Members on both 
sides of the aisle, there would be an agreement that we need a 
strong foundation, and we need to strengthen retirement 
savings.
    So now the challenge is how do we get there. How do we 
assure at the end of the day that women who are protected so 
strongly by Social Security now will still be protected? How do 
we strengthen that system so that any changes made are fair 
across sexes, races, and income groups? I think it is a tough 
challenge, but I think there is more of a consensus out there 
than might appear about the need for retirement savings and the 
need for a strong foundational benefit.

                equity for women in individual accounts

    Mrs. Lowey. I would like to move on to questions involving 
the individual accounts that have been proposed, but it is 
clear we agree on the premise, but I would like to continue 
this dialogue with you for the record as to the proposals which 
you are recommending that will provide some equity, because as 
I mentioned, this is not a new issue. It has been going on a 
long time. Women's salaries are low. They take time off from 
the workplace. And I would be very interested in your 
recommendations to the Congress so that 20 years from now we 
still don't talk about the fact that there is real inequity.

                individual accounts in reform proposals

    But I want to move on to the individual accounts because 
most of the proposals for reform do focus on some kind of 
individual accounts and the authors of these various plans are 
quick to point out the returns individuals might expect to 
receive, and I have looked at many of those tables. What the 
plans are much less explicit about seems to be the costs 
associated with these plans, such as the fees for managing the 
accounts, administering the accounts, and educating individuals 
with respect to their investment options. And in fact, for a 
number of reasons, women and minorities are particularly 
reliant, as we know, on the comprehensive guarantees offered by 
Social Security.
    In talking about these accounts, I would like you to 
respond to two questions: Number one, what particular risks do 
these individuals potentially face under a system of privatized 
individual accounts which have been discussed? And secondly, 
have you estimated what the total costs of private accounts 
might be? We see these tables which show the tremendous growth, 
but, as I mentioned, less explicit details on the costs of 
these accounts.
    Mr. Apfel. Well, there are certainly risks to the creation 
of individual accounts, more than under the Social Security 
System, given the fluctuations in returns that come from 
individual accounts. If a person tried to retire at a time of a 
significant economic downturn in the market, and if large 
amounts of the account were in the market, that could create a 
significantly higher risk. That is one of the reasons why the 
President has said we need a foundation, not to have individual 
accounts replace the foundational benefit, but separate from 
Social Security and to supplement that benefit. And retirement 
savings investments probably should be a little riskier than 
our foundational benefit, and if the retirement savings 
component potentially would move up and down with the market, 
the risks are ameliorated if there still is the foundational 
benefit beneath it.

                      costs of individual accounts

    In terms of the costs, there has been a lot of work done on 
the costs of individual accounts, the cost of universal savings 
accounts, the costs of the different options that are out 
there. To the extent that payments are made into an individual 
account on a regular basis, like a monthly basis or every 
couple of weeks, administrative costs get potentially extremely 
high. We don't have the systems in place to be able to handle 
that.
    The President's proposal for universal savings accounts is 
a once-a-year investment in universal savings accounts with the 
first payment and the match payment taking place through the 
tax system. That tends to minimize costs. The second mechanism 
also is a TSP model, Thrift Savings Plan model, rather than a 
pure open-ended market-based model, that also tends to reduce 
costs for a savings component.
    So I think those are the two key variables that need to be 
looked at as to the number of times payments are put in, and if 
it is on an annualized basis, those costs are going to be a lot 
less. Two, to the extent that the investments are made in a 
limited number of choices, those costs could be potentially 
quite a bit lower as well, as opposed to going into a whole 
range of different private instruments.
    Are administrative costs a killer issue? I think the answer 
is no. I think that with enough resources you can do anything, 
but I think creating the President's universal savings accounts 
with a restricted number of funds and an annualized payment, I 
think that these payments could be done--the Treasury 
Department would speak much better on this than I because this 
is really their proposal, but I think it could be done within 
that context.
    Mrs. Lowey. Thank you. And thank you, Mr. Chairman.
    Mr. Porter. Mrs. Lowey, would you yield on this point?
    Mrs. Lowey. I would be delighted to yield, especially since 
my time is up. But I am always delighted to yield to you.

                       chairman porter's proposal

    Mr. Porter. I have one of the proposals, as you may know, 
to, in effect, privatize the system over a period of time, and 
if I can tell you what my plan does--first of all, costs are 
subject to regulation by the government. If you are going to 
put out 100 million new accounts out there called individual 
Social Security retirement accounts, and you are going to allow 
insurance companies and banks and other money managers to 
manage them at the choice of the individual, there is no reason 
why you can't regulate what the costs are, particularly for the 
smaller investor. The government would certainly have the 
authority to do it, and you would find specialization where so 
many measures would seek a lot of small accounts and others 
would seek only the large ones. They both would make money.
    Secondly, you talk about risks. In my plan, the government 
again has regulatory authority to put parameters on what you 
can invest in. The thought that you can get out there and 
speculate and invest in wildly risky stocks with your 
retirement funds is not part of any plan that I know of.
    Thirdly, my plan provides a 95 percent guarantee so that if 
something goes wrong, the government is still there as a safety 
net for those who might be in trouble.
    Fourth, and Mr. Apfel referred to this, our plan says that 
you can retire as early as 59\1/2\ if you want to or anywhere 
on up, but even if you were forced to retire at a particular 
age when the market was bad, as history tells us that the 
investments you would have made on average will make you better 
off than anything that Social Security has provided in terms of 
benefits today.
    And finally, the whole system is optional. You can stay in 
traditional Social Security. If you are worried about high risk 
and don't want to take the risk, you can stay exactly where you 
are, and Social Security continues for you and for others that 
choose that option in the same way that it does today. So I 
think that the question of getting into trouble and risk is 
really very minimized.
    I thank the gentlelady.
    Mrs. Lowey. I thank you, and I look forward to learning 
more about your plan. Thank you very much.

                         front-end interviewing

    Mr. Porter. Mr. Jackson, we are going to finish the first 
round with Ms. Pelosi, and then you will have the next 
question.
    Ms. Pelosi.
    Ms. Pelosi. Thank you, Mr. Chairman.
    Mr. Porter. Yes, ma'am.
    Ms. Pelosi. Welcome. Nice to see you. I wanted to--since we 
are around that sad time again, the anniversary of the Oklahoma 
City bombing, I wanted to ask a question or two about security, 
beyond the Social Security, the security. It is my 
understanding that SSA has hired a security firm that has 
recommended some design for front-end interviewing that 
accommodates members of the public in the private interview 
area adjacent to the reception area. I wondered how this is 
being implemented; in how many offices; also, what the progress 
is of getting security guards and how many field offices have 
security guards. I am very concerned about our employees in all 
of the--well, let me leave it at that and have you respond to 
those. Thank you.
    Mr. Apfel. This is a major issue for the agency and has 
been over time. We have more than doubled the resources that 
are now going to security guards, and now three-quarters of our 
employees are protected--and our beneficiaries coming in the 
door, customers, are protected with security systems and with 
security guards. It is a sad reality of life, but our employees 
have requested it in many cases, our managers have requested it 
in many cases, and we have accommodated those requests. So we 
are moving to significantly increase, and have increased, our 
security presence.
    In addition, you mentioned front-end interviewing. We have 
a work group that has been established throughout Social 
Security to look at criteria for how many additional offices 
should move over to front-end interviewing. This provides a 
more secure physical environment within our offices. A number 
of offices have moved to this. As leases are coming up, we are 
examining ways to continually move for upgrades in this 
situation. In terms of numbers of offices that have front-end 
interviewing, unless you have it, Yvette, I would have to 
provide that for the record.
    [The information follows:]

                Front-End Interviewing in Field Offices

    Currently, over 600 SSA field offices use front-end 
interviewing.

                         computer workstations

    Ms. Pelosi. I appreciate that. While we are on that 
question, I am also concerned about the workplace, a safe 
workplace and sound environment ergonomically as well as 
otherwise. Can you tell us about SSA's efforts to provide 
ergonomic furniture for employees, and have you budgeted 
adequate funding for providing ergonomically sound 
environments? Last week was our National Secretary's Day, and 
we were calling upon people in addition to sending flowers to 
get an ergonomic audit of their assistants' work station. I 
just wanted to ask you how you were doing in this field.
    Mr. Apfel. As part of our automation investment activities, 
we have had a significant increase in upgrading our existing 
computer work stations as well as in a way that is 
ergonomically sound. I am not sure that is the right word.
    Ms. Pelosi. That is good.
    Mr. Apfel. I can provide for the record the number of our 
work stations over the course of the last 5 years that have 
been upgraded with this better computer work station 
environment. There has been a significant trend to do so, and 
it is one that I want to move forward on.
    I don't know whether, Yvette, you have the actual numbers. 
If not, we will provide it for the record.
    Ms. Pelosi. Just provide it for the record. That will be 
fine.
    [The information follows:]

                         Computer Workstations

    During the last 5 years, the Social Security Administration 
(SSA) has provided approximately 36,300 systems workstations to 
its employee nationwide in an effort to provide a safe and 
healthy environment. As computer use increased, SSA focused on 
enhancing workstation design, consulting with qualified health 
and safety experts and the Union to identify features that 
added to employee comfort and reduced the risk of repetitive 
stress injuries.

                       return to work legislation

    Ms. Pelosi. I am interested in another subject, the status 
of returning to work legislation. With regard to Social 
Security and SSI in particular, what are you doing to assist 
people who are disabled and are receiving benefits who are 
interested in returning to work, but may in the future again 
become too disabled to work? Will they be able to maintain or 
again receive their benefits under current regulations? And 
what is your perspective, Mr. Commissioner, on pending return 
to work legislation?
    Mr. Apfel. We strongly endorse the return to work 
legislation that is now moving through the House. Two main 
parts, one is access to greater health care for those who 
return to work; and, two, access to our ticket to enable people 
to have a much greater set of training and employment 
opportunities than are available now to enable people to return 
to work.
    If we look at the trends in the future, the very few 
numbers of individuals on the rolls in a position to return to 
work, is not surprising. Someone does return to work, and all 
of a sudden benefits are cut off, health care is gone. There is 
a real concern out there--a lot of misinformation, but a lot of 
concern that--if I were on the disability rolls, I would be 
very hesitant about ever going back to work for fear of losing 
health care coverage.
    Legislative proposals that we have gone forward with and 
are moving very positively through the Congress, and we are 
very pleased about that, on a bipartisan basis would expand 
health care coverage. Also we have proposed regulations to 
enable beneficiaries to keep more--to be able to work more 
hours per year and still keep their disability payments as 
another incentive mechanism. We are viewing that we need to be 
able to do more through legislation and through regulations to 
expand return to work.
    The last piece of legislation that I think is so critical 
is the provision that has an easy ``back on'' provision. If 
someone works and goes off of our rolls, and keeps their health 
care coverage, under current law that individual would then 
have to go back in and start the process all over again for new 
eligibility. The legislation provides for an easy ``back on,'' 
an automatic provision--you can come back on the rolls while we 
reassess your disability situation. This is another way that I 
think that we can help move the system forward to help create 
greater incentives to return to work.
    Those are three ways and this is an area where I see a lot 
of bipartisan interest, and I am very, very optimistic that we 
will see movement this year.
    Ms. Pelosi. I appreciate you giving us your perspective on 
it.

                          field office closing

    Mr. Chairman, you are used to me talking about San 
Francisco, but I grew up in Baltimore, and I am probably one of 
the few Members of Congress who ever worked in the Social 
Security Administration when I was in college. It was--well, I 
don't want to tell you how long ago it was, but we filed. If 
you can imagine how long ago that was, people filing anymore? I 
don't think so, but we were preparing things for the computer.
    But I did want to talk about my district for a moment, not 
just to be parochial, but how it might apply to others as well. 
We have an office, a Social Security office, close in Bay View 
Hunter's Point, which is a very important area in our 
community, a largely African-American community. People are 
interested in the service that the Social Security office 
provided there. Now it has been closed, and it is quite a 
distance for them to go to the other office, but they were told 
that the office didn't function that well anyway, so it is just 
as well that it was closed. I don't know--it reminded me of 
Yogi Berra saying, I don't like the food at that restaurant; 
besides, they don't give you enough.
    In any case, I would hope that as you review these closings 
of offices, that your customers are transitioned very well to 
the next step because it is--for this community, it was a big 
setback. The promise is made about the kind of services that 
are even going to be better than they had before. I hope that 
will be the case. I am certain this is not the only office that 
has been closed in America, so it would apply to my colleagues' 
constituents as well.
    Mr. Apfel. I will look into the specifics because I am 
unaware of the specifics. I know that one thing that we try 
very hard to do is to conduct surveys of the overall areas and 
of the bus routes, etc. A whole set of steps are done through 
our regional structure to determine whether access is available 
through other mechanisms. I don't know the specifics of this 
one case. It is a very delicate issue, but we will look into 
it.
    Ms. Pelosi. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Ms. Pelosi.
    Mr. Jackson, we will get to round two in just a minute, but 
Mr. Wicker is still here for round one.
    Mr. Wicker. Thank you, Mr. Chairman. I will defer to Mr. 
Jackson. I just walked in, and it might take me a second or two 
to get up to speed. It may take me several months to get up to 
speed. I will defer for at least a few moments.
    Mr. Porter. I would like to thank the gentleman from 
Mississippi for taking the chair last week in one of the 
afternoon sessions with public witnesses. By all accounts he 
did a wonderful job as always.
    Mr. Wicker. Thank you.
    Mr. Jackson. Mr. Chairman, I have no further questions, so 
my good friend only has a few seconds to get up to speed.

                       washington post editorial

    Mr. Porter. If the gentleman from Mississippi would like, I 
have some questions.
    Mr. Wicker. That would be fine, Mr. Chairman.
    Mr. Porter. Mr. Apfel, The Washington Post had a very 
timely editorial. They must have known you were coming this 
morning. It is called ``A Rout on Social Security.'' It begins 
by saying, the President now denounces the congressional 
Republicans for refusing to take a step on Social Security that 
the President himself has consistently shunned. The Republican 
leaders say they won't bring up a bill this year to restructure 
the program so that in the long term revenue will cover costs; 
they don't want to take the political risk this close to the 
next election. The President deplores the fact that they have 
abandoned the effort, are either unable or unwilling to face up 
to the challenge, et cetera, et cetera. I have proposed 
concrete steps, said the statement, issued in his name last 
Friday, but he no more than they have said how we would make 
what he once again called the tough choices needed to secure 
the Trust Fund over the long term, and it goes on from there.
    Let me ask you a question. You are the Commissioner of 
Social Security. You can see, as I can see and everyone else 
can see, that both Republicans and Democrats are afraid to move 
ahead on this issue for fear that the other one will take 
political advantage of it. I don't know whether I say this as a 
Republican or a Member of Congress, but it seems to me that the 
President of the United States has to lead. He can't stand 
there on the sidelines waiting for Congress to lead--either 
party. The President is the one that has to lead, and yet he 
refuses to do so.
    What is your role in all of this? Could you convene the 
President's representatives and the congressional 
representatives to a bipartisan meeting and get something 
going? I could see this thing going on, where the President 
will refuse to lead, not only for this next couple of years.
    I can see if it happens--unless it happens that we have a 
Congress of the same party as the President, which the American 
people are very loathe to do--we can never come to grips with 
this issue. It is too hot to handle. Do you see it that way? 
What is your role? What should you be doing in all of this?
    Mr. Apfel. I think it would be enormously unfortunate if we 
lost this opportunity. Over the course of the last year and a 
half, this issue has come before the American people in major 
ways. The President's State of the Union address a year plus 
ago and now the most recent one have helped to galvanize a lot 
of attention on the Social Security reform issue, the 
importance of Social Security as well as the need to move 
forward.
    As I said, in Social Security we have done an enormous 
number of forums and town meetings around the country on a 
bipartisan basis with Members of Congress, with groups from the Concord 
Coalition to the AARP and others, to educate the American people on 
this issue. The President has also participated in town hall meetings. 
Those have all helped set the stage for an understanding that there is 
a need for action. I think there is a need for action.
    I would disagree with your notion, Mr. Chairman, that the 
President has not led on this. I think his framework is a very 
important step forward on this, not to have the surpluses be 
drained away, but to utilize those surpluses to strengthen 
Social Security. That is not a painless step because there are 
other things that could potentially be done with those funds.
    Mr. Porter. I agree with that, and the Republicans agree 
with that. So now we are at the next step.

                           equity investments

    Mr. Apfel. The President has said for the next step what we 
should do is equity investments of the Social Security Trust 
Fund, just as State and local governments have done with their 
pension systems, to strengthen rates of return. There is less 
consensus on that, I would admit.
    Mr. Porter. Do you mean the idea that Alan Greenspan shot 
down the very next day after the State of the Union address, 
that idea?
    Mr. Apfel. Well, Alan Greenspan does have deep concerns 
about this, I will admit that.
    Mr. Porter. That whole thing is DOA. We all know it. Let's 
go on from there.
    Mr. Apfel. I am not so sure. I am not so sure. The question 
is whether the appropriate balance in independence can be 
established for those equity fund investments. Every State and 
locality is now providing equity investments through their 
retirement systems. Indeed, equity investments are now about 60 
percent of most State and local pension systems. If it wasn't 
for that, States and localities would either have to raise 
taxes significantly or cut benefits significantly.
    What the President's proposal does is invest a very modest 
amount, 15 to 20 percent of the Trust Fund balances, in 
equities. I don't rule out the possibility that this could 
still happen. What he has also called for is coming together on 
a bipartisan basis and doing it this year. Those are tough 
choices, and it is not an easy issue to be done. There is no 
doubt that there are hard issues as raised by Mrs. Lowey about 
the choices that would have to be confronted on that, and there 
is a wide range of options available.
    In terms of my role I am involved in the public education, 
and, also, I meet on a very regular basis on Capitol Hill with 
Members about this. I met with Mr. Shaw. I am in the White 
House frequently to discuss how to try to move the ball 
forward.
    I think it is too early to say that this issue is gone for 
the year. I think that it is still very possible for us to come 
together. In many respects, this is certainly a hot time, I 
would admit that. The timing of hearing----
    Mr. Porter. You may be right, but right now what the 
Congress has basically said is, we are not going to do anything 
until the President provides the leadership that we think he 
ought to provide. If we are not going to do that, and the 
President is not going to provide that leadership, nothing is 
going to happen. That would be, as you and I both agree, a 
travesty, something we shouldn't allow to happen under any 
circumstances, because this problem will just get worse.
    Mr. Apfel. I agree.

                 liabilities of the federal government

    Mr. Porter. Let me change the subject. The President's 
budget, in discussing Social Security, states that it is a 
promise, a guarantee. Yet in the audited financial statement of 
the United States, veterans' pensions, Federal retirement, 
environmental cleanup are all listed as liabilities in the 
audited financial statement of the United States. Neither the 
debt held by the Trust Funds nor the funding needed in excess 
of assets to assure benefit payments are listed as liabilities 
for Social Security. It is not in the audited financial 
statements. Secretary Rubin indicated in his cover letter to 
the report that the administration initiated the development of 
this financial report in order to create a management tool for 
policymakers and a source of useful information for the public.
    Commissioner, why should we take the administration's 
incessant protestations concerning its commitment to Social 
Security seriously when the official statement of assets and 
liabilities of the Federal Government excludes liabilities to 
Social Security or for Social Security? Do you believe that the 
accounting rules should be changed to show this as a liability?
    Mr. Apfel. Actually, the way that the Social Security 
System works is on an open model which assumes the payment of 
payroll taxes and the outlay of benefits. There are some that 
believe--I am not one of them--that we should be using a closed 
group model that would say there would be no more people coming 
into the System; say, 15 year-olds and younger would not be 
paying into the System. All of the liabilities that have been 
incurred would be paid out. That is the ``closed group'' model 
that would assume that somehow no Americans after a certain age 
be part of the System.
    The Social Security Administration has traditionally used, 
through its actuaries, the open group model in determining the 
unfunded obligations of the System. Those amount to somewhere 
on the order of $3 trillion; significant obligations that are 
unfunded. That is really what this debate is all about: How are 
we going to resolve this issue? How much through financing and/
or revenues, how much through benefit structures, how much 
through increased rates of return? These are really about the 
three options that are out there.
    Mr. Porter. Yes, sir, and that is the same $3 trillion that 
I was referring to before. That is where the problem is. There 
is no $3 trillion, and somehow it has all been spent.
    Mr. Apfel. The $3 trillion is the loss--how much income is 
coming into the System----
    Mr. Porter. That is the difference between revenues and 
projected benefits.
    Mr. Apfel. That is correct. The trustees' report that we 
just released again late last month, our recent release of that 
report specifies that $3 trillion shortfall and----
    Mr. Porter. And raising taxes was meant so there wouldn't 
be a shortfall. In other words, raising taxes 15 years ago or 
20 years ago was meant to make certain that we didn't have a 
shortfall, but we have it anyway because we spent the 
additional revenue.
    Mr. Apfel. Actually not because of the spending. It is 
because that back in 1983, the projections were of a zero 
unfunded obligation over the 75-year window because revenues 
would go up, and then revenues would back down back to zero at 
the end of the 75-year window. Under the current projections 
revenues from 1983 on do go up, but not on a 75-year term; now 
on a 50-year time line. Then beyond that 50 years you see 
sizable obligations that are unfunded. So it is the fact that 
over the 75-year window we face this $3 trillion unfunded 
obligation that we need to focus on.

                          unfunded liabilities

    Mr. Porter. The point of the question is we aren't even 
listing that as a liability even though it obviously is a huge 
unfunded liability.
    Mr. Apfel. We talk of it as an unfunded obligation in our 
Trustees' report and make very clear with graphs and charts and 
tables about how important this issue is. The trustee's report 
is one of the institutional arrangements that we have that I 
think is so important. It is--it has never been, to the best of 
my knowledge, criticized as a partisan document. It is an 
analytical framework that says given economic trends, the 
status of the funds over a long period of time. Seventy-five 
years is what is used. I think that this institutional 
arrangement has helped me educate the American people about the 
long-term financial structure, and problems that we face.
    Mr. Porter. Unfortunately, much of what we do in terms of 
financial information in the Federal Government and much of the 
way we budget is done to allow us to do things that we 
shouldn't do. I can make a very good argument that what we 
ought to do as far as looking at what we have to spend for the 
next fiscal year is not to project revenues, but rather to look 
at last year's revenues, which we already have in hand. If we 
did that, we would be a lot more conservative of our budgets. 
But we don't do it, of course. We project revenues, and they 
are always pretty good projections even in bad times.
    Mr. Wicker.

              status of social security reform legislation

    Mr. Wicker. Mr. Apfel, will the President be coming forward 
with a specific piece of legislation that we can introduce on 
his behalf reforming the Social Security System?
    Mr. Apfel. That decision has not been made. He has laid out 
his framework, as you know. But whether there will be a 
specific piece of legislation to implement the three parts of 
the plan, that decision has not been made. He has been 
continuing the discussions, and we have been on the Hill to 
determine the best way to proceed, but the decision has not 
been made yet, sir.
    Mr. Wicker. Who is participating in these discussions?
    Mr. Apfel. Well, wouldn't the Administration?
    Mr. Wicker. The discussions that you just spoke about.
    Mr. Apfel. They are being led in the National Economic 
Council by Gene Sperling with Secretary Rubin and Larry 
Summers; with myself; Janet Yellen; Jack Lew, the head of OMB; 
and President and Vice President meet on an ongoing basis to 
examine different alternatives, to continually determine how to 
move the ball forward. So we continue to meet regularly to talk 
about these issues and to determine how best to proceed.
    Mr. Wicker. Have you participated in many meetings with 
congressional leadership concerning the issue of whether to put 
forward a bill?
    Mr. Apfel. I have not with congressional leadership. I have 
with Mr. Shaw. I have with Mr. Matsui on the Ways and Means 
Committee. These discussions continue to move forward, and we 
hope to continue to move the ball forward through that.
    Mr. Wicker. I hope so, too. And I also read The Washington 
Post editorial this morning.
    Mr. Apfel. Nicely timed.
    Mr. Wicker. Which apparently refers to a criticism of the 
President and the Vice President of congressional Republicans 
for not coming forward with a plan. I think there is probably a 
lack of political courage on both sides in this issue, to be 
quite blunt, but it does seem to be--I will echo what my 
chairman says--it does seem like the President has an 
obligation, having made this an issue in the last two State of 
the Union Addresses and many other occasions, to come forward 
with a bill. Now, the House leadership has reserved H.R. 1 for 
this very purpose, and to me it would be a logical starting 
point for the administration to come forward with this bill.
    You mentioned equity funds investment. Will the--do I 
understand that the President is specifically suggesting that 
15 to 20 percent of the Trust Fund be invested in the stock 
market?

                      risks of equity investments

    Mr. Apfel. In equities, that is correct.
    Mr. Wicker. In equities. So that is the stock market plus.
    And you are aware that there is considerable fear and 
distrust among the American people, according to public opinion 
polls, in allowing the Social Security Trust Fund to be 
invested in the stock market. What do you say to elderly people 
who remember ups and downs of the stock market? What do you say 
to the children of the Depression, many of whom are on Social 
Security right now, to allay those fears?
    Mr. Apfel. What I say, because I am in town meetings with 
Americans very frequently, is I think it is an appropriate 
balance to help us increase rates of return to the Social 
Security System. State and local pensions are invested in 
equities very highly. If they weren't, there would have to be 
revenue increases or benefit reductions to compensate for it. 
The same thing is true for the Social Security System. A modest 
amount of Trust Funds in equities would not threaten the 
viability of benefits to the Social Security System, if it is a 
modest amount.
    I would also point out, compared to what? If that is not 
done, if that extra rate of return is not arrived at through 
that mechanism, then other things have to be found to fill that 
hole.

                       chairman archer's proposal

    Mr. Wicker. Let's talk about comparing it to other 
suggestions then. I am sure that you have had an opportunity to 
be briefed on Mr. Archer's, Chairman Archer's, proposal about 
Social Security. Have you had a chance to look at the broad 
framework there?
    Mr. Apfel. Actually, no. There has been a large number of 
proposals. I understand that may be released tomorrow, but I 
have not seen the details of the proposal. I believe that it 
has been changing, but I am not familiar with the details.
    Mr. Wicker. Are you familiar with the general outline of 
the Archer proposal?
    Mr. Apfel. I am familiar with some of the outline.
    Mr. Wicker. Let me say this: I don't intend to speak for 
Mr. Archer, but I will say this--and I am not going to be a 
cosponsor yet on his bill, but at least the Chairman of the 
House Ways and Means Committee is going to put forward a 
specific proposal that may not be a perfect document, but at 
least it is a framework for discussion. I understand that my 
chairman also has a specific proposal. It just seems to me that 
it is incumbent on the President to come forward with his.
    What if the Archer proposal or any proposal said, let's 
take 2 percent of a worker's contribution in terms of payroll 
FICA taxes, and instead of putting 100 percent into the Social 
Security Trust Fund, to let that worker invest 2 percent of his 
funds in an individual retirement account. Now, is that your 
understanding of the general approaches of the Archer plan are?
    Mr. Apfel. I don't think so.
    Mr. Wicker. Okay. What do you think about what I just 
suggested? Then compare it to what you have heard about the 
general outline, realizing that you haven't seen the specifics 
yet.
    Mr. Apfel. Sir, what you just described is what is known as 
a carve-out proposal, which is to take 2 percent of the 12.4 
percent of the payroll tax and carve it out of the Social 
Security System and create an individual account with that 
amount of resource. I think that is more in line with the 
proposal of the National Commission on Retirement Policy as 
introduced by Mr. Stenholm--and Mr. Kolbe. I met with both of 
them on the bill, and Senator Breaux and Senator Gregg. That is a 
carve-out approach.
    We do have strong concerns about a carve-out approach 
because it would lead to lower moneys coming into the Social 
Security Trust Fund and likely a significant lower benefit 
structure. That would be replaced with an individual account 
that would fluctuate. But a carve-out approach digs us a deeper 
hole in terms of the Social Security Trust Fund. We do have and 
I do have concerns about a carve-out approach that would reduce 
the amount of money coming into Social Security if that 
triggered a need for a lower benefit structure in the future. 
So we continue to talk with sponsors of this legislation and 
others, but we do have sizeable concerns about that approach.
    Mr. Wicker. You said that differed from what you understood 
the Archer approach to be. Realizing that you don't have the 
details, I would appreciate you answering the second part of 
the question, and that is, what are your concerns about what 
you know of the Archer plan?

                     provisions of the archer plan

    Mr. Apfel. Well, on the one hand, the Archer proposal is 
not detailed. It is a moving target that is yet to be laid out, 
but it appears that general revenues beyond the payroll tax are 
used, as well as equity investments, which is potentially 
something that we would want to take a look at. But on the 
other hand, it also creates individual accounts that are 
somehow--this is the specification that we don't understand 
yet--are clawed back out of the Social Security System.
    We don't have those details yet. I hate being in a position 
of commenting on a proposal that I haven't yet seen the details 
on, but one of the issues that I would want to understand in 
very close depth is how that claw-back works in terms of what 
the benefit structure would be. So at this time I would rather 
not make any projections as to what it might be until I see 
what it is. I don't want to be saying things one way or the 
other if they turn out to be wrong----
    Mr. Wicker. Just briefly----
    Mr. Apfel [continuing]. With all due respect to Mr. Archer. 
I think that it would be a mistake to be making projections as 
to what it might be and what we might think about it. I think 
we ought to just wait to see what it is.

                       universal savings accounts

    Mr. Wicker. Let me just say this. When the Chairman of the 
Ways and Means Committee comes forward with a specific 
proposal, I think that it is going to be incumbent upon you and 
the Administration to comment rather expeditiously as to your 
initial impressions of how this bill will work. Do we have 
legislation yet on your USA accounts that the President 
mentioned in his State of the Union, a bill on that?
    Mr. Apfel. Not legislation. Again, this is not part of 
Social Security Administration, but I know that the Treasury 
Department and the President released quite detailed 
information on the operations of the USA accounts, but it is my 
understanding that the legislative language has not been 
forwarded to Capitol Hill yet.
    Mr. Wicker. I would submit to the Administration it would 
be helpful if we had a bill, if somebody would introduce it, 
and we could look at the administration's proposal, which was 
mentioned in January, on USA accounts. Thank you.
    Mr. Porter. Thank you, Mr. Wicker.
    Mr. Jackson.
    Mr. Jackson. I have no further questions.
    Mr. Porter. Mr. Apfel, did the USA accounts, did that idea 
originate in the Social Security Administration?
    Mr. Apfel. No.
    Mr. Porter. Do you know where it came from?
    Mr. Apfel. The National Economic Council has been holding a 
work group on Social Security and retirement security issues 
for the last year and a half. A lot of discussion on the issue 
of strengthening retirement savings was brought up by that 
group. I was at some of those meetings on it. The Treasury 
Department really was in the lead because it is a Treasury tax 
system, so a lot of the detail of the work was provided by the 
Treasury Department.
    Again, it was the group that has been meeting to try to 
work on moving the ball forward on both of these fronts, both 
retirement savings as well as Social Security reform.
    Mr. Porter. Am I correct that under the USA accounts, there 
is no adjustment to Social Security benefits? In other words, 
it doesn't affect your Social Security benefits, it is an add-
on?
    Mr. Apfel. It is an add-on separate entirely from the 
Social Security System.

                        use of budget surpluses

    Mr. Porter. But am I also correct that it is going to take 
a portion of the money that is in the Social Security surplus, 
so-called, and invest it for people by simply having the 
government refund that directly to people and put it into 
accounts for them?
    Mr. Apfel. No, sir.
    Mr. Porter. It is money that would otherwise be used to pay 
off debt.
    Mr. Apfel. It is money that would otherwise be used to pay 
off publicly-held debt, although the USA accounts are funded 
from the on-budget side of the budget surpluses. It is not part 
of the Social Security Trust Funds.
    Mr. Porter. Except that we have also spent the first 
trillion of the money that is supposed to be set aside. So 
anything that isn't set aside to make up for that trillion--in 
other words, what we should do is--start off by paying down a 
trillion dollars worth of Social Security debt that should be 
there but isn't there. That is the first thing we should do. 
But you are saying for future Social Security surplus money, it 
wouldn't be put into these accounts?
    Mr. Apfel. That is correct. It is general tax revenue 
financed through the on-budget surpluses. I know there is a 
major debate going on around about what to do with those on-
budget surpluses. The President has argued for USAs to be 
funded out of those on-budget surpluses.

                       chairman porter's proposal

    Mr. Porter. I am not, frankly, against making a tax cut and 
forcing people to save it for their retirement. That doesn't 
sound like a bad idea to me as an alternative to doing 
something real. That at least doesn't allow us to simply put 
the money into more VCRs and fancy automobiles and makes us say 
that it has to be there to help our retirement, which I think 
we are going to need. Again, it really doesn't come to grips 
with the needs of the Social Security System per se, and 
doesn't really have an adjusting effect on Social Security.
    I might say that, although we haven't seen Mr. Archer's 
proposal, I have seen enough that I think we are not doing any 
better in that regard either, although the claw-back could be 
interpreted as some kind of an adjustment to benefits in the future.
    Let me ask you for the record. You know that I have 
proposed a system that would allow people to opt into a private 
investment or to stay in Social Security if they want to. Mrs. 
Lowey and I discussed a portion of that earlier. I neglected to 
mention two other things. One is the accounts would be insured 
by the Federal Government, and the trustees who manage those 
accounts would have to be certified by the Federal Government 
and would be criminally and civilly liable if they went outside 
the law. Why don't you take a look at that plan and then answer 
the question that I am going to ask for the record: Why 
shouldn't we allow people to do this and still protect our 
traditional Social Security System? I will let you do that one 
for the record, if you would, please.
    Mr. Apfel. I will, sir.
    [The information follows:]

       Optional Private Investment or Traditional Social Security

    You asked for my views on an approach that would allow 
people to opt into a private investment plan in lieu of Social 
Security, but keep our traditional Social Security system as an 
alternative choice.
    I think this is an interesting proposal, but, because of 
its voluntary nature, it is difficult to fully evaluate its 
long-term effects. The difficulty with voluntary proposals 
stems from the fact that it is impossible to guess who and how 
many might choose to opt for the new system. In addition, its 
voluntary nature makes it extremely difficult to accurately 
assess the long-term impact of this approach on the program.
    Nonetheless, it is clear that allowing workers to choose to 
divert a substantial portion of their FICA taxes into 
individual accounts would have the effect of reducing receipts 
to the OASDI program at a time when the trust funds are not in 
long-range actuarial balance. Diverting FICA taxes into 
individual accounts exacerbates the Social Security financing 
problem. If all who were eligible to opt out of OASDI did so at 
the earliest opportunity, payroll tax income would be 
drastically reduced--but benefit obligations would change very 
little in the near term. The scenario could result in nearly 
immediate deficits.
    I also have concerns about those who choose to opt out of 
the traditional Social Security system because of the amount of 
individual risk that each person would have to assume for basic 
protection. The truth is that stock market returns are 
essentially uncertain--both on an aggregate and individual 
basis. While the average real rate of return in the stock 
market has been about 7 percent this century, there has been a 
wide variation in returns. Some investors have done much better 
and some have done much worse. I have concerns about retirement 
savings being a replacement, rather than a supplement to Social 
Security.
    While providing a guaranteed level of benefits would reduce 
these concerns, such a guarantee could be very costly if there 
was not a dedicated funding mechanism, such as the FICA 
contribution. The alternative would be that the guaranteed 
benefit would ultimately have to rely on other commitments for 
funding.
    Having said this, I recognize that there are lots of 
meritorious ideas--many of which are controversial--that need 
to be fully assessed. It is critically important that we have a 
full and open discussion of these ideas along with an analysis 
of their impact. This will best insure the path we choose has 
the support of the American people. I look forward to working 
with this Committee and other Members of Congress on a 
bipartisan basis to insure economic security for future 
generations.

            ensuring the integrity of government investments

    Mr. Porter. I believe that it is fair to say that a trustee 
relationship focuses exclusively on the financial interests of 
the trust. In the case of the President's proposal to have the 
Federal Government invest in the stock market, I assume that 
the exclusive concern of the government would be the safety and 
return on investment for the beneficiaries. Do you agree that 
the concern of the government under the President's proposal to 
invest in the stock market would solely relate to the 
preservation of investments and improve the rate of return? 
What mechanism does the President propose to assure that future 
Congresses or Presidents may not limit or prohibit investments 
that are financially advantageous but politically incorrect, 
such as investments in tobacco, nonunion companies, companies 
that find it economically advantageous to manufacture products 
overseas and so forth? In other words, one of the flaws of 
simply allowing that kind of investment is that Congress or 
future Presidents might want to tamper with the type of 
investments that could be permissible.
    Mr. Apfel. I think that is why it is so important to 
establish a system that is shielded from government 
interference. What the President's proposal does is establish 
that it wouldn't be the government doing the investing. It 
would be independent private sector money managers that would 
be making those investments in funds.
    Mr. Porter. Under the USA accounts, you mean?
    Mr. Apfel. Under the equity investments of the Trust Funds.
    Mr. Porter. All right. But those would still be subject to 
law, whoever manages it. Congress could say no investment in 
the tobacco companies even though the rate of return might be 
good, or no investment in companies that do things that we 
don't like for one reason or the other.
    Mr. Apfel. That is a potential risk. The way to obviate 
that risk is to establish an independent structure. We look at 
the Thrift Savings Plan model. That is one that has not been 
tampered with legislatively, and there is a lot of money, 
needless to say, in that model without there being tampering or 
targeted investments. I think that it is very possible to do 
this. It is an independent, arm's length, approach, not the 
government doing the investing that, I think, is appropriate.
    You do raise the issue that future Congresses could change 
the law. They could always change the law in the future, but we 
believe the right balance can be found.
    Mr. Porter. You trust government more than I do.
    Mr. Apfel. What I am concerned about is an adequate benefit 
structure for the future. The reason why States and localities 
have moved into equities to fund their systems is to obviate 
those big tax increases or benefit reductions that were going 
to be necessary. I view this as a way to help assure higher 
rates of return to the system as well as a better financing 
source without revenue increases or benefit reductions.

                    private investing for retirement

    Mr. Porter. I think it is time to allow the American people 
to do the investments without the government being there, at 
least in part. It seems to me the whole movement of the 1980s 
and 1990s has been toward not defined benefit plans, but 
defined contributions, and let people reach the level of 
benefits that they can achieve by good management. It seems to 
me there are plenty of very able people to help people invest 
wisely and maximize their return and that benefits our economy. 
By allowing investment rather than debt, which is where we are 
now, and improving our situation to true investment where 
people own and manage with a certified and liable trustee in an 
insured account seems to me to be the way to go.
    Mr. Jackson. Will the Chairman yield?
    Mr. Porter. Yes, I yield.
    Mr. Jackson. We can do that now, though, right, Mr. 
Chairman? Nothing prohibits us from investing as individuals in 
private stocks or mutual funds or markets.
    Mr. Porter. Not with the Social Security Trust Fund, no. 
How about people, though, Mr. Jackson, who can't save because 
they are paying 15 percent in Social Security taxes and have 
nothing left over? Those people aren't investors because they 
can't save. They don't have the resources.

                         social security taxes

    Mr. Jackson. Will the gentleman continue to yield? I did 
have a question that I submitted for the record, but I 
certainly, if I could, try and ask it. It may be even 
positioned in the context of a response. Once the person 
reaches around 68- to $69,000 a year, they stop paying Social 
Security taxes. For example, Members of Congress, including all 
of us here, stop paying Social Security taxes around July 1 
because we earn $136,000 a year. Over 92 percent of all 
Americans earn less than $68,000 a year, thus low- and middle-
class-income wage earners bear a disproportionate share of 
Social Security taxes. Maybe if we are willing to make Social 
Security taxes more progressive and people who are earning more 
than $68,000 a year pay a fair share of their Social Security 
taxes, we can help create more solvency.
    Mr. Porter. I would imply to the gentleman that the Social 
Security System, the benefit package is progressive in that 
lower-income people get a good deal more back in terms of their 
investment over their working lifetime than high individual 
beneficiaries do. Also, low-income individuals don't have to 
pay income tax on any portion of that or a smaller portion than 
higher-income individuals do. So the benefit structure is 
highly progressive.
    Now you are going to say, let's do that with a tax 
structure as well. I think if you are going to adjust one, you 
have to adjust the other in some reasonable way. Frankly, 
raising taxes in any way on Social Security, I think, is not 
the way to address this problem. I think taxes are high enough, 
and we have got to look at other ways. Higher taxes and lower 
benefits are off the table. We have got to work it out in a way 
that we can live with that doesn't do either one of those 
things.
    If I could, I would rather lower taxes and raise benefits. 
I think that I can do that. Actually, my plan allows for a 20 
percent tax cut over a period of time, and the benefits are 
much better than Social Security can provide today.
    Mr. Jackson. I thank the Chairman for having yielded me the 
time. I just find it hard to imagine that after $68,000 a year, 
the likes of Bill Gates and other similarly situated Americans 
just pay nothing else into the system, but are essentially 
entitled to the same amount of benefits that people who pay and 
are shouldering more of the burden than any other American do 
pay. But I thank the Chairman for yielding.

                      defined contribution system

    Mr. Apfel. Mr. Chairman, if I could add----
    Mr. Porter. Do you want to get into this discussion?
    Mr. Apfel. I would like to actually talk to you about my 
administrative budget, but I would point out that, again, this 
is where there could be more commonality than may exist in the 
public press. Universal savings accounts are a way to establish 
a real defined contribution system for low- and middle-income 
workers, the workers that you talked about. I think there is a 
real strong possibility to work together on a way to establish 
a defined contribution system for middle- and low-wage earners 
through the tax system in a way that would help strengthen 
another part of the retirement safety net that I think is so 
very important.
    There is a consensus that something in the area of 
retirement savings is absolutely needed. I think there is a 
strong disagreement on how to do that. But there is a 
bipartisan consensus that more retirement savings for low- and 
middle-income workers are needed. Most of our tax benefits now 
for retirement savings are for those with incomes above 
$100,000. We have got to find ways to create incentives for 
low- and middle-income workers to strengthen that leg of the 
retirement stool. That will take some of the pressure off 
Social Security.
    Mr. Porter. Absolutely.
    Mr. Wicker.

                          lower-income workers

    Mr. Wicker. Just a couple of closing points from my 
perspective. With respect to Mr. Jackson's first point, if the 
lower-income worker is paying a certain amount of actual 
dollars into FICA taxes now, I think the point that Mr. Porter was 
making is he doesn't have to pay any more if you set a part of that 
aside and get a lot better return for it. I think that is the beauty of 
a carve-out. There may be problems with all of the ramifications of a 
so-called carve-out, but I would submit to you that certainly anybody 
now can save money and put it into an IRA, but it is hard to do that if 
you don't have the money. But if it is money that he has already paid 
but just invested better, I don't see why we don't work toward that.
    Mr. Jackson. Does the gentleman yield?
    Mr. Wicker. Yes.
    Mr. Jackson. I thank the gentleman for yielding. I said 
nothing about lower-income Americans. I said 92 percent of all 
Americans, which overwhelmingly are in the middle class, they 
vote Democrat, they vote Republican, they are our 
constituents--92 percent of all Americans, that includes mostly 
working-class Americans, earn less than $68,000 a year.
    Mr. Wicker. That was your second point. I wasn't addressing 
the second point, Mr. Jackson.
    Mr. Jackson. Okay. I am sorry.
    Mr. Wicker. I was addressing the point where you asked the 
Chairman, can anybody save in an IRA right now, and that is 
certainly true. The point is there is forced savings in Social 
Security, and it is the worst investment a young lower-income 
worker could possibly have because the return is so poor. That 
is the only point that I am making. Let part of that investment 
go to something that gets them a better return.

                    securing retirement investments

    Mr. Jackson. The only argument that many of my colleagues 
have made with respect to even a part of that investment is 
that we lose the ``secure'' in Social Security. Mr. Chairman, 
it is precisely the conditions that the market created that 
even created the system. Unless we are able to address no 
losses in that process for Americans who are expecting some 
decent retirement income, that has to be a factor.
    Mr. Wicker. Certainly making it secure for those people who 
are looking towards Social Security for a specific benefit has 
certainly got to be a part of it. I think that we can make 
Social Security have a higher return on investment and still 
keep it secure.
    Mr. Porter. Will the gentleman yield?
    Mr. Wicker. I yield, and then I want to make a final point.
    Mr. Porter. I want to make the point again to Mr. Jackson, 
and that is that the accounts that I am referring to are both 
insured accounts, and there is a guarantee of 95 percent of 
what you would have received under traditional Social Security, 
and you can remain in the traditional system. If you are 
worried about security and you don't want to take a risk that 
is 5 percent, you can stay in the traditional system. There is 
no requirement that you leave it. It remains a viable system.
    Mr. Jackson. I thank the Chairman for that clarification.

                        usa accounts legislation

    Mr. Wicker. Finally, Mr. Apfel, you went back to the issue 
just a moment ago about the USA savings accounts, the universal 
savings accounts. I sort of agree with my chairman here. If 
this is the only way that we are going to get a tax cut, this 
might be something that I could support. I do think that it 
would help if you are enthusiastic about this or if the 
President shares the same enthusiasm that he had at the State 
of the Union, if you would come forward with a bill and run it 
up the flag pole. You never know. You might get more support 
than you think. If it is the only way that we are going to 
rebate a little money back to the people and have it used for 
long-term savings, I think that might be the way to go. So send 
us a bill.
    Mr. Apfel. I will bring that request back to the President 
and to Secretary Rubin. I think there is a real potential 
benefit here for retirement savings that is a major benefit for 
this country.
    Mr. Porter. Thank you, Mr. Wicker.
    Mr. Jackson, you can have time of your own.

                       social security wage base

    Mr. Jackson. No, Mr. Chairman--well, maybe I will take a 
second here. I just want to go back and raise my second point, 
which Mr. Wicker apparently did not necessarily agree with, 
that when I say that Social Security taxes should be more 
progressive, for 92 percent of all Americans who earn $68,000 
or less, the working class, middle-class Americans, they stop 
paying taxes at $68,000. Is it the Administration's position 
that people who earn above--in terms of the Social Security 
reform proposals, that people who earn above $68,000 a year 
should pay no more into the Social Security System that might 
help with its long-term solvency problems?
    Mr. Apfel. The Administration has not ruled in or ruled out 
an increase in the wage cap. When we talk about the structural 
changes that may be needed to complete the last action, this is 
one of the issues that I think needs some serious attention. 
The Administration has no position on this or on, say, the 
benefit reduction or the retirement age. But this is one of the 
half dozen cornerstone issues that needs to be addressed.
    Mr. Jackson. I see my colleague Mr. Wicker----
    Mr. Wicker. It smells a lot like a tax increase, Mr. 
Chairman.
    Mr. Jackson. I am not opposed to it. It has become a bad 
word in this town, but sometimes we have to pay for our dreams 
and pay for our expectations. I think that one of the problems, 
and I have had discussions with Administration officials about 
this, is that there is a significant number of Americans, a 
very large body of Americans, who earn incomes somewhere 
between $68,000 and $150,000 a year. For that particular group 
to shoulder an even greater burden, disproportionate to the 
amount they will actually receive out, is a concern obviously 
for many of us, and I think a very legitimate concern.
    Nevertheless, there are Americans, a large body of 
Americans, increasingly smaller, but increasingly growing in 
terms of their income, who earn well over $150,000 a year. It 
is not a large number of Americans, but a significant number of 
Americans who could pay more into the system.
    When you talk about progressive tax structure as a 
possibility, an option on the table, has the administration 
considered the possibility of bypassing the group between 
$68,000 and $150,000 so that they don't shoulder more of a 
burden than they should?
    Mr. Apfel. I think there are stronger arguments against 
increases at that very top range. It really gets to the social 
insurance nature of Social Security. Right now, virtually 
everyone pays into the system. It is a capped amount. Virtually 
everyone receives an amount out of the system based on their 
contribution. If one group of Americans is asked to pay a very, very 
large amount into the system, the question is whether that unravels 
some of the interconnected nature of Social Security, some of the 
fabric of Social Security, the collectiveness of it, and whether it 
creates an unraveling of the support across generations and across 
income groups.
    My own belief, if we look at Social Security in the long 
run--and this is true for any large institution in this 
country--is you need legitimacy for that institution across 
ages, across income groups, across races and sexes. There is a 
question if there is a very large tax rate on the very high 
end, whether that would have the potential of unraveling some 
of the legitimacy of the overall system. I would be 
uncomfortable that that could have an unraveling effect on both 
the intergenerational as well as the cross-income-group nature 
of Social Security.
    Mr. Jackson. Not one of the great conflicts that I ever 
thought about, nor is it one that I ever think would actually 
become a reality.
    I know that my time has expired, but I do want to say that 
it is becoming increasingly clear that people who earn a 
certain amount of income will never need anything from Social 
Security. They can invest in the private stock market, take 
advantage of bulls and bears, and take advantage of just the 
dollar cost averaging process of earning more revenue. They 
will never have a need for Social Security. Yet they will 
become socially insecure if a large number of Americans are 
approaching retirement age and making more demands upon 
government, upon their needs as they approach retirement. So 
there is a simple principle, to whom much is given, much is 
required, that may be applicable there, and I look forward to 
continued discussions.
    Thank you, Mr. Chairman.

                    universal social Security system

    Mr. Porter. I would say to the gentleman again that those 
high-income individuals are paying a higher rate of tax, but it 
seems to me that you don't need a Social Security System if you 
follow that philosophy. Why not just terminate it, and we will 
have a welfare system that takes care of people who are in need 
when they reach retirement age?
    The whole idea of Social Security was a universal system 
that would have everybody participate, everybody pay the taxes 
at the time when they didn't know whether they were going to be 
in the first group or the second group and build up some equity 
so that they could be supported when they were no longer 
productive.
    I think the concept of Social Security is an outstanding 
one. I think that it has been universally accepted by the 
American people, and it has been a system that has worked up to 
this point extremely well in eliminating senior poverty in our 
country. So I am a big supporter of it. I just think that we 
don't want to see this good system go down the drain where 
benefits have to be cut because there are a lot more retirees 
and a lot fewer workers to support them. If we don't make some 
changes in the system to make it as good in the future as it is 
today, we are going to see it unravel. I think that would be a 
terrible mistake. Why go to a system that is basically a 
nonuniversal system that I think people would not support? I 
just think that the concept of it is good. We ought to keep it.
    Mr. Jackson. Mr. Chairman, I support a universal system. I 
would only argue that the premise of the Social Security system 
is precisely in response to what many of my colleagues are 
abdicating, and that is some portion of their resources should 
go into the private market when the Social Security was created 
to protect many Americans for failures and market corrections 
that inevitably occur and did occur that dropped millions of 
Americans into poverty. So the goal of the Social Security 
Administration was to provide some security against free market 
forces that inevitably have--bear markets and bull markets--
that ultimately could create untenable conditions in our own 
country.
    The issue of security for millions of Americans, just 
because the market appears at this moment to be doing better 
than it has historically, and much of that is the byproduct of 
a new industry in this service-based economy that is 
essentially Internet-driven, is a social concern that many of 
us have for the long-term solvency of the program.
    Mr. Porter. If the gentleman will yield, I don't think that 
it was a premise of the Social Security System created in 1935 
to protect people from the vagaries of the stock market, 
because at that time a very small proportion of the American 
people were investing in the stock market. Even in 1929, that 
wasn't a source of retirement for very many people at all. I 
don't think that was part of the premise.
    I do think that the problem has become that the disparity 
between the rate of return of the Social Security System and 
the rate of return of other investments, whatever they are, has 
become so broad that the general support for Social Security is 
waning, particularly among the young who are saying, gee, I 
could invest over my working lifetime and do 3 or 4 times or 
maybe 10 times as good for my own retirement as the Social 
Security system does.
    You are right, there is risk in that, and we have to 
minimize that risk if we are going to retain a system that 
works for people. But it seems to me that the disparity has 
become so great that people are questioning the whole system 
because the rate of return is so low. That is something we have 
got to come to grips with. Other alternatives are simply so 
much better in addition to the demographic problems we have.
    Mr. Commissioner, I did have a lot of questions on the 
management of the Social Security Administration. I am going to 
have to submit these for the record.

                    status of social security reform

    Mr. Porter. Your being here gives us the opportunity to 
discuss these broader issues. You spend a lot of time yourself 
obviously discussing them, even though the major portion of 
your job is to manage the system that we have now. We still 
find it fascinating to discuss them with you. We appreciate the 
fine job that you are doing. You are doing an excellent job 
there.
    I would just like to have the Administration--I don't care 
if they propose things that agree with where I am on this or 
not--I think the Administration has to lead. It simply is not 
acceptable for the President to say, I don't have a position on 
that, or, we haven't yet gotten to a position on that. You have 
got to have a position. It seems to me that is what the 
President is there for; not to stick his finger in the wind to 
see how the polls are doing, but to tell us what we need to do 
to make this country and our Social Security System work 
better. Otherwise, why be President? You are just a follower, 
not a leader.
    Thank you for being with us. Do you want to respond to 
that?
    Mr. Apfel. I probably have to a little bit.
    I think the President has provided an important framework 
to this that I hope that we can work with to move this debate 
forward and to resolve it this year. It is my desire, my deep 
desire, that we are able to do that. You know, when many people 
ask me, is Social Security going to be there 30, 40, 50 years 
from now, the answer is, absolutely it is going to be there, 
but there are going to have to be changes.
    I would also say, is the Social Security Administration 
going to be there, and I would say the answer to that is 
absolutely yes. We are managing results. I talk about Porter 
commitments every week. There is no doubt that we are an 
organization that tries very hard to provide good customer 
service. It is a tough time, given extra workloads and also the 
changeover to more integrity activities. But Mr. Chairman, you 
have been a strong supporter of what we do in the organization, 
and you have been a guiding light helping us frame issues 
through the Porter commitments. We will be there and will be 
doing everything that we can for the American people, both in 
terms of the solvency issue and the education fronts, as well 
as providing customer service to the American people.
    Mr. Porter. Mr. Commissioner, I think the job that you and 
everybody that works for the Social Security Administration 
does is exemplary. I think that you can be very proud of the 
organization that you head in terms of providing to the 
American public, your customers, the highest level of service. 
I think you are always working to find ways to make it even 
better.
    I think there definitely will be a Social Security 
Administration 50 years from now. I think, frankly, that the 
program that I have proposed is the one that will be there in 
place. It will still require a great deal of involvement by the 
government, a great deal of management, and a great deal of 
oversight, but I think eventually we are going to move to a 
system that is in the hands of the American workers where they 
own it and they manage it according to fixed rules by the 
government and government guarantees. I think it is inevitable 
that this is going to happen. The disparity just gets too great 
as you get economic growth, and it is going to happen. It still 
requires a universal participation and government regulation.
    Thank you for appearing today and thank you for the fine 
job that you are doing.
    Mr. Apfel. It is an honor to be here, sir.
    Mr. Porter. We stand in recess until 2:00 p.m.
    [The following questions were submitted to be answered for 
the record:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                           Tuesday, April 27, 1999.

            OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION

                               WITNESSES

 STUART E. WEISBERG, CHAIRMAN
WILLIAM J. GAINER, EXECUTIVE DIRECTOR

                       Introduction of Witnesses

    Mr. Porter. The subcommittee will come to order.
    We complete our hearings of the independent agencies under 
the subcommittee's jurisdiction with the Occupation Safety and 
Health Review Commission. We are pleased to once again welcome 
Stewart E. Weisberg, the Chairman, accompanied by William J. 
Gainer, the Executive Director.
    Mr. Weisberg, it is good to see you.
    Mr. Weisberg. It is good to see you, Chairman Porter. Good 
afternoon. It is again a pleasure to appear before you to 
testify about our budget requests. We have worked closely with 
this subcommittee to meet the goals of our strategic plan.
    Let me introduce our Executive Director and strategic plan 
meister, William Gainer.
    I have a prepared statement to insert into the record in 
its entirety.
    Mr. Porter. That will be received.

                           Opening Statement

    Mr. Weisberg. Thank you, Mr. Chairman.
    First, Mr. Chairman, I would like to do something I was not 
able to do last year, namely introduce a fellow commissioner. 
Let me present Commissioner Thomasina Rogers. Until 
Commissioner Rogers joined us in late October, we had been 
without a quorum for almost a year. We had a long run of the 
double feature Home Alone and I Know What You Did Last Summer. 
With the welcome addition of Commissioner Rogers, that was 
replaced by We Have Got Quorum.
    Our budget request is $8.5 million, roughly a 5 percent 
increase, and considerably less than would have been needed if 
not for our past cost savings.
    Let me point out that when we are appropriated the money 
and we find that we don't need it due to commissioner vacancies 
or savings, we return it to the Treasury. Since 1996, we will 
have returned almost $1 million to the Treasury by the end of 
the fiscal year.
    Our regional office restructuring was completed earlier 
this month with the closing of our office in Boston as promised 
to this subcommittee. We recently implemented our new case 
settlement part as a 1-year pilot program. This part applies to 
all cases involving proposed penalties of two hundred thousand 
dollars or more. It features a settlement judge to facilitate 
the settlement, in-person conferences with the parties, and a 
requirement that someone with full settlement authority be 
present.
    The results of our E-Z Trial program continue to be 
gratifying. Our cycle time from docketing to judge's decision 
in cases that go to hearing has averaged 165 days, compared to 
423 days earlier for similar cases in conventional proceedings.
    There has been an uptick in the percentage of E-Z Trial 
cases that go to hearing rather than settle, from 4.5 percent 
to 6 percent. This is not viewed with alarm, but rather it 
shows to us that the program is working. It empowers smaller 
employers, enabling more of them to get their day in court if 
they so choose. That was one of the main purposes of the E-Z 
Trial program.
    We have started working on E-Z Appeal to make it easier for 
the same small employers to appeal their cases before the 
Review Commission, to simplify the process, make it easier for 
them and less costly to appeal a judge's decisions.
    We will soon be issuing our first Guide to Review 
Commission Procedures for employees and labor unions. This idea 
came from a focus group meeting with stakeholders in Chicago in 
September, 1997. One of the participants pointed out that our 
Guide to Review Commission Procedures is geared almost entirely 
to employers rather than employees or unions, and he had a 
valid point. As a result of that, we will soon be issuing this 
new guide.
    We are meeting our goal of providing 40 hours of training 
annually for each employee, a far cry from 1994 when I joined 
the Commission and we spent $4 per employee on training.
    We are meeting most of our strategic plan goals with one 
notable exception, the time for issuing Commission decisions. 
In fiscal year 1998 or, rather, the first month and a half of 
that year, since that was the only part of the year that we 
were actually able to issue decisions, we did it in 295 days, 
well below our 1-year target. We issued 13 decisions during 
that period.
    However, it is not possible at the Commission level to 
issue decisions within 1 year during 1999 when we were without 
a quorum for almost a year. Thus, each case before us aged 1 
year. Aging is good for wine and some cheeses but not for 
appeals cases, particularly not health and safety cases where 
there is no requirement to abate a hazard until there is a 
Review Commission decision.
    My greatest frustration has been that, for 3 of the last 4 
years, we have not had a full complement of three 
Commissioners. For 1 year we were without a quorum to even act.
    My term ends tonight at midnight, and the agency will once 
again be without a quorum. There is a Republican nominee who 
the Senate is expected to act on in the next week or so. My own 
status remains uncertain, while waiting for the White House to 
make a decision on my renomination.
    In any event, Mr. Chairman, it has been an honor and a 
pleasure for me to work closely with you and with this 
subcommittee since 1994. Thank you. Mr. Gainer and I will be 
pleased to answer any questions that you might have.
    [The prepared statement follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                         commissioner vacancies

    Mr. Porter. Mr. Chairman, there is a Republican vacancy on 
the Commission?
    Mr. Weisberg. There is a vacancy now. A Republican has been 
nominated. His name was sent to the Senate 3 weeks ago; and the 
Senate committee, I understand, is scheduled to act on it 
within the next week or so.
    Mr. Porter. With your term expiring, that creates--until 
they act on that individual nomination, you would again be 
without a quorum?
    Mr. Weisberg. Exactly.
    Mr. Porter. If they do act on that, even if they don't act 
on your reappointment--you are seeking reappointment, aren't 
you?
    Mr. Weisberg. Yes.
    Mr. Porter. If they don't act on that, you would still have 
a quorum, though?
    Mr. Weisberg. There would be a quorum to conduct business. 
Again, the agency would be without a full complement of 
commissioners.
    Mr. Porter. All right. Do you know if the Administration is 
going to reappoint you or is this all up in the air?
    Mr. Weisberg. This is up in the air. I feel like I am 
waiting for the call from the governor as the clock is ticking.
    Mr. Porter. Without a quorum you can't issue any decisions?
    Mr. Weisberg. Can't issue decisions.
    Mr. Porter. You can do all of the other things, but you 
can't do----
    Mr. Weisberg. At the Commission level, we cannot rule on 
motions. A simple motion for extension of time cannot be acted 
upon. Interlocutory appeals cannot be acted on. The work of the 
Commission continues, however, at the judges' level, but any 
action at the Commission level in respect to any case 
processing cannot be done.
    Mr. Porter. Remind me why the 1 year was lost. Was it a 
failure to send up a name or was the Senate sitting on it?
    Mr. Weisberg. It was a combination. I think there was a 
lack of communication between the White House and the Senate; 
also there was a debate over whether a position is a Republican 
position on the Commission or a Democrat position. It took a 
while for that to be ironed out.

                                caseload

    Mr. Porter. What does your caseload tie to, OSHA 
inspections?
    Mr. Weisberg. It is entirely wholesale. It is based 
entirely on OSHA inspections. When a company chooses to contest 
a case if they receive a citation, then we handle it, and it is 
assigned to one of our judges for hearing.

                               ergonomics

    Mr. Porter. If OSHA were to issue a new regulation on 
ergonomics, have you given any thought to what they might do to 
your caseload?
    Mr. Weisberg. In general, Mr. Chairman, any time you have a 
new standard there are unresolved issues. The more ambiguities, 
the less clear the standards; the more issues, the more cases. 
Ergonomics is harder to enforce under the general duty clause.
    There have been relatively few cases in recent years where 
OSHA has issued a citation for ergonomic violations under the 
general duty clause. While there have been a few cases, those 
cases have been extremely time consuming to decide.
    If you recall Pepperidge Farms, which I testified about 2 
years ago, there were 62 days of hearings, an 11,000 page 
transcript, and 400 exhibits, including 60 scientific studies 
and articles. There was a 250-page judge's decision, and the 
Commission decision was 150 pages.
    Overall I think we probably would see more ergonomic cases. 
Whether the actual amount of time would be more or less than 
the current cases under the general duty clause, I think we 
will have to wait and see.

                               e-z trial

    Mr. Porter. You received the Hammer Award for your work 
with establishing the E-Z Trial process, and we congratulate 
you on that.
    Mr. Weisberg. Thank you, Mr. Chairman.
    Mr. Porter. One of your performance indicators for 1999 was 
to increase the percentage of the Commission's cases that go to 
E-Z Trial from 25 to 30. How has the Commission been doing with 
this performance goal? I think that you said there was an 
increase in the number of cases in that category.
    Mr. Weisberg. There has been an increase. I think that we 
are about 27 or 28 percent [Clerk's note.--Later corrected to 
26 percent], and we are hopeful of meeting the 30 percent 
figure by the end of the fiscal year.
    Mr. Porter. After that your goal is to keep it at 30 
percent; is that correct?
    Mr. Weisberg. I think it is really a question, Mr. 
Chairman, of balancing and seeing how much of an additional 
workload in E-Z Trial the judges can bear. Balancing that, for 
example, with our settlement part in dealing with the big 
cases, the monster cases, the two hundred-thousand-dollar-plus 
penalty cases. It is really a balancing act.
    While we want to increase the number of cases in E-Z Trial, 
we don't want it to negatively impact on the cases in 
conventional proceedings.
    Mr. Porter. Have small businesses primarily been the ones 
that have gone the E-Z Trial route?
    Mr. Weisberg. We found that the number of E-Z Trial cases 
that employers were handling pro se had increased to 50 
percent; that is, litigating the case without an attorney. That 
was up from, I guess, one third. That again was one of the 
goals of the E-Z Trial program, to make it easier for these 
small employers to have their day in court.
    In many cases, the cost of an attorney or having to do 
without, were equally troublesome for the small employer. This 
program enabled the small employer to appear before a judge, to 
argue their case without the strict conformity of Federal Rules 
of Evidence, and without having to go through the hurdles that 
exist in conventional proceedings.
    I think in 1998 there was only one case that was not 
settled or decided on the merits and where an employer was 
disqualified compared to many, many such cases before E-Z 
Trial.

                           caseload inventory

    Mr. Porter. At the end of fiscal year 1997, there was a 
total ALJ inventory of 1,021 cases; and at the end of fiscal 
year 1998 only 842. How did your Commission reduce its end-of-
the-year inventory so much?
    Mr. Weisberg. One, we had a decrease in cases coming in. 
But we also had increased productivity by our judges during the 
year and in 1998 as well.
    In fiscal year 1997, we also met our goal at the judges' 
level of issuing their decisions in less than 1 year.

                              office rent

    Mr. Porter. There is a 13 percent increase in the 
Commission's space rent costs despite the fact that there has 
been no change in the amount of space or the location of the 
office. What was the explanation given to the Commission as to 
why there was a 13 percent increase?
    Mr. Weisberg. The short answer to that, Mr. Chairman, is 
the same answer that I received last week when I phoned my long 
distance carrier and asked them why I was no longer paying 12 
cents a minute and I am now paying 15 cents a minute. The 
answer was, there has been a change in pricing policy.
    However, it should be noted that when we renewed our lease 
we were assured by the General Services Administration, assured 
in writing, that there would be no increase in our rent other 
than for inflation. However, subsequent to that, GSA changed 
its policy nationally and, whether it was a renewal or not, 
started to impose market rents that they determined.
    Mr. Gainer can expand upon that.
    Mr. Gainer. Apparently, they changed their policy several 
times. At one point, they said they changed the national policy 
based on our case. So if you had a renewal they would keep you 
at a cost based or negotiated rent. We had negotiated the rent 
down by several hundred thousand dollars in our first year at 
the Commission. GSA, I think, intended to honor that 
negotiation, but at a much higher level the policy decision 
took over, and it was decided they were going to enforce a 
single rent policy nationwide. That is a market rate policy. So 
all bets were off.

                         boston office closing

    Mr. Porter. You mentioned that the Boston regional office 
has been closed. What happened to the employees from that 
office?
    Mr. Weisberg. One of the judges transferred to our Denver 
office. A second judge retired. The attorney in that office 
transferred to our Washington office and is now working in our 
general counsel's office, and the two support people chose to 
separate from government.
    Mr. Porter. Have you experienced any problems with that 
office being closed?
    Mr. Weisberg. It just closed April 15.
    Mr. Porter. Oh, it just closed. Do you plan on closing any 
other regional offices?
    Mr. Weisberg. No, we don't, Mr. Chairman. This is part of a 
reorganization and restructuring that we began in 1996. We feel 
now that having judges' offices in Washington to handle the 
East, and in Atlanta to handle the South and deep South and in 
Denver to handle the West gives us a nice triangle structure. I 
think that would probably maximize our effectiveness, again, 
since the hearings take place where the alleged violations 
occurs. I think that we are strategically well placed as far as 
cities in which we have offices.
    The problem arose because many years ago the Commission had 
15 offices. Over the years, as different States converted to 
State plans, those offices were closed, often without rhyme or 
reason as to the larger picture. And so we were left then with 
five offices and not the locations one would have selected 
based on caseload and other factors.

                             reappointment

    Mr. Porter. Well, Mr. Weisberg, you have done an excellent 
job in your term as chairman, and I hope that the White House 
sees fit to reappoint you. I think if they want an example of 
someone who has come in and done a fine job, they couldn't find 
anyone better. If that is their criteria, and it ought to be, 
you ought to be reappointed. So thank you for the fine job you 
have done and are doing, and we hope that you will be back here 
next year as well.
    Mr. Weisberg. Thank you, Chairman Porter, and thank you 
also for your support for our agency. Again, I tremendously 
enjoyed working with you.
    Mr. Porter. Thank you. I hope to see you again next year.
    The subcommittee will now stand in recess until 10:00 a.m. 
tomorrow.
    [The following questions were submitted to be answered for 
the record:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                           W I T N E S S E S

                              ----------                              
                                                                   Page
Apfel, K.S.......................................................  1997
Baker, Richard...................................................  1423
Barnes, C.R......................................................  1053
Bell, Linda......................................................     1
Briggs, Ethel....................................................  1475
Coonrod, Robert..................................................   211
Crable, S.E......................................................   931
Darden, Harding..................................................  1709
Endres, Tom......................................................   469
Feinstein, Fred..................................................  1709
Frankel, D.B.....................................................     1
Gainer, W.J......................................................  2213
Gleichman, Norman................................................  1423
Hentges, Harriet.................................................  1239
Hilbert, Maj. Gen. Donald........................................  1609
Jackson, Y.S.....................................................  1997
Jacobsen, M.G....................................................   931
Jordan, M.L......................................................  1423
Kemp, John.......................................................  1475
Kever, Jerome....................................................    97
King, J.D.W......................................................   931
Lacy, D.F........................................................  1609
Leonard, Fran....................................................  1053
London, Diana....................................................   469
McCrimon, Audrey.................................................  1475
Nelson, C.E......................................................  1239
Nelson, Ken......................................................   401
O'Brien, Tom.....................................................  1053
Ross, Murray.....................................................  1651
Russell, Judy....................................................  1547
Simon, J.H.......................................................  1547
Solomon, R.H.....................................................  1239
Speakman, Virgil, Jr.............................................    97
Sywetz, Betsy....................................................     1
Thomas, Cherryl..................................................    97
Traynham, Vella..................................................  1053
Truesdale, John..................................................  1709
Weisburg, S.E....................................................  2213
Wilensky, Gail...................................................  1651
Willard, R.S.....................................................  1547
Wofford, Harris..................................................   469
Zenker, Wendy....................................................   469
Zink, Commander J.W..............................................  1609



                               I N D E X

                              ----------                              

                Institute of Museum and Library Services

                                                                   Page
Budget Request:
    Administrative Costs.........................................    14
    Amount.......................................................    12
    Congressional Justification..................................    20
    Library Grants to the States.................................    17
    National Digital Library for Education...................14, 16, 18
Communications Technology and Disadvantaged Children.............    15
Director's Resignation:
    Director's Departure.........................................    12
    Accomplishments of Director..................................13, 15
GPRA.............................................................    13
Results of IMLS..................................................    19
Statements:
    Opening......................................................     2
    Written......................................................     4
Witnesses, Introduction of.......................................     1
Y2K Compliancy...................................................    17
Beneficiaries, Program...........................................   120
Biographies:
    Jerome F. Kever, Management Member...........................   117
    V.M. Speakman, Jr., Labor Member.............................   116
    Cherryl T. Thomas, Chair.....................................   115
Buyout Authority.................................................   131
Comments:
    Chairman Porter..............................................   118
    Congressman Jackson..........................................   121
Fiscal year 1999:
    Carry Over of Funds..........................................   118
Fiscal year 2000:
    President's Proposed Appropriations..........................   106
    Request for Additional Funding...............................   110
GSA Rent Charges.................................................   123
    Chronological History........................................   125
Information Technology:
    Fiscal Year 1999 Funding.....................................   121
    Positioning for the New Millennium...........................   109
    Preparations for Year 2000...................................    99
    Status of Year 2000 Project..................................   129
Investment Committee:
    Investment Practices.........................................   123
Performance Measures:
    Impact of Budget, on.........................................   119
Point of Contact Service.........................................   130
Railroad Retirement Board:
    Background...................................................   106
    Transfer of Functions........................................   122
Staffing:
    Customer Base and Agency.....................................   119
    Effects of Funding and Staffing Reductions...................   112
    FTE Reductions, Fiscal Years 1993-2000.......................   108
    Impact of Reductions.........................................   122
    Recent Reductions............................................    98
Statements:
    For the Record...............................................   106
    Opening......................................................    97
Suggestions for the Future:
    Comments.....................................................    99
    External Reports.............................................   104
    Headquarters versus Field....................................   101
    Interaction with other Federal Agencies......................   103
    Labor Member Office, Reform of...............................   100
    Office of Inspector General, Budget and Staff Size...........   102
    Outsourcing, Potential for Savings...........................   100
    Outstanding Regulations, Finalization........................   100
    Railroad Retirement Act, Simplification......................   103
    Reorganization and Downsizing................................   101
    RRB Hearings, Should Administrative Law Judges Conduct?......   104
    RRB Investment Authority.....................................   102
    Three Member Board, Problems.................................   102
    Transfer of Medicare Part B Claims to HCFA...................   101
Trust Funds:
    Financial Status.............................................   114
    Investments..................................................   130
Weaknesses, Material.............................................   129
Witnesses:
    Introduction of..............................................    97

                  Corporation for Public Broadcasting

Administrative Issues............................................   292
American Literature, New Series on...............................   255
Ancillary Income.................................................   257
Appropriations Request and Justification.........................   333
Benefits of Digital Public Broadcasting..........................   261
Censorship.......................................................   258
Children's Educational Programming...............................   326
Commercial Stations and Digital Conversion.......................   238
Commercial Stations and Digital Conversion.......................   271
Compensation of Employees........................................   304
Cost of Digital Conversion.......................................   265
CPB, not a Federal Agency........................................   262
Culturally Diverse Programming...................................   331
Deadlines, Digital Transition....................................   256
Digital:
    Broadcasting.................................................   324
    Conversion...................................................   268
    Conversion Authorization.....................................   238
    Conversion of the Commercial Stations........................   238
    Conversion Costs.............................................   265
    Conversion Timing............................................   249
    Multicasting.................................................   247
    Public Broadcasting, Benefits of.............................   261
    Technology and Diverse Audiences.............................   248
    Television Initiatives.......................................   290
    Transition Deadlines.........................................   256
    Transition's Impact on Public Radio..........................   285
Distribution of Digital Funds....................................   264
Distribution of Digital Funds....................................   301
Diverse and Underserved Audiences................................   246
Educational Programming, Children's..............................   326
Employees, Full-Time Equivalents.................................   270
Employees, Compensation..........................................   304
Federal Contribution, the Importance of..........................   257
Full-Time Equivalent Employees...................................   270
Funding for Digital: PTFP and CPB................................   244
Funding Trends...................................................   307
Future Funds.....................................................   265
Future Funds.....................................................   288
Internet Programs................................................   323
It's Elementary..................................................   291
Minority Programming.............................................   328
Minority Training................................................   248
New Series on American Literature................................   255
NPR Satellite Replacement........................................   302
NPR's Satellite Replacement......................................   286
NPR's Satellite Replacement......................................   323
One Grant Per Market.............................................   263
Opening Statement of Witness.....................................   211
Programming......................................................   269
    Decisions....................................................   258
    In the Digital Era...........................................   260
Public Radio:
    Digital Transition's Impact on...............................   285
    Programming..................................................   327
Questions for the Record.........................................   267
Ready To Learn...................................................   244
Ready To Learn, Question for the Record..........................   267
Request and Justification........................................   333
Revenue Sources..................................................   299
Rural Stations' Needs............................................   302
Teacher Training.................................................   250
Teacher Training.................................................   291
Testimony, prepared, of Robert T. Coonrod, President and CEO.....   214
Viewers and Listeners............................................   306
Witness Opening Statement........................................   211

                     National Education Goal Panel

Opening Remarks by Ken Nelson....................................   401
Questions Submitted and Answered for the Record..................   414
Congressional Budget Request for FY2000..........................   430

                    Corporation for National Service

AmeriCorps*VISTA:
    Collaborative Efforts........................................   517
    Community Technology Centers.................................   785
    Faith-based organizations....................................   495
    Field Offices................................................   766
    Individual Development Accounts..............................   511
    Partnerships.................................................   494
Budget:
    Fiscal Year 2000 Budget Estimate.............................   873
    Appropriations Split with VA-HUD, Independent Agencies.......   493
Enthusiasm for National Service..................................   513
Financial Management and Auditability:
    Computer Support.............................................   765
    Database.....................................................   765
    Financial Audit..............................................   492
    Financial Management.........................................   767
    Program Administration.......................................   493
    Training on Procurements.....................................   764
    Year 2000 Compliance.......................................523, 767
National Senior Service Corps:
    Consultation on Performance Indicators.......................   774
    Demonstration Programs.......................................   774
    Evaluations:
        DC Reads Book Partners Program Final Report..............   606
        Effective Practices of Foster Grandparents in Head Start 
          Centers................................................   577
        Foster Grandparents Accomplishment Summary...............   714
        Launching Experience Corps...............................   787
        Retired and Senior Volunteer Program Accomplishment 
          Summary................................................   730
        Seniors for Schools 1997-98 Content Analysis.............   526
        Seniors for Schools 1997-98 Data Analysis................   546
    Expansion Grants.............................................   770
    Programming for Impact.......................................   769
    Stipend Increase.............................................   773
    Tutoring and Literacy........................................   523
Personnel:
    Contract Employees...........................................   764
Reauthorization..................................................   519
Testimony:
    Opening Statement of Harris Wofford..........................   469
    Testimony Before Other Committees............................   520
    Written Testimony of Harris Wofford..........................   472

                        National Mediation Board

America West and American Airlines...............................   957
Annual Performance Plan:
    FY 2000......................................................  1018
    FY 1999......................................................  1035
Arbitration:
    Annual Performance Plan--FY 1999.............................  1048
    Annual Performance Plan--FY 2000.............................  1030
    Backlog......................................................   956
    Salary.......................................................   957
Biography Sketches:
    Magdalena G. Jacobsen........................................   953
    Stephen E. Crable............................................   954
    June D.W. King...............................................   955
Budget Request...................................................   981
Charts:
    Arbitration..................................................  1015
    Mediation and ADR............................................  1005
    Presidential Emergency Board.................................  1017
    Representation...............................................  1007
Charts:
    Bargaining in the Air Transport Industry.....................   935
    Bargaining in the Railroad Industry..........................   933
Congressional Support For Their Positions........................   936
Contracts In First Negotiations or Up for Re-negotiations......951, 952
Dispute Resolution...............................................   959
Employee Ownership...............................................   959
Introduction of Witness..........................................   931
Mediation:
    Annual Performance Plan--FY 1999.............................  1039
    Annual Performance Plan--FY 2000.............................  1022
    Process......................................................   958
Mission Statement................................................   989
NMB Budget, Fiscal Year 2000.....................................   976
Opening Statement of Magdalena G. Jacobsen.......................   942
Presidential Emergency Board.....................................   958
Program Descriptions:
    Alternative Dispute Resolution...............................  1004
    Abritration..................................................  1014
    Mediation....................................................   992
    Presidential Emergency Board.................................  1016
    Representation...............................................  1006
Questions and Responses.........................................961-975
Railway Labor Act................................................   956
Representation:
    Annual Performance Plan--FY 1999.............................  1045
    Annual Performance Plan--FY 2000.............................  1027
Statement Summary................................................   931

               Federal Mediation and Conciliation Service

ADR and International..................................1058, 1081, 1083
Authorization....................................................  1075
Best Practices...................................................  1057
Bottom-Up Strategic Planning.....................................  1063
Budget Request...............................................1060, 1068
Concluding Remarks...............................................  1077
Customer Feedback......................................1054, 1661, 1078
Economy..........................................................  1076
FMCS Institute.........................................1056, 1065, 1079
Government Performance and Results Act...........................  1067
Grants...........................................................  1085
Mediation Activity.....................................1054, 1076, 1083
New Curricula..........................................1057, 1066, 1080
Opening Statements and Remarks...............................1061, 1075
Performance Planning.........................................1055, 1063
Recruitment......................................................  1075
Technology.......................................................  1085
Witnesses........................................................  1053

                    United States Institute of Peace

Africa...........................................1240, 1247, 1270, 1303
Afghanistan......................................................  1353
Agency for International Development (AID).......................  1321
Angola.......................................................1245, 1304
Appendices....................................................1407-1422
Appropriation Request............................................  1294
Arms control.....................................................  1372
Army War College, U.S........................................1242, 1334
Asia.........................................................1348, 1371
Belgrade...............................................1242, 1243, 1253
Biographies:
    Richard H. Solomon...........................................  1254
    Harriet Hentges..............................................  1255
    Charles E. Nelson............................................  1256
    Board of Directors..................................1308, 1407-1409
    Officers and Senior Staff.................................1410-1411
Board of Directors......................................1308, 1407-1409
Bosnia and the Balkans...1241, 1245, 1249, 1261, 1266, 1274, 1281, 1315
                         1324, 1373, 1379, 1398
Balkans Initiative....1259-1262, 1265, 1270, 1274-1276, 1283, 1315-1318
                      1327
Burundi..........................................................  1270
Cambodia...............................................1282, 1304, 1334
Central Africa...................................................  1352
Central Asia...........................................1274, 1334, 1353
China........................................................1286, 1303
Cold War...............................................1246, 1252, 1303
Colombia.........................................................  1354
Conflict resolution..............................................  1323
Congo............................................................  1245
Cost sharing for training........................................  1263
Croatia..........................................................  1281
Cross-cultural negotiation.............................1355, 1370, 1380
Cuba.............................................................  1355
Cyprus.................................................1303, 1334, 1352
Day in the Life of the Institute.................................  1244
Dayton Peace Accords.......................1241, 1249, 1260, 1295, 1315
East and Southeast Asia......................................1247, 1346
East Timor.......................................................  1286
Education and training program..........................1330-1344, 1375
Endowment of the U.S. Institute of Peace......................1258-1259
Ethiopia and Eritrea.............................1245, 1272, 1303, 1352
Europe................................1247, 1270, 1336, 1346-1347, 1371
Expanded Focus on Bosnia and the Balkans................1241, 1249-1250
Expanded Practitioner Training................................1247-1249
Fellows Selection................................................  1267
Focus on Younger People..........................................  1264
Full-time equivalents (FTEs).....................................  1402
Funding:
    Additional Funding...........................................  1295
    Constraints on Funding...................................1283, 1295
    Larger Request from OMB......................................  1266
Georgia..........................................................  1286
Government Performance and Results Act...........................  1257
Grant Program.............1282, 1284, 1288, 1322, 1324, 1362, 1367-1375
Great Lakes Region (Africa)......................1270, 1306, 1352, 1361
Growth of Practitioner Training..................................  1239
Haiti............................................................  1304
Human Rights Implementation......................................  1356
International Criminal Investigative Training Assistance Program 
  (ICITAP)..............................................1247, 1323-1324
Information Systems..............................................  1396
Institute History................................................  1257
Institute's Signs of Success.....................................  1257
Inter-American Defense College...............................1247, 1334
Introduction of Witnesses........................................  1239
Iran.............................................................  1303
Iraq....................................................1270, 1303-1304
Israel.......................................................1351, 1364
Jennings Randolph Fe1242, 1271, 1282, 1289, 1322, 1324, 1326, 1376-1381
Jordan...........................................................  1253
Kashmir..........................................................  1354
Kenya........................................................1281, 1352
Korea and Korean Peninsula.............................1251, 1349, 1380
Kosovo.....................................1245, 1248, 1250, 1273, 1315
Latin America..........................................1247, 1303, 1346
Lebanon..........................................................  1364
Liberia..........................................................  1334
Library Program...............................................1382-1386
Management and Administration.................................1399-1406
Media Relations..................................................  1394
Mexico...........................................................  1272
Middle East..........................1270, 1272, 1335, 1346, 1350, 1380
Montenegro.......................................................  1276
National Peace Essay Contest............................1265, 1339-1342
National Security Council........................................  1276
New Millennium...................................................  1245
Nigeria......................................................1352, 1364
Non-governmental organizations (NGOs).......1242, 1261-1262, 1283, 1328
North Atlantic Treaty Organization (NATO)..1252, 1274, 1283, 1287, 1379
Northern Ireland.......................................1245, 1304, 1380
North Korea............................................1245, 1252, 1346
Office of Communications......................................1392-1398
Opening statement of Richard H. Solomon.......................1239-1243
Operating budgets.............................................1300-1301
Organization chart............................................1312-1313
Organization of American States (OAS)..................1240, 1247, 1338
Organization on Security and Cooperation in1247, 1276, 1278, 1283, 1338
Outreach to Young People and the Public..........................  1250
Outstanding Examples of Institute Support........................  1242
Pakistan.....................................................1245, 1249
Palestine........................................................  1253
PeaceWatch.......................................................  1390
Peacekeeping in Bosnia and the Balkans...........................  1249
Permanent headquarters facility......1251, 1259, 1264, 1284, 1309, 1311
Personnel summary................................................  1402
Peru.............................................................  1297
Post-Cold War....................................1270, 1294, 1297, 1378
Practitioner training............1282-1286, 1305, 1309-1310, 1339, 1374
Publications program....................................1279, 1387-1391
Religion, Ethics, and Human Rights................1266, 1322, 1363-1366
Republika Srpska.......................................1248, 1267, 1366
Research and Studies program..........1270, 1278, 1282, 1289, 1345-1358
Romania..........................................................  1278
Rule of law.......................................1262, 1311, 1358-1362
Russia.....................................1242, 1248, 1253, 1303, 1366
Rwanda.................................................1304, 1361, 1397
Serbia....................................................1273-74, 1276
Somalia..........................................................  1304
South Africa............................................1304, 1352-1353
South Asia.......................................................  1353
Sri Lanka........................................................  1364
Staffing level...................................................  1262
Status of Institute's Authorization..............................  1257
Sudan.......................................1272, 1282, 1352-1353, 1364
Support to Policymakers..........................................  1251
Tanzania.........................................................  1281
Track II diplomacy...........................................1357, 1371
Training...................1262, 1277, 1279-1280, 1311, 1321, 1331-1332
Training practitioners in conflict management skills.............  1371
Transitional justice.............................................  1359
Truth and Reconciliation Commission in Bosnia.................1266-1267
Turkey.................................................1303, 1346, 1352
Tuzla............................................................  1262
Uganda...........................................................  1272
Ukraine................................................1336, 1364, 1379
United Nations..........................1240, 1247-48, 1283, 1289, 1332
United States Information Agency (USIA)..........................  1335
United States Institute of Peace Act....................1299, 1412-1422
Virtual Diplomacy................................1357, 1372, 1386, 1396
War crimes.......................................................  1360
Web site.....................................................1263, 1395
Witnesses for March 24, 1999 hearing..........................1254-1256
Written statement of Richard H. Solomon.......................1244-1253
Yugoslavia...................................................1286, 1364
Zaire............................................................  1272

            Federal Mine Safety and Health Review Commission

Audit:
    Frequency....................................................  1441
    Report Findings..............................................  1439
ALJ Compensation.................................................  1436
Appeal Rates.....................................................  1436
Budget Justification.............................................  1442
Opening Statement................................................  1423
Performance Goals:
    Appellate..........................................1436, 1438, 1459
    Baseline.....................................................  1433
    Trial........................................................  1464
Respirable Dust:
    Closure of Cases.............................................  1424
    Federal Monitoring Program...................................  1432
Trial Cases:
    Assignment Time..............................................  1439
    Filings by Source............................................  1438
    Inventory....................................................  1437
Witnesses:
    Listing......................................................  1423
    Biography....................................................  1431

                     National Council on Disability

Ability to Work and Receive Health Benefits......................  1500
ADA and IDEA Town Meetings.......................................  1494
Amounts Available for Obligation.................................  1515
Analysis of Changes: FY 1999 to FY 2000..........................  1514
Analysis of Language Provisions and Changes......................  1510
Appropriations History...........................................  1516
Authorizing Legislation..........................................  1511
Biographical Information on Witnesses:
    Audrey McCrimon..............................................  1485
    John D. Kemp.................................................  1486
    Ethel D. Briggs..............................................  1487
Budget Authority and Staffing by Activity........................  1512
Budget Increase..................................................  1477
Closing Statement................................................  1497
Congressional Directives.........................................  1517
Conclusion.......................................................  1484
Current Activities for FY 1999...................................  1483
Disability Civil Rights Monitoring Project.......................  1476
Fellowship Program...............................................  1495
FY 2000 Budget Request...........................................  1502
IDEA.............................................................  1498
IDEA vs. School Construction or 100,000 New Teachers.............  1499
Introduction of Witnesses........................................  1475
Liaison with Other Federal Agencies..............................  1477
Major Activities Summary--FY 1998................................  1528
Major Accomplishments During FY 1998.............................  1481
Members of the National Council on Disability....................  1526
Minority and Rural Outreach......................................  1477
Mission of the National Council on Disability....................  1491
Narrative Justification..........................................  1518
National Voter Registration......................................  1496
NCD Overview.....................................................  1480
NCD Publications.................................................  1488
NCD Web Site.....................................................  1494
Opening Statement................................................  1475
Organizational Chart.............................................  1508
Planned Activities--FY 1999......................................  1541
Planned Activities and Budget Request for FY 2000................  1483
Proposed Appropriations Language.................................  1509
State Responsibilities...........................................  1498
Summary of Changes...............................................  1513
Summary of Request...............................................  1525
Teacher Training.................................................  1499
Technology.......................................................  1477
Testimony........................................................  1479
Unique Role of the National Council on Disability................  1475
Youth Leadership Development Program.............................  1495
Witnesses........................................................  1475

        National Commission on Libraries and Information Science

Commissioners....................................................  1603
Government Printing Office.......................................  1554
Internet and Libraries.......................................1558, 1565
Institute of Museum and Library Services...............1555, 1556, 1566
Intellectual Property............................................  1565
International Activities.....................................1550, 1556
Justification of Budget Estimates, Fiscal Year 2000..............  1567
Kids and the Internet: the Promise and the Perils............1549, 1555
Libraries, Federal Support for...............................1550, 1555
Library Services and Technology Act..............................  1550
Opening Statement: Jeanne Hurley Simon, Chairperson..............  1547
Organization chart...............................................  1605
Past Accomplishments.........................................1548, 1554
Program Areas for Fiscal Year 2000...............................  1550
Sister Libraries Program...............................1549, 1550, 1562
Statistics, Library..............................1549, 1556, 1558, 1562

                      Armed Forces Retirement Home

AFRH Alignment with DoD/Armed Services...........................  1623
AFRH Budget Justification:
    AFRH Board...................................................  1648
    Appropriations History.......................................  1644
    Authorizing Legislation......................................  1637
    Budget Authority by Activity.................................  1640
    Capital Outlay...............................................  1641
    Executive Summary............................................  1635
    OMB Passback on FY 2000 Budget...............................  1624
    Organization Chart...........................................  1634
    Resident Data................................................  1646
    Revenue from Land Sale.......................................  1647
    Staffing History.............................................  1645
    Summary of O&M Changes.......................................  1642
    Total Obligations by Object Class............................  1643
    Trust Fund...................................................  1639
AFRH Operating Costs.............................................  1625
AFRH Property Sale...............................................  1622
    AFRH Land Issue..............................................  1624
    Revenue from Land Sale.......................................  1647
Biographies:
    Donald C. Hilbert, MG, USA, Ret., Director, U.S. Soldiers' 
      and Airmen's Home..........................................  1620
    David F. Lacy, Chairman, AFRHB...............................  1619
    Commander John W. Zink, CEC, USN, Deputy Director, U.S. Naval 
      Home.......................................................  1621
Capital Program..................................................  1612
Closure of AFRH Facilities.......................................  1624
Congressional Support of the AFRH................................  1625
Funding for AFRH:
    Insolvency of Trust Fund.....................................  1622
    Search for Alternative Funding...............................  1615
Future of AFRH...................................................  1617
Opening Statement................................................  1609
Prepared Statement...............................................  1612
Questions for the Record.........................................  1628
Residents........................................................  1613
    Care for the Residents.......................................  1615
    Data.........................................................  1646
    Planned Downsizing...........................................  1613
    Quality of Life..............................................  1614
U.S. Naval Home..................................................  1626
Witnesses........................................................  1609
    Introduction of Witnesses....................................  1609

                  Medicare Payment Advisory Commission

Academic Health Centers..........................................  1668
Accomplishments:
    During Fiscal Year 1999......................................  1656
    Activities and...............................................  1698
Administration and Management....................................  1701
Appropriations:
    Amounts Available for Obligation.............................  1693
    Authorizing Legislation......................................  1689
    Estimates for Consulting Services............................  1706
    Estimates for Related Services...............................  1707
    FY 2000 Request ...................................1653, 1662, 1687
    History Table................................................  1694
    Language.....................................................  1688
    Narrative Justification General Statement....................  1697
    Summary of Changes...........................................  1690
Biographical Sketches:
    Gail R. Wilensky, Ph.D.......................................  1666
    Murray N. Ross, Ph.D.........................................  1667
Budget:
    Authority....................................................  1665
    Authority by Object Class....................................  1691
    Justification Introduction...................................  1686
    Justification of Proposal....................................  1701
Comment Letter on a Prospective Payment System for Home Health 
  Agencies.......................................................  1680
Comments on Proposed Regulations.................................  1659
Congressional Directives in House and Senate Appropriations 
  Committee Reports..............................................  1696
Contract to Review Health Plans' Selection of Providers..........  1677
Data Development, Analysis, and Research.........................  1701
Effects of the BBA...............................................  1673
Future Work......................................................  1660
Health Care:
    Home.....................................................1669, 1677
    Long-Term....................................................  1671
Introduction of Witnesses........................................  1651
Medicare Payment Advisory Commission:
    Legislative Mandate..........................................  1654
    Meetings Over the Past Year..................................  1699
    Members, Professional Affiliations, and Three-Year 1664, 1703, 1704
    Operations...................................................  1677
    Statutorily Required Reports.................................  1657
Opening Statement................................................  1651
Payment Policy...................................................  1674
Prescription Drugs for Low-Income Seniors........................  1670
Staffing:
    History......................................................  1695
    Personnel Summary............................................  1692
Testimony........................................................  1659

                     National Labor Relations Board

Administrative Law Judges........................................  1713
Agency Resource Levels and Impact on Performance.................  1863
Beck Cases.......................................1728, 1865, 1868, 1939
Biographies:
    Fred Feinstein...............................................  1720
    John C. Truesdale............................................  1715
Budget:
    Budget Request...........................................1718, 1846
    Division of Funds............................................  1941
    Impact of $10.5 Million Reduction............................  1729
    Justification for Budget Request.............................  1713
Case Activity Tracking System (CATS).............................  1723
Case Backlog.....................................1710, 1724, 1848, 1866
    Breakdown....................................................  1730
    Current......................................................  1718
    Effect on Parties Involved...................................  1844
    Impact of Agency Staffing on.................................  1731
    Management of................................................  1941
Caseload:
    Effort to Reduce.........................................1728, 1845
    Impact of Chairman's Agenda on...............................  1734
    Intake per FTE...............................................  1724
    Previous Year................................................  1733
Cases, Categorization of.........................................  1727
Chairman's Agenda................................................  1721
Costs............................................................  1948
Efficiencies.....................................................  1942
Elections, Certification and Recertification.....................  1938
Equal Access to Justice Act Cases................................  1949
General Counsel:
    Appointment of New...........................................  1729
    Field Restructuring Memo.....................................  1925
    Field Restructuring Report...................................  1871
    Record of Accomplishment.....................................  1717
Government Performance and Results Act (GPRA)................1717, 1851
Information Technology, Improvements in..........................  1845
Interpreters.....................................................  1870
Jurisdictional Thresholds....................................1722, 1734
Justification of Estimates.......................................  1953
Labor Policy Agenda..............................................  1945
Mail Ballots.....................................1936, 1949, 1951, 1952
Members' Staffs..................................................  1713
Opening Statements:
    Fred Feinstein...........................................1716, 1717
    John C. Truesdale........................................1709, 1712
Performance Goals................................................  1849
Performance Plan, Annual.........................................  1711
Political Purposes, use of NLRB for..............................  1944
Regional Offices...1725, 1726, 1733, 1734, 1843, 1850, 1866, 1870, 1939
Salting Cases....................................................  1946
Small Business, Impact on........................................  1867
Staffing, Agency.................................................  1732
Summary of U.S. and Canadian Collective Bargaining Laws..........  1736
Truth in Employment Act, Impact on NLRB..........................  1945
Training:
    Agency Employee..............................................  1724
    and Information Technology...................................  1843
Voting Secrecy Issue.............................................  1950
Website, Agency..................................................  1845
Year 2000 Compliance.............................................  1723

                     Social Security Administration

Biography:
    Kenneth S. Apfel, Commissioner...............................  2032
    Yvette S. Jackson, Deputy Commissioner for Finance, 
      Assessment and Management..................................  2033
Budget Freeze....................................................  2075
Carryover Balances...............................................  2072
Chariman Archer's Proposal.......................................  2055
Chairman Porter's Proposal...................................2046, 2058
Commissioner's Budget............................................  2074
Comptroller General's Comments...................................  2040
Computer Workstations............................................  2048
Costs of Individual Accounts.....................................  2046
Defined Contribution System......................................  2061
Ensuring the Integrity of Government Investments.................  2059
Equity for Women in Individual Accounts..........................  2045
Equity Investments...............................................  2051
    Risks of.....................................................  2055
Erroneous Report of Death........................................  2034
Field Office:
    Front-End Interviewing in....................................  2048
    Security.....................................................  2035
    Closing......................................................  2049
Flexiplace Work Telecommuting....................................  2082
Front-End Interviewing...........................................  2047
Front-End Interviewing in Field Offices..........................  2048
Governmentwide Approach to Internet Security.....................  2038
GSA Rent Charges.............................................2072, 2076
Impact of Performance Measure....................................  2071
Individual Accounts:
    Costs of.....................................................  2046
    Equity for Women in..........................................  2045
    For Social Security..........................................  2068
    In Reform Proposals..........................................  2045
Individual Accounts for Social Security..........................  2068
Individual Accounts in Reform Proposals..........................  2045
Investments:
    Equity.......................................................  2051
    Optional Private Investment..................................  2058
    Private Investing for Retirement.............................  2060
    Risks of Equity Investments..................................  2055
    Securing Retirement Investments..............................  2062
    Stock Market.................................................  2069
Internet:
    Availability.................................................  2036
    Domain Names.................................................  2039
    Governmentwide Approach to Internet Security.................  2038
    SSA's Webpage................................................  2039
    Security.....................................................  2037
Internet Availability............................................  2036
Internet Domain Names............................................  2039
Internet Security................................................  2037
Introduction of Witnesses........................................  1997
Justification of Estimates.......................................  2083
Legislation:
    Return to Work...............................................  2048
    Status of Social Security Reform.............................  2054
    USA Accounts.................................................  2062
Liabilities:
    Of the Federal Government....................................  2052
    Unfunded.....................................................  2053
Liabilities of the Federal Government............................  2052
Lower-Income Workers.............................................  2061
Medicare Buy-in Demonstration Program............................  2077
Misuse of Government Names.......................................  2039
Need for Level Staffing..........................................  2036
Opening Statement................................................  1997
Opportune Time for Changes.......................................  2043
Optional Private Investment or Traditional Social Security.......  2058
Paying Down Publicly-Held Debt with Surplus......................  2041
Performance Measures:
    Impact of....................................................  2071
Private Investing for Retirement.................................  2060
Proposals:
    Chairman Archer's............................................  2055
    Chairman Porter's........................................2046, 2058
Provisions of the Archer Plan....................................  2055
Questions for the Record.........................................  2067
Redirection of AIF Funds.........................................  2075
Reimbursement of Conference Registration Fee.....................  2067
Retirement:
    Private Investing for........................................  2060
    Research.....................................................  2079
    Savings......................................................  2044
    Securing Retirement Investments..............................  2062
Retirement Research..............................................  2079
Retirement Savings...............................................  2044
Return to Work Legislation.......................................  2048
Return to Work Strategies........................................  2080
Risks of Equity Investments......................................  2055
SSA's Webpage....................................................  2039
Securing Retirement Investments..................................  2062
Security:
    Field Office.................................................  2035
    Governmentwide Approach to Internet Security.................  2038
    Internet.....................................................  2037
Social Security:
    As a Liability...............................................  2067
    Investments in the Stock Market..............................  2069
    Financing....................................................  2040
    Reform, Status of............................................  2065
    Reform Legislation, Status of................................  2054
    Tax Changes in 1983..........................................  2042
    Taxes........................................................  2060
    Universal System.............................................  2064
    Wage Base....................................................  2063
Social Security as a Liability...................................  2067
Social Security Investments in the Stock Market..................  2069
Social Security Financing........................................  2040
Social Security Reform:
    Individual Accounts in Reform Proposals......................  2045
    Status of....................................................  2065
    Status of Legislation........................................  2054
Social Security Tax Changes in 1983..............................  2042
Social Security Taxes............................................  2060
Social Security Wage Base........................................  2063
Solvency:
    And Disabled Individuals.....................................  2081
    Women's Issues in Solvency Proposals.........................  2043
Staffing:
    Need for Level Staffing......................................  2036
Statements:
    Limitation on Administrative Expenses........................  2026
    Office of Inspector General..................................  2030
    Opening......................................................  1997
    Payments to Social Security Trust Funds......................  2016
    Special Benefits for Disabled Coal Miners....................  2018
    Supplemental Security Income.................................  2021
Status of Social Security Reform.................................  2065
Status of Social Security Reform Legislation.....................  2054
USA Accounts Legislation.........................................  2062
Unfunded Liabilities.............................................  2053
Universal Savings Accounts.......................................  2056
Universal Social Security System.................................  2064
Use of Budget Surpluses..........................................  2057
Washington Post Editorial........................................  2050
Women's Issues in Solvency Proposals.............................  2043
Year 2000....................................................2071, 2074
Year 2000 Systems Compliance.....................................  2034

            Occupational Safety and Health Review Commission

Additional Questions.............................................  2228
Boston Office Closing............................................  2227
Budget Request...................................................  2231
Caseload.....................................................2225, 2227
Commissioner Vacancies...........................................  2225
Ergonomics.......................................................  2225
E-Z Trial........................................................  2226
Introduction of Witnesses........................................  2213
Office Rent......................................................  2227
Opening Statement................................................  2213
Reappointment....................................................  2228

                                
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