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

                     DEPARTMENTS OF LABOR, HEALTH AND HUMAN

                   SERVICES, EDUCATION, AND RELATED AGENCIES

                            APPROPRIATIONS FOR 2001

    _______________________________________________________________________

                                    HEARINGS

                                    BEFORE A

                               SUBCOMMITTEE OF THE

                           COMMITTEE ON APPROPRIATIONS

                             HOUSE OF REPRESENTATIVES

                           ONE HUNDRED SIXTH CONGRESS

                                 SECOND 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, Carol Murphy, Susan Ross Firth,
                 and Francine Mack-Salvador, Subcommittee Staff

                                    ________

                                     PART 6

                                RELATED AGENCIES

                                                                       Page

    Institute of Muscuem and Library Services .......................     1
    Railroad Retirement Board .......................................    37
    Corporation for Public Broadcasting .............................   137
    National Education Coals Panel ..................................   181
    Corporation for National and Community Service ..................   253
    National Mediation Board ........................................   443
    United States Institute of Peace ................................   537
    National Council on Disability ..................................   717
    Armed Forces Retirement Home ....................................   789
    Naitonal Labor Relations Board ..................................   831
    Social Security Administration ..................................   909

                                    ________

             Printed for the use of the Committee on Appropriations
                                    ________

                         U.S. GOVERNMENT PRINTING OFFICE
     64-439                     WASHINGTON : 2000

                            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                 MICHAEL P. FORBES, New York
     RODNEY P. FRELINGHUYSEN, New Jersey    CHET EDWARDS, Texas
     ROGER F. WICKER, Mississippi           ROBERT E. ``BUD'' CRAMER, Jr.,
     GEORGE R. NETHERCUTT, Jr.,             Alabama
    Washington                              MAURICE D. HINCHEY, New York
     RANDY ``DUKE'' CUNNINGHAM,             LUCILLE ROYBAL-ALLARD, California
    California                              SAM FARR, California
     TODD TIAHRT, Kansas                    JESSE L. JACKSON, Jr., Illinois
     ZACH WAMP, Tennessee                   CAROLYN C. KILPATRICK, Michigan
     TOM LATHAM, Iowa                       ALLEN BOYD, Florida
     ANNE M. NORTHUP, Kentucky
     ROBERT B. ADERHOLT, Alabama
     JO ANN EMERSON, Missouri
     JOHN E. SUNUNU, New Hampshire
     KAY GRANGER, Texas
     JOHN E. PETERSON, Pennsylvania
     VIRGIL H. GOODE, Jr., Virginia

                     James W. Dyer, Clerk and Staff Director

                                      (ii)

    DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION, AND RELATED
                        AGENCIES APPROPRIATIONS FOR 2001

                                  ----------

                                                Tuesday, April 4, 2000.

                    INSTITUTE OF MUSEUM AND LIBRARY SERVICES

                                   WITNESSES

    BEVERLY SHEPPARD, ACTING DIRECTOR
    LINDA BELL, DIRECTOR, POLICY PLANNING AND BUDGET

                           Introduction of Witnesses

        Mr. Porter. The subcommittee will come to order. We
    continue our hearings on the budget for fiscal year 2001 with
    the Institute of Museum and Library Services, and we are
    pleased to welcome the acting director Beverly Sheppard, and
    before you begin, Ms. Sheppard, I want to say how much we miss
    Jean Simon and what a wonderful job she did as the Chair of the
    National Commission on Libraries and Information Science.
        Her untimely death at a relatively young age was a shock to
    all who knew her, and I knew Jean from very early in my public
    career, and my father knew Jean Simon. She was a young
    assistant district attorney in Chicago and served her first
    assignment, I think, in his courtroom, and so he knew Jean
    Simon before she was married to Paul, and we certainly welcome
    your service here, but I do want to say that Jean did such a
    wonderful job at everything she did and we are going to miss
    her very much.

                               Opening Statement

        Ms. Sheppard. I know that the whole of the library
    community does indeed share in that loss and recognizes the
    tremendous leadership that she brought to the field.
        Good morning, Mr. Chairman. I would like to introduce my
    colleague, Ms. Linda Bell, who is the director of policy
    planning and budget at the Institute of Museum and Library
    Services. I am very pleased to have this opportunity to appear
    before you and I would also like to say on behalf of IMLS and
    on behalf of the library community that we deeply appreciate
    your long and committed support to the library community, and
    we certainly wish you well in your future endeavors as well.
        For the past year, I have had the privilege of serving as
    the acting director of the Institute of Museum and Library
    Services. I came into this responsibility from the position of
    deputy director where I had the specific responsibilities of
    oversight of the Office of Museum Services. Consequently this
    has been a tremendous experience of learning more about the
    library community and working with them, and it has been a year
    of really truly understanding the very remarkable and essential
    services that libraries bring to the public. I feel
    extraordinarily privileged to be able to speak to the role of
    Federal funding of libraries through the Institute of Museum
    and Library Services, and through administration of the Library
    Services and Technology Act.
        The President's budget request calls for an investment of
    $173,000,000. This represents an increase of $6,749,000 for the
    Office of Library Services of the Institute of Museum and
    Library Services. We see this as a true endorsement of the
    irreplaceable and essential work of libraries across the
    country. We see it also as an investment in the ability of
    libraries to respond to the profound changes at work in
    American society. And in particular, reflected in this budget
    are the ways in which libraries address a couple of those very
    profound changes, specifically the dramatic advances in
    technology, the increasing diversification of our populations
    and our communities, and the growing demands for learning
    throughout a lifetime.
        Libraries in this Nation have been called the people's
    university. This is a fitting name. It refers not only to the
    fabulous wealth of content found in library collections, but
    perhaps even more significantly to the core commitment of
    libraries to provide free and equitable access to that content.
        Libraries are a great equalizer in an increasingly unequal
    society. In a society that is continually growing in its
    demands for technology and driven by technology, libraries are
    narrowing the gap between the haves and have-nots. They speak
    directly to what we call the digital divide. The Department of
    Commerce's survey ``Falling through the Net'' found that
    libraries are the number one point of access in the country for
    those who do not have Internet access at home or at work.
        The number of libraries that have Internet connectivity and
    provide Internet access for the public continues to grow.
        We know that today slightly more than 90 percent of public
    libraries have some kind of Internet connection. There are
    great needs however: needs for more workstations, more
    efficient stations, more bandwidth, and more equitable
    distribution.
        Libraries also provide more than access. They train, they
    organize, they guide. Librarians are skillful knowledge
    navigators. They teach their users how to operate computers and
    how to find their way through the glut of information that is
    on-line today. They help them identify their needs and they
    select the tools to find them. They research and develop the
    systems that give everyday users a clear road map to the
    quality information that they need.
        And so we see libraries addressing the issues of
    technology, not only through providing the hardware and also
    providing the guidance, but libraries are deeply involved in
    the research and the development of model projects that will
    address broad issues of operational standards and how one is
    going to be able to put on-line the most quality kind of
    information.
        This becomes especially important in the demand for
    learning across a lifetime. In the 21st century, more learning
    will take place through the use of technology. Earlier this
    month, the Institute of Museum and Library Services, together
    with the University of Missouri at Columbia, hosted a
    conference called ``Web Wise.'' This was a conference on
    libraries and museums in the digital world. This conference was
    an opportunity to share the best practicesand to also focus on
    the issues involved in the digital library development.
        Since 1998 IMLS has provided grants to State library
    agencies and individual libraries for research, digitization,
    and management of digital resources. These grants are
    addressing very important issues--critical preservation issues
    and interoperability issues. Because of the leadership that we
    have assumed in this direction, IMLS has been charged by a
    presidential directive to work together with the National
    Science Foundation, the National Park Service, and the
    Smithsonian Institution to create a digital library for
    education. This will be bringing together the cultural and
    educational resources in museums and libraries for the public.
        These collaborative efforts also concentrate on identifying
    and building the infrastructure required to support what we
    refer to as seamless access to the high quality learning
    resources that are across disciplines and across geographical
    boundaries. One way in which the Institute of Museum and
    Library Services will build an Interagency effort is with the
    National Science Foundation where we are jointly looking at
    examining and researching issues of metadata and core standards
    for information sharing.
        So in the area of technology, the role of libraries is
    increasing, is a leadership role, is a profound one, but we
    also have the way in which libraries are addressing the whole
    of community life. These libraries increasingly are truly
    community centers. They create environments where families can
    come together and interact; community officials and townspeople
    can gather. Students can come after school hours and complete
    their homework. Senior citizens are learning new skills. New
    immigrants are learning English and even job seekers can come
    and find advice. They are masters at building partnerships
    within their communities, extending their reach throughout the
    community by linking with countless others.
        Next week the Institute of Museum and Library Services will
    present its first annual award for libraries and their
    communities. The National Award for Library Services will honor
    four libraries for the outstanding work that they are doing to
    address community needs. We are talking here about libraries of
    all sizes, from the Queens Borough Public Library, which serves
    a county that represents people from 178 different countries,
    speaking 120 different languages, extraordinary, all the way
    down to a tiny little elementary school library in Wyoming
    where this library is the point of contact, not only for the
    students working on computers, but for their families and
    communities as a whole.
        In going through this process, the nominations that we saw
    were just amazing. They describe libraries of all sizes and
    types again that spread from the urban library and its diverse
    populations to the tiny rural libraries really reaching into
    impoverished rural areas. We read of libraries that were
    catalysts for economic development. They brought together civic
    and social leaders from throughout their communities to look at
    the needs of the community as a whole. We discovered libraries
    that were taking a baby's first books into maternity wards and
    encouraging parents to read to their children from the very
    beginning. We saw them developing teen centers, giving teens
    meaningful work after school.
        We also saw their work extending across the life span with
    creative mobile book carts moving into nursing homes and senior
    centers. We found libraries in partnership with prisons, with
    day care centers, with garden clubs, 4-H Clubs, Head Start,
    junior colleges. Truly, the list of partners is as long as you
    can possibly imagine. What we saw through this process is a
    portrait of excellence in community service, and across the
    country, libraries have become the cornerstones of their
    communities.
        Even assuming these very broad new roles, libraries
    continue to provide core services. They are in constant demand.
    In pursuit of lifelong learning, Americans seek out and depend
    on their libraries in quite staggering numbers. Research
    published by the American Library Association tells us that
    Americans visit libraries 3.5 billion times each year. I always
    have to look back at that. It is a billion times. 1.6 billion
    items are borrowed annually from public libraries and research
    librarians answer 7 million questions every week.
        So clearly, libraries are not only responding to the
    demanding challenges of an information age, to the changing
    needs of their community, but they are continuing to serve in
    this traditional role as well.
        As you look at the budget request, we are seeking increases
    in all program areas. I would like to take a moment to speak
    specifically to the funding to the State programs. IMLS has a
    highly valued relationship with the Chiefs of the State library
    agencies who provide important feedback to us. They help us
    understand the needs of the States and help us find ways to
    meet them most effectively. They have also been sharing with us
    rich stories of the effectiveness of libraries in their States.
    One of the most popular elements of the program is that States
    have the flexibility to use Federal library funds to advance
    their highest priority needs.
        The States provide the Institute with 5-year plans of how
    they will spend Federal funds. We have been analyzing these
    plans as well as the States' annual reports. We find that
    States are using Federal funds to do all of the things which we
    have addressed here: to increase information through technology
    and narrow the digital divide, to establish partnerships that
    extend the impact of service, and to provide, in the very
    critically needed area of professional development,
    opportunities for the training of new librarians and the
    ongoing training of those who are working in libraries today.
        We have brought with us a couple of charts. I think what is
    particularly important in these is that they show how the aims
    of LSTA are being met through the State library programs: Chart
    A, ``A Lifetime of Learning at the Library,'' shows that
    diverse user groups have been directly affected by these funds,
    and what you have there, I don't know if everybody can see it,
    that is an analysis of the target ages that are being served by
    the variety of programs that we see in the State reports. They
    range from the large blue area, the senior citizens with 30
    percent of the programs to children, youth adults,
    intergenerational programs.
        If you are a little confused by the Section ``other,''
    since all the ages are rather well-defined, wealso have some
    programs that simply do reach out to the entire community and serve in
    a whole variety of ages. So again, it is across the age span which we
    feel is extremely important. And the other graph that you see to the
    left, this is evidence of how the State libraries are meeting the needs
    of all types of libraries. The LSTA legislation allows for State funds
    to reach out to every kind of library, and what is being shown here are
    the number of different funding awards given to the various types of
    libraries.
        On the left in purple represents the year 1998, and on the
    right of each line there represents the number of awards
    presented in 1999. You can see very clearly that as this
    program is better understood and more effectively being used,
    that awards are being given across the board to all types of
    libraries. I point out that we see a spike in the K through 12
    libraries, and that represents largely library systems helping
    the school libraries with technology issues and bringing them
    on-line and into the programs.
        We are also seeing that as the program has become
    increasingly well established, the number of applicants to the
    program has increased dramatically. On the left you see the
    number of applicants, the purple, and the other color, the
    numbers that are funded. On the right in 1999, you see a
    tremendous growth in the number of applications. I will also
    point out that the need is very evident there too, that these
    applications represent important projects and not all of them
    certainly can be funded. It appears that little more than half
    have been funded.
        So we are seeing that one of the effective outreaches of
    this program is very, very effectively taking place.
        The Institute of Museum and Library Services is truly
    uniquely positioned to understand the breadth of needs of the
    library community nationally. Through ongoing dialogue with the
    field, through carefully administered funded programs, we
    recognize the growing needs of libraries to meet the changing
    expectations of the American public. The President's budget
    request for 2001 does indeed reflect the kind of investment
    necessary to assist libraries in meeting these escalating
    changes. We sincerely hope you will support this very important
    investment of $173 million to support the library program.
    Thank you.
        [The information follows:]

                            THE FUTURE OF LIBRARIES

        Mr. Porter. Thank you, Ms. Sheppard. You and I discussed
    this before, but I want to discuss it on the record. We have
    the capability today to scan theoretically at least to scan
    every bit of information ever possessed anywhere in the world
    into some kind of an Internet system. So we can put every book,
    every page of every book on the line somewhere. Looking at the
    latest technology, we have, I think it is a Palm Pilot 7 that
    can access to Internet from your hand.
        Looking out a relatively short time, I would guess, 10 or
    15 years, and you have answered this in part with all of the
    things that libraries do to interact with the community and
    groups, and I understand that, but looking out 10 or 15 years,
    is it possible that we will see libraries that have no books,
    that maybe have a leather-bound Palm Pilot-type of device where
    you can bring up the book you want to read, have each page on
    it in front of you, and go curl up in the corner with your
    computer book and read anything you want, or get any piece of
    information you want?
        And what if that is the case, and it seems to me we are
    heading in that direction somehow, because of information
    technology, what would then be the role of libraries if that
    were available? And by the way, I would think that in such a
    system, the government would want to provide to every single
    individual in the country at least that capability. In other
    words every kid, when they are able to read, they are going to
    have to learn obviously the normal old way, but once they can
    read, can't we give every child access to every piece of
    information and can't we have all of our lessons and all of our
    books taught in classrooms with this one single device that
    will allow us to access any piece of information anywhere. I am
    just interested to your comments on the record on that.
        Ms. Sheppard. Well, I have to begin by saying I am not a
    futurist in that I know exactly where all this is going, but I
    think that the image that you have provided is an interesting
    one. It is actually a question I have had to answer in a number
    of ways when people talk about what is the future of the book.
    There are various people who strongly believe that books are
    very much a part of our culture and will continue to be--how
    the format may change, of course, is another question. But I
    think that the core question here that is very significant is
    how will the role of libraries change. I think there are some
    very key points to be made.
        Number one comes through the definition used earlier, the
    librarian as a knowledge navigator. We are finding more
    significantly than ever that a well-trained librarian who
    understands the process of finding and sorting information is
    essential, that the kinds of minds that have created the
    cataloging systems and the systems that organize information in
    libraries today will continue to be absolutely essential to the
    process of how we will find and explore information. So that
    role will take on different levels of complexity butwill
    remain, I believe, central to all of this.
        I think there are other very important issues to think
    about as well. One is making sure that students have access to
    quality information, and one of the important things that we
    are examining as we look toward the responsibility of a digital
    library of images as well as text, is making certain that the
    best of those materials are on board.
        I think that the information literacy skills are going to
    be increasingly important as we look forward to our future.
    There is, right now, when you go on-line, a lot to weed through
    before you can actually get to what you want. How are we going
    to train and provide those information skills that enable our
    citizens to judge material, to find quality material, to
    evaluate it and to connect it? And that too has always been a
    very central part of the library system.
        Before we can even get to the point of having access and
    finding our way through this tremendous number of resources,
    which indeed can be very enriching, we need to develop those
    kinds of infrastructures that support them. A number of our
    grants right now, particularly in the research areas, are
    looking at the ways in which you can go from image to text or
    the ways in which people could access music where sound could
    be brought in as a component here. We have disparate projects
    going on in many places, and we feel that one of our most
    important responsibilities is to make certain that those
    projects will develop with a sense of interoperability and that
    the research level of that structure is going to be one of the
    most important ones we can provide.
        So some of the areas that I think I can play futurist with
    are again, the librarian as knowledge navigator, as the teacher
    and supporter of critical thinking skills and literacy, as the
    researcher that brings this access together. Those are
    certainly three very important areas that are going to change
    library service and reinforce what we know today.
        Mr. Porter. Just to comment, if such a world as the one I
    have described occurs, it seems to me that, in part, this is
    already happening, we tend to withdraw from one another into a
    technological interface with our computer and the information
    on it, and it seems to me that there will probably be a swing
    of the pendulum back to interacting with other human beings
    rather than with the technology, but it is a worry in a certain
    sense that we can get too involved in the technology and lose
    the interaction among each other that it seems to me is
    essential to a happy society, and it is so fascinating, and I
    am retiring, as you mentioned.
        I haven't yet gotten into this really very deeply. I am
    about this far into it, but I know when I get a little more
    time I am going to find it as fascinating as other people do
    and want to get more and more involved in it, and try to access
    all the different information and ideas that it provides.

                           FEDERAL ROLE FOR LIBRARIES

        Let me ask now, did you mention the total cost of libraries
    all over the country? I thought you did, but I am not certain
    that I got the figure.
        Ms. Sheppard. A total figure?
        Mr. Porter. Absolute total figure.
        Ms. Sheppard. I don't think I have that figure. I think it
    is something that comes together from many, many different
    sources to look at this budget. The total of Federal funding to
    libraries is actually a small percentage of that whole. It is,
    however, an extremely important endorsement.
        Mr. Porter. All right. This is my question. It seems to me
    that probably the role of the Federal Government in respect to
    libraries is even smaller than the role of the Federal
    Government in respect to K-to-12 education, which is, in
    dollars, about five percent. Here I would bet the amount is
    substantially less than one percent.
        Ms. Sheppard. It is right around that one percent figure.
        Mr. Porter. Given the fact that the States--if you look at
    your chart, the one on the floor there, and the increasing
    grants that came--I mean, if you look at K-12, 105 awards in
    1998 and 4,852 the next year; is that correct?
        Ms. Sheppard. Yes, that is correct.
        Mr. Porter. 105 to 5,000. The huge amount of increase, I
    don't know whether that translates into dollar terms, that is
    the number of awards, I guess, not the dollar amount, but it
    seems to me that as the States have themselves benefitted from
    a growing economy, that they are obviously putting a great deal
    of money particularly into technology, as you mentioned, for
    their libraries, which is a very healthy thing. But I wonder if
    you could kind of lay out for us the role of the Federal
    Government in respect to libraries, and you have mentioned a
    lot of different things that grants do, but is there a defined
    role for the Federal Government? Is it similar to the role in
    education? How far do we go into this process and how effective
    is Federal leadership in marshalling assets and ideas and
    approaches to the whole process, or are we just a player on the
    edge?
        Ms. Sheppard. Let me begin by saying that I think that
    ``player on the edge'' is not the definition here of Federal
    funding. It is a very important question because I feel that
    what we are seeing here is very significant. When I use the
    word ``endorsement'' for the quality of libraries, it is not
    only an endorsement for the quality in the work, it is also for
    the library as a core democratic institution. There is, from
    the beginning of the history of libraries in this country, an
    alignment between the values that libraries represent and the
    values that this country represents. The idea of presenting
    equitable access to information and the idea that information
    is an essential component of a free and democratic government
    is a very profound statement that the Federal Government is
    supporting.
        I also think that there is the role of leveraging through
    that endorsement the growing funds on the State and the local
    and the private level in support of library funding. There is a
    quality that one can hold up to say that the Federal Government
    has supported, sees and recognizes the need for these kinds of
    services.
        And I also feel that the role that we have taken quite
    profoundly in bringing all this together is a strong leadership
    role that we are providing through our services, the
    identification of core problems, and we are raising them to
    national visibility. We are addressing and sharing best
    practices as solutions to meeting those problems. We are
    working on an interagency level to compound the impact of that
    by working with other agencies like NSF, and we are also
    providing leadership in some core areas like evaluation, so
    that we are teaching and training.It is a communication process
    that is happening that brings the national perspective to these issues.
    So that small percentage, I believe, is truly leveraged into much more.
        Mr. Porter. Thank you Ms. Sheppard.
        Mrs. Lowey.

                    THE COST OF NARROWING THE DIGITAL DIVIDE

        Mrs. Lowey. Thank you, Mr. Chairman. And thank you Mrs.
    Sheppard, for your eloquent, articulate statement and for your
    responses to the questions. And I must say, Mr. Chairman, I
    can't help but remember a meeting I attended recently with
    about 20 members of Congress. It is not important what the
    subject was; we were awaiting a report, and the person who was
    making the presentation said to the members, give me your e-
    mail address and we will get it to you as soon as it came out,
    and the whole room broke up laughing, and one of us had the
    courage to say can we leave you a Fed EX envelope, and I think
    many of us are in the position, although my husband will say to
    me it is no longer cute, and I think it is time for people like
    myself, and not you--I am sure you are more sophisticated in
    the use of the Internet--to become proficient, and I almost
    feel frantic when I visit our libraries and our schools in the
    district, because I see that digital divide growing and
    growing.
        Even in my district, and I represent that district you were
    talking about, but I also represent Westchester County, one of
    the wealthiest counties in the Nation, but even in Westchester
    County, you have some communities such as Eastchester,
    Scarsdale, Rye, where the youngsters have a computer on every
    desk and a computer at home and there are others districts in
    Westchester County where they will go to a computer lab once a
    week, and in Queens you discuss the challenges there. They are
    absolutely enormous.
        So I am so enthusiastic about the work you are doing in
    regard to our libraries, and I appreciated the Chairman's
    question, his last question about funding, because what I began
    to think about as I was listening to and reading your testimony
    is how urgent is this and can we wait for the States, and if we
    submit RFPs, or if we fulfill this request for funding, if we
    double that funding or triple that funding, could it be
    absorbed, and I do appreciate the Chairman's question, and I
    think we have to do a lot more thinking about that because the
    longer we wait to make sure that every library is a community
    center, and that library has the capacity to deal with our
    community of learners, the wider our digital divide is.
        So I have several questions, maybe the first one would be,
    if we even double the amount or triple the amount, I just think
    it is such a priority out there, and I think you have one of
    the most exciting jobs. I won't say in the Hill, in the
    government. Could it be absorbed? Maybe I should stop and ask
    that first question.
        Ms. Sheppard. I don't think there is any question that it
    certainly could be absorbed. As we all know the costs of
    technology are huge, and I basically outlined three areas. One
    is providing the hardware, the tools, equipment, the bandwidth.
        The second area is the training piece because bringing a
    lot of people up to speed at the library, at various levels of
    sophistication, and training the librarians to be able to do
    this themselves, training the trainers. There are huge grants
    right now, one in Illinois, which I think is particularly
    interesting, where the College of Dupage is using distant
    learning to reach about 5,000 librarians across the State to
    bring them as quickly up to speed as possible.
        Finally, there are those very core issues of the research
    and the digitization process itself. I think that we are buoyed
    in this by the fact that so many people are alert to these
    problems, are looking at how we can work together, are trying
    to find solutions. So between the private community and the
    foundations that are saying this is priority, and our
    leadership Federally, I think we can make a true difference at
    this point.

                           PRIVATE SECTOR INVOLVEMENT

        Mrs. Lowey. Do you have much interaction with the private
    sector, the foundations, and the corporations obviously who
    have an interest or whether it's personal or philanthropic
    interests such as Gates who is in the news these days, or IBM
    who are making major contributions?
        Ms. Sheppard. I think that our interaction is largely one
    of information sharing and also knowing that many of the
    constituents such as the libraries in the country are working
    with the Gates Foundation. I have spoken on panels with
    representatives there. I have gathered at the offices here a
    number of foundations to address common issues to see where we
    are all examining funding and how we might be looking at issues
    that affect all of us, and so that collaboratively we can make
    really an impression in these issues.
        Also, at the program that I mentioned a couple of times,
    here the Web Wise conference, our keynote speaker was the
    individual David Bolt, who produced the PBS series on the
    digital divide and who brings PBS to these issues as well. In
    all of these conversations, we all share what we are seeing, so
    that we have a kind of common agenda that addresses these
    issues from the individual perspectives.
        Mrs. Lowey. Do you feel that the grants which you are
    providing right now are structured adequately to encourage
    private sector involvement? Because, as you and I know, there
    are so many people out there who have been very successful as a
    result of the digital revolution and would like to direct
    resources towards institutions such as the library. Are we
    doing all we can to encourage these activities to encourage
    these partnerships? Is there any way we could do it or that we
    could help by doing it more effectively?
        Ms. Sheppard. That is a very interesting question. The
    National Leadership Grant Program--that is, the part that we
    direct specifically in a competitive process--that grant
    process not only encourages, but requires a match, particularly
    for the larger grants. So that we not only require a specific
    match for those larger grants, we encourage a match also for
    the smaller grants. This is one way, of course, of encouraging
    and making it necessary for the grantees to identify other
    sources, and these are largely private funding sources.
        Again, recognizing the way in which the State program
    operates, the State grants are allocated, as I said, through
    State agencies. They determine where the funds are going, but
    in reviewing where those grants go and how they are impacting
    the community, again, it is a leveraging piece so we areseeing
    a lot of private funding join that.

                               THE GENDER DIVIDE

        Mrs. Lowey. I am obviously very interested in the digital
    divide. I am also interested in the divide between the male and
    the female population, which is not reflected in these
    statistics, and I wonder if there's a digital divide between--
    well, let us start with the adults, between the male and the
    female adults. Are you aware of any research at looking at
    these differences?
        Ms. Sheppard. In my conversations with David Bolt, who did
    considerable research in this area, he does feel there is a
    gender divide, and that that gender divide begins in school
    about the same point where girls cease to take as many of the
    science classes as boys, and the same things are happening in
    the computer area. There is a great deal of concern about that.
        Mrs. Lowey. Well, if I may just pursue that, Mr. Chairman,
    what are we doing about the concern.
        We did have a demonstration. In fact, I introduced it when
    I first got to Congress after talking with Carol Gilligan, I
    did introduce legislation focused on encouraging young girls to
    enter the fields of math and science, and I fear that we have
    the same thing with computers.
        Ms. Sheppard. I believe we do and we would have to do an
    analysis of grants presently, projects being funded to explore
    that. I don't really specifically know what those figures would
    be from the kinds of programs we have. Basically the programs
    that I think of immediately would not be gender-biased in any
    way.
        Mrs. Lowey. No, no I don't expect the programs to be
    gender-biased, but what are we doing if this divide--if it is
    assumed that this divide exists, what are we doing
    affirmatively to decrease the divide and to direct, direct
    training to encourage women, young girls?
        Ms. Sheppard. Again, I can not speak to what those grants
    specifically are doing, but I think at the core here is raising
    and defining the issues so that the grants are well structured
    to encourage the creative approach to how these problems can be
    solved. That is exactly the reason, as you will see in the
    budget, why we have an increased request for administrative
    funds. The core of that is to increase our role in sharing
    through conferences, through publications, through a larger and
    more responsive Web site, exactly that of defining the issues
    and then sharing those best practices that are addressing
    specifically those core kinds of issues.
        Mrs. Lowey. Thank you, and thank you, Mr. Chairman.
        Mr. Porter. The Chair apologizes to the gentlelady from New
    York, that she was placed on the clock and I wasn't. So let us
    go back and forth one question each, and I want to emphasize
    something that the gentlelady just raised, and I think that is
    a very, very, very important issue. And I think that just
    assuring that the programs are administered in an even-handed
    way is not enough, as you said. I can see a real problem down
    the line unless women, young women are encouraged to keep up
    and provide leadership in this whole area of information
    technology. It will be a divide in a lot of different ways, and
    that seems to me to be one that is very, very worrisome.
        Mrs. Lowey. Well, I just recently met Mr. Chairman and Ms.
    Sheppard with Heidi Miller, who just left as the chief
    financial office of Citigroup, and she is now at Priceline.com,
    and we were talking about the numbers of women at her level, or
    even near her level in the .com world, and they are nowhere to
    be found. And given the impact of this whole industry on the
    next generation, or the next 10 years, it is not even next
    generation, I think we have to be concerned and try and focus
    some attention on it.

                FUNDING THROUGH TWO APPROPRIATIONS SUBCOMMITTEES

        Mr. Porter. Absolutely. Let me ask a question about the
    divide between jurisdictions here where part of your budget
    comes out of interior, I think it is, and the rest of it comes
    out of our subcommittee. First of all, how much money is the
    museum part of the budget that goes to interior offhand; do you
    know?
        Ms. Sheppard. Pardon?
        Mr. Porter. What is the request to the interior committee
    this year?
        Ms. Sheppard. $33,000,000.
        Mr. Porter. $33,000,000?
        Ms. Sheppard. Yes.
        Mr. Porter. So it is a much smaller piece of the whole.
        Ms. Sheppard. Yes, it is.
        Mr. Porter. Do you see any problem with there being a
    jurisdictional divide between, besides the fact that you are to
    testify to two different subcommittees, present different parts
    of the case, do you think it makes a lot of sense to divide
    these two institutions part of your whole responsibility or
    would it make more sense to be in one place or the other?
        Ms. Sheppard. I was not present when all this came
    together, so I am not certain of the decision-making and the
    early history of it. I think that we have been able to work
    with this effectively. I do think, however, there is something
    to be said for streamlining the process so that it is not only
    one testimony, but the way in which we operate internally as
    well, such as keeping the books and things of that sort. We
    feel that we are comfortable and are able to do this very well,
    but we have had that question raised, and there are certainly
    are areas where it would make sense to bring the two together.
        Mr. Porter. It frankly seems to me that there is so much,
    obviously, putting them in a single institute indicates the
    relationship between libraries and museums, and then dividing
    them in the Congress doesn't make a lot of sense to me at all.
        Ms. Sheppard. Well, if I may just add to that, too. I think
    one of the things we found most committing and interesting
    about having brought the two together is that the collaborative
    piece of this merger is really becoming an increasingly
    important one. Not just through our programs and grants and
    things of that sort, but we are also seeing that museums and
    libraries do not function in these separate silos in the
    outside world either. So our job in supporting their
    educational goals, all of these things that do bring them
    together the way in which they serve communities, makes it
    logical to have one set of ways to address many of those
    collaborative issues.
        Mr. Porter. Well, I probably have no chance at all of
    getting the museum base away from Ralph Regula, but it seems to
    me it would make a lot of sense to have it in one place or the
    other.
        Mrs. Lowey.

                            TECHNOLOGY AND STUDENTS

        Mrs. Lowey. I was just talking about how as we are putting
    this bill together, perhaps we can put together some sort of a
    demonstration, Mr. Chairman, really directed towards maybe even
    girls in the middle school, because we were saying chances are
    in elementary school they are all learning at the same level,
    but in the middle schools and high schools, it seems at that
    level they are interested in some other things. I am not sure
    if I have any other questions. This is just such an interesting
    topic we could probably keep you here for another hour, but I
    just want to thank you again and tell you that I know the
    Chairman and I appreciated the opportunities, the challenge,
    the potential of your agency, and I for one look forward to
    continuing to work with you and to see if we can be helpful
    through the grand process in creating those partnerships that
    have been very exciting.
        In New York, I was talking to a young man who is one of
    those making mega millions, and he uses the term ``knowledge
    navigator,'' and not only is he contributing to computer
    technology, but he is bringing in the trained people to work
    with the students and to work with the teachers because he
    found by just contributing the equipment, they were going
    nowhere. And so through his work he is almost revolutionizing,
    creating a revolution in the school.
        So you have great potential, not only of providing the
    dollars, but changing the way the schools, the libraries, are
    working, and the links between what you are doing in the after-
    school account are obvious, the comprehensive school, the whole
    school reform that you have been working on. And I am very
    excited about it and I look forward to continuing discussions.
        Ms. Sheppard. Well, thank you very much for your words of
    support. Those are the kinds of things that go a long way for
    us.

                            NATIONAL DIGITAL LIBRARY

        Mr. Porter. Can we talk about the national digital library
    for a minute?
        Ms. Sheppard. Certainly.
        Mr. Porter. Can you lay out for us the concept of the
    national digital library, and are you requesting the funding
    for this in fiscal year 2001? And if so, how much?
        Ms. Sheppard. The concept of a national digital library is
    one that is based on an educational role, and it is the concept
    of bringing together the resources in museums, in libraries,
    the science and math education resources presently being
    developed through National Science Foundation, the resources of
    many of our national treasurers, the Smithsonian, the National
    Park Service, and bringing them together in one gateway
    representing the best of the quality information that is useful
    and structured in a way that access to it is meaningful, so
    that it has many, many different layers.
        When we spoke about this last year, and it had just come up
    as a special funds initiative. Although that funding was not
    there in the long run, it did say to us that this is not just
    an issue of content. This is an issue of very, very core
    infrastructure. I have learned a whole lot about metadata and
    all of these things during the course of this year, and we felt
    that in order to address the issue, we needed to play a very
    strong convening role to identify what are all of the issues
    within the whole definition of this, which we did, and we are
    very pleased that that process has led to an ongoing
    conversation at an interagency level, and has also connected us
    with some of the best and brightest out there addressing these
    issues.
        This year, yes, there is money here that moves in that
    direction. On the other hand, it is not a specific line item.
    We looked at the three components that were so clear to us.
    Again, those questions of access and making sure that as
    content comes together it is, can be accessed. The training
    issues and then looking at the research demonstration projects,
    digitization grants that we give on both sides of the library
    to the museum, that all of these would be leading to developing
    these resources in a connected way. So that the increases for
    technology as a whole across these budgets, these steps are
    measured--are included in there. There was no way to separate
    this out. It just gave us a vision that we could see how we
    could move toward it.
        Mr. Porter. Clearly you have authority to do this. You
    don't need authorizing legislation to set this up. You don't
    need a special line item for it either, can simply take it out
    of the funds that you have; correct?
        Ms. Sheppard. That is correct.
        Mr. Porter. I am not sure why you asked for a special
    funding initiative last year to do this rather than simply add
    it to your existing funding.
        Ms. Sheppard. That is how we are doing this.
        Mr. Porter. I am not sure why Congress said specifically no
    either, and I ought to know the answer to that, but I don't.
        Ms. Sheppard. I believe it was presented to us in that way,
    that here is something we would like you to take on, and we
    have been, from that moment, committed to working toward that
    concept, because that is ultimately how we provide access.
        Mr. Porter. The report language specifically denies funding
    for some reason. And I certainly don't recall. Conference
    agreement does not accept the President's request for
    $5,000,000 for the National Leadership Grants for libraries,
    for the National Digital Library Initiative. The increase in
    funding for this account should be used for new awards under
    the regular grant competition et cetera. I don't know whether
    that came as a result of the Senate's position on it or not,
    but in any case, it seems to me that this is a project that
    ought to proceed, and my only question then would be, would the
    increase that the President has suggested allow you to initiate
    this and begin the process traditionally?
        Ms. Sheppard. I believe that we have really started that
    process through the way in which we have convened a----
        Mr. Porter. So you are already really doing it.
        Ms. Sheppard. And working with the National Science
    Foundation, in particular, has been very effective because what
    we are doing is sharing research, and those are the kinds of
    things that perhaps were really in mind as this was started to
    bring together everybody who would be a player, providing rich
    content and finding ways to identify those issues. So we are
    very much committed to seeing that we are not a separate pocket
    somewhere doing our own thing, but bringing this together that
    we are aiming toward a very central idea.

                     GOVERNMENT PERFORMANCE AND RESULTS ACT

        Mr. Porter. Now, an important question but a more kind of
    nuts-and-bolts kind of thing. Under GPRA, we have emphasized to
    every department and agency, the importance of focusing on
    results-oriented standards. We notice that mostof your
    performance indicators are still very output-focused. And you are
    measuring, for example, the number of awards made rather than what the
    results of the awards might be. What do you have in your plans to
    develop outcome-oriented indicators rather than these output-focused
    indicators that we think represent the old way of thinking?
        Ms. Sheppard. Let me begin by saying we are totally deeply
    committed to the process of outcome-based evaluation. Everyone
    on staff has now undergone training and we have developed a
    long-term relationship with a consulting organization that is
    helping us develop outcome-based training for every one of our
    grantees. So in the process of identifying what outcomes mean
    to us and how we are going to be able to report back the
    outcomes of this funding, we have recognized that we have to
    take that leadership role to learn it, understand it,
    incorporate and share it with our grantees.
        We have brought in eleven of the State agencies for
    training, and we have trained a number of the various grantee
    programs also, in fact we have training going on next week with
    the Native American Enhancement Grants. We are also being
    recognized by other agencies as having taken this leadership
    role.
        So I want to stress that very important commitment that we
    have made to it. I think that part of the broader issue here is
    the fact that the development of benchmarks is also an
    important part of being able to put in place a number of the
    performance indicators that will show that what the outcomes
    are and that doing benchmarks for the range of library services
    is pretty daunting, as you can imagine, with everything that is
    out there.
        So we have made quite a strong commitment also to
    determining many of those benchmarks. We are presently putting
    together a couple of strong survey instruments, one of which is
    going to be working with the library community in determining
    the extent right now of their digitization projects that are in
    place and planned, and what the impact of those will be, so
    that we can measure, as we do more in the way of digitization,
    exactly what kinds of projects we are producing and what the
    impact of Federal grants will be.
        We have just undertaken the first analysis of the LSTA
    State reports, which required a little bit of time. So what you
    are seeing here gives you a little bit of some of the numbers,
    but in those State reports we can also see, again, the role
    that these programs are playing in terms of enhancing
    connectivity as well as many of the other community services.
    We did undertake and complete a lexicon project, which was
    finding that initially these reports and 5-year plans from the
    States used a lot of different language to describe some of the
    same things. So we have pared that down to provide us that
    vocabulary that we know that we can identify. We have also had
    a history of doing a systematic use of advisory groups that we
    bring in to help provide feedback, and impact feedback, in
    particular, that process is underway and we regularly evaluate
    each of the programs.
        So I think that where we are going and how this performance
    report is changing reflects much more of that baseline
    information, benchmarking information. Our commitment to the
    process of outcomes and then being able to share that I know
    formation much better next year.
        Mr. Porter. Well, I realize it is where you do a great deal
    of grant-making or award-making, it is difficult to develop the
    outcome performance standards, but there are many institutions
    of the Federal Government that have the same type of role, and
    you probably could draw on, perhaps, their experience in doing
    that. We have a number of other questions for the record that
    we would ask you to answer, Ms. Sheppard.
        We appreciate very greatly the intellect and leadership you
    bring to this role. You are doing a wonderful job there and
    thank you for appearing today.
        Ms. Sheppard. Thank you very much.
        Mr. Porter. We will stand very briefly in recess.
        [Recess.]
        [The information follows:]

                                             Wednesday, March 29, 2000.

                           RAILROAD RETIREMENT BOARD

                                   WITNESSES

    CHERRYL T. THOMAS, CHAIR
    V.M. SPEAKMAN, JR., LABOR MEMBER
    JEROME F. KEVER, MANAGEMENT MEMBER

                           Introduction of Witnesses

        Mr. Porter. The subcommittee will come to order.
        We continue our hearings on the appropriations for fiscal
    year 2001 with the Railroad Retirement Board; and we are
    pleased to welcome Cherryl T. Thomas, the Chair; Jerome F.
    Kever, the Management Board Member; and V.M. Speakman, the
    Labor Board Member, this morning. Welcome to all of you. Nice
    to see you.
        Ms. Thomas, why don't you proceed with your statement, and
    then I assume Mr. Kever and Mr. Speakman have statements as
    well, and then they can follow.

                               Opening Statement

        Ms. Thomas. Thank you.
        Mr. Chairman and Members of the Committee, good morning. I
    am Cherryl T. Thomas, Chair of the Railroad Retirement Board,
    and with me today presenting joint testimony are V.M. Speakman
    Jr., the Labor Member of the Board, and Jerome F. Kever, the
    Management Member of the Board.
        Mr. Chairman, at this time, we would like to take a moment
    to extend to you our best wishes as you close your
    distinguished public service career. For 20 years you have been
    a strong and trusted voice for the residents of the 10th
    District as you have championed such important issues as the
    protection of our environment, the advancement of human rights,
    the pursuit of biomedical research, and the commitment of our
    Government to ethical and fiscal responsibility. As Chairman of
    this Subcommittee, you have provided fair and compassionate
    oversight for programs vital to the health and welfare of
    millions of Americans, including the Nation's railroad workers
    and their families. On behalf of the employees of the only
    Federal agency headquartered in the great State of Illinois, we
    congratulate you and thank you for your leadership and your
    willingness to serve.
        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 Railroad Unemployment Insurance Acts.
    The Board also has administrative responsibilities under the
    Social Security Act for certain benefit payments and Medicare
    coverage for railroad workers. During fiscal year 1999, the
    Board paid $8.2 billion in railroad retirement and survivor
    benefits to 748,000 beneficiaries, and unemployment and
    sickness insurance benefits of $95 million to nearly 34,000
    claimants.

                          NEED FOR ADDITIONAL FUNDING

        While our financial reports on the funding of these
    programs have been favorable, my fellow board members and I are
    concerned that the agency's level of program service will begin
    to deteriorate as a result of funding constraints this fiscal
    year. Despite having significantly reduced staffing and
    spending in such areas as travel and training during fiscal
    year 2000, we simply do not have the funds necessary to provide
    for our information technology initiatives. These important
    initiatives would have strengthened our technological
    infrastructure, helped us to develop new systems and allowed us
    to better fulfill various requirements pursuant to Federal
    mandates. Our inability to fund the activities needed to start
    and/or continue certain mission-critical automation
    initiatives, combined with the large number of employees who
    have left the agency, will begin to erode our performance this
    year and in years to come.
        The President's proposed budget level of $92.5 million for
    the Board's fiscal year 2001 administrative expenses is not
    sufficient to address our concerns relative to our ability to
    provide adequate service. With a budget of $92.5 million we
    will be required to once again defer technology investments and
    further reduce staffing.
        We will, for example, be unable to acquire the technology
    to pursue our automation initiatives. We will again be forced
    to defer mission-related projects, such as future phases of a
    system to allow applications to be taken on-line, in a
    paperless, folderless environment, as well as providing ``one
    and done'' customer service. Moreover, we will be unable to
    expand our use of document imaging, a multiyear information
    technology project that has already been successful in our
    unemployment and sickness insurance program.
        Finally, we will have insufficient funding to invest in
    Internet security tools and technology essential to conducting
    electronic business transactions in a safe, private, and secure
    environment. Specifics on these investments in technology are
    detailed in our written statement.

                              STAFFING REDUCTIONS

        As to staffing, the Board has undergone dramatic reductions
    in staffing over the last several years, which have affected
    our ability to withstand further cuts. We estimate that the
    President's proposed funding would be sufficient for only 1,112
    full-time equivalents, which is 70 FTEs less than we started
    with in fiscal year 2000 and 84 FTEs less than we utilized in
    fiscal year 1999. At the President's proposed level of $92.5
    million the FTE reductions from 1993 through fiscal year 2001
    are projected to total 586, or a reduction of about 34.5
    percent of the Board's total staff. This is almost double the
    reduction of 18.2 percent projected for total civilian
    employment in the Executive branch of the government and nearly
    four times the reduction of 8.7 percent projected for
    nondefense employment shown in the Analytical Perspectives
    published as part of the President's proposed budget for fiscal
    year 2001.
        In order to meet the staff reductions resulting from budget
    constraints in fiscal year 2000, the Board was granted
    authority to offer buyout payments through March 30th, 2000.
    The Board has fully utilized this authority, approving buyouts
    for 67 employees, which reduces our costs by approximately
    $550,000 this year and as much as $4 million annually in fiscal
    year 2001 and beyond. Since fiscal year 1994, we have granted
    buyouts to 244 employees.
        Mr. Chairman, we thank you and the Members of the
    Subcommittee for your continued support in granting us buyout
    authority, which enables us to avoid a significant reduction-
    in-force and even greater disruption to our operations.
        We fully recognize that, over time, we can and must perform
    our operations with even fewer employees. However, if we
    continue to reduce our staff before we have the proper
    automation support in place, our customer service, including
    benefit payment accuracy and timeliness, will suffer.

               REQUEST FOR ADDITIONAL FUNDING IN FISCAL YEAR 2001

        We estimate that the Board will need an additional $2.5
    million in fiscal year 2001, for a total administrative
    appropriation of $95 million.
        First and foremost, we will need an increase of
    approximately $2 million for automation initiatives to achieve
    our long-term objectives of proper efficiency and continued
    quality customer service. In addition, we will need
    approximately $500,000 for salary and benefits to maintain our
    current level of customer service by funding1,119 FTEs in
    fiscal year 2001.

                             INFORMATION TECHNOLOGY

        The Board's Capital and Information Resources Management
    Plans, both of which support the agency's Strategic Plan,
    outline a comprehensive approach toward maintaining and
    enhancing our customer service. These plans, however, cannot be
    implemented without closing the sizeable gap between our
    planned initiatives and those which a reduced level of funding
    would permit.
        As you consider our request for funding of $95 million in
    fiscal year 2001, it is important to remember that the Board
    administers entitlement programs established by the Congress.
    Our basic entitlement programs are not subject to discretionary
    spending; payroll taxes paid by railroad employers and
    employees are their primary source of financing. In order for
    us to manage the significant cuts in staffing we have already
    experienced, as well as additional cuts in future years, our
    agency must have the information technology tools in place to
    help maintain an adequate level of customer service.

             RENTAL CHARGES BY THE GENERAL SERVICES ADMINISTRATION

        Last but not least, it should be noted that our funding
    request provides for paying actual costs for rent to the
    General Services Administration, rather than commercial rates.
    We are continuing to work with our authorizing committee, the
    House Transportation and Infrastructure Committee, toward
    enactment of our proposed legislation to make this arrangement
    permanent.

                               Concluding Remarks

        In concluding our testimony, we want to stress the Board's
    continued commitment to improving our operations and providing
    quality service to our beneficiaries in the face of tight
    budgetary constraints. Without the appropriate level of funding
    support from the Congress, we will be unable to meet our
    objectives and fulfill our commitments to our constituents.
        Yet again, Mr. Chairman, I thank you for the opportunity to
    appear before you today. We will be happy to respond to any
    questions you or the Members may have. Thank you.
        Mr. Porter. Thank you.
        [The information follows:]

                             Statement By Mr. Kever

        Mr. Porter. Mr. Kever.
        Mr. Kever. Thank you, Mr. Chairman.
        Chairman Porter, it has been my distinct professional and
    personal privilege to testify on behalf of the Railroad
    Retirement Board before this Subcommittee since my initial
    appointment in 1992 and especially on a personal level since
    you have been my Congressman representing the 10th District of
    Illinois.
        While I will miss your leadership and that of your staff on
    this Subcommittee, I would be remiss if I did not thank you
    personally on behalf of the employees of the Railroad
    Retirement Board and the railroad industry for all of your
    support and interest in our Chicago-based agency while you have
    been a member of this Subcommittee. It was certainly very
    helpful for us to have a fellow Illinoisan on the Committee and
    as Chairman.
        I wish you well in whatever you pursue after your
    distinguished career in Congress and trust that you will stay
    involved in government issues in some capacity. And I thank you
    very much.
        [The information follows:]

                           Statement By Mr. Speakman

        Mr. Porter. Mr. Speakman.
        Mr. Speakman. Mr. Chairman, I don't have a formal
    statement, but I would also like to echo the sentiments of my
    colleagues in expressing the very best wishes for you in your
    future endeavors. Clearly, you have demonstrated a great deal
    of leadership and openness in the vital issues at the Railroad
    Retirement Board. I think you need to know, if you don't
    already know, this fact has not been lost upon the constituency
    we represent; and rail labor would also wish to thank you and
    wish you well in your future endeavors.

                   ADMINISTRATION'S PROPOSED LEVEL OF FUNDING

        Mr. Porter. Ms. Thomas, Mr. Kever and Mr. Speakman, thank
    you very much for those kind words. I certainly appreciate them
    very much. This agency has been one that we think is very well
    managed, and I am kind of dismayed that the President doesn't
    put the right amount of money in his budget for you. Why is
    that?
        Ms. Thomas. You want me to answer that?
        Mr. Porter. Yes, I do. I assume you sent up 4.8 percent to
    OMB and they sent back down 2 percent, which is under
    inflation, even below the inflation rate we have today. Why?
        Ms. Thomas. I think that the matter which has been
    explained to us is that we have to remember that, although we
    can go to the Congress and ask for more, that we are really a
    government agency and we have to experience the cuts just like
    everyone else does, which I certainly can appreciate. But I do
    believe that in some respects we are a bit different, and we
    have a customer base that we need to support who is accustomed
    to a certain kind of service from us. And these are, to a
    degree, private funds; and we think that we need the money to
    provide the customer service and the increased technology that
    we must have. But the explanation that we get, basically, is
    that everyone has to participate in the cuts that are decided
    by others than ourselves.
        Mr. Porter. I was going to say, what cuts? There are a lot
    of things the President has increased hugely in his budget.
        I think it is very disingenuous--I have said this many
    times before. I think it is disingenuous of the White House to
    send up a budget that they know is too low and we know allows
    them to plus up other accounts and therefore play to
    constituencies knowing that we believe that this number makes
    it very difficult for you to operate. It is not done once; it
    is done time after time after time. And I just think the
    President well knows that you are not going to be able to do
    your job with this kind of increase, and we know it. It is a
    matter of getting the resources.
        As I have said many times before, this agency is a very
    well-run agency. You have looked at the need to set up
    standards, and you have set them and strived to make them a
    reality in each case, and we think the money is very well
    managed. But, you know, it makes it very difficult for us when
    the President recommends a 2 percent increase and it is in a
    budget where a lot of the other increases are supported by user
    fees and taxes that aren't and he knows aren't going to be
    enacted. So we will, of course, do the best we can, but it is a
    problem.
        One of the other things that is awfully interesting to us
    is that if you were Donna Shalala and sitting there and he had
    cut your budget, Donna Shalala would say, we agree with the
    President. You know all the Departments never say they disagree
    with the President's budget. The independent agencies, you are
    not the only one, will come here and say, the President
    shortchanged us, and we need more money. We like the refreshing
    candor of your telling us that it is not a workable budget, and
    the number is too low.
        Take me back through the--you have done all the buyouts you
    can do, is that correct?

                                 AGENCY BUYOUTS

        Ms. Thomas. We have done all the buyouts we think we can
    do, absolutely. You know, some of those--about 33 of those were
    early retirements plus the buyouts, for a total of 67 people
    who left; and, actually, the buyouts help us to avoid a
    reduction-in-force which would be more damaging to what we are
    trying to achieve at the Railroad Retirement Board.
        Mr. Porter. $500,000 is the difference between your number
    and the President's number, salary and benefits, while $2
    million is for information technology investments, correct?
        Ms. Thomas. Correct.
        Mr. Porter. And would you reduce your workforce to
    implement the technology initiatives or are we just simply
    putting them off, if you had to have that kind of choice?

                       INFORMATION TECHNOLOGY INVESTMENTS

        Ms. Thomas. We would have to--actually, at this point, Mr.
    Chairman, we would have to delay the information technology
    initiatives. At this point in time, we just cannot lose any
    more people. We have to service our customers, and they expect
    that.
        Mr. Porter. The $874,000 for information technology in the
    President's budget, does that allow for development of new
    systems or is that just maintenance of the systems you already
    have?
        Ms. Thomas. It is insufficient to allow for new technology
    systems.
        Mr. Porter. So that would simply keep everything in place.
        Ms. Thomas. Going.
        Mr. Porter. And maintain them.
        Ms. Thomas. Right.
        Mr. Porter. And provide no new money for new technologies.
        Ms. Thomas. Correct, insufficient funds. We might be able
    to do something, but it certainly wouldn't be worth it because
    we need the entire package.
        Mr. Porter. If the $2 million were provided, would that be
    a one-time investment or would you need that annually into the
    future?
        Ms. Thomas. Well, as you know, these systems continue to
    evolve. As far as we can tell, that is what we need to get to
    where we want to go in terms of the folderless, paperless
    environment. You are going to need some percentage, of course,
    over the next few years to update, to make sure you are keeping
    abreast of the changing technology, but, as far as we estimate,
    that is what we need in the coming year, and we would need some
    percentage in the ensuing 10 or 15 years, too, for updating but
    not $2 million every year, no.
        [The information follows:]

        The agency's Strategic Information Resources Management
    Plan presents estimated funding for information technology
    expenditures through fiscal year 2004. This information was
    included in the Fiscal Year 2001 Budget Submission sent to the
    Congress in September 1999.

                              PROPOSED REGULATION

        Mr. Porter. Okay. At last year's hearing, you provided your
    response to a document put together by your predecessor, Mr.
    Bower, entitled Suggestions for the Future. One of the
    suggestions was for the RRB to finalize four outstanding
    regulations. In your response you indicated that three of these
    had been finalized and implemented. The fourth had to do with
    reduction and nonpayment of annuities by reason of work which
    you said had raised concern among both rail management and
    labor.
        Finalizing this rule was put on hold until the year 2000
    computer problem was resolved. Now that Y2K is out of the way--
    and, congratulations, no problems--what is the status of this
    regulation and can you tell us more about the thrust of the
    regulation? What are the concerns of both management and labor
    regarding it?
        Ms. Thomas. Well, Management and Labor, of course, are
    still working out part 230, but the proposed rulemaking is
    still being considered by the Board. But I would think that at
    this point in time we have to remember that H.R. 5 certainly
    would have an impact on part 230. So, at this point in time, we are
    still looking at it, but we are waiting to see what happens with H.R. 5
    because that would amend part 230. So at this point in time we aren't
    doing anything with that because of H.R. 5, and I think that maybe my
    colleagues would agree with that.
        Mr. Porter. And that is for Transportation?
        Ms. Thomas. That is correct.
        Mr. Porter. And what is the prognosis for their action?
        Ms. Thomas. As far as I know, that is going to be passed. I
    don't have any other information to the contrary.
        Okay. It has passed the House.
        Mr. Porter. It has passed the House and Senate already.
        Ms. Thomas. The earnings test, it has passed the House and
    Senate.
        Mr. Porter. Okay. I wasn't focusing on what H.R. 5 was.
    That would make a good deal of difference in what you have to
    do.

                    PROPOSED LEGISLATION CONCERNING GSA RENT

        At last year's hearing, we discussed the potential impact
    of the RRB, a trust fund agency having to pay full rent cost to
    GSA. You have traditionally only been held to paying actual
    cost to GSA, but they have pushed for you paying full rent cost
    in 1999 and 2000, but they have been discouraged from
    instituting this policy by OMB and the Congress. You have
    already told us what the situation is and the fact that you are
    pushing for actual costs, and maybe you can fill me in a little
    bit more on what GSA's response has been to this point. Is this
    the legislation that is pending before Transportation?
        Ms. Thomas. Yes.
        Mr. Porter. This is the legislation.
        Ms. Thomas. Yes.
        Mr. Porter. Okay, and do you know what they are likely to
    do?
        Ms. Thomas. Well, what we are hoping they are going to do--
    and we do feel that we have some support--is to pay actual
    costs. Social Security is in the same position we are actually
    with this, and this would increase our budget request by $3.8
    million, which we don't have, and it has not been provided for,
    and we think that the manner in which this has been handled for
    the last 26 years ought to continue.
        We don't think that the trust funds should be utilized for
    building public buildings and courthouses and some of the
    things that GSA said that money needs to be utilized for. So we
    are hoping that we have presented an argument before the
    Committee that they will understand that these are trust fund
    moneys that the retirees have a right to, and they shouldn't be
    utilized for building public buildings.
        Mr. Porter. And if the legislation were to pass and be
    signed this year, how would that affect your budget numbers?
    Would that add $3,500,000?
        Ms. Thomas. It would add $3.8 million to our costs if GSA
    were to have the right to charge us commercial rent.
        Mr. Porter. Otherwise, that amount goes to GSA.
        Ms. Thomas. Correct.
        Mr. Porter. Okay. What is going to happen here is that we
    are going to go to have a vote and that the minority has
    requested that we hold no further appropriation hearings
    because there is a supplemental appropriation bill on the
    floor; and we are going to have to comply with that and
    complete our hearing here this morning with your agency and
    postpone the Libraries Institute until this afternoon.

                             AGENCY REORGANIZATION

        One of the suggestions that Mr. Bower made was for the RRB
    to undertake additional consolidation reorganization and
    downsizing. Your response indicated that in December, 1998, you
    approved a reorganization plan for the three-person executive
    committee to be expanded to five voting members and one
    nonvoting member. This plan was instituted in January, 1999.
    You also indicated that you had hoped that this action would
    filter down below the executive level. Has this reorganization
    had the effect that you hoped for? Was the request and approval
    of buyout authority part of this plan? And what other actions
    are planned affecting the size and organization of the Board?
        Ms. Thomas. Mr. Chairman, I think that what we have done
    will, in effect, overall, in years to come, make the agency, if
    you will, lean and mean, much more streamlined, much more
    effective. Of course, these things do take time. I was very
    ambitious, being a new Chair, and you want to get everything
    done right away so that you come back the next year and say we
    have done all of these things. It is a process, and it is
    working.
        Just recently, we have added a new Senior Executive
    Officer, if you will, to the Executive Committee. We think that
    that will indeed help us to coordinate and communicate much
    better between the three Board Members and the agency's
    Executive Committee.
        I would say that, overall, we have experienced a very good
    year. We have had a lot of positive things happen.
        But I must say that when you are told that you have to take
    lots of cuts and that you are possibly facing a RIF, it is
    disruptive. So, to some degree, we were trying to figure out,
    if we did not get the buyout authority, what we do and that
    would cause a RIF. So sometimes it tends to stall the programs
    that you have going because you have to figure out what you
    would do if you don't have the people.
        In essence, what happened is we got the buyout authority,
    and we could allow the people that wanted to leave, and we are
    back at the table putting things in order. But, overall, it is
    going very well. We have very good people who have been there a
    long time. So they understand where we are going and how things
    need to work. So I would say, overall, it has been very
    positive.
        Mr. Porter. Thank you, Ms. Thomas.
        Mr. Dickey, we are going to have to adjourn this hearing
    after we recess for the vote. We are going to have to--the
    minority has requested that we hold no further hearings this
    morning because the supplemental is on the floor. So I am going
    to call on you and ask you when you finish your questions then
    to recess until two p.m.
        Mr. Dickey  [presiding]. I will do that. I will need to
    talk quickly. I have got some introductory language. I want to
    see if we can do it this way.

                                 60/30 PROPOSAL

        Does the Railroad Retirement Board endorse the 60/30
    proposal? Do you know what that is?
        Ms. Thomas. Mr. Chairman--no, Mr. Dickey, I do not.
        Mr. Dickey. I am not the Chairman. I am just kidding you.
        Ms. Thomas. I mean Congressman.
        Mr. Dickey. What it amounts to is the stakeholders in the
    railroad retirement system agreed on a proposal to allow for
    retirement at age 60 after 30 years of service. Do you have a
    position on that?
        Ms. Thomas. At this point in time, rail management and rail
    labor are discussing that issue, and they are trying to come to
    some sort of an agreement relative to some other issues that
    they have. I, as the Chair, am trying to remain neutral in that
    respect. If they should decide that----
        Mr. Dickey. Excuse me, I am going to have to interrupt you.
    I just wondered if we can get that answered later. We can do
    it.
        [The information follows:]

        Ms. Thomas. The agency has not as yet taken a position on
    the proposed legislation.

                              RAILROAD EMPLOYMENT

        Let me ask this question. Much like the social security
    system, those paying into the system today finance current
    railroad retirement. There is an important link between how
    many people companies hire and the security of the current and
    future retirement system. Does the Railroad Retirement Board
    have any guidance to its constituent companies with regard to
    hiring?
        Ms. Thomas. No.

                             MAXIMUM HEALTH BENEFIT

        Mr. Dickey. Okay. Currently, the railroad retirees receive
    an annual $75,000 maximum health benefit. As we all know,
    health costs are increasing and a few simple procedures can
    exhaust this total very easily. Does the Board plan to increase
    this limit based upon current and projected health care costs?
        Ms. Thomas. We don't have anything to do with that at all.

                                EARNINGS LIMITS

        Mr. Dickey. The Congress just approved an adjustment to the
    social security earnings limit. Does such a limit exist for the
    railroad retirement system and, if so, what is it?
        Ms. Thomas. It is the same limit.
        Mr. Dickey. Are there any plans to increase that amount?
        Ms. Thomas. Not at this point in time.

                              LEGISLATIVE PROPOSAL

        Mr. Dickey. Okay. Currently, elected officials will lose
    their railroad pension if they accept money for their elected
    position. One of my constituents is a council member in Pine
    Bluff, Arkansas, and is affected by this problem. Are there any
    plans to fix this problem and what can we do as Congress to
    address this?
        Ms. Thomas. You are proposing legislation, correct----
        Mr. Dickey. That is correct.
        Ms. Thomas [continuing]. In that regard.
        Mr. Dickey. Are you going to be able to endorse it?
        Ms. Thomas. I would need to review the specific proposal
    before I could say we would or wouldn't support it.
        Mr. Dickey. I apologize for hurrying through all of this.
        Ms. Thomas. Yes.
        Mr. Dickey. Will you hit the gavel for me?
        We are adjourned. Thank you very much.

                                               Tuesday, March 28, 2000.

                      CORPORATION FOR PUBLIC BROADCASTING

                                    WITNESS

    ROBERT T. COONROD, PRESIDENT AND CEO, CORPORATION FOR PUBLIC
        BROADCASTING

                            Introduction of Witness

        Mr. Porter. The subcommittee will come to order. We
    continue our hearings on the fiscal year 2001 appropriations
    with the Corporation for Public Broadcasting and we are pleased
    to welcome this afternoon, Mr. Coonrod. Mr. Coonrod, it is good
    to see you. Why don't you proceed with your statement and then
    we will have some easy questions.

                               Opening Statement

        Mr. Coonrod. If they are as easy as the last 2 years, Mr.
    Chairman, it will be interesting. Thank you. I have submitted
    testimony for the record, but if I can make a few brief opening
    comments, I would like to take this opportunity to congratulate
    you on the 20 years that you served in Congress and the 6 years
    that you led this subcommittee. From your first day as
    chairman, you provided thoughtful and conscientious leadership
    to spur us in public broadcasting to improve and better our
    practices. We have taken your leadership seriously and
    responded with important and fundamental changes in public
    broadcasting, and we appreciate the work of the subcommittee to
    secure funding for CPB year after year. We are especially
    grateful for your strong support and enduring commitment to
    public broadcasting.

                               CPB BUDGET REQUEST

        Last year, Congress funded CPB at $350 million, for fiscal
    year 2002. This year we are seeking an appropriation of $365
    million for fiscal year 2003. That $15 million increase would
    largely be distributed to public television and radio stations
    through the television andradio community service grants. At
    the same time, Mr. Chairman, we are seeking $20 million in fiscal year
    2001 to assist in the conversion of public broadcasting to digital
    technology, as mandated by the Federal Communications Commission. This
    money would be used primarily to support digital program development,
    production and distribution.

                                OVERLAP MARKETS

        As this is my last opportunity to testify before you as
    chairman, I would like to take this opportunity to review the
    progress we made during your tenure. Over the last 6 years,
    public radio and television have innovated and improved. They
    have improved their operations through technology and
    programming. First in television, we have developed, adopted
    and have now fully implemented, a one-base-grant-per-market
    policy, which responds directly to the questions you raised in
    1995 about overlap markets.

                                  FUTURE FUNDS

        In 18 overlap markets, 44 public television stations that
    in the past had received full base grants now share a single
    base grant with other stations in the same market whose
    broadcast signals overlap significantly. More importantly, the
    majority of these stations are now engaged in collaborative
    efforts that have reduced redundant operations and freed
    valuable resources to better serve their communities. We also
    created two new programs, one for television and one for radio:
    the Future Funds. They involve initiatives designed to improve
    community service, more efficiently raise revenues and reduce
    operating overhead. In Illinois, CPB has funded the creation of
    a statewide organization that will consolidate stations'
    underwriting activities and lower the net cost of donations.
        Over the past 5 years, television and radio future fund
    projects have either saved or raised $7 for every $1 invested.
    A further improvement to our radio and television grant
    programs is renewed emphasis on support for rural and minority
    stations. Both the television community service grant and the
    radio community service grant programs have recently been
    rewritten to direct a higher percentage of resources to
    stations in greatest need of economic support. Programming has
    also been enhanced over the last 6 years. We have expanded our
    education services. We are developing new and innovative
    worldwide Web applications, expanding new satellite services
    and demonstrating the potential of interactivity.
        Mr. Chairman, if I can leave you with a single impression,
    it is simply this: The 400-plus licensees who receive support
    through CPB are no longer just radio and television stations.
    They are using all forms of media to provide educational and
    informational services to communities across the country.

                              MINORITY PROGRAMMING

        One of CPB's long-standing commitments has been funding
    programs for minority and diverse audiences. We are continuing
    to provide critical support to the national minority
    programming consortia, and we have established a new program
    grant for diverse initiatives. In public radio, historically
    more than 60 percent of CPB radio program funds have supported
    independent or diverse productions. CPB also funds nearly 60
    minority-owned stations, a Spanish language satellite service
    and a satellite service for Native Americans. As I mentioned
    earlier, Mr. Chairman, we are requesting that this subcommittee
    provide $20 million to CPB in 2001 to assist in the conversion
    to digital technology. With more channel space available, as
    many as four more channels per station, public broadcasters
    will be well positioned to offer educational services for all
    audiences ranging from preschoolers to senior citizens all at
    the same time.

                               DIGITAL CONVERSION

        As of February of this year, 27 states had already
    committed nearly $211 million for their local stations digital
    conversion efforts. The total funds raised by State and local
    governments and from private sources for the digital conversion
    so far exceeds $300 million. With your continued support and
    the critical support of State legislatures, local viewers and
    listeners, public broadcasting will be able to meet the FCC
    mandate to convert to digital broadcasting. And in a world of
    mergers and consolidations where media content may be
    controlled by a handful of telecommunications conglomerates, we
    believe that public television and radio will continue to meet
    the public's interest in locally operated, publicly owned,
    noncommercial educational and informational programming
    sources.

                                   CONCLUSION

        So in conclusion, I would like to say we thank the
    committee and this Congress for providing funding for digital
    broadcasting in the last two appropriations cycles, and on
    behalf of public broadcasting, I would like to thank you and
    the subcommittee for your leadership and support over the
    years.
        [The information follows:]

                         RADIO AND TELEVISION LICENSEES

        Mr. Porter. Thank you, Mr. Coonrod. Of your 400 licensees,
    how many fall in radio and how many in TV?
        Mr. Coonrod. There are 176 TV licensees and the others are
    radio.
        Mr. Porter. 400 and----
        Mr. Coonrod. There are 350 roughly.
        Mr. Porter. 350 radio and 176 TV?
        Mr. Coonrod. That's correct.

                             FCC DIGITAL CONVERSION

        Mr. Porter. Is the mandate of the FCC in the same time
    frame for radio and TV?
        Mr. Coonrod. It is not. The mandate from the FCC for
    television is specific. The conversion is to be completed by
    2003. In radio there is as yet no mandate. There are a couple
    of digital conversion plans under consideration and the FCC has
    not reached a decision on which one it will choose.

                          CPB FISCAL YEAR 2000 BUDGET

        Mr. Porter. How much is your budget this year? How much are
    you spending this year?
        Mr. Coonrod. For fiscal year 2000 we have $300 million.
        Mr. Porter. How much of that is granted to radio and how
    much to television?
        Mr. Coonrod. By formula, 25 percent goes to radio and 75
    percent goes to television.
        Mr. Porter. So 75, and 25 to television. But you have costs
    and programming and the like, you just allocate it that way?
        Mr. Coonrod. No. By law, we allocate up to 5 percent for
    administrative purposes. 6 percent is for essentially supplied
    services, and the rest is allocated 75/25 to television and
    radio stations and producers.

                            RADIO DIGITAL CONVERSION

        Mr. Porter. Now, how many of the large radio stations,
    commercial stations, have already converted to digital, any?
        Mr. Coonrod. For large commercial radio stations, none is
    broadcasting in digital. It is fairly common to have digital
    studio equipment but nobody is actually broadcasting in
    digital.
        Mr. Porter. Since probably most people listen to the radio
    in their cars, there are no cars equipped yet with digital
    receivers, are there?
        Mr. Coonrod. Not in this country. That's right.
        Mr. Porter. So radio conversion is a little way off. TV,
    there is some conversions having been accomplished to digital
    equipment. Is there anybody broadcasting digitally?

                         TELEVISION DIGITAL CONVERSION

        Mr. Coonrod. There are 14 public television stations that
    are broadcasting digitally at low power, and a number of
    commercial stations.
        Mr. Porter. To whom do they broadcast? Is anyone buying
    digital TVs or conversion equipment in any way?
        Mr. Coonrod. Right now there are a limited number of
    televisions. You can buy a digital television. The market is
    very small for digital televisions. There is in production, and
    soon to be marketed by the end of the year, a converter box
    that will allow you to receive digital television on your
    analog television sets. So for something less than $200, you
    will receive a digital signal. You will get a slightly enhanced
    picture from what you get now. If it is a multi-cast situation,
    you will be able to multiplex. The other thing, Mr. Chairman,
    there is a card which you can put into your PC, your home
    computer which also allows you to receive digital television.
    One of the early sort of ways in which we think digital will
    roll out will be to the computer for educational purposes.
        Mr. Porter. Tell me the advantage to the consumer of
    digital broadcasts? It is a higher resolution picture and what
    else?
        Mr. Coonrod. It is a significantly higher resolution
    picture. Even a standard definition television picture is far
    superior to the regular National Television Systems Committee
    (NTSC) picture. A high definition picture is even better.
        In addition, it allows the broadcasters to multiplex the
    signal so where you now have one signal or one channel, you
    could have at least four channels. It is very easy to--in
    digital, to send opportunistic data along with the video so you
    can enhance the program. By enhancing the program, we would
    describe it as providing additional information that you can
    receive on your television set. All digital television sets and
    set top boxes will have the capability to receive this
    additional data. For example, it can be more information about
    the subject on the program that is being broadcast.

                            RADIO DIGITAL BROADCAST

        Mr. Porter. What about radio, what is the advantage to the
    consumer of a digital broadcast in radio?
        Mr. Coonrod. Since there is no standard established yet, we
    can only say with certainty that radio will have CD quality
    sound. If the system that is now being favored is adopted,
    which is the in-band, on-channel system, if that is adopted by
    the FCC, the ancillary benefits will be minimal. There will be
    some ability to send some data, but primarily it will be an
    improvement in sound. The flip side of that is that it will be
    forward-and-backward compatible, which means that you will be
    able to receive a digital radio signal on your analog radio so
    you won't have to buy a new set. And it will be on the same
    frequency that it is currently on. So if that is the approach
    that is taken by the FCC, the in-band, on-channel, it will be a
    more robust signal, much better sound and real convenience to
    the consumer.

                           DIGITAL CONVERSION FUNDING

        Mr. Porter. Now, going to the bottom line, and you and I
    have discussed this, if you look at a station like WETA in
    Washington, or WTTW in Chicago, these broadcasters, telecasters
    are doing very well and probably have the resources even
    without any help from anyone to convert to digital. They can
    raise the money. Is that a fair assumption in most cases? And
    that the ones that really need the help are the smaller rural
    stations or the ones that are in connection with some small
    college or something like that?
        Mr. Coonrod. It is certainly the case that the smaller
    stations, those below a certain revenue level, need the help
    more. The cost of digital conversion is not contingent on the
    size. A tower is a tower, a transmitter is a transmitter. So as
    a percentage of their revenue, it is a much larger percentage
    for the smaller stations.
        Mr. Porter. You don't have an authorization for this yet,
    so you don't know necessarily how it will be directed to be
    distributed, but it is possible that Congress would say in the
    authorization it is going to go to the smaller stations and not
    very much to the bigger stations or very little. Is that true?
        Mr. Coonrod. That's possible, sure.
        Mr. Porter. This is my final question. If you have a small
    station that can't afford this conversion easily, and they are
    going to have four channels where they had one, aren't these
    channels worth something in terms of future revenues by which
    they might pay back the costs of the digital conversion? In
    other words, if the authorizers said let's have a loan program
    and you pay us back from a period of years from the additional
    revenues from having additional channels, wouldn't that be a
    workable way of getting Congress to authorize?
        See, I am worried about the authorization. I can provide
    you funds, but I can't do it without an authorization, and I am
    trying to get a way where the authorizers can see the net cost
    is maybe very low or even nothing.
        Mr. Coonrod. Mr. Chairman, we have analyzed that set of
    circumstances. There are a couple of issues that it raises,
    which make me wonder whether it could work. One of the issues
    is that we don't yet know what the revenue generating potential
    of the additional spectrum would be. In other words, it is a
    hypothetical value. So we can't monetize it. That is one thing.
        The other thing is that it is not clear yet what the FCC
    ruling on the supplementary and ancillary uses of the spectrum
    will be, so we would be operating on the assumption of the
    existence of additional revenue opportunities before the FCC
    were to rule on that.
        And the third area that has caused us some concern as we
    looked at it, as we have projected the gap between revenues and
    expenses going out to the year 2004 and beyond, we look at
    roughly a $180 million gap between revenues and expenses. If we
    were to have a loan program, it would increase that gap so that
    even if it were an interest-free loan, there would still be an
    additional expense that stations would have to bear so that the
    gap between revenue and expenses would wideneven further. And,
    therefore, it looks to us if it is possible to use that spectrum for
    revenue-generating purposes, that it would be better to look at using
    that to offset operating costs rather than capital costs.

                        DIGITAL CONVERSION AUTHORIZATION

        Mr. Porter. Can you tell us where you are in terms of an
    authorization for digital conversion, where you think you are?
        Mr. Coonrod. We are eternally optimistic, Mr. Chairman.
    There was a bipartisan bill that was introduced in the House.
    We haven't had any formal action on it yet; but we are also
    working with the authorizers in the Senate to see if we can get
    something started in the Senate. Perhaps simply an
    authorization for the digital portion of the funding.
        Mr. Porter. The only thing that could happen to a station
    if they didn't convert, according to the FCC mandate, is that
    they could lose their license, correct?
        Mr. Coonrod. That's correct.
        Mr. Porter. There is no other sanction there? You know, I
    am looking at 2003, and I am looking at the market and I don't
    see a lot happening at this point. It could happen very fast, I
    recognize that. But there is a lot of thought out there that
    2003 may be adjusted given the market realities.
        Mr. Coonrod. There has been considerable talk about that,
    Mr. Chairman. But the FCC, at this point, has given no
    indication that it is considering changing the deadline, and
    there has been no formal action taken by Congress to do that.
    So right now we are working under a hard-and-fast deadline.
        Mr. Porter. Except the authorizers aren't.
        Ms. Lowey.

                             ANNENBERG/CPB CHANNEL

        Mrs. Lowey. Thank you very much, Mr. Chairman. Welcome Mr.
    Coonrod. I haven't had a chance to speak with you again and
    congratulate you all on your work. As I am reading through your
    testimony, I see all of the educational work that you do. The
    work with the Annenberg Foundation is very exciting, and with
    all of the focus today on instruction for teachers, for other
    people in the education profession, it seems to me that you are
    certainly leading the way, and I would appreciate if you could
    give us more detail about the Annenberg CPB channel teaching
    program. You indicate in your testimony that the program is
    growing very rapidly. I would be interested in knowing how you
    get your teachers involved, how are schools reacting to this
    training. Are they working with you?
        Mr. Coonrod. Yes, I would be happy to give you more
    information. I can provide, for the record, a full accounting
    of the work of the channel.
        [The information follows:]

        Mr. Coonrod. Let me start by saying that one of the reasons
    that the Annenberg Foundation chose to partner with Public
    Broadcasting was because of Public Broadcasting's history of
    providing education services to communities around the country.
        The channel starts from a basic premise that the biggest
    education challenge that the Nation faces is training teachers.
    And we started off 2 years ago with a math science channel that
    PBS distributed 6 hours a day, 4 days a week and the response
    was so positive CPB, PBS, and the Annenberg Foundation, thought
    that it made a lot of sense to expand it to a full-time service
    so that the teachers would have access to it not just during
    classroom hours or school, but also have access to it at home
    and that it would cover the range of disciplines, not just math
    and science.
        The channel has essentially two parts. One focuses on the
    pedagogy, what you need to do to become a good teacher; these
    are basically workshops, and there is a companion Web site,
    learner.org, where the teachers can engage in dialogue among
    themselves after they view the workshop on television. The
    second part of the channel is content. What are the things that
    a math teacher needs to know to teach math or a history teacher
    so both of those elements are part of the basic channel
    service.
        It is expanding quickly. About a thousand schools a week
    are licensing it. The license is free. It comes at no cost.
    That was a prerequisite from Walter Annenberg--that it be a
    free service. But about a thousand schools a week are licensing
    it. A number of public television stations already transmit it
    even before digital. We see it as a digital multicast service,
    but before digital has come on the scene, a number of public
    television stations are broadcasting it, some do it on local
    PEG channels or local ITFS services, which are their
    exclusively educational services. It is easily downlinkable by
    school systems. It is being promoted primarily through the
    educational organizations, the teacher organizations which are
    partners in developing the content. So we see this as a
    partnership with the education community.
        And it is a kind of a service that speaks directly to a
    national need, has national distribution because of the ability
    of public television to distribute it nationally, but it can
    also be tailored to meet the local needs, so if standards are
    different in one State than another, it can be locally tailored
    to take account of those different standards.
        Mrs. Lowey. You mention it grows at a rate of 1,000
    schools, 500 new homes per month. Is it directed at elementary
    school, high school, a combination of all?
        Mr. Coonrod. It is K through 12. While we say it is K-12,
    so far the focus has been sort of 4th grade to 9th grade,
    although, as we build it out, it will be a full K-12 service.
        Mrs. Lowey. Is it providing lesson plans and methodology?
        Mr. Coonrod. There are no lesson plans as part of the basic
    channel. However, either through the learner.org service or
    companion services, lesson plans are available to the teachers.
    For example, a number of stations are digitizing their
    instructional television material and they are linking them to
    the local standards, so you can go to, for example, KCPT in
    Kansas City, through their Web site, you can get video
    materials. So a teacher has available in addition to the kind
    of pedagogical information available through the Annenberg
    channel, material that the teacher can use in the classroom.
        Now, our challenge is to fuse these things in a way that
    they become seamless to educators. Right now there are a series
    of complementary initiatives. But what we need to do is put
    them together in a way that a teacher goes to one source and
    can key into the array of services that are available. That is
    the next phase in this operation.

                           PBS ADULT LEARNING SERVICE

        Mrs. Lowey. Clearly I know that I am particularly
    interested in this, and look forward to continuing the
    dialogue. I also want to ask you to discuss further the adult
    learning service which you said was available in 41 states. Do
    the PBS affiliates wait for the schools, universities, and
    colleges to approach them about this program or do you reach
    out? Is the Nebraska model being adopted by other states? Could
    you tell us more about this?
        Mr. Coonrod. It is, to use the phrase, it is a proactive
    effort. The stations reach out and use this as a way of
    signaling their value in their communities and as a way of
    providing an additional community service. The Nebraska model I
    wouldn't say is--I would say it is a model in the sense that it
    has all of the elements that we look for in a service, and it
    is one, therefore, that we highlighted in the testimony. Others
    are looking to emulate the Nebraska model, but there are others
    out there that are--I want to say just as good. By that I mean
    given the places where they are working, they work as
    effectively as the Nebraska model. One of the great things
    about public television is that the local stations are able to
    provide services that make sense in their communities. A rural
    State has kind of a whole different set of requirements than a
    State that has both urban areas and rural areas. So while the
    Nebraska model is an excellent one, it isn't always appropriate
    for some states.
        Mrs. Lowey. Thank you. I heard the bell and I look forward
    to continuing our discussions about this, particularly the
    Annenberg CPB partnership.
        Mr. Coonrod. We are pleased that it is a continuing
    partnership. It has been going for about 10 years, but we have
    entered into a new phase, and we look forward to a long-term
    relationship with the foundation.
        Mrs. Lowey. Thank you.
        Mr. Porter. Mr. Wicker.

                               DIGITAL CONVERSION

        Mr. Wicker. Thank you, Mr. Chairman. Mr. Coonrod, we are
    delighted to have you here with us today. Let me follow-up on a
    couple of questions that the chairman asked about digital
    conversion. I noticed that one of our stations in Mississippi
    is one of the first to convert.
        Mr. Coonrod. Jackson.
        Mr. Wicker. Do I understand you to say that there is a FCC
    mandate that you move very quickly but not necessarily a
    congressional mandate? Is that the gist of your conversation
    between the chairman?
        Mr. Coonrod. That is the gist of the conversation. The FCC
    has set the time line for digital conversion.
        Mr. Wicker. And do I understand also that converting
    rapidly to digital radio gets us almost nowhere at this point
    because there is hardly anybody who--that can receive a digital
    signal?
        Mr. Coonrod. Well, there is no standard. No standard has
    been adopted in radio yet. So it would be premature to convert
    to digital radio until the standard has been adopted.
        Mr. Wicker. So the $20 million that you are requesting in
    2001, is that all for television?
        Mr. Coonrod. As part of the total package of $450 million
    of which $95 million would come through the Corporation for
    Public Broadcasting and the remainder would come through the
    Public Telecommunications Facilities Program. Of the total $450
    million, $60 million is for radio and $390 million is for
    television.
        Mr. Wicker. So this just gets us started?
        Mr. Coonrod. Our sense is that it is about 25 percent of
    the total conversion cost.
        Mr. Wicker. Just looking down the road, when do you think
    total--according to your plans, when do you think total
    conversion can be accomplished or will be accomplished?
        Mr. Coonrod. In order for a station----
        Mr. Wicker. If you had your druthers.
        Mr. Coonrod. In order for stations to maintain their
    broadcast licenses, they must convert to digital, and by that,
    I mean provide a pass through capability by 2003. We are going
    to work to help stations do that one way or another.
        As I mentioned earlier, 27 states have already committed
    funding for this, and there are local capital campaigns, local
    fund-raising efforts.
        I guess I would say, in response to your question, is if
    the 2003 mandate were not there we would be following a
    different timetable but we would still be working vigorously to
    make the conversion to digital because of the potential that
    digital offers for enhancing service going forward. So the
    particular road that we are on is one that was determined by
    the FCC requirement, but, in fact, it is a road that we would
    like to travel in any case.
        Mr. Wicker. Well, it just seems to me that the chairman,
    this may be $20 million we could save this year if Congress--if
    the jurisdictional authorizing committees are not ready to
    move, perhaps we could work with the FCC and decide that this
    is money that we could save and spend at a later time. What
    would you say to that? There is really not that much impact out
    there for the consumer for early conversion?
        Mr. Coonrod. I guess there are two parts to the answer. In
    terms of the consumer acceptance and consumer use of digital,
    the sooner the consumers have an opportunity to experience
    digital television, the more quickly the actual conversion will
    take place. Therefore, the more quickly the costs will come
    down because as we know, the more sets that a manufacturer
    produces, the lower the unit cost. So there is that question
    from a consumer side. From the planning side, it is important
    to consider what it takes to make the digital conversion.
        And there is a time line that needs to be taken into
    consideration. There are a limited number of broadcastengineers
    who can construct broadcast towers, and you have to get in the queue in
    order to get your tower or you have to order a transmitter. With all of
    the stations making the conversion in a relatively short period of
    time, they have to get their orders in and get at the head of queue. So
    the sooner we get the funding, the better position we are in getting
    the orders in. I would add one of the things that we are better able to
    do, too, is aggregate the orders which would provide for group
    purchases, and therefore have some reduction in cost overall.

                          PUBLIC TELEVISION VIEWERSHIP

        Mr. Wicker. Thank you very much. Mr. President, what is
    your overall market share, your Nielsen share for people who
    watch public television?
        Mr. Coonrod. The way to sort of make a general statement
    about that is the average is about a 2 share.
        Mr. Wicker. That is 2 percent?
        Mr. Coonrod. That's correct.
        Mr. Wicker. Of your viewers that are watching at any given
    time, how many are watching on cable and how many of them are
    watching over the air?
        Mr. Coonrod. It is hard to generalize because cable
    penetration rates vary from location to location, from city to
    city. One of the things we can say as a general statement, the
    viewership of households that regularly watch public television
    tend to have a lower rate of cable penetration than households
    that do not regularly watch public television, but that is a
    gross generalization because it really works out market by
    market. In some markets the cable penetration is over 70
    percent, and in some it is below 60 percent.
        [The information follows:]

        According to Nielsen statistics from December 1999, for all
    households, 70% of the national sample have cable and 99%
    receive PBS. Specifically, in households with less than $20,000
    income, cable penetration was only 59% versus PBS's 97%. In
    rural areas, 55% had cable but 95% received PBS. Among
    unskilled-worker households, 65% had cable while 98% received
    PBS. Finally, among minority households, 62% of Hispanic origin
    homes and 65% of African American households had cable,
    compared with PBS penetration of 98% and 99%, respectively.

        Mr. Wicker. Well, I wish that you could, for the record, be
    more specific if you could find that information, because you
    may have been here in 1995 when we had very serious testimony
    about doing away with public television entirely, and one of
    the arguments that were being made on behalf of public
    television, this is something that a lot of people watch that
    don't have any other stations to watch. They are watching their
    public television stations. I will like to know where we are on
    that.
        Mr. Coonrod. There has been a dramatic erosion in
    viewership of commercial television. The erosion in viewership
    of public television has been very small. While all of the
    competition has come out there from cable and from other
    sources, public television has held its own in that competitive
    environment, whereas commercial viewership has diminished by
    over 60 percent.
        Mr. Wicker. Commercial over-the-air viewership?
        Mr. Coonrod. Whether over the air or on cable. So if you
    look at it in terms of viewer loyalty, the public television
    viewer is extremely loyal.
        Mr. Wicker. Please follow-up on the record. Thank you.
        Mr. Porter. Thank you, Mr. Wicker. Ms. Pelosi.
        Ms. Pelosi. Thank you, Mr. Chairman.
        President Coonrod, congratulations to you on your excellent
    work and on the wonderful Corporation for Public Broadcasting
    that you are here justifying the budget for today. CPB has many
    fans in the Congress and in the country and nothing
    demonstrated that more clearly than when the Corporation for
    Public Broadcasting came under siege a number of years ago and
    the people of our country rose up to demonstrate their support.
    Over the years I have had questions recognizing the excellence
    of what you do, but some questions about funding for
    multicultural programming and audience building for minority
    productions, and of course, the questions about digital have
    been important to all of us. Especially in light of the plan to
    retrain and develop minority producers. That will be the focus
    of my questions.

                                LOW POWER RADIO

        But first I wanted to ask you, because it was in the news
    yesterday about the FCC moving forward on issuing low power FM
    licenses in radio, and I thought we could have the benefit of
    your wisdom on that subject. The article in the New York City
    Times indicates that National Public Radio (NPR) may be opposed
    to this, and knowing that you share the value of more
    participation and outreach, et cetera, I wonder if you can
    elaborate on that.
        Mr. Coonrod. We are on the horns of a dilemma when it comes
    to the low power FM question. Certainly, the goals that are
    represented in the low power FM decision that the FCC made are
    ones that we share. We see it potentially as very complementary
    to the work that we are doing in public radio and the work that
    we have done to expand the reach of public radio.
        However, there are some technical issues that need to be
    resolved. And in the absence of that resolution, we continue to
    have reservations about it. To give you one example, about a
    million people a day listen to the radio reading service which
    is carried on a subcarrier by public radio stations. These are
    people who are visually impaired. We would really want to have
    assurances that those kinds of services would not receive
    interference from a new station that was licensed under the low
    power FM regime.
        With those kinds of assurances, I think we could embrace
    the notion of low power FM, but there are some questions that
    need to be worked through in a regulatory way before we can be
    enthusiastic about it.
        Ms. Pelosi. So this is a mechanical technological question
    that you have, other than that you accept it?
        Mr. Coonrod. Yes. It is a question of interference. For
    example, another kind of issue, in rural areas, most of the
    coverage is through translators, and there is nothingin the FCC
    order which protects those translators, so that means that at least
    potentially, the reach of a public radio station in Wyoming, for
    example, where public radio is very important, the reach of that public
    radio station could be adversely affected by a new low power station
    which would have a smaller coverage area. A low power station may have
    a coverage area of only 2 or 3 miles, whereas it would interfere with a
    translator which would be covering hundreds of miles. Those are the
    kinds of equities that need to be balanced as we go forward.
        Ms. Pelosi. I appreciate your elaboration on that. The
    broadcasters are very much opposed to this. I hope for the same
    reasons, a question of interference and not about competition
    or for these audiences. So I am just hoping that that is the
    case. As comfort to them, you have these questions as well, and
    of course your name will be used in this discussion. I am a big
    believer in science and technology overcoming the difficulties
    that are there.
        Mr. Coonrod. It is our sense that these are issues that can
    be surmounted if all of the parties can talk about them in the
    right spirit. But speaking on behalf of an organization that
    represents broadcasters, I will say that interference is a real
    issue and by eliminating the third adjacency for broadcasts in
    the FM band, you do raise questions that ought to be resolved
    before going forward, or at least have a regime in place to
    deal with them effectively if they do come up.

                         INDEPENDENT TELEVISION SERVICE

        Ms. Pelosi. Please talk for a moment about the independent
    producers. A few of us sent you a letter which I have here for
    the record, and last year you educated this committee and the
    authorizing committee about the Independent Television
    Service's (ITVS) significant contribution to diverse
    programming for public television, and you said PBS merited
    funding increases. While funding increased slightly in fiscal
    year 2000, it is far below the 1995 peak level. Please tell us
    what the status is of ongoing talks with ITVS to establish
    higher baseline funding which some members of Congress consider
    justified?
        Mr. Coonrod. We have established a higher baseline funding
    for the administrative expenses. We have increased those by
    about 10 percent. Where we are working now is on the
    programming side, and what we have done is we have put aside
    $3.8 million in a special fund earmarked for diverse
    programming. As you know, in addition to the ITVS, we also
    support the work of the five national minority consortia--and
    we have also provided additional administrative support for the
    five consortia.
        It is our view that maintaining new programming money in a
    central pot and dispensing it in a competitive way is the best
    way to assure that it will go for excellent projects that have
    a high probability of being broadcast on public television. In
    any given year, one organization may have a better project than
    another. We recognize there is not enough money to go around.
    But that in this environment, it is important to encourage
    competition.
        And so we are setting the money aside for diverse
    programming, we would expect that the ITVS and the minority
    consortia would compete effectively for it. We believe it is
    better to do it that way than to simply increase the baseline
    funding available for each organization because the amount that
    would be possible, given the important constituents that we
    serve, would not aggregate to the level that we think would be
    significant. So that is part of what we are doing.

                               PRODUCERS ACADEMY

        We are also in cooperation with PBS working on something
    called the Producers Academy, which would be an opportunity for
    established producers to provide internships or assistantships
    for younger producers from the minority and ethnic communities
    as a way of developing their expertise and their ability to
    actually be competitive in programming. That complements the
    work that we are doing with what we call the digital road
    shows, which are a series of meetings that we have around the
    country where we invite producers in to learn about the new
    technology, to exchange ideas with producers who have
    successfully developed projects around digital.
        So the combination of the digital road shows and the
    Producers Academy we believe is going to provide real
    opportunities as we move into the digital realm.
        The other thing I would say finally is that in the regular
    general program fund that CPB has available, a significant
    portion of that fund is awarded on a competitive basis for
    diverse programming. About 35 percent of all of our program
    dollars goes in these areas.
        Ms. Pelosi. I appreciate that, President Coonrod. My time
    has expired, but since my next question was about the minority
    consortia----
        Mr. Hoyer. I yield.
        Ms. Pelosi. Thank you, but he already answered that.
        Mr. Porter. Thank you, Ms. Pelosi.
        Mr. Hoyer.
        Mr. Hoyer. Thank you. I apologize for not hearing your full
    testimony. I have been across the hall where they have a
    hearing going on there as well.

                                 DIGITAL DIVIDE

        I just have one question, and you may have spoken to it.
    Obviously the digital divide is of great concern to everybody.
    We are all focused on trying to make hardware available to
    everybody so they can participate in the electronic age in
    which we are now living.
        I wanted to ask you--not only do we want to make hardware,
    but content to speak to everybody as well. When you broadcast
    in digital, what kind of content will you be providing that
    speaks to a broad audience?
        Mr. Coonrod. I think that public broadcasting can make a
    real contribution to bridging that digital divide. Part of it
    is the hardware which would provide the opportunities, but it
    is really more about the content.
        One of the things that public television stations have been
    constrained by is the technology. So I would focus on two
    areas. One in the educational realm, making sure that the kinds
    of programs that help people use technology better are
    available at the same time as those kinds of programs that
    public television is already noted for.
        The Ready-To-Learn Service. We know that the Ready-To-Learn
    Service does have a demonstrable effect in helping kids get
    ready for school. At the same time, during that same time
    period in a digital environment, we could be providing remedial
    instruction for people who wanted to have a better feel for how
    to use technology. There are a couple of projects underway now
    that are aimed primarily at teachers because they are Web-
    based. But in a digital environment where you can use a
    broadcast-based service which would be free of charge and
    universally available, those same programsor those same
    techniques could be made available to the general public.
        So we have those same kinds of educational applications.
    Public television is the best source of diverse programming.
    And part of what we look at when we look at the digital divide
    is the kind of cultural divide that we also see. It isn't just
    around the technology. But as we understand ourselves better as
    a Nation and if we can tell good stories that all of us can
    relate to, we bridge that divide in additional ways, and public
    television is very good at doing that.
        One of the things that the research shows, is that one
    reason that members of certain minority groups do not use
    technology is because they don't think that there is anything
    in the technology that is relevant to their experience and
    interest. That is where public television can play an important
    role.
        Mr. Hoyer. I think clearly in an environment in which we
    are living, this is going to play an extraordinarily powerful
    role in the creation of our future community. And the kind of
    community we have and the kind of relationships that we have in
    the community and the kind of democracy we have in many
    respects.
        Mr. Coonrod. One of the things that we look a lot at is the
    changing demographics. As you move down the generational
    ladder, the ethnic and cultural diversity of the population
    changes dramatically, so that the younger audiences, which are
    audiences that are important to address, are more ethnically
    and culturally diverse. So the programming has to be relevant
    to their experience. And that is why I think we see this as one
    of those exciting opportunities. It is one I think we will play
    an important role in contributing to bridging that divide.
        Mr. Hoyer. I agree with you. Not only do we need to find
    ways to communicate that are relevant, but we need to find ways
    to communicate and educate and unify, if you will. I don't mean
    homogenize, but I mean unify. That is one of our challenges. As
    our country becomes more diverse, we want to maintain the unity
    that has made us strong, and this is one way that is going to
    be accomplished. Television has been, in many respects, the
    most powerful communication device yet known, and it has
    unifying aspects to it of a very substantial proportion, and I
    think this will follow onto that.
        Mr. Coonrod. I certainly hope so.
        One of the sort of principles that we are trying to use
    when developing our initiatives is to look at programming that
    is by or about members of ethnic minorities, and is programming
    for all Americans so that they can help build those bridges and
    provide the unity that you are talking about.
        Mr. Hoyer. Thank you. When you say in your statement that
    this is the last time testifying before you, the ``you'' refers
    to Mr. Porter, you expect to be back, but you don't expect Mr.
    Porter to be back, is that how I interpret that?
        Mr. Coonrod. He said something publicly. I am just reacting
    to what he said publicly.
        Mr. Hoyer. That is a very artful answer.
        Mr. Coonrod. I expect to be back.
        Mr. Hoyer. Thank you, Mr. Chairman.

                               DIGITAL CONVERSION

        Mr. Porter. Going back to digital conversion, when you say
    that--on TV, you will be able to go from one channel now to
    four in the same amount of spectrum, how exactly would a
    station use the additional channels? In other words, would you
    have to have two receivers, one receiving the primary message
    and the other being their data? How exactly--would the screen
    be split? What would the additional channel work like together
    with the primary channel?
        Mr. Coonrod. The answer to all of that is yes. Maybe if I
    can just break it down, one would be a multicast situation
    where what you get, in effect, was a menu and you would choose
    from channel A, B, C or D, and it would be a regular television
    program, but it would be a better quality signal but it would
    be a regular television program.
        Mr. Porter. But you would have four choices instead of one?
        Mr. Coonrod. During the day you could have a Ready-To-Learn
    Service for preschoolers, you could have instructional
    television, something ready to be used in the classroom, you
    could have the how-to programs, and what we are seeing
    increasingly for some audiences is to run the prime time
    schedule during the day so people who can't watch it at night
    can watch it during the day, especially for senior citizens. So
    you have those four services and you would pick the one that
    you wished to use. That is one approach.
        Another approach and one that we think has a lot of
    potential and have done a lot of experiment with is enhanced
    television. Along with the program that you were getting,
    additional data would be sent up opportunistically would be
    sent down and received on your set top box or by your
    television set so that you could further pursue some aspect of
    the show, and there would be a little icon that would show up
    on the screen that would say for more information click here.
    So you would, in effect, suspend the program, you would stop
    watching the program, you would get this additional data which
    may be biographical information about one of the characters.
        Mr. Porter. How would you get that data?
        Mr. Coonrod. On the screen.
        Mr. Porter. So you would lose the one picture and have
    another one?
        Mr. Coonrod. There are two possibilities. One you could do
    a picture within a picture. The other is if you wanted to use
    full screen, you could freeze the television program and then
    go back and watch it linearly later on. Both of those things
    would be possible. Which kind of technology will actually role
    out is a little bit speculative at this point. There are
    already boxes that are for sale which provide some version of
    that service for National Television Systems Committee (NTSC)
    signals.
        Mr. Porter. Going to the cost, the total conversion cost is
    $450 million, as I understand it?
        Mr. Coonrod. The total conversion would be about $1.8
    billion.
        Mr. Porter. The Federal portion is $450 million?
        Mr. Coonrod. Yes.
        Mr. Porter. How much of that is equipment conversion and
    how much is program production and development?
        Mr. Coonrod. The way that we have broken this out is that
    there are essentially three ingredients. One is hardware for
    local transmission. The other is providing of local service and
    the other is national distribution.
        The amounts of money that would be appropriated to the
    Public Telecommunications Facilities Program (PTFP) would be
    used primarily for the hardware for the transmitter, the studio
    totransmitter links and the master control, those things that
    would be necessary to get a signal out to the public. The money that
    would come through this committee, the----
        Mr. Porter. How much of that is PTFP money then?
        Mr. Coonrod. That is what the PTFP money would go for.
        Mr. Porter. How much of that 450?
        Mr. Coonrod. 450 minus 95.
        Mr. Porter. So 355. The 95----
        Mr. Coonrod. The 95 would be used for local service and to
    make sure that there is the national distribution, that there
    is a digital national distribution system in place so that
    digital programming could actually be provided to the stations.
        Mr. Porter. The production and development of programming
    would be most of the 95?
        Mr. Coonrod. I guess the answer to that would be it
    depends. If we could get all of the money--if it were
    predictable when we would get the money, the time frame when we
    would get the money, it would be easier to answer that
    question. But because this is the third year of the request,
    and so far we have not gotten any of that money and as we see
    things changing, what we are going to have to do is apply
    whatever funds we do get to the most urgent needs. For example,
    every station is going to have to have an emergency capability.
    That is a local service. That is an essential local service.
    How far along that will be when this money comes is not clear.
    But certainly we would hope to be able to allocate a
    significant portion of this money for program production.
        Mr. Porter. How much money is spent now this year on
    program production and development?
        Mr. Coonrod. Nationally?
        Mr. Porter. By CPB?
        Mr. Coonrod. By CPB about a little over $50 million.
        Mr. Porter. The question arises then, why do you need
    additional money for digital program development, production
    and development when obviously if everybody is converted to
    digital, you are not going to do any more analog program
    production and development, you are going to use your regular
    funds for that?
        In other words, is this money for conversion to this type
    of programming a one-time thing and why would it be any
    different than the money that you are using right now for
    production?
        Mr. Coonrod. The primary use of the money, the TV
    programming dollars available through CPB is to develop new
    national programming. The money that we are seeking here would
    be for providing local services. So it would be to position
    stations to be able to provide local programming and local
    services. Now some of that would go toward equipment purchases,
    but some of it would also go for establishing the training, the
    expertise and the other things so that a station could be in a
    position to take advantage of the new technology that will be
    available. So we are talking about programming in that sense.
    In other words----
        Mr. Porter. In other words it is identical to the previous
    question where you said there may be a number of different ways
    of using this technology, but these stations wouldn't
    necessarily know how, and they need to have some kind of a
    national program to show them that and--in other words, it
    isn't just for the programming, it is for--I'm not sure what
    you mean.
        Mr. Coonrod. It is for the ability to--to develop the
    ability to develop this programming locally. In the absence of
    this additional appropriation, a station would not be able to
    fully take advantage of the digital technology. All the station
    would be able to do is pass through a signal that came from a
    central source. So the local nature of public television, which
    is such an important part of its reason for being, the local
    nature of public television would be compromised.
        The quality of the programming that came from a central
    source might be excellent quality, but it wouldn't have any of
    the local education service, those kinds of services would not
    be possible because----
        Mr. Porter. They have local educational services now.
        Mr. Coonrod. They do now, but because they don't have the
    appropriate equipment to provide those services in digital or
    they may not have developed the expertise in order to produce
    those services in digital. If I can go back to the illustration
    of the emergency alert service, right now every station
    provides an emergency alert in times of crisis or tornado or
    anything else. That is an essential local service.
        With the conversion to digital, the station will still have
    to be able to provide that service. There is nothing in the
    PTFP set up that makes that possible, so the stations have to
    find their ability to deliver that local service from the funds
    that would be available from CPB, for example.
        Mr. Porter. What I would like you to do, for the record,
    would you provide in detail how you arrived at the $95 million
    figure and exactly what it would get?
        [The information follows:]

        Federal funding for public broadcasting digital conversion is
    intended to cover a portion of the actual cost of conversion. Public
    broadcasters estimate the total cost of conversion to be $1.8 billion.
    $450 million represents 25% of that total. Within the $450 million,
    about 80% is reserved for basic transmission equipment needs to be
    administered through the Public Telecommunications and Facilities
    Program of the United States Department of Commerce. About 20% of the
    total federal contribution is designated to CPB to facilitate, from a
    national perspective, program distribution, production and development.
        Within the broad categories of digital program distribution,
    production and development are needs that far exceed the $95 million
    being requested through CPB. CPB, in consultation with stations, is
    continually evaluating these needs and planning for the best uses of
    digital funding, once funding becomes available for distribution. Over
    the course of the three years that we have advocated for these funds,
    the basic needs have not changed but circumstances and priorities are
    regularly reviewed. In considering the uses of funds for 2002 and 2003,
    we recognize that future events may elevate certain needs above others,
    leading to adjustments in priorities.
        Based on current circumstances, if $20 million for digital funds
    were approved and available today for distribution prior to the end of
    the fiscal year, our priorities would be to secure needed digital
    distribution master control and interconnection facilities at PBS and
    fund some basic research and development of new content with
    applications across media platforms. Fully building out PBS' digital
    program distribution capacity is critical to future digital broadcast
    capability. Individual station conversion to digital transmission is of
    little value if the main national programming arm of public television
    is unable to transmit digital programming. Program development funds
    may be used for pilot projects to develop digital technology
    applications that meet our public service broadcast needs and extend
    the educational benefits of programming to encompass the entire range
    of alternative platforms.
        To the extend that the initial $20 million would allow, CPB is
    prepared to provide a limited amount of financial support to encourage
    innovation and efficiencies among stations in the construction of
    digital facilities critical to digital program production and
    distribution.
        An additional priority is to ensure universal service where such
    service may be in doubt. In those rare cases in which financial
    hardship threatens public television's universal reach, and PTFP funds
    cannot address the matter, CPB is prepared to use digital funds
    appropriated to us to ensure universal service. This is a critical
    program distribution issue, the scope of which may be knowable in part
    in 2001, and more fully in 2002 and 2003.
        Finally, again considering the use of funds beyond 2001, CPB
    recognizes that stations must purchase emergency activation system
    (EAS) equipment for their digital transmitters and that funds for these
    FCC mandated devices is not provided for through the PTFP program. EAS,
    if implemented nationally through the PBS system, would become part of
    the interconnection distribution system. Potential benefits to the
    system of a centralized EAS include efficiency, cost savings and
    uniformity. If additional funds are provided beyond 2001, CPB will work
    with all interested parties to address these needs.

        Mr. Coonrod. Yes. I would like to do it two ways. One based
    on having the money all at once, and another having the money
    in sequence, so much per year.
        Mr. Porter. You probably can assume so much per year. Mr.
    Coonrod, thank you very much. You are doing a fine job. We are
    trying to provide funding--I'm sorry, Mr. Wicker.
        Mr. Wicker. I wonder if I can ask another couple of
    questions.
        Mr. Porter. Certainly.

                      PUBLIC BROADCASTING FUNDING SOURCES

        Mr. Wicker. Mr. President, let me ask you, does CPB receive
    any funds other than from the Federal Government?
        Mr. Coonrod. It does. It receives about $9 million a year
    annually from the Annenberg Foundation. But that money is not
    allocated according to the congressionally established formula.
        Mr. Wicker. So it is those two sources?
        Mr. Coonrod. Primarily.
        Mr. Wicker. With regard to public broadcasting in general,
    what is the funding mix out there?
        Mr. Coonrod. The funding mix for public broadcasting, in
    this last year, CPB provided about 12 to 13 percent of the
    total revenue for public broadcasting. The other sources of
    revenue include State and local governments, local membership.
    The largest single source of funding is membership, 25 percent,
    these are the people who contribute voluntarily. There is
    corporate underwriting, and of university sources because a
    number of public radio and television stations are licensed to
    universities. So there are a variety of funding sources.
        Mr. Wicker. If you would supply that breakdown for the
    record.

        Mr. Coonrod. Sure.

                          PUBLIC TELEVISION LICENSEES

        Mr. Wicker. You mentioned in your testimony and in the
    submission to the committee, you mentioned a type of
    programming that I would call academic or classroom, whether it
    is direct teaching or teaching people how to teach, and then,
    of course, as we know, there is the nonacademic type of
    broadcasting, and here I am talking about television. Can you
    give me a breakdown of how much of our television broadcasting
    and public television nationwide is what I call academic or
    classroom and how much is other?
        [The information follows:]

        Airing educational or academic programming is the primary
    mission of university licensees, and in many instances, state
    licensees. Local authority licensees focus less on educational
    programming and more on community service and outreach. A
    breakdown of public television licensee by type is provided
    below.
        One hundred and thirty one public television stations carry
    the PBS Adult Learning Service. Through the PBS Adult Learning
    Service, public television stations team with local colleges
    and universities to air instructional programming. The public
    television station in Jackson, Mississippi, WMPN, Channel 29,
    broadcasts academic programs from the PBS Adult Learning
    Service. The programs distributed by the PBS Adult Learning
    Service are frequently the basis for distance education
    courses.
        Thirty-one public television stations and eight state
    networks, including Mississippi ETV's EdNet, carry the
    Annenberg/CPB Channel. The Annenberg/CPB Channel provides
    professional teacher training courses in math, science, and
    other subject areas. The Annenberg/CPB Channel is available,
    free of charge, to classrooms and communities across the
    country 24 hours per day, 7 days per week. Three types of
    programs are available on the Channel: workshops, libraries,
    and series. Nearly 45,000 schools and over 25 million homes
    have access to the Channel.
        The following comprise the 177 licensees in public
    television:

    Community.........................................................    89
    University........................................................    60
    Local Authority...................................................     7
    State.............................................................    21
                                                                      ______
        Total TV......................................................   177

        Mr. Coonrod. I can supply it for the record. I can give you
    a general answer now.
        Mr. Wicker. Okay.
        Mr. Coonrod. It is actually a very interesting question. I
    don't want to take a lot of time here, but public television
    grew out of two sources, one was educational television and one
    was community television. The educational broadcasters tend to
    have, as their primary mission, providing educational services.
    So a State network in Arkansas or Alabama or Mississippi,
    provides a large amount of educational programming, to use your
    phrase, academic programming, as part of its basic service. It
    also provides the other kind of educational programming as part
    of its general public service. Other stations that grew up in a
    different tradition, more of community service do less of the
    academic programming and more of the other type. We have
    thatbreakdown. We can provide it to you by station or aggregate it.

                                  PROGRAMMING

        Mr. Wicker. Both. One final question. My family can be at
    home watching public broadcasting in Mississippi and if we miss
    Quorum on Mississippi ETV, we have a chance to watch it on a
    commercial station three or four days later. How much--and you
    may not be able to tell me this, but I hope you can tell me
    this on the record, how much of the programming of that sort
    that is done by public broadcasting is also duplicated on
    commercial stations?
        Mr. Coonrod. I can make a general statement.
        Mr. Wicker. All right.
        Mr. Coonrod. The programming that you see on public
    television is available exclusively on public television for
    some period of time. Part of what we do and part of what PBS
    does when it secures the rights to a show, it secures the
    rights for that show for 4 or 6 years.
        Once that licensing has expired, those programs can migrate
    to commercial television. And in fact, one of the things that
    public television has done over the years has been to provide a
    source of quality programming for commercial television. But,
    with one exception maybe, which is the science guide which was
    a joint project between public television and Disney, the
    programs that are available on public television are available
    on public television exclusively for some period of time,
    depending on what the terms of the license were.
        What you do see is a lot of programming that was
    established as programming that was of interest to a public
    television audience is now available in a third run or fourth
    run on cable television. That is, for example, A&E does the old
    mystery series so you can see those kinds of programs.
        Mr. Wicker. But if I am seeing that on public television, I
    am not seeing new programming, that is what you are saying?
        Mr. Coonrod. That's correct.
        Mr. Wicker. Thank you, Mr. Chairman.
        Mr. Porter. Is Ken Burns doing anything with CPB or any of
    your other stations?
        Mr. Coonrod. There is a new series that is currently in
    development, and I am not sure when it is scheduled to premier.
    It is a multi-part series on jazz. It was part of the trilogy
    of Civil War, baseball and jazz.
        Mr. Porter. Thank you. The subcommittee will stand briefly
    in recess.
        [Recess.]

                                                Tuesday, April 4, 2000.

                         NATIONAL EDUCATION GOALS PANEL

                                    WITNESS

    KEN NELSON, EXECUTIVE DIRECTOR
        Mr. Porter. Subcommittee will come to order. We continue
    our hearings on the budget for 2001 with the National Education
    Goals Panel, and we are pleased to welcome, once again, Ken
    Nelson, the executive director. It is nice to see you.
        Mr. Nelson. Thank you, Mr. Chairman. It is nice to see you
    and other members, and as previous people have said, I would
    like to echo, we certainly wish you the best in your future
    endeavors.
        I also would like to introduce, I have my budget officer
    here today, John Masaitis and then also accompanying me is the
    head of the Wisconsin office here in D.C., because Governor
    Tommy Thompson is chair of our panel for this year, and this is
    Sky Babb. So they are here as well. I will have some very brief
    comments.
        Ten years ago in his State of the Union, President George
    Bush announced the National Education Goals, which he and the
    governors had developed at the Nation's first education summit.
    And in those words he said, ``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.'' President Bush knew that these goals were
    ambitious, but he said ``the Nation will not accept anything
    less than excellence in education.''
        He and the governors also created the unique bipartisan
    body of State and Federal officials called the National
    Education Goals Panel, which was authorized by Congress in
    1994. This year has been a very productive one for the goals
    panel under the 1999 chairmanship of Governor Paul Patton of
    Kentucky, and the 2000 chairmanship of Governor Tommy Thompson
    of Wisconsin.
        I would like to just mention, first of all, the panel
    produced its ninth annual goals report. We have gone up the
    calendar to the year 1999 with all of the present data
    available on national and State progress, and then we also
    deliver a more popular version of progress toward the goals for
    the general public. The prior one is more of a data volume. All
    of this material is on our Web site.
        Then we go behind the numbers. As we have gotten older, in
    other words, as we have gotten more data, we have gone behind
    the numbers to say what is the meaning of this and how can we
    derive the benefits of some of this for States, for State and
    local policy-makers. So in going behind the numbers, we look at
    our data and then we ask how did respective States do so well.
    We found that Connecticut did very, very well in reading. Not
    only did it have the highest performing, but it was a most
    improved, which is a phenomenal thing. So we commissioned a
    study to demonstrate how and why they got to such a high level
    of achievement in reading, and we made this available for all
    policy-makers at State levelprimarily, but local level as well,
    with a policy statement in that. We did that 2 years ago for North
    Carolina and Texas.
        We also go behind the numbers with this edition Promising
    Practices. We look at each of our goals and then we analyze
    which States have done the best toward those goals in terms of
    achievement. Then we go back to those States and ask the States
    how they did it. Now, granted, we never say this is solid
    research. It is anecdotal, but we call the right people in
    those respective States, and we characterize their policies and
    practices and then we put it in a publication, make it very
    available for people and indicate a contact point in each State
    on each of the goals.
        In addition, Mr. Chairman, we had this past year a
    celebration, as well as a special conference on the 10th
    anniversary of the goals. Governor Tommy Thompson, our present
    chair, and former Chair Paul Patton wrote this, an Ed Week
    commentary on Continuity of Purpose and a Common Vocabulary,
    indicating one of the benefits of the goals is that they have
    provided that continuity of purpose and common vocabulary for
    all people to work around and toward.
        We also commissioned a 10th anniversary historical analysis
    of how we got to Charlottesville, and it is interesting, the
    fellow who wrote this, Manis Vinovskis, is in the audience at
    this time, but this is a road to Charlottesville, and we have
    done a series of historical studies about the goals and how the
    goals panel has been able to report on their progress.
        Mr. Chairman, this year our chair, Governor Tommy Thompson,
    has a very aggressive agenda entitled ``high achieving schools,
    the promise, the practice and the results.'' We will kick off
    our year-long examination of innovation in the classroom on
    April 13th with a nationwide video teleconference that will
    illustrate how States, districts and schools can implement
    criteria for quality improvement in education, and, by the way,
    we have over 200 downlink sites already indicated on that, and
    we are going to Web-cast that simultaneously.
        In addition then, we will hold a series of hearings at
    Governor Thompson's suggestion in Los Angeles; Burlington,
    Vermont; Atlanta and Chicago to identify other successful
    strategies to get all students to perform to high standards.
    And a follow-up teleconference will share the recommendations
    of that panel with the general audience.
        Simultaneously, we have formed a Measuring Success Task
    Force. This is, for the future, to recommend to the panel how
    to best develop, use and report data for education improvement.
    That is the core of our being, how do we best report data and
    it is becoming more and more a policy-makers' necessity. So we
    are providing, we believe, the best data in the country that is
    comparable among States, but for future we realize, especially
    using electronic means, as you were discussing with the library
    people, transmission of data can be done instantaneously so a
    parent can immediately know how well their child is doing in
    that classroom or a teacher can better use data immediately the
    next day, so data doesn't have to be delayed as long as it has
    previously been.
        We have asked former governor of Maine, John R. McKernan,
    to chair this task force, and he was both panel member and a
    former chair.
        Those, Mr. Chairman, are some of our future endeavors,
    presently engaged in, and we are asking then an increase of
    $100,000 in our budget. This will primarily focus on our end-
    of-the-decade reports. I indicated with this graph that we are
    now at the ninth report. We are hoping to deliver the 10th
    report next year once we have 2000 data for all of the States
    on all of the goals and all of the indicators of the goals,
    many of which are not reported in these annual reports. This
    will be an end-of-the-decade report. It will be a mega report,
    sort of our ultimate report for the decade on multiple
    indicators for the goals and broken up for each State on each
    data point between 1990 and the year 2000. So our request for
    an increase is targeted to that endeavor.
        In closing, Mr. Chairman, members, we look forward to
    serving you, the Congress, the President, Secretary, governors,
    State legislators with this information in a timely manner to
    better achieve the national education goals and to also
    escalate that progress. Thank you. I look forward to your
    questions.
        Mr. Porter. Thank you, Mr. Nelson.
        [The information follows:]

        Mr. Porter. In a certain sense, this setting of outcomes
    standards sort of preceded the whole concept of GPRA, where we
    do it now throughout the government by the President setting
    specific outcome goals or standards for the country and then
    our attempting to work toward them. The difficulty is we
    haven't met any of them; am I correct?
        Mr. Nelson. That is correct. Some States have met some, but
    not all States have met all of them.
        Mr. Porter. John Kennedy said we had to get to the moon
    before the end of the decade and we did it. George Bush said we
    had to better educate our children up to standards and we
    didn't do it. Give me a kind of bottom line on the goals. You
    know, some States are doing better than others I understand,
    but overall are we getting closer, are we standing still on the
    water? Give me an idea.
        Mr. Nelson. Well, unfortunately, Mr. Chair, it is mixed.
    But there is progress and, especially, I was looking at that
    this morning in our report. We characterize in math and
    science, for instance, all grades across the country, not in
    all States, but as you compile it totally, the Nation has made
    progress, and several States, some 35 States have made
    progress. So in that category, in those categories' the
    academic achievement is up at least in math and science. We
    don't have some data on other academic subjects yet. That is
    where the 2000 report will provide more of that.
        Mr. Porter. It seems to me that maybe it was a couple of
    years ago when we took the Timms test that we weren't doing so
    well in math and science. In fact, compared to the rest of the
    world, we were doing very poorly; am I correct in that?
        Mr. Nelson. You are correct in that we did more poorly in
    math and science in comparison to the other countries. It was
    not a time to be proud. We believe the goals are going to
    create greater energy around that and the fact that we have the
    Timms study so we can benchmark to the best in the world, to
    see how well we are doing, even if it is bad news, we have got
    to report it as bad news. And it is interesting we have seen a
    trend in the early 1990s, when the goals panel was first
    created, there was a reticence among the governors to share
    information and be compared to other States. Now they really
    look for it. They want comparable information among States.
    They want to be compared because they can leverage change in
    their own States vis-a-vis other States, so hopefully in this
    country against like a Timms standard.
        Mr. Porter. This is a comment rather than a question, but
    here we are, perhaps the leading technological Nation in
    history, leading in so many different areas from information
    technology to biomedical science and the like, and yet our kids
    in school aren't doing very well in math and science overall,
    though you are probably telling me we are making some progress,
    and fortunately we have managed to attract to our country and
    this is--I want your comment on it. Fortunately it seems to me
    we have managed to attract to our country brilliant people from
    all over the world who have come here because this is a place
    of freedom and opportunity and have kind of filled in the gaps
    for our native population which, in a way, seems in too many
    instances not very well prepared in math and science, and also
    seems to not want to go into those fields.
        You know, it seems to me all the bright kids I know in my
    district want to be stockbrokers or in an Internet company
    instead of being researchers or scientists or the people that
    develop the technologies that make our economy grow, and yet we
    have drawn a lot from the rest of the world to fill that gap.
    That is not something we want to rely on. We need to emphasize
    the technological skills that keep us ahead among our own
    people who are born and educated here, and we want to get young
    people into these fields as career paths so that we aren't
    going to be dependent upon a flow of talent coming from the
    rest of the world. Can you comment on that for me? I know it is
    kind of off the subject.
        Mr. Nelson. Well, Mr. Chairman I certainly agree with you,
    instead of a brain drain, I guess we have a brain influx in
    this country which has been to our benefit. Partly for the
    reasons you have cited. It is a very creative society, it is a
    very challenging society, a very entrepreneurial society versus
    other societies. I recall when I was State legislator in
    Minnesota, we were working on getting more engineering degrees
    produced in our State without having to rely upon people coming
    from foreign countries. And I think that that continues. I
    don't have a quick answer for that. I don't have a decent
    answer for that.
        I do believe the fact that we have set goal 5 as a separate
    math and science goal has said this is of critical importance
    for the country. It certainly was in 1990 when the goals were
    set and the governors and the business community said we have
    to ratchet up our interest and commitment to math and science.
    So we also report on not just that achievement, but how many
    students are now getting math and science degrees versus prior.
    So in our little way, we are attempting to assist that
    commitment, but it remains a very serious problem for the
    country, I do believe.
        Mr. Porter. Has any State met all of the goals?
        Mr. Nelson. No, no, Mr. Chairman.
        Mr. Porter. How many of the goals have been met by the top
    State and what State is that?
        Mr. Nelson. Well, 2 years ago we highlighted North Carolina
    and Texas for being on the top in terms of most indicators,
    there are 34 State indicators and they had achieved at top
    rank, about 10 of them respectively. So we highlighted that.
    Now you can look at respective States. Now Connecticut
    obviously did very well in reading. More States are achieving,
    the most measurable goal, of course, is ninety percent
    completion rate for high school graduation or its equivalent,
    and I think about 30 States are there now, maybe it is more
    than 20, I would have to double-check, but we moved in the
    right direction on that because I think this last decade even
    the young people are seeing the worthiness of education and the
    importance of it, so they are committed more to it themselves,
    staying in school longer, realizing that high school degree
    doesn't get you very far in our society.
        We try to emphasize the respective States achievement
    toward the goals as much as the Nation's achievement, because
    we believe that is where the action is in the respective States
    and in this particular periodical, or in this annual report, we
    do highlight greatest improvement over time, highest performing
    States and most improved. So we subdivide all States by each
    indicator to try to positively identify those States who are
    doing very well. It would depend on each goal. We would have to
    look at each goal and by indicator to see how the respective
    States are doing.
        Mr. Porter. Thank you Mr. Nelson.
        Ms. Pelosi.
        Ms. Pelosi. Thank you, Mr. Chairman. Mr. Nelson, welcome.
    Thank you for your testimony and for your service and your
    interest in the education of America's children. I was
    interested in our chairman's line of questioning that we had
    these goals: President Kennedy's man on the moon at the end of
    the decade, President Bush's Goals 2000 and it was interesting
    to me to observe that when President Bush was president and the
    governors came up with this bipartisan plan and President Bush
    accepted it, everyone was very happy it was bipartisanship, a
    common goal and a great deal of enthusiasm for it. It wasn't
    really, until the Democrats lost the House, that people started
    to criticize the goals, whether it had a different name, Goals
    2000 or whatever it was, some of which came directly out of the
    recommendations of the bipartisan governors committee and
    signed off by President Bush.
        In all fairness to him, if his own party--I don't want to
    get into a political thing here, it has always been a mystery
    to me and maybe you can solve it for me, I guess it was just a
    different point of view within the party but how they began to
    undermine the goals that were set forth in a bipartisan
    fashion, approved of by President Bush wholeheartedly,
    supported by him and something we were following the President
    on. Can you comment on any lack of enthusiasm andhow that may
    have impacted our success, my question?
        Mr. Nelson. I will do my best. The Goals 2000 Program,
    which was run out of the department, was more heavily
    criticized by more conservative people throughout the country,
    concern I believe about Federal influence or control. We made
    it very clear that we report on progress toward the goals. That
    is why we are separate from the department as a bipartisan
    agency directly accountable to Congress. So we distinguished
    ourselves from the Goals 2000 Program.
        Ms. Pelosi. Just so I understand, now I understand the
    distinction you are making now, do you think that Goals 2000 as
    presented as an initiative by President Clinton is a departure
    from the agreement the goals that were established by the
    bipartisan committee, bipartisan governors initiative?
        Mr. Nelson. That was established in 1994 and the same act
    that created the goals panel. Prior to that time.
        Ms. Pelosi. I understand, but is there a difference between
    Goals 2000, or a major departure between Goals 2000 and the
    1994 initiative versus what was signed off on by President Bush
    and the bipartisan governors committee.
        Mr. Nelson. I think the intention of the Clinton proposal
    was to continue it. President Clinton was a lead Democratic
    governor present at the Charlottesville summit, and the Goals
    2000 Program would allow the States to create those kind of
    policies and activities which would be toward goal achievement,
    toward the eight national education goals.
        Ms. Pelosi. So that would be the logical next step for
    toward the implementation of what President Bush approved of
    and the governors presented?
        Mr. Nelson. I would think so.
        Ms. Pelosi. My point, Mr. Chairman, is that one of the
    reasons we may not have reached President Bush's call for all
    of this improved education in a limited time is that his
    mandate was undermined by other thinking on this subject, and I
    don't mean to make this a political point.
        Mr. Porter. I think you have made it a political point.
        Ms. Pelosi. But I just think this----
        Mr. Porter. Would the gentlelady yield on this and we can
    discuss it without being charged on her time? I think it is
    true that when Republicans took control of the House, the Goals
    2000 Program was not valued very highly, and I suggest two
    reasons for that. One was that the national party felt that
    this money was mainly planning money. It didn't go to educate
    any kids. It went for organizing at the State level the follow-
    on to the goals that were set by the President, by the
    Charlottesville conference, and I think mostly the feeling was
    that that can be done by the States without Federal money, that
    they didn't need any encouragement to do that because they were
    already taking this up at a very high level as a priority for
    each of the States, and that the money would be far better
    spent by giving them money for programmatic use such as Title 1
    or IDEA or others.
        The second was that it ran right squarely into the
    flexibility versus Washington control issue, that was a primary
    issue with Republicans at the national level and has been ever
    since, and the thrust of our thinking is that it is far better
    to allow the States and the local school districts to use
    Federal resources in a way that they feel is most appropriate
    and most needed rather than to have Washington dictating that
    this money has to go for Goals 2000 programmatic planning
    rather than for something to educate kids or improve the
    classroom.
        Ms. Pelosi. I appreciate that, Mr. Chairman, but my
    question to Mr. Nelson was, was that Goals 2000 a logical
    initiative following the recommendation of the governors? Was
    that consistent with what the governors had proposed and what
    President Bush had signed off on, the Goals 2000 Program?
        Mr. Nelson. Well, it was intended, I believe, to be grant
    money for the States to use under the title of Goals 2000, but
    I think they had a lot of flexibility in terms of what they
    used it for, whether they chose to use it for goal achievement
    or not I think was left up to the respective States.
        Ms. Pelosi. I see. We are having--I don't know--the way
    Republicans attacked the Goals 2000, it appeared that they were
    disassociating either they were disassociating themselves with
    what President Bush had signed on to himself, or because it was
    a Democratic initiative, they were no longer interested in it.
    When it was a Republican initiative, they did, and the reason I
    mention it is because you mentioned President Bush in a way
    that sounded like he didn't reach his goal, and in all fairness
    to him, he was gone by then.
        But I think it is really important for us if we are going
    to reach our goals and we bring governors together and we put
    forth a proposal that has bipartisan support by the governors
    who have to deliver the service after all and the President of
    the United States signs off, that if we, if Goals 2000 is a
    departure from that, let us say that, but if it isn't, let us
    recognize that we have changed course when we try to measure
    success on this in a line springing from what gave birth to
    your panel as we go from here with your very distinguished
    chairman of the panel, or is that what we call them, chairmen,
    each year of the panel?
        So I don't know how, I mean, I don't know how--you are
    answering for how you measure the success and the rest of that
    and thank you for what you do.
        Mr. Porter. Will the gentlelady yield just briefly again. I
    want to put something in the record and that is because his
    representative is here, Governor Thompson of Wisconsin called
    me twice, I believe, two different years on this issue saying
    that the Goals 2000 money was important, so there is a
    difference of opinion within the Republican party about the
    importance of this program. And yet I think that the bottom
    line on it is that the flexibility and the need for money to go
    for direct student services has won out over the idea of a
    Federal planning program.
        Ms. Pelosi. The point has been made. Thank you Mr. Nelson,
    for what you do. Thank you, Mr. Chairman for putting on the
    record that Governor Thompson supports Goals 2000. I appreciate
    that. Thank you.
        Mr. Porter. You have more time if you want to continue.
        Ms. Pelosi. Well, I would be interested.
        Mr. Porter. I took some of it.
        Ms. Pelosi. I was interested in how you translate the
    success in Connecticut in the reading program. What do you do
    next? You did a study to see why they succeed and how they
    succeeded. Then how do you make that available to the other
    States? I started thinking about these children reading better,
    and I think I missed your point there.
        Mr. Nelson. What we did is submit this report Exploring
    High and Improved Reading in Connecticut, and we
    actuallycommissioned this study. We had somebody who had worked in the
    Department of Connecticut who also then teaches at Harvard, Joan
    Barron, to do the study for us through a series of interviews, but also
    through a series of analyses of the data, and we tried to make our
    studies as relevant to policy-makers as possible. So we had her break
    out State education policies and practices and local district policies
    and practices that were beneficial to the respective players in
    Connecticut.
        We actually went to Connecticut and released this report
    there with a little press conference at a local school in
    Hartford, low income school where the students had done very,
    very well.
        Ms. Pelosi. Do we know why they did well?
        Mr. Nelson. Yes. They really focused a lot on teacher
    development. They also used data very effectively at the local
    level. They get feedback immediately on tests and assessments
    how well students are doing, which is then usable by the actual
    classroom teacher. They also share that information with the
    community so that the community itself is fully informed about
    how well the school is doing, that enables the parents to hold
    the school more accountable where their students are.
        At State level they have also provided resources to the
    neediest of districts once they see a how a district is going
    or a school building, they target money to that District. Some
    of what we saw in North Carolina and Texas as well.
        Ms. Pelosi. That's interesting. Are you making that
    available to the Department of Education as well?
        Mr. Nelson. Absolutely. It is on our Web site and we have
    distributed it quite extensively throughout the States. We
    consider our primary customers as State policy makers. That is,
    governors, State legislators, chief State school officers,
    school board members, and business education coalitions. So we
    send them all copies of this.
        Ms. Pelosi. I hope the Department of Education is getting
    it too. Mr. Chairman, do we know who the members of the panel
    are from the Congress? There are two from the House and two
    from the Senate.
        Mr. Nelson. Yes. I could respond. Congressman Goodling and
    Congressman Martinez are on it, used to be Congressman Kildee
    and now Congressman Martinez, are on the panel from the House.
    From the Senate, it is Senator Jeffords and Senator Bingaman.
        Ms. Pelosi. Thank you so much for your answer.
        Mr. Porter. Thank you, Ms. Pelosi. Number 7 on the National
    Education Goals states, ``every school in the United States
    will be free of drugs, violence and the unauthorized presence
    of firearms and alcohol and will offer a disciplined
    environment conducive to learning.'' anecdotally, from reading
    the headlines in our newspapers over the last few years, one
    would say we are regressing from that goal rather than
    progressing. You have data, though, that shows that in much
    greater detail rather than anecdotal evidence. What would you
    say we are doing in respect to that goal? Have we made progress
    or are we definitely regressing?
        Mr. Nelson. Mr. Chairman, we have four indicators under
    goal 7, and as a whole, we are regressing. This is data from
    1991 to 1998, some data is not as recent as 1998, but the trend
    is not positive for the use of drugs, the sale of drugs,
    victimization of teachers, and disruptions in class by
    secondary school students. Those are trends in the negative
    direction. There are some status quo trends. Sometimes we don't
    have statistically significant variants in our data to report.
    The one positive is that 10th grade students are reporting less
    victimization, in other words, they were threatened or injured
    at school less from 1991 to 1998, so that is a positive, but on
    the whole it is a regress.
        Mr. Porter. Well, here we are, we are spending a ton of
    money on drugs, we are spending a good deal of money on safe
    and drug-free schools, we have thrown money at these problems
    for a long time and we seem to be going in the wrong direction.
    Does your evidence show any reasons for this or you just have a
    bottom line on it?
        Mr. Nelson. I would have to go into a Promising Practices
    document to see what respective States have done well on this
    goal, and I could certainly get back to you on that, Mr. Chair.
    We highlighted three States, South Dakota, Vermont and Nevada,
    for having progressed positively on this. I think we would say
    that our society has become more violent, and I guess we all
    know that and certainly the Columbines have become more
    prominent, and yet there is still pretty solid evidence that
    schools are pretty safe places for a number of students to be.
        Mr. Porter. Well, it seems to me that this goal seems to be
    very important to achieving the other goals. If you don't have
    discipline in the classroom, if you have firearms brought into
    the school, if you have drugs and your students under the
    influence of drugs, if you have violence against your teachers,
    I don't know how you can have any learning go on in an
    environment like that. So it seems to me a very important one,
    and it seems to me we are falling way short of where we ought
    to be in respect to it, and I don't know that anybody has
    really given us any answers that work. Do you agree with that?
        Mr. Nelson. Well, we share your concern, Mr. Chair, and so
    does the general public. It is the goal that they are most
    concerned about, it is most visible and obviously it is the one
    that generates more passion and feeling because of the safety
    of our children.
        Mr. Porter. How long does the Chairman have as a term, 1
    year or 2 years?
        Mr. Nelson. One year.
        Mr. Porter. One year, so we have had what? How many
    different chairmen have we had, seven or eight?
        Mr. Nelson. Yes, I think Governor Thompson is our ninth
    chair.
        Mr. Porter. Ninth chair. I know Governor Thompson takes all
    of this very, very seriously, and put it a very high priority
    it seems to me, if you are going to work on one thing that
    might make a difference. It might be this one among a lot of
    very important priorities, and obviously we think that you play
    a very valuable role and are doing a fine job there, Mr.
    Nelson, and gearing to try to do everything possible to give
    you the resources you need to do it even better.
        Mr. Nelson. Thank you very much.
        Mr. Porter. Thank you very much for appearing. The
    subcommittee will stand in recess until 2:00 p.m.

                                              Thursday, March 30, 2000.

                        CORPORATION FOR NATIONAL SERVICE

                                   WITNESSES

    HARRIS WOFFORD, CHIEF EXECUTIVE OFFICER
    WENDY ZENKER, CHIEF OPERATING OFFICER
    ANTHONY MUSICK, CHIEF FINANCIAL OFFICER
    MATT DUNNE, DIRECTOR, AMERICORPS*VISTA
    TOM ENDRES, DIRECTOR, NATIONAL SENIOR SERVICE CORPS
        Mr. Porter. The Subcommittee will come to order.
        We continue our hearings on the fiscal year 2001
    appropriations with the Corporation for National Service. And
    we're pleased to welcome Senator Harris Wofford, the Chief
    Executive Officer. Senator Wofford, we commend you on your
    service not only in the legislative branch but now most
    recently in the executive branch. You've done a fine job and
    there I'm going to miss you.
        Please proceed with your statement. Again, my apologies for
    having to curtail our hearing today. When the minority requests
    that we do not hold hearings during appropriation bill debate
    on the Floor, we have to accede to that request. And that
    request was made, so we had to close down our hearings for the
    last day and a half and squeeze a bit here. So I apologize for
    that.
        Mr. Wofford. Mr. Chairman, thank you so much. I'd like to
    introduce Wendy Zenker, the Corporation's Chief Operating
    Officer and Tony Musick, the Chief Financial Officer, our new
    Chief Financial Officer. They both helped us make great headway
    in improving our operations and financial management.
        Also I want to introduce Tom Endres, who you've seen
    before, the Director of the National Senior Service Corps, and
    Matt Dunne, the new Director of AmeriCorps*VISTA, and the
    Director of AmeriCorps as a whole, Deb Jospin, is behind me.
    Matt was recently sworn in by VISTA's founder, Sargent Shriver.
    Both Matt and Tom bring energy and vision to the helm of these
    two essential programs.
        Mr. Chairman, let me begin by thanking you and members of
    your Subcommittee for strong support of these programs. You've
    been steadfast in recognizing the importance of national
    service and in providing resources necessary to improve and
    expand the Senior Corps and VISTA. So thank you.
        I'm here to present the President's budget request for
    national service programs in your jurisdiction. The President
    calls for increases in both the three senior programs and in
    AmeriCorps* VISTA. Let me bring you up to date on important
    developments in each of these programs and on progress that's
    been made in the last year on improved financial management.
        For more than three decades, the three senior programs have
    been at the forefront in placing older adults in service to
    American communities. This year is the 35th anniversary of
    Foster Grandparents. Together, Foster Grandparents, Senior
    Companions, and RSVP have placed millions of older Americans in
    volunteer opportunities that strengthen communities and change
    lives.
        The fastest growing segment of our population is the number
    of Americans over the age of 55. As they retire from their
    working career, they are going to be, they already are, a
    tremendous resource to help solve community problems. National
    Service is the vehicle to make senior power a vital force in
    meeting the needs of America.
        Toward that end, the President's budget request supports
    the progress of local programs in implementing the Programming
    for Impact initiative. The Senior Corps has successfully moved
    from how much time and how many senior volunteers do we provide
    to what are our senior volunteers getting done in our
    communities.
        Our Government Performance and Results Act report, to go to
    you very shortly, will show that the Senior Corps is meeting
    our goals.
        For fiscal year 2001, our emphasis is again on
    strengthening existing projects. Specifically, our goal is to
    ensure that local projects have the technology they need to
    support a growing volunteer base. That's why a significant
    share of the overall $9.7 million increase requested for the
    Senior Corps will be devoted to much-needed technology
    improvements.
        Another national service program is marking an anniversary
    this year. It's VISTA's 35th year in the fight against poverty.
    VISTA has provided more than 130,000 Americans the opportunity
    to fight poverty in every State. Today VISTA is now almost
    6,000 strong, about double its force in 1992.
        One of the outstanding strengths of the VISTA program has
    been its tradition of cutting edge programs that demonstrate
    the value of service in building communities. As Sargent
    Shriver said in swearing him in, our new VISTA Director is well
    suited to carry this tradition into the 21st century. Matt
    Dunne was the youngest assistant majority leader whip in the
    country as a member of the Vermont House of Representatives.
    He's also been the marketing director of a successful software
    company. He has the drive, the commitment, and the
    entrepreneurial spirit to help VISTA flourish.
        Our requested increase for AmeriCorps*VISTA, which totals
    $5.4 million, will bolster three central program initiatives
    that keep VISTA on the front lines of anti-poverty efforts
    today. AmeriCorps*VISTA has already established itself as a
    national leader in the fight to bridge the digital divide. Our
    request will strengthen these crucial efforts to close the gap
    between the haves and the have nots in technology of the
    internet and the information highway.
        In recent years, a growing portion of AmeriCorps*VISTA
    resources have been focused in helping children read well by
    the end of the third grade. Our 2001 request enables a full 40
    percent of VISTA resources to be focused on literacy.
    AmeriCorps*VISTA has also made it a high priority to assist
    those who are moving from welfare to work. For 2001, we will
    increase support for job creating activities that provide
    credit and capital to low income individuals making this
    transition.
        Like the Senior Corps, AmeriCorps*VISTA has already made
    significant headway in matching its program goals to tangible
    outcomes and measurements, something I know you over the years
    have been emphasizing yourself. VISTA has met or exceeded our
    Results Act goals in key categories. We will continue to
    emphasize the importance of strong outcome measures in the
    VISTA program.
        Since the President asked me to head the Corporation, I've
    made it my top internal priority to strengthen our management.
    To guide these efforts we crafted and implemented a
    comprehensive Action Plan to improve our stewardship of Federal
    funds. I can report that we've already completed more than 80
    percent of the tasks include in this Action Plan. We now have a
    strong and deep management team in place to lead our business
    operations.
        Since last year, we've added an exceptionally gifted Chief
    Financial Officer, Tony Musick. We've also appointed a Deputy
    CFO and a new Chief Information Officer. And this team, along
    with our outstanding Chief Operating Officer, Wendy Zenker, has
    brought vigor, rigor and discipline to the Corporation's
    business operations. With their leadership, we've installed and
    implemented a new core financial management system that
    dramatically improves the Corporation's financial
    accountability.
        Soon, I'll be able to provide to you the results of the
    Corporation's fiscal year 1999 financial statement audit. The
    Corporation has received the audit report and has provided a
    response. We expect a final report to be issued shortly, and I
    will directly communicate those results to you.
        We know we've come a long way, and we know we still have
    some distance to go to achieve our goals. Mr. Chairman, this is
    likely to be the last time you will hold the gavel in a hearing
    on appropriations for the national service programs, a fact
    that gives all of us a great sense of loss. We have appreciated
    your wisdom, your guidance, your thoughtfulness, and your
    support. You played a central, critical role in making national
    service a vital part of this Nation's civic life.
        Like you, my tour of duty will be ending later this year,
    so this will probably be the last time I appear before this
    Committee. It's been a great privilege to head the Corporation,
    to work with you and the Subcommittee and to see national
    service win more and more bipartisan support in Congress and
    nonpartisan support around the country. Thank you.
        Mr. Porter. Senator, thank you very much for your kind
    words. Your plans are to return to academia?
        Mr. Wofford. Maybe a little bit. [Laughter.]
        Mr. Porter. Maybe.
        Mr. Wofford. And to champion the cause of national service
    as a private citizen.
        Mr. Porter. Wonderful. Well, as I say, you've done a
    wonderful job there, and the country appreciates your service,
    both in the legislative branch and the executive branch.
        Now we have to talk about the financial audit a little bit.
    We understand that, as you said, the 1999 audit is going to be
    released very soon, we understand as early as tomorrow.
        Mr. Wofford. We would hope so.
        Mr. Porter. And as you also indicated, it shows progress in
    reducing the number of material weaknesses. But it still will
    not be a clean audit. Is that the correct understanding?
        Mr. Wofford. Right. We have a clean audit on the initial
    basic statement of financial position, and disclaimers on the
    related two statements.
        Mr. Porter. And that will indicate a level of progress
    above the 1998 audit. What would you expect for the year 2000?
    Will you be able to get a clean audit then, or a qualified
    opinion or what?
        Mr. Wofford. I'd like you to hear from our Chief Financial
    Officer, or Chief Operating Officer. But let me just say that
    we believe the progress we've made this year in implementing an
    entirely new state of the art financial management system and
    other very significant things that have enabled the National
    Service Trust, through web based reporting and remedial work
    with the digital imaging system relating to the 150 some
    thousand members of the Trust, have put us in a position, a
    good solid position, to move to clean opinions next year.
        But I'd like you to hear from those that know more about
    this. They've been an extraordinary team who had the
    difficulty, Mr. Chairman, this year, of going from financial
    reporting system, that like many government agencies, was
    antiquated and out of date, to an entirely new system. They
    converted it during the year, and kept our flow of resources to
    the several thousand grantees and agents of the Senior Corps
    and VISTA going while converting to this system, a process we
    had to do in order to comply with Y2K problems. Which we did,
    we made it, and we kept the ship moving.
        Mr. Musick. Mr. Chairman, I think it's probably
    inappropriate to say that we will get a clean opinion. I think
    the thing that we try to do is to continue to improvethe
    activities of the organization. For example, this past year, when
    you're bringing on new staff and you're putting in a new financial
    system, and we had the old system for 10 months, which was our problem
    in the previous year, 1998, it's very difficult to say what you can do
    in that period of time.
        In addition to that, there were so many process changes.
    When you bring on a new system, you're changing all the
    accounting practices that people enter data and have to follow.
    So there was a lot going on.
        I think we are making incremental improvements. I think
    we're improving the links between the system so the data will
    be entered once, and then it will be passed electronically. But
    my hesitancy is that I don't control the audit. That's through
    the IG. And they come in as an independent look. And really for
    me to say yes, we're going to get a clean opinion, I don't
    think that's really appropriate. All I can really promise is
    that we're going to work hard to try to clean up the things
    that were still a problem.
        From what I understand from the auditors, we really had one
    major issue this year. And we tried to overcome that to the
    very end. And we don't know if we had had more time we could
    have. But there was just a lot of difficulty in converting to
    the new system and trying to do everything. And I think that
    was the problem.
        But again our goal is, of course, to get a clean opinion on
    all statements and move that way.
        Mr. Porter. Well, our job is to pressure you to do that.
        Mr. Musick. Yes, sir. [Laughter.]
        Mr. Porter. And we're doing that. I will leave a note for
    my successor to be after you next year, how's that?
        Mr. Musick. Sounds good.
        Mr. Porter. Senator, the programs have been unauthorized
    for four years, I understand. Is there any progress on
    reauthorization? Do you expect any of them to be reauthorized
    this year?
        Mr. Wofford. We are hopeful that the Corporation and all
    its programs will be reauthorized. We expect the
    reauthorization bill to be introduced within a month. We have
    strong bipartisan groups in both Houses that have stepped
    forward to be the co-sponsors. We should be able to report very
    soon to you the schedule and proposed steps in both Houses.
        Mr. Porter. In response to a question submitted for the
    record last year regarding a stipend increase in the senior
    programs, the Corporation indicated that a 5 cent increase,
    equaling $1 per week per volunteer, does not make
    administrative sense and is generally viewed negatively by
    volunteers. My understanding is that stipends have not been
    increased since fiscal year 1998.
        Are you requesting a stipend increase in the senior service
    programs in the next fiscal year? And what is the Corporation's
    position on providing a 5 cent increase?
        Mr. Wofford. Could I ask Tom Endres, the Director of the
    Senior Corps, to respond?
        Mr. Endres. Mr. Chairman, in considering a possible bill
    for the reauthorization, we've committed as an organization
    that we would fight for an increase once over the authorization
    period should that move forward. Our current plans with the
    amount of money the President is requesting in this particular
    budget would not allow us to do a stipend increase in 2000.
    Obviously we believe, and are concerned about the level of
    stipend necessary for Foster Grandparents and Senior Companions
    and are tracking that.
        If we had our preference, our preference would be to
    increase the stipend more than 5 cents, just because we believe
    that Foster Grandparents volunteers deserve it. We believe it's
    absolutely necessary to the program to sustain the current
    level of current volunteer involvement. And as I mentioned from
    an administrative perspective, it is much easier to do in one
    fell swoop.
        Mr. Porter. We are about to remove the earnings limitation
    or offset for seniors 65 to 70. And I think the President has
    already said he will sign that. What effect will that have on
    the volunteers?
        Mr. Endres. We'll have to analyze that, Mr. Chairman. We
    haven't really begun to do that. We'll have to really step back
    and as that proposal moves forward, carefully assess the
    impact. I have not had a chance to do that.
        Mr. Porter. Would that obviate the need for a stipend
    increase where people actually end up with more in terms of
    personal revenue?
        Mr. Endres. All I can say at this time, Mr. Chairman, is we
    really have to look at that carefully.
        Mr. Porter. I would ask that you do that analysis and
    submit it for the record when you've completed it. I realize
    it's going to take some time to do it, but we'd like to see
    that and see what effect that might actually have.
        Mr. Endres. I'd be happy to do that, Mr. Chairman.
        Mr. Wofford. That's a good question, Mr. Chairman. We were
    just agreeing we want to get the answers for ourselves and to
    you.
        [The information follows:]

        Mr. Porter. It may make some significant difference to
    people that are volunteering for the programs.
        Last year, Congress enacted language stating that no funds
    could be used to provide tax-free stipends to volunteers whose
    incomes exceeded the income guidelines established by Congress
    for stipends paid under the Foster Grandparent and Senior
    Companion programs. This provisionwas put into place because of
    concern that limited Federal dollars should only go to people who meet
    the means test established by Congress.
        Of course, we encourage volunteering by all segments of
    society, but the idea behind creating an income threshold is
    that persons above this income level are able to afford to
    volunteer without a Federal subsidy. I see your budget proposes
    to remove this language this year, and I presume this is
    because you plan to pay people above these income thresholds
    for their volunteer efforts.
        Why would you propose to remove this language, and what is
    the average annual income of a retired senior living solely on
    Social Security?
        Mr. Wofford. I'd like Tom Endres to first comment on that.
        Mr. Endres. Mr. Chairman, we have followed to the letter
    the directions provided to us by your Committee. We have heard
    loudly and clearly the message of the Appropriations Committee
    and the priority to maintain and continue to expand
    opportunities for low income people.
        We intend to follow the Committee's direction and
    instruction. And again, we have done so. As far as next year is
    concerned, we do not intend to use appropriated monies to
    provide any incentives for people who do not meet income
    eligibility requirements for the programs. We do, and are
    offering a new approach to senior demonstration programs and in
    so doing, we are shifting the focus from determining particular
    improvements that we can make in the existing programs to the
    issue of how do we really develop sufficient numbers of
    opportunities through the existing programs and other programs
    to meet and keep up with the growing aging population within
    our country.
        The issue we want to study is really the issue of helping
    large, non-profit organizations figure out how they can
    mobilize significant numbers of seniors to further their
    organizational missions and meet particular objectives of their
    organizations. If in the implementation of that program we want
    to or find the need to provide for an intensive, which may mean
    a 15 hour week commitment for a year, we've determined from
    prior demonstrations that that particular role, a commitment of
    a year, 15 hours a week or more, is really an important role if
    we're going to help local organizations expand their use of
    other volunteers.
        But if we use such a role in our approach to
    demonstrations, we will do that by borrowing a notion that's
    been successful for VISTA in recent years, and that's a cost
    sharing approach. Or we will develop partnerships so that any
    incentives that are provided in the demonstration program will
    come from non-appropriated sources.
        Mr. Porter. Like what?
        Mr. Endres. We might ask foundations, try to develop a
    partnership with an existing foundation who has an interest in
    expanding senior service opportunities in the country. We might
    look to other philanthropic approaches or corporations. We
    might ask the organizations that we fund demonstrations through
    themselves, an organization like Big Brothers Big Sisters, or
    Lutheran Social Services of America, to actually contribute to
    the support of those roles which we feel are important.
        Mr. Porter. Wouldn't this be an area where the earnings
    limit would be particularly important, since this would affect
    the higher income people much more than the lower income
    people? In other words, people who are above the threshold
    would get a better break than others who may have already had a
    break because of the amount that they could earn and not have
    the offset. Again, I think that's going to have an effect
    that's probably going to be positive.
        Do you think that people need to have some form of reward
    to recognize their worth? In other words, is there some
    element, not of monetary income, but of recognition, that says
    ``this makes me a part of the organization and shows that I'm
    doing something worthwhile?''
        Mr. Endres. Yes, Mr. Chairman, I think that that's an
    important factor. In addition to that, I believe that to really
    ask people to commit a year, on a 15 hours per week basis, it
    does require some kind of an incentive or recognition for them
    to make that commitment, particularly if we're going to ask
    them to take on some of the high priority needs facing our
    local communities.
        Mr. Wofford. Tom, you might just suggest the dimension that
    so far the Senior Corps has been testing, which is, if I'm
    right, about an average of $150 a month for those that do 15 or
    20 hours. Am I correct?
        Mr. Endres. That's correct. Through the Seniors for Schools
    programs that we have been managing, and will be completing the
    final year in that, what we found is that the incentive of, on
    average, $150 a month to defray out of pocket expenses for that
    year-long commitment of 15 hours a week, is about what it
    takes.
        And what the participants in the demonstration program are
    telling us is that, without that incentive, they would go back
    to serve typically what we find is served through the RSVP
    program, Retired and Senior Volunteer Program, which is on
    average three to five hours a week. So without that incentive,
    somehow it makes a difference to the nature of the commitment
    and the time that they're willing to devote.
        Mr. Porter. I think you could even see it for those of us
    that run for public office. It used to be that people would
    just come in and volunteer. But then they got the feeling that
    if they had some sort of compensation, they'd actually be a
    part of the campaign apparatus and have status and it was
    meaningful. Not necessarily money, but just recognition that
    they were an important part of the staff.
        Senator Wofford, I'm pleased to see that your budget
    justification this year includes some performance indicators.
    And I'm especially pleased to learn the progress you've made in
    the Programming for Impact effort. However, from the
    information presented in the budget justification, it looks
    like many of the performance indicators you are tracking
    measures outputs, rather than outcomes. And most of these
    measures, which are designed to track outcomes, still do not
    contain data.
        When will you be able to start reporting actual data on
    your program's performance?
        Mr. Wofford. I would like you and your staff to review the
    Results Act report, the GPRA report that in the next few days
    will be coming to you, to see if you still have that concern
    when you read the full detail. Only some fragments of the
    preliminary results were in the budget presentation.
        Actually, it is such an important question, it's related to
    both VISTA and the senior program. If briefly Matt Dunne and
    Tom Endres could comment on that, I'd appreciate it.
        Mr. Porter. All right.
        Mr. Dunne. Thank you, Mr. Chairman. First of all, I was
    delighted when I came on board, I think it's nine weeks ago,to
    be able to review a set of goals that are set out as clearly as they
    are in our GPRA report. That allows someone who is coming in and trying
    to get up to speed quickly a sense of the priorities, where we're
    heading and where we need to allocate our resources.
        Many of the GPRA goals that you have seen and that we've
    reported on and that we will continue to report on get to the
    core of what we feel we have control over in VISTA. And that
    includes the number of volunteers that we're able to acquire,
    making sure that they have a positive experience, making sure
    that they are supported effectively, and that they complete
    their year of service. And that's one of the things that we
    look to as one of the major things that we can control.
        I do know, however, that you also have interest, as do we,
    in the ultimate impact of those services on the outcomes for
    the beneficiaries that they're serving to help. And to that
    end, we have taken on a couple of different kinds of studies.
    And we are continuing to look for other ways to measure that.
        I would point to, since you have had an interest in
    literacy in the past, a study that was just completed, which I
    believe we provided, which was on the D.C. Reads program, which
    was a local demonstration project we did. And we just did an
    evaluation of year two. And in that evaluation, we were able to
    take quantitative analysis on a longitudinal basis to look at
    improvements in our target audience in those areas, to see that
    they were actually improving their literacy and being able to
    most importantly catch up to their peers at the same level and
    be able to then be on an even playing field when they enter the
    later years of school, which are frequently the most difficult.
        I would encourage you to look at the summary of this
    report, because I think it's in line with what you're looking
    for. We're also undertaking a large AmeriCorps-wide analysis of
    literacy programs that we're involved in. That will look at
    other Reads programs that VISTA is involved in, as well as
    other literacy programs on a more macro basis across the
    country. And that should be available in September.
        My hope is to incorporate those into future GPRA goals and
    allow us to measure ourselves against those.
        Mr. Endres. Mr. Chairman, in response to the Government
    Performance and Results Act, we've set particular goals for
    each of the three programs. In the Retired and Senior Volunteer
    Program, we have set a goal of 20 percent of the Retired and
    Senior Volunteers assigned through a position description that
    specifically defines what those volunteers will be
    accomplishing in the community. And we're pleased to report
    that over 32 percent of the Retired and Senior Volunteer
    programs have assignments now that are specifically oriented
    towards outcome assignments.
        What we've done then is we've taken each of the programs
    and we've completed an accomplishment report. And we're happy
    to provide the accomplishment reports as part of the record, so
    that we're able to see then within those 32 percent of
    assignments exactly what is being accomplished by the Retired
    and Senior Volunteer Program.
        [The information follows:]

        Mr. Endres. Similarly, for the Foster Grandparent Program,
    we set a goal this first year, 50 percent of all the
    assignments. And the goal that we have achieved is 64 percent.
    And again, we've done an analysis of the accomplishments that
    those 64 percent Foster Grandparents are achieving.
        In the Senior Companion program, the goal, because the
    Senior Companion program within it had a requirement for a care
    plan, which included some definition of what it was that a
    Senior Companion was going to achieve in relationship to the
    care plan for the client, we established a very high goal for
    the Senior Companion program of 75 percent of all assignments.
    And we've achieved that mark.
        So we believe that our system is working, and that we have
    set up a third party survey system that will actually capture
    the accomplishments that the programs are achieving on an
    annual basis.
        Mr. Porter. Well, I would just say that obviously, we like
    to know how many volunteers there are and how many dollars are
    being spent and how many centers may be maintained and the
    like. But what we really want to know, and what's really
    important to us is what difference you're making in people's
    lives, and is the money really buying what we intend it to buy
    in helping people live better or live longer or live more
    helpfully or the like.
        And so those are the goals that we want to focus on. And we
    want to keep you working toward that end and making certain
    that that's what you're telling us as we go along, and that
    you're meeting those goals.
        Mr. Wofford. Mr. Chairman, could I just say that, and I
    speak for the Corporation, we wholeheartedly agree with you. We
    are particularly interested in applying service to great goals
    and show that you can reach them. The literacy efforts are
    focused largely on seeing in the fourth grade reading tests, at
    the end of the third grade, we close the gap from 40 percent in
    the country, we play a critical role in programs that close the
    gap between the 40 percent that do not pass the basic standards
    grade level test at the end of third grade, a great proportion
    of whom head to disaster thereafter. And we want to help
    achieve that goal, we want to measure it community by
    community, school by school.
        Same way with the new digital divide effort. It's going to
    be measurable in very clearly tested ways whether those that
    are not getting any knowledge or any access to computers and
    the information highway, particularly young people, getit. I
    think increasingly, and we will press for that, we have those goals and
    we give you reports year by year.
        Mr. Porter. Yes, sir.
        Mr. Wofford. You and I are getting those reports from a
    little distance.
        Mr. Porter. Yes, and if we see that the money is not
    getting what we expect to get, then we have to re-think the
    program and make sure we are supporting something that gets
    results for people. That's the whole purpose.
        Well, I'm sorry to have to cut this hearing short. As I
    explained, we need to do that. And I very much thank you for
    your testimony and for your service, Senator. And I thank all
    of you for answering our questions.
        And we'll take a short recess at this point.
        Mr. Wofford. Thank you, Mr. Chairman.

                                              Thursday, March 30, 2000.

                            NATIONAL MEDIATION BOARD

                                   WITNESSES

    ERNEST W. DUBESTER, CHAIRMAN
    STEPHEN E. CRABLE, CHIEF OF STAFF
    JUNE D.W. KING, CHIEF FINANCIAL OFFICER
        Mr. Porter. The Subcommittee will come to order.
        We continue our hearing on the fiscal year 2001
    appropriations with the National Mediation Board. We're pleased
    to welcome Ernest W. DuBester, Chairman of the Board.
        And before you give your statement, Mr. Chairman, I'm
    advised by my staff that your budget justification was very,
    very late in arriving, in fact arrived only last week. And we
    need to have the budget justification in time so that we can
    review the materials and prepare for the hearings. And I would
    ask that you give your personal attention to ensuring that that
    comes to the Subcommittee in a timely fashion next year and
    this problem is not repeated.
        Please proceed with your statement.
        Mr. DuBester. Good afternoon, Mr. Chairman. Let me just say
    I will give that my personal attention and I apologize to you
    and the Subcommittee for the delay in the statement's arrival.
    And any time that you need from me in terms of sorting through
    information or asking questions subsequent to the
    Subcommittee's hearing today, I'm obviously willing to provide
    to expedite your work and that of your staff.

                           Introduction of Witnesses

        Accompanying me today to my left is Stephen Crable, our
    Chief of Staff. And to my right is June King, our Chief
    Financial Officer.

                               Summary Statement

        I've submitted a brief summary statement which I
    respectfully ask be incorporated into the record. I also would
    ask that while we formally transmitted to you, Mr. Chairman, a
    copy of our annual performance report, if I could, when we're
    concluded here, if I could personally hand you a copy, I'd
    appreciate that opportunity.
        Mr. Chairman, as you know, we're a small agency. But I
    believe we have a large mission, namely to assist in the
    constructive resolution of a variety of labor management
    disputes in the airline and railroad industries. Beyond the
    importance of the work that we do, I think it is often
    misunderstood by many the extent of our responsibilities and
    the volume of our work. For example, high profile matters such
    as the resolution of the collective bargaining dispute
    involving U.S. Airways and the flight attendants, in which the
    Board played a role and I personally played a role, are quite
    visible and well understood by the general public.
        But in fact, on a daily basis, we're handling
    responsibilities that involve several hundred carriers in the
    airline and railroad industries that involve almost a million
    employees. And many of those carriers are not as well known,
    and you don't think about them on a day to day basis.
        But I would say to you, Mr. Chairman, that notwithstanding
    that fact, over the last few years, we've made a concerted
    effort, responding to a large extent to the message that we've
    heard from you and this Subcommittee, to try to do more with
    less. And toward that objective, I would just refer you in our
    budget submission on pages two to three, that if you just look
    at the appropriation for the years between 1994 and 1999, that
    six year period, you will see that at the end of that period,
    we were still receiving an appropriation after six years that
    was lower than that we had received in 1994.
        And again throughout that period, we made an effort to
    improve our productivity, our efficiency and the quality of the
    services that we provided to all the parties in the airline and
    railroad industries.
        Now I would submit to you, Mr. Chairman, that in a sense we
    are the victims of our success. Because our intense efforts
    over the past several years, which include revamping our work
    force, a major reorganization that you were helpful in seeing
    us through, the upgrading of our services, the increase in the
    number of programs that we offer, have been very well received
    by the customers we serve in the airline and railroad
    industries. And I believe that you should have heard that or
    will be hearing that in the near future.
        But it has also led to a dramatic increase in the demand
    for our services. For example, in the last fiscal year, we
    closed 180 cases which is more than 200 percent above the
    number of cases that we closed for the five year average
    between 1994 and 1998.

                                    STAFFING

        And we achieved this result, I would emphasize,
    bymaintaining the pursuit of doing more with less. Because in one very
    meaningful respect, throughout this entire period, we have been very
    understaffed. Currently as I sit before you today, we are more than 15
    percent below the ceiling that we are authorized to have in terms of
    the number of employees, or full time equivalents, as you understand.
        And I would suggest that to maintain the current level of
    services for our projected caseload in the mediation area, the
    agency is going to require additional mediators. And I would
    point out that this is projected within this budget request.

                         ALTERNATIVE DISPUTE RESOLUTION

        Another reason for the increased demand for our services
    involves an initiative that we launched in 1997, which we call
    the Dispute Resolution Initiative. And its purpose essentially
    is to assist representatives in the airline and railroad
    industries to learn and apply more constructive and less
    confrontational methods for resolving disputes.
        And I will tell you as part of that initiative, Mr.
    Chairman, it involves our agency and our staff providing
    training and education to the parties, both in new techniques
    to improve the quality of collective bargaining, to provide
    alternative ways, as I said, that are more constructive and
    less confrontational, that can bring us to both quicker and
    more positive resolution of some of the disputes that we face.

                           PUBLIC-PRIVATE PARTNERSHIP

        Toward that end, one initiative that we've launched this
    year that we're kind of excited about, which among other things
    provides an opportunity, we believe, for a unique public-
    private partnership, which can maintain and complement the
    quality of services we've been providing and perhaps defray
    meaningfully the extent to which our resources are needed to
    provide that endeavor.
        And that involves an initiative with one of our local
    universities, the George Mason University, where we worked out
    an opportunity where we hope to create an interdisciplinary
    center at the law school at George Mason, along with one of
    their institutes, which is the Institute for Conflict Analysis
    and Resolution, which is one of the original such institutes
    for conflict resolution in this country.
        And we're very excited about the opportunity there. As I
    indicated, we hope that it can provide both a supplement and a
    complement to our ability to provide the training to the
    airline and railroad customers that we're currently providing,
    as well as to assist in our professional development program
    for our mediators.
        And the startup costs for that initiative are also part of
    the budget request for this next fiscal year.

                              SECTION 3 ACTIVITIES

        Finally, I would just mention that in our appropriation for
    fiscal year 2000, Congress included an increase of $500,000
    over the request for the purpose of reducing section 3 case
    backlogs by improving the availability of arbitrators through
    increased arbitrator compensation. And we provided to the
    Subcommittee, Mr. Chairman, a brief report on the results,
    which are limited in terms of time as to the impact of that
    supplemental appropriation.

                             ARBITRATORS' SALARIES

        I would just point out briefly that it involves an effort
    in a vital part of our statutory mission, by which we have
    statutorily the obligation to pay for arbitration proceedings
    in the railroad industry, whereby we can increase the daily
    rate to the arbitrators that we use for that business to the
    level of $300. And I would just say, it would be the first time
    that they've had an increase since 1982. So it's been almost 20
    years.
        And number two, I would point out that in the rest of the
    private sector, the average rate that most of these neutrals
    receive is about $600. And obviously we have what I would call
    a competitive disadvantage in terms of attracting and retaining
    quality neutrals to perform this service. But we think that
    this increase, at least, will go a long way and has already
    shown evidence of going constructively towards the ability to
    both resolve our grievance arbitrations more efficiently and
    hopefully reduce the number.

                           ARBITRATION PILOT PROJECTS

        In addition, we have a number of pilot projects that we've
    initiated with the cooperation, again, of the parties that we
    work with in the railroad industry. And we hold out great hope
    that they also can improve both the efficiency with which they
    are resolved, but also long term reduce the number of cases
    that contribute to our backlog.
        And so we have a non-traditional pilot project that we had
    with one of the class one railroads, the Norfolk Southern, and
    one of the organizations on their property, the Brotherhood of
    Locomotive Engineers, that had very good results. There's been
    a major initiative agreed to this year involving all four class
    one railroads, and another organization, United Transportation
    Union, which both represents the largest number of employees in
    the railroad industry, but also is the largest user of the
    section 3 process.
        And this is a commitment to the grievance mediation
    project, which again we think holds a lot of potential for both
    improving the efficiency of the handling of these kinds of
    disputes as well as reducing the number long term.
        So I've submitted that report. I'm happy to answer any
    questions that the Subcommittee has about any area, of course.
        I just want to add, since it was mentioned earlier, and of
    course it's a public announcement, that as one who has spent
    more than 50 percent of his life in Government service, which
    is about 15 years, and I know you've announced you're
    anticipating the end of 20 years of service here in the
    Congress, that I appreciate that public service. I appreciate
    the role that the Subcommittee has played both in considering
    and understanding our mission. And, I wish you well in the
    future.
        [The prepared statement of Mr. DuBester follows:]

        Mr. Porter. Thank you very much for saying that.
        I was looking at the appropriations over the last five or
    six years as opposed to the President's requests to the
    Congress. And we have either come very, very close in two of
    the six years to the President's request. In three others we
    exceeded it very substantially. And in only one have I noticed
    that were substantially under the President's budget request.
        One is, well, first, let me say that you have a very
    important role and we know you need resources to do your job
    well, and our job is to get you the resources that you need, so
    that you can avoid the kinds of conflicts that shut down
    portions of our transportation industry, and obviously cause
    great disruption to commerce and cost the Nation, as well as
    individuals, a great deal of resources and time.
        But you're telling me you're doing such a good job with
    less, I'm inclined to say maybe we ought to keep it less and
    keep you doing the good job.
        Let me ask a question about commuter rail. It seems like
    every five or six years, we have a major confrontation that
    affects commuter rails that the Congress eventually ends with
    legislation. Are we likely to have that any time soon, or have
    we passed that by already?
        Mr. DuBester. Well, we constantly have, given the number of
    commuter rail properties that exist, mostly in thenortheast
    corridor, but one near your home, Metra, and for a variety of reasons I
    will just say to you that Metra has been able to deal with their
    business, if you will, in a fairly distinctive way. And in fact, I
    don't think it's inappropriate to say that we actually have them
    visiting our offices tomorrow to share their experiences with our staff
    and with the board.
        But I would say, Mr. Chairman, while I'm aware of the
    matters that you refer to, that I would say during my time on
    the board, which is now going on seven years, and I'm pleased
    with respect to the role that the Congress plays in these
    matters of public interest and involving interstate commerce,
    that these matters have not come before Congress during that
    time. And they've been resolved through what I would call the
    statutory processes and the processes of collective bargaining,
    almost always with our mediatory assistance.
        So I'm hopeful that that record will continue. And while I
    know that there are a number of unresolved disputes involving
    again, mostly the commuter rail properties in the northeast
    corridor, I don't have any reason to believe that they're going
    to require turning to you for assistance, if you will, or
    imposition of any kind of solutions.
        Mr. Porter. What was the last time Congress had to
    intervene? It was some time ago, you're telling me. Over seven
    years, you're saying.
        Mr. DuBester. Well, I would say over seven years, and I'd
    be guessing with preciseness, even though I can remember some
    of the disputes in the 1980s more, where I think Congress had
    to involve themselves, one involving the Long Island Railroad,
    I recall. There may have been another one. I can remember one
    involving either Metro North or New Jersey Transit.
        The Long Island Railroad is one that comes to my mind, and
    that was in the 1980s.
        Mr. Porter. Time flies when you're having fun.
        Mr. DuBester. Exactly right. [Laughter.]
        Mr. Porter. How much of your increase, your increase is
    what, $850,000? Does that sound right, in round figures?
        Mr. DuBester. In round figures, I'd say a little less than
    that, but in round figures, yes, sir.
        Mr. Porter. How much of that would go to this George Mason
    University initiative? That's a new initiative.
        Mr. DuBester. Yes, sir, Mr. Chairman. It's $180,000.
        Mr. Porter. And are there other participating entities
    besides the board and the University?
        Mr. DuBester. Well, what we anticipate is, and this is
    where we will get the complement to our recurrent training and
    education services, we are in the throes of establishing a
    steering committee which I think will rotate probably on an
    annual basis. And the steering committee will probably consist,
    again, of representatives of some of the major airlines and
    major railroads and their employee representatives.
        That is why again I characterize this initiative as one
    that holds the potential for a unique public-private
    partnership. Because we're hopeful that a lot of the resources
    that we currently need to think about or allocate for these
    educational and training purposes will be borne by the parties
    themselves with our assistance and cooperation.
        But the actual initiative itself, other than what I just
    said, is basically an effort to create, as I said, an
    interdisciplinary center at the University with our
    involvement.
        Mr. Porter. A final question, pertaining to case closure
    rates. You've stated, the investment made by the Board over the
    past several years in recruiting new mediators and upgrading
    the skills of existing mediators likewise paid dividends during
    the fiscal year through a dramatic increase in case closures.
    And you've described that. The statistics provided indicated 76
    percent reduction of cases closed in fiscal year 1999, and in
    your closure forecast rate for fiscal year 2000 and 2001, you
    indicate you cannot sustain the rate that was achieved in
    fiscal year 1999.
        Why was the rate higher in fiscal year 1999 and why can't
    you maintain that kind of rate in the ensuing years?
        Mr. DuBester. Well, we believe that the rate was higher in
    1999 for a couple of reasons. Generally just the positive
    response to our constant attempts to persuade the parties to
    pursue more constructive ways of resolving their disagreements,
    if you will, and then providing meaningful assistance.
        But in particular, the one distinctive feature involves our
    dispute resolution initiative. In fact, I have a brochure on
    that which I'll provide for you, Mr. Chairman, when I give you
    our annual performance report. And that involves now a number
    of matters, a number of cases that we never had before. We
    launched that in 1997.
        So fiscal year 1999 was really the first time when we saw a
    large number of matters before us involving training and
    education of the parties in a variety of major disputes to help
    them provide alternative ways of resolving disputes that
    minimize if not eliminate the potential for confrontation.
        For example, and this is not even reflected in fiscal year
    1999, we recently assisted in an agreement being reached
    between Continental Airlines and the flight attendants. They
    agreed with our assistance to use what I'll call a non-
    traditional alternative dispute resolution process for reaching
    their agreement. And it's certainly again indicative of a
    growing trend and response.
        The reason why I say that we cannot maintain that is, with
    all due appreciation to the comment you made about wanting us
    to keep doing more with less, is we are understaffed. We are
    probably six to eight below staff with our mediators. I would
    say while they're all dedicated, hard working people, that if
    we don't give them some relief in terms of spreading out the
    work that they are currently performing, we're going to lose a
    lot of the talent that we currently have. And I think that
    would really be unfortunate.
        Mr. Porter. Do we assume correctly, Mr. DuBester, that the
    figure you're requesting is the figure that was submitted to
    OMB by you?
        Mr. DuBester. Yes.
        Mr. Porter. So that if you got an appropriation of this
    magnitude that would solve the problem of having too little to
    work with?
        Mr. DuBester. Yes, it is, Mr. Chairman. And we would be
    committed to making it work with that, of course.
        Mr. Porter. All right. Thank you very much for your
    testimony. I'm sorry, again, to have to cut the hearing short.
        We're going to do our best. As I said earlier, you perform
    a very important function in our society. You're very correct
    that people only hear about what you do when something goes
    awry and breaks out into a dispute that gets out of control.
    That's I think unfortunate, that people don't understand that.
    We do. And we're going to do our best to provide the resources
    you need.
        Mr. DuBester. We appreciate that very much, Mr. Chairman.
        Mr. Porter. Thank you very much.
        The Subcommittee will stand in recess until 10:00 a.m.
    Tuesday next.
        [The following questions were submitted to be answered for
    the record:]

                                             Wednesday, April 13, 2000.

                        UNITED STATES INSTITUTE OF PEACE

                                   WITNESSES

    RICHARD H. SOLOMON, PRESIDENT, UNITED STATES INSTITUTE OF PEACE
    CHESTER CROCKER, CHAIRMAN OF THE BOARD OF DIRECTORS, UNITED STATES
        INSTITUTE OF PEACE
    HARRIET HENTGES, EXECUTIVE VICE PRESIDENT, UNITED STATES INSTITUTE OF
        PEACE
    CHARLES E. NELSON, VICE PRESIDENT, UNITED STATES INSTITUTE OF PEACE

                           Introduction of Witnesses

        Mr. Porter. The subcommittee will come to order. Before we
    recognize the United States Institute of Peace, I want to read
    into the record that this is the last regular hearing of this
    year. We have had 77 total hearings; 32 hearings for the
    Department of Health and Human Services, 10 for the Department
    of Education, 7 for the Department of Labor, 13 hearings for
    independent agencies under our jurisdiction. We have had 61
    Members testify and 190 public witnesses testify individually.
        This is a huge workload, and I want to thank the members of
    our staff. Tony, Carol, Susan, Jeff, Francine, and Tom have
    done an absolutely marvelous job for us. They are true
    professionals. We are dependent on their knowledge and judgment
    for the decisions that we make, and we are blessed to have such
    capable and honorable people serve as our staff of this
    subcommittee. I know that Members on both sides of the aisle
    feel this way.
        Our last but not least, the United States Institute of
    Peace, and we are pleased to welcome Dr. Richard H. Solomon;
    the Director; Chester Crocker, the Chairman of the Board of
    Directors; Harriet Hentges, the executive vice president, and
    Charles Nelson, the vice president.
        Nice to see all of you. I apologize for the long delay and
    appreciate your patience.
        Dr. Solomon.

                               Opening Statement

        Mr. Solomon. Thank you, Mr. Chairman. It really is an honor
    again, for my colleagues and myself, to have this opportunity
    to report to you on our work and specifically to review with
    you our request for our fiscal year 2001 appropriation request
    of $14,450,000. This amount is an increase of just about a
    million and a half dollars over the Institute's fiscal year
    2000 appropriation. This increase is much needed to make
    possible, in particular, expansion of our Balkans work, further
    development of our conflict resolution training activities,
    creation of new educational programs, and to help fill a gap in
    the Arab-Israeli peace process--I am sorry, the Israeli-
    Palestinian peace process.

                           INSTITUTE ACCOMPLISHMENTS

        Fifteen years have passed since the Institute's creation in
    1984. Can we say that we have made a difference? Mr. Chairman,
    I believe the answer is an unqualified yes. We can say with
    confidence that the work of the United States Institute of
    Peace is strengthening our nation's ability to deal with
    conflicts around the world by political processes and to
    achieving America's foreign policy goals by means short of war.
        How is this so? How can we make that statement? We are
    training professionals in conflict management and peacemaking
    skills. And there is now a worldwide network of more than 150
    former Institute fellows serving as professionals in conflict
    management around the world. As examples I might cite Adnan Abu
    Odeh, who was selected as the chief political adviser to the
    new King of Jordan; or Colonel Jim Warner, who commanded the
    U.S. brigade in Tuzla after his year with us as an Army Fellow.
    As I indicated, these individuals are some of the over 150
    former Fellows who are the alumni of our programs. They are the
    human embodiment of the work and the purposes of the Institute
    of Peace, the people who are implementing the skills that are
    the result of our training programs.
        The Institute is helping former adversaries find common
    ground. There is a deeper understanding among communities in
    conflict--Kosovar Albanians and Kosovar Serbs, Chinese from
    Taiwan and mainland China, Palestinian and Israeli youth--of
    the costs of unending conflict as a result of the frank and
    constructive dialogues facilitated by the Institute.
        We have shown senior officials in such places as Indonesia
    and Bosnia how processes of reconciliation and justice can help
    create sustainable peace through the rule of law. We have
    expanded the range of policy options for senior officials here
    and abroad through the workshops and writings that are much of
    our work day to day, giving alternatives to the use of force--
    most notably, perhaps, through the efforts of our Korea Working
    Group.
        We have developed flexible and mobile training programs to
    help professionals in many countries become state-of-the-art
    conflict managers--in the Balkans and Southeast Asia and
    elsewhere.
        Institute publications, now widely used in university
    teaching and research, are expanding the body of knowledge
    about the underlying sources of conflict in today's world and
    approaches to dealing with them.
        We are developing curricula on conflict resolution to help
    educators attract the next generation of practitioners and
    thinkers to careers in international affairs.
        As a result of our work, a growing number of leaders from
    the U.S. and abroad now turn to the Institute as an
    independent, nonpartisan forum to address questions of
    international conflict. In the past 2 years, world figures, led
    by President Clinton and including the Presidents of Ecuador
    and Peru, and Mr. Chen Shui-bian, the newly elected President
    of Taiwan, have chosen the Institute as a platform for major
    policy addresses or as a vehicle for policy development
    workshops. They tell us that we are making a difference for
    peace.

                         PROMOTING PEACE IN THE BALKANS

        Mr. Chairman, let me briefly review the programs that we
    propose to expand in the coming year. First and most time-
    urgent are activities designed to build and keep the peace in
    the Balkans. The Institute has made a special effort in the
    Balkans for 5 years, developing a mixture of mutually
    reinforcing programs both on the ground in the region and here
    in Washington.
        Our projects in the Balkans are extensive and numerous. We
    are supporting peace implementation efforts in Croatia, Bosnia,
    and Kosovo and activities designed to prevent further armed
    conflicts in Serbia, Albania, Macedonia, and Montenegro.
        When Serbs and Albanians met at Rambouillet in early 1999,
    two of the delegates had had the benefit of Institute training
    programs in negotiating skills. We are currently working with
    the U.S. Army to provide conflict resolution and negotiation
    training to Serbs and Albanians in the U.S. sector of
    operations, and we are collaborating with the State Department
    to bring Kosovo Serbs and Albanians together to develop a
    tolerance for ethnic differences in Kosovo.
        The themes of our Balkans work are stabilization and
    security, prevention of new or escalating conflicts, and
    support of indigenous and regional efforts to promote peace and
    security. To these ends, we will use additional funds requested
    for fiscal year 2001, among other things, to expand the efforts
    to bring Serbs and Albanians in Kosovo into dialogue; focus on
    reconciliation efforts in Brcko by bringing together local
    groups; support grass-roots conflict prevention efforts in
    those parts of Montenegro where future violence may break out;
    continue to support the creation of a truth and reconciliation
    commission in Bosnia; work to prevent conflict in Macedonia and
    Albania, specifically through conflict resolution training as
    well as sessions of facilitated dialogue; and we plan to work
    with educators in the Balkans who are now at the front lines of
    conflict prevention as they promote curriculum reform and
    textbook revision related to conflict resolution.
        In Washington, the Institute's Balkans Working Group
    continues to provide a unique forum for administration
    officials, regional experts, and private sector NGOs active in
    the Balkans to exchange information, develop policy options,
    and build consensus on steps needed to secure peace in that
    region.
        We strongly believe that our peacekeeping efforts in the
    Balkans are an essential element to stabilizing that troubled
    region and protecting our national investment in peace there.
    National Security Advisor Samuel Berger and U.N. Ambassador
    Richard Holbrooke have acknowledged our important role in this
    regard. Secretary of State Madeleine Albright has written to me
    that it is her hope, quote, that the Institute will be able to
    expand its resource base both to carry on its important work in
    this region, and to meet new challenges as they arise, close
    quote.

                 CONTINUING EXPANSION OF PRACTITIONER TRAINING

        Closely related to our Balkans work are efforts to expand
    training activities for practitioners in conflict management
    and negotiation skills. Of all the Institute areas of activity,
    our training program has shown the greatest growth and
    evolution over the past year. We are benefiting from the
    seasoned leadership in our training efforts of Ambassador
    George Ward, who, encouraged by your support for this work, Mr.
    Chairman, has rapidly developed our training programs.
        By several measures, the ongoing expansion of the
    Institute's training activities has been notably successful.
    The number of persons trained increased by 400 percent between
    fiscal year 1997 through fiscal year 1999. This current fiscal
    year we project another increase of 65 percent in the number of
    individuals trained over last year.
        Perhaps just as, or more, important than the numbers of
    individuals trained, training evaluations are enthusiastically
    positive, with former students telling us of concrete instances
    in which Institute training helped them better manage real-life
    conflict situations in their professional assignments. The
    Institute's worldwide network of partnering training
    organizations has been strengthened, and our partners regularly
    provide financial and/or in-kind support for our joint efforts.
        We continue to train practitioners involved with conflict
    management in every area of the world. We maintain strong
    institutional associations abroad with a range of international
    organizations. Within the United States we work in cooperation
    with the Department of State, the Agency for International
    Development, the Department of Defense, the Federal Mediation
    and Conciliation Service, and federally-funded research and
    development organizations.
        Let me mention just two of our many training initiatives to
    illustrate the nature and the variety of our programs. Police
    training is an interesting example. Physical security, of
    course, is crucial to postconflict stability, as is a keen
    understanding of local circumstances. These are the objectives
    of our police training as in a recent orientation program for
    all U.S. police officers who volunteer for service as
    international police in Bosnia, Kosovo, and East Timor. We will
    also train police, together with local Balkan officials,
    community leaders, and international police monitors on
    problems of policing in a democratic political environment.
        And there is a program entitled Women Waging Peace. The
    institute has played an integral role in training a worldwide
    network of women leading conflict resolution efforts in their
    local communities. This past year we worked with 110 women
    community leaders brought together at Harvard University from
    10 different zones of conflict around the world to address
    their own experiences in conflict management and resolution.
        The increased funding requested for fiscal year 2001 will
    be devoted to working with vulnerable governments and local
    organizations in Southeastern Europe and the former Soviet
    Union to reduce the likelihood of ethnic and religious
    conflict. Our objectives are to prevent new Bosnias and
    Kosovos; to upgrade the skills of Americans, both civilian and
    military, who are assigned to work in peace operations; and to
    focus on conflict areas in Africa, Asia, and Latin America.

                       EDUCATING THE EMERGING GENERATION

        Now let me briefly comment on our work in educating
    emerging generations. To create a less violent world, we have
    to do a better job of educating new generations of potential
    leaders about the difficult challenges they will face, the
    options that they might have in responding to future conflict
    situations, and an awareness of the range of peacemaking skills
    available to professionals. We are therefore proposing to
    expand significantly our educational activities, both within
    the United States and abroad.
        In the United States we plan to double the number of
    Institute-run, high-demand faculty curriculum enrichment
    programs, allowing us to work with hundreds of high school,
    college, and graduate school faculty from New York to Hawaii
    who are teaching the emerging generation of potential
    peacemakers. Similarly, building on Institute-supported
    cutting-edge research, the annual peace essay contest and path-
    breaking Institute books on negotiating skills and the art of
    third-party mediation, we plan to intensify the development of
    teaching materials--written, audiovisual, andinteractive--to
    prepare this next generation.
        Outside of the United States, we plan to work with faculty
    in countries in conflict using educational programs as a means
    of building conflict resolution capacity.

                   SUPPORTING THE ARAB-ISRAELI PEACE PROCESS

        Finally, we propose to fill a gap in the Israeli-
    Palestinian peace process. Peace between Israelis and
    Palestinians will require cooperation on a myriad of routine
    legal issues: Which laws apply? Whose court has jurisdiction,
    and who will enforce the court's decision? Without a fair legal
    process, a minor issue such as an automobile accident can
    become a larger political incident, and too often does.
        At the request of senior Israeli and Palestinian officials,
    the Institute has organized a special dialogue on Palestinian-
    Israeli legal matters, working under a previously nonoperative
    provision of the Oslo Accords. The Institute is requesting for
    the coming fiscal year additional funds to help build
    professional relationships between these two legal communities
    to help them jointly explore a range of common operational
    issues, a process that they have not been able to undertake
    without outside facilitation and that no other international
    party is now supporting.
        The Israeli and Palestinian Ministers of Justice have both
    expressed to us their appreciation of the Institute's efforts
    in this area and requested our assistance in developing further
    joint activities designed to promote day-to-day relationships
    grounded on the rule of law. Senior U.S. officials also have
    urged us to expand this effort as an important element in the
    overall Middle East peace process.
        Given the substantial increase in the Institute's
    programmatic work, Mr. Chairman, it is important that we
    maintain the strength and effectiveness of our administrative
    and support units. For this reason we are planning a modest
    increase in staffing for the Institute's publications and
    administration activities.

                      DEVELOPING A PERMANENT HEADQUARTERS

        Before concluding, Mr. Chairman, I would like to touch on
    two other activities that I think are worthy of mention here.
    As you know, the Institute is continuing to advance its project
    for a permanent headquarters facility at 23rd Street and
    Constitution Avenue here in Washington. Fundraising is ongoing,
    and we have now raised over $2.5 million from private sources,
    and I am pleased to say that just yesterday we received from a
    private family foundation a $1.5 million donation to this
    project.
        At the building site, the Institute has completed boundary
    and topographical surveys, and is conducting the analysis
    required for what is technically termed an ``architectural
    program.'' That is an assessment of how much space we need to
    carry out our work now and in the future. This survey has
    established the size of a building that can be constructed on
    the site and the rough dimensions of a facility that will serve
    the Institute's needs as best we can anticipate them well into
    the new century. We expect to move forward in selecting an
    architectural design team later this year.

                        UTILIZING INFORMATION TECHNOLOGY

        Let me stress, Mr. Chairman, that the Institute's permanent
    facility will be more than a bricks-and-mortar institution. We
    intend it to be, in the argot of our times, a ``clicks-and-
    mortar'' enterprise. As part of the architectural work, we are
    designing a cyberstructure for this building. This is the
    ``clicks'' part of the equation, to capture the benefits of the
    telecommunications revolution, to give the Institute the kind
    of global outreach that is now made possible by advanced
    communication technologies, but without requiring a major
    increase in staffing size.
        As an example of the power of this technology, I might
    mention that we recently began Webcasting our current issues
    meetings, and one such recent session, which was a review of a
    book that we recently published on the challenges of
    negotiating with the North Koreans, reached a global audience.
    During this Webcasting session, we had a real-time call-in
    question over the Internet that came in from, of all places,
    Mongolia--as well as from other parts around the world. This
    gives us a dramatic example of the kind of global outreach that
    this new technology affords the Institute.
        In closing, Mr. Chairman, 15 years is enough time for us to
    have made an impact, but it is clearly too short a time to
    fully realize the promise of the Institute's charter from
    Congress. I believe we have laid a solid foundation in our
    programs that will train the talent for better managing
    international conflict well into the 21st century. A century
    from now I believe our successors will look back and be
    appalled by the primitive way that we dealt with conflict in
    this just-concluded 20th century, not to mention in earlier
    times.
        Before I conclude, I would like to give Dr. Chester
    Crocker, the Chairman of our Board, an opportunity to make a
    comment or two about our work.

                           EXPRESSION OF APPRECIATION

        Mr. Crocker. Thank you very much, Ambassador Solomon.
        Mr. Chairman, it is great to be with you again. This is the
    last of a long series of hearings you have held, and I will be
    very brief.
        I want to say a word of thanks on behalf of the Board of
    Directors for your support during the past 6 years that you
    have been Chairman--and long before that as well--on your
    service in this committee.
        You have heard Ambassador Solomon say that we are making a
    difference. And he is right, but I would like to add that you
    have made a difference in your support for this organization.
    We appreciate it. Your commitment to our training and education
    programs has urged us on so that today we can hardly keep up
    with the demand for our services. And I think what Ambassador
    Solomon has indicated, that we are scrambling to keep up with
    the demand for our work, and we are going to keep ahead of the
    curve if we can. And we appreciate your support. This
    investment, yours and ours, is a long-term commitment to
    America's future and for a future of goodwill and peace. This
    is what this Institute is all about.
        We wish you well. We thank you for your support, and we
    hope to stay in touch. Thank you, Mr. Chairman.

                        PLANS FOR PERMANENT HEADQUARTERS

        Mr. Porter. Thank you for those very kind words. I have
    been a fan of this concept and this institution from the very
    beginning. And let me ask some kind of nuts-and-bolts questions
    first. What was your first year appropriation, doyou remember?
        Mr. Solomon. About $5 million.
        Mr. Porter. We haven't made nearly enough progress. All
    right.
        How much money is needed to build the building? I realize
    you are not even into the architectural program, but what do
    you estimate you need to get this done?
        Mr. Solomon. We are raising money for three purposes:
    first, the physical construction of the building; second, we
    want to raise an endowment for operations and maintenance
    costs, to keep up the facility so that we are not drawing so
    heavily on our annual appropriation; and third, a small
    endowment for program-related hospitality.
        I should also add, built into this effort are the costs of
    fundraising, which we are trying to keep to a minimum, and also
    the architectural work. We now estimate that the total cost is
    going to be something in the range of 50- to $70 million.
        Mr. Porter. How much of that is nonendowment fund, in other
    words, actual construction, do you estimate?
        Mr. Solomon. The first very rough cut of cost based on
    square footage estimates was something in the range of 25- to
    $30 million.
        Mr. Porter. Well, Dr. Solomon, I need to correct--I
    described your position as Director. You are president of the
    U.S. Institute for Peace.
        Mr. Solomon. I feel like a quarterback.

                      EXPANDING SUPPORT FOR THE INSTITUTE

        Mr. Porter. You are the quarterback then.
        I think the Institute of Peace has more than met our
    expectations over the years. You are really everywhere where
    there is need for conflict resolution and ahead of the
    existence of many. Unfortunately, human beings have a
    proclivity to continue to create them at too large a rate. It
    is like dealing with human rights problems. There seems to be
    an unending supply, and you hope to reduce that over a period
    of time, and that is, of course, what your purpose is in
    reducing conflicts and heading them off before they can do real
    damage.
        It seems to me that--and these are comments more than
    questions--but it seems to me that not enough is known outside
    of government circles about your work. I doubt very much that
    most Members of Congress know much about it at all, and somehow
    we have got to correct that because they ought to know about
    it. They ought to be inspired about it. They ought to be
    supporters of it. And we need to do something to change that
    lack of knowledge, and I am stating the issue without stating
    how to do it. It is hard to do, obviously, and I realize that,
    but somehow there has got to be a greater understanding, at
    least outside this subcommittee, of what it is you do and why
    you are making a difference as you are.
        Mr. Solomon. Could I just comment on that briefly?
        Mr. Porter. Sure.
        Mr. Solomon. We fully realize the importance of trying to
    both broaden understanding and support in Congress for our
    work. What we have learned over the last few years is that,
    given our modest size as an organization, it is particularly
    important for us to work with congressional staff, who are the
    main folks focusing on our work. We make a consistent effort to
    invite staff to our programs, and in other ways make sure they
    understand what we are up to.
        Secondly, we have designed a number of programs to be held
    here on the Hill to make it easier for the Members to
    participate in programs. For example, one of our very inspiring
    programs is called Seeds of Peace and brings together
    youngsters from Israel, from the Palestinian areas, from the
    contending areas of Cypress, and from the Balkans Teenagers at
    this very impressionable age deal with each other in a
    supportive environment, draw out their hostilities, their
    stereotypes, and get to see that they can work together. We
    published a book on this experience and held a book-launching
    party here on the Hill that had, I think, seven or eight
    Members of Congress come to the event. So it is those kinds of
    activities we work on to try to broaden understanding here in
    Congress.
        The irony is, Mr. Chairman, that in some ways we are better
    known abroad than we are in this country. If you go to the
    Balkans, if you go to South Korea, if you go to certain areas
    in the Middle East, you will find that the Institute of Peace
    is better known than it is here in Congress.
        Mr. Porter. We have got to change that. That, for example,
    getting young people together who might otherwise learn only
    one side is, to my way of thinking, wonderful work that we need
    to provide tremendous support for, and we are not doing nearly
    enough to make that happen. Are there any similar institutions
    in other countries like yours; in other words, that are
    separate agencies, not part of their diplomatic apparatus?
        Mr. Solomon. There are a number of private foundations and
    some government-supported institutions.
        Mr. Porter. Where are the countries that have government-
    supported institutions?
        Mr. Solomon. Canada, Norway, Switzerland. There are a
    number of foreign affairs-oriented organizations--what you
    might call ``think tanks''--in Indonesia, in Japan, in China,
    not necessarily directly oriented to our work, and we have
    begun to do some partnering with these folks. But, again, our
    resources are stretched to the limit.
        What we are finding, and our Chairman just underscored this
    for me, is our use of the Web site--our ability to reach out
    through electronic mail, and our Institute Web site, is turning
    out to be an extremely cost-effective outreach vehicle for this
    institution. We find that our Web site is now visited by people
    around the country and the world over 10,000 times per week
    when there is some particularly active event under way. We have
    had on occasion 10,000 hits per day on our Web site, so we are
    finding this is a very cost-effective and a dramatically
    visible way of reaching out to people interested in our work.

                  INSTITUTE RELATIONSHIP WITH EXECUTIVE BRANCH

        Mr. Porter. Describe for me your relationship with our
    State Department, realizing that you have many people who have
    been at the State Department on your faculty. But is there a
    good working relationship and a positive experience in the two?
        Mr. Solomon. I guess the way to put it is as the State
    Department, and the National Security Council and the Pentagon
    learn about our work, we are under increasing demand to work
    with them--in no small measure because we have certain
    resources they don't have. Their own budgets are stretched and
    they increasingly turn to us and look to partner with us in
    ways that are increasingly operational.
        When I first came to the Institute some 6 years ago, the
    policy planning staff of the State Department asked that we
    collaborate in a study of what was then a notion of
    ``preventive diplomacy.'' Since that time our work with
    theState Department has become increasingly operational. For example, a
    few months ago State asked us to organize for them a seminar with
    senior Indonesian officials--the Minister of Human Rights, the Attorney
    General, and several others--to explore how other countries had dealt
    with the legacy of human rights violations. So we, working with the
    State Department, put together such a program.
        Last fall our Chairman and our Executive Vice President,
    Harriet Hentges, convened a meeting at the Lansdowne Conference
    Center of the Kosovar Albanian leadership, to try to get them
    to see the role they could play in the peace process in Kosovo.
    We offered similar activities to the Serb communities. We did
    one program with Kosovar Serbs in Sofia, again with State
    Department collaboration or encouragement. So we are
    increasingly moving from an institution generating knowledge to
    one that is becoming quite operational.
        Mr. Porter. You then see yourselves as both teachers and as
    operations people? You see both roles?
        Mr. Solomon. Teachers in the sense of educators, trainers
    in the sense of preparing professionals for operational roles,
    and to some degree playing a hands-on operational role on our
    own part.
        Mr. Porter. If we are having a negotiation--a part in the
    negotiation between Israel and the Palestinians, let's say, how
    are you brought into this process? Are you invited in by our
    State Department for a specific role? Do you initiate this
    yourself saying, we have a role that we can help play? How do
    you go about becoming a part of this process, or is it just
    automatic?
        Mr. Solomon. The answer, in a sense, is ``all of the
    above.'' The example I mentioned of our work with both the
    Palestinian and Israeli officials on rule of law promotion
    really came about because of the initiatives of Neil Kritz, who
    runs our Rule of Law program, but the State Department involved
    in overall responsibility for the peace process supported this.
        Mr. Porter. Did they call you and say, we need you to do
    this? In other words, how do you get into the process?
        Mr. Solomon. Once we had demonstrated an initial success
    through contacts by Mr. Kritz, then we got a call from the
    officials saying, ``we need more of this.''
        There is another example I might cite. We ran a facilitated
    dialogue between the Chinese from Taiwan and from the China
    mainland several months ago. This was before the recent
    election. These are people who had stared at each other across
    the Taiwan Strait but had never met face to face. They had 3
    days of what turned out to be a promising dialogue. They saw
    where their differences were, but expressed an interest in
    cooperation. Following the Presidential election, we are now
    being approached by people on the Taiwan side to help them
    further develop a dialogue with the mainland. So it is an
    interactive--it is an active/interactive process.
        In the case of the legal activities, our Chairman reminds
    me that Father Ted Hesburg, who, as you know, is on our Board,
    is on the so-called ``anti-incitement commission,'' which is
    part of the Wye agreement. This commission encourages Israeli
    and Palestinian communities, through their press, their
    textbooks, not to incite more hostility and stereotypical views
    of the other. Father Hesburg has been dealing with the people
    in the region, and he has played a role in stimulating
    awareness of what the Institute could do in the rule of law
    area.

                             NEED TO PUBLICIZE WORK

        Mr. Porter. Dr. Solomon, it seems to me, for example, the
    Balkans, although it drops off the major news focus, it is a
    huge success story. Yes, there are still problems, but think of
    the fact that people aren't getting killed there. People are
    living in relative peace. We are teaching younger generations
    to be sensitive to one another and through your efforts in an
    area where people have killed each other for a long, long time
    whenever they got the opportunity to.
        The point I want to make here is not enough people know
    that it is a success, and not enough people get information as
    to the role of the U.S. Institute of Peace in respect to that
    success. I am not saying you should hire a publicist, but--I am
    serious about this--but I do believe that you have to somehow
    get up on the screen of the news networks, not necessarily the
    nightly news, but the analysis--I don't know, the New York
    Times Magazine, whatever resonates with people, what you are
    doing and how you are helping to make a difference.
        I realize there is some risk in that: If something goes
    wrong, you also get part of the blame. But it seems to me we
    have got to sort of raise consciousness that this effort is
    going on in our country, that we are providing this leadership
    out across the world, that other people in the world understand
    it and appreciate it, and that you are making a difference in
    holding down the level of conflict and anticipating heading off
    conflict everywhere.
        Mr. Solomon. Mr. Chairman----
        Mr. Porter. I know you are going to say you need more money
    to do that.
        Mr. Solomon. No. What I was going to say is that you just
    helped me in a little debate we are having internally. We
    looked at the issue of hiring someone to further our press
    outreach and have a trade-off between bringing someone in to
    raise our visibility in that regard versus putting staff into
    other areas of activity.

                             UNMET BUDGETARY NEEDS

        Mr. Porter. That gets back to the money thing. Do you have
    a professional judgment budget that you submit; in other words,
    your wish number?
        Mr. Solomon. We generally look at what we can cope with
    roughly at our present size of activity.
        Mr. Porter. Let me ask it this way: What was the number you
    submitted to OMB before this number found its way into the
    Presidential budget?
        Mr. Solomon. $14.9 million.
        Mr. Porter. About $500,000 more.
        Mr. Solomon. The point I wanted to make is we had a
    discussion with them and came to an agreement on a number. We
    asked for the additional amount, but ended up agreeing with
    them on a smaller figure.
        Mr. Porter. If you had $5 million more in your budget, what
    could you do with that money that you can't do now?
        Mr. Solomon. There are several areas of activity that I
    think are worth expanding. One, we have unfunded educational
    programs at the undergraduate level that I think are worth
    expanding, and to some degree at the graduate level--again, to
    attract new generations into this work. I think we could very
    usefully expand the number of Fellows who we bring to the
    Institute. One of the unique aspects of our work is that we
    don't have a permanent research staff even though all of my
    colleagues who are on the staff have their areas of expertise.
    There is a tremendous demand to be a fellow of the Institute of
    Peace for a year and work on some war- and peace-related issue.
    About half our fellows are foreign nationals. It is very hard
    for folks from Northern Ireland, from the Middle East, from the
    former Soviet Union to find anopportunity to come to this
    country and work with colleagues from the United States on issues of
    conflict management in their countries. We could expand the number of
    our fellows, let's say, by 10.
        We could make an important investment in the infrastructure
    of electronic outreach, which has a tremendous leveraging
    effect on our work. For example, our National Peace Essay
    Contest: we now reach 7- or 8,000 kids around the country. We
    have the capacity through the Internet, through Webcasting,
    through teleconferencing, to start reaching 10 times that
    number. States around the country are beginning to wire up
    their classrooms. So we could, again, take the work that we do
    and give it much more outreach through a modest investment in
    the technology that will enable us to do so electronically.
        I am tempted to ask my colleagues how they want to spend
    the money.

                        NEED FOR MORE EDUCATIONAL FUNDS

        Ms. Hentges. Let me add some specifics to what Dr. Solomon
    said. One of the areas we cut back after we submitted our
    budget to OMB was work supporting education in foreign zones of
    conflict. We think that some of the work we do now with high
    school and college and university teachers in the U.S. is
    valuable. We requested funds for doubling that effort in the
    U.S., but we can also do that work in the Balkans and some of
    the other zones of conflict. But we had to scale that back.
    Right now all we have been able to plan is some help with
    textbook revision and curriculum reform, but there is certainly
    more that can be done with educators there.
        We also have, I think, some programs with the next
    generation in the zones of conflict where you replicate the
    successful experience of dialogue across differences. So I
    think that is an important area. Very often the training
    programs that we do lead to facilitation opportunities because
    of the information we provide and the confidence that they
    begin to have in us because of that experience. And so I think
    there are a number of ways that that could be expanded as well.
        Mr. Crocker. Mr. Chairman, if I could respond quickly to
    that challenge as well. This is an organization that has no
    slack in it at all. In fact, it is negative slack, and I have
    been on this Board for 9 years, most of those years as
    Chairman. I sometimes feel like it could be for life unless the
    appointment process can move a little swifter. In my experience
    looking at the organization grow and develop and reach out,
    there are lots of situations where we simply do not have the
    manpower, the person power, the horsepower to send out a
    response team to assess a situation, an opportunity, for
    example, for program development, for training, for education,
    for facilitation. We just don't have the horses. We are very
    much stretched.
        So we feel--I think I can speak for everybody here--that
    there would be times when you wish there were just one or two
    more people who could respond to that situation at fast break,
    whether it is Indonesian transition, the development of a real
    humanitarian crisis in Sierra Leone where you might be able to
    do something.
        Mr. Porter. Well, I apologize for having to--we could talk
    a great deal more because you are doing so many interesting
    things. It seems to me there is a great deal of creativity and
    imagination going into how you can make a difference with a lot
    of different programs aimed in a lot of different directions
    that shows people are really thinking these things through, and
    trying to change behavior, and anticipate problems. And I love
    the idea of working with young people in conflicted situations
    to try to change the result in the future. I think that is
    very, very important work.
        We need to do a better job on your funding. At one time
    there were active hostile enemies in the Congress in the early
    years. I think that that has changed, although I don't want to
    test it to find out. I think that that has changed. And what we
    need to do is to find a way to give you additional resources so
    that you can take advantage of the opportunities that are there
    to make further difference, and I am not sure quite how to do
    that, but I know I would like to do it and want to do it, and
    we are going to have to look at creative and imaginative ways
    on this side to see how we can make the growth of this
    institution occur at a faster rate and allow you to do much
    more of what all of us understand is God's work and makes a
    difference in individual and country lives that is so important
    to the future of life on this planet.
        So thank you for the wonderful job you do, and we will do
    our best to try to reflect that in our appropriations process.
    Thank you all for being here.
        Mr. Solomon. Thank you, Mr. Chairman.
        Mr. Porter. The subcommittee stands in recess until May 2
    at 10:00 a.m.
        [The following questions were submitted to be answered for
    the record:]

                                               Thursday, April 6, 2000.

                         NATIONAL COUNCIL ON DISABILITY

                                   WITNESSES

    KATE PEW WOLTERS, VICE CHAIRPERSON
    ETHEL D. BRIGGS, EXECUTIVE DIRECTOR
        Mr. Porter [presiding]. The subcommittee will come to
    order.

                           Introduction of Witnesses

        We continue our hearings on the budget for fiscal year
    2001, and are pleased to welcome Kay Pew Wolters, the Vice
    Chairperson, accompanied by Ethel D. Briggs, the Executive
    Director of the National Council on Disability. Nice to see
    you.
        Please proceed with your statement and then we will see if
    we have questions.
        Ms. Wolters. Thank you. I believe that you have my prepared
    testimony for the record. And I have some brief remarks in
    addition.
        Before I begin, I bring greetings from our chairperson,
    Marca Bristo, who is from your fair state, Illinois. And I
    would also like to congratulate you on your upcoming retirement
    and thank you for your support over the years. We have enjoyed
    working with you and your staff. Thank you very much.

                               Opening Statement

        First, I will present you with an overview of NCD and our
    work, and highlight some specific areas of our work during the
    last few years. Then I will present our proposed budget for
    fiscal year 2001, with an explanation of this proposal.
        Finally, I will make a few closing remarks and then welcome
    any questions.
        NCD is an independent Federal agency makingrecommendations
    to the President and Congress on disability policy that affects 54
    million people with disabilities, regardless of age, disability type,
    perceived employment potential, academic need, specific functional
    ability, or any other circumstance.
        NCD is comprised of 15 members appointed by the President
    and confirmed by the U.S. Senate. Our members span from the
    East Coast to the West Coast. We come from all walks of life;
    we come from rural and urban areas, we are culturally diverse,
    and we represent all disabilities.

               UNIQUE ROLE OF THE NATIONAL COUNCIL ON DISABILITY

        Established in 1978 within the Department of Education, NCD
    was designated as an independent agency in 1984 so that it
    would be in a unique position to offer objective and
    independent expert advice to the Congress and the
    administration.
        Our authorizing legislation, the Rehabilitation Act,
    provides a very broad mandate covering all aspects of
    disability policy. While many government agencies deal with
    issues and programs affecting people with disabilities, NCD is
    the only Federal agency charged with addressing, analyzing and
    making recommendations on issues of public policy that affect
    people with disabilities.
        NCD recognizes its unique opportunity to facilitate
    independent living, community integration and employment
    opportunities for people with disabilities by ensuring an
    informed and coordinated approach to addressing the concerns of
    people with disabilities and eliminating barriers to our active
    participation in community and family life.

                 Major Accomplishments During FY99 and to Date

        I would now like to highlight some of the major
    accomplishments of NCD during fiscal year 1999 and to date.
        As a result of recommendations that were made from hundreds
    of disability leaders in 1996, and compiled in our report
    ``Achieving Independence,'' NCD is currently coordinating a
    multiyear study on the implementation and enforcement of
    several civil rights laws for people with disabilities,
    including the ADA, the Individuals with Disabilities Education
    Act, or IDEA, the Air Carrier Access Act and the Fair Housing
    Act.
        On March 18, 1999, NCD released a ground-breaking report
    documenting the ineffective enforcement of the Air Carrier
    Access Act since the law's passage in 1986. NCD's report,
    ``Enforcing the Civil Rights of Air Travelers with
    Disabilities,'' contains recommendations on how to improve
    enforcement, including changes to the law and improvements for
    the Department of Transportation.
        Unfortunately, NCD found that although things have improved
    since the Air Carrier Access Act was passed in 1986, people
    with disabilities continue to encounter frequent significant
    violations to their civil rights. When we complain, we
    encounter an enforcement effort that is both inconsistent and
    limited in scope.
        The Department of Transportation and Secretary Slater have
    addressed many of our concerns in new rules and communications.

                               MINORITY OUTREACH

        Now I would like to take a moment to elaborate on NCD's
    outreach to people with disabilities from diverse cultures. NCD
    has conducted several meetings and hearings to gather
    information from people with disabilities from diverse cultures
    and rural areas. As a result, NCD published its 1999 report,
    ``Lift Every Voice: Modernizing Disability Policies and
    Programs to Serve a Diverse Nation.'' The executive summary of
    this report was released at the White House Forum on Disability
    and Cultural Diversity that also celebrated the ninth
    anniversary of the Americans with Disabilities Act. The forum
    convened by the White House and NCD, with support from the
    Leadership Conference on Civil Rights, focused on how to
    improve outcomes in education, employment, and civil rights
    enforcement for people with disabilities from diverse cultural
    backgrounds.
        I am delighted to tell you that in May, NCD will conduct
    Think Tank 2000, Coalitions for Advancing the Civil and Human
    Rights of People With Disabilities From Diverse Cultures. The
    Think Tank is a brain child of our second vice chairperson,
    Judge Hughey Walker and will include invited leaders from
    diverse cultures include people representing grass-roots
    disability and traditional civil human rights groups as well as
    the Chairs of the Congressional Hispanic, Native American,
    black, and Asian and Pacific American Caucuses.
        The purpose of Think Tank 2000 is to highlight common
    causes and identify key strategies for eliminating barriers to
    civil and human rights for people with disabilities from
    diverse backgrounds. An action plan from Think Tank 2000 will
    then be presented to the President and to the 106th Congress.
    The committee will hear more about Think Tank 2000 at next
    year's hearing.
        NCD receives literally thousands of telephone calls, e-mail
    messages and letters from concerned individuals and
    organizations about disability issues. With continued
    refinement of its award-winning Web page that receives more
    than 600,000 hits per year, and e-mail capabilities, NCD's
    outreach to its constituents continues to grow in record
    numbers.

                         Current Activities for FY 2000

        NCD's proposed priorities for the current fiscal year 2000
    include the implementation of a policy fellowship program for
    new and emerging leaders with disabilities, completion of a
    study of Federal policies affecting access to technology for
    people with disabilities, and completion of the first phase of
    the Disability Civil Rights Monitoring Project which looks at
    implementation and enforcement of disability civil rights laws.
        NCD will continue its studies that monitor the
    implementation and enforcement or the Fair Housing Act
    amendments and section 504 of the Rehabilitation Act.
        We will conduct briefings in the 10 Federal regions to
    gather input on the national enforcement agenda developed from
    the Disability Civil Rights Monitoring Project reports.
        On January 20th, NCD released its report, ``From Privileges
    to Rights: People with Psychiatric Disabilities Speak for
    Themselves.'' NCD board member, Rae Unzicker, presented the
    report on behalf of NCD at the winter conference of the
    National Association of Protection and Advocacy Systems. The
    report is based on NCD's testimony from mental health
    professionals, lawyers, advocates, and relatives of people with
    psychiatric disabilities and from people with psychiatric
    disabilities themselves.
        They describe in graphic detail how people with psychiatric
    disabilities have been beaten, shot, isolated incarcerated,
    raped, deprived of food and bathroom privileges, and physically
    and psychologically abused in institutions in their
    communities.
        This testimony resulted in a number of recommendations for
    change in the way people with psychiatric disabilities are
    treated. The most important is the elimination of coercion.
    ``From Privileges to Rights'' calls on the President and
    Congress to address the many problems faced by people with
    psychiatric disabilities and ensure that they are fullyand
    substantively involved in the making of policy changes that will enable
    them to claim their full citizenship rights.
        With regard to the Disability Civil Rights Monitoring
    Project, parents, students, and disability advocates braved a
    blizzard to participate in NCD's January 25th news conference
    highlighting the release of its ``Back to School on Civil
    Rights'' report. The report confirms what parents and children
    with disabilities have repeatedly told NCD, that noncompliance
    with the Individuals with Disabilities Education Act, IDEA, has
    persisted in some States over many years, placing enormous
    burdens on children and families. NCD also found too many
    parents of children with disabilities continue to spend endless
    resources to overcome obstacles to their child's basic right to
    an appropriate education, often at the expense of their
    personal lives, their careers, and their family's financial
    security.

               Planned Activities and Budget Request for FY 2001

        And now on to our current requests: NCD is requesting
    $2,615,000 for fiscal year 2001, which is an increase of
    $215,000 above that appropriated for fiscal year 2000. These
    additional funds will primarily be used to cover operational
    costs, such as the cost-of-living and rent adjustments, three
    FTEs, and funds for research and contractual.
        In fiscal year 2001, NCD will build upon fiscal year 2000
    activities. Our proposed activities for 2001 include the
    continuation of the second phase of the Disability Civil Rights
    Monitoring Project, which includes continued work from studies
    on the Fair Housing Act and the Rehabilitation Act that began
    in fiscal year 2000; an assessment of the process for
    addressing the civil rights compliance of various agencies at
    the regional and State levels; and a review of the
    implementation of the United Nations Standard Rules for the
    Equalization of Opportunities for Persons With Disabilities
    within the U.S. Federal agencies dealing with international
    disability issues.
        NCD's fiscal year 2001 initiatives capitalize on NCD's
    ability to play a unique and valuable role in the Federal
    policy process. With this requested increase, NCD will continue
    to strengthen the linkage between the administration, Congress,
    and the growing but often overlooked constituency of people
    with disabilities.
        In fiscal year 2001, we are proposing to undertake major
    and important initiatives designed to markedly improve
    disability policy in this country. We have historically
    operated in a cost-effective manner, with a small core staff to
    identify issues and coordinate research projects.

                               Closing Statement

        In conclusion, we are very excited about our planned
    activities for 2001. As an independent Federal agency
    representing the concerns, needs, and interests of our
    constituents, and yours--currently 54 million Americans with
    disabilities and their families--we will continue to provide
    the President and Congress with timely information and advice
    on the most important issues facing all Americans with
    disabilities.
        I hope that you will contact NCD at any time, should you
    need information regarding issues affecting people with
    disabilities. Thank you for providing us with an opportunity to
    present testimony on our 2001 budget request, and I would be
    happy to answer any questions you might have.
        [The information follows:]

        Mr. Porter. Thank you very much. That was a very fine
    statement.
        We have 54 million people with disabilities out of a
    population of approximately 270 million. Do we have any
    historical figures as to whether the numbers are going up or
    down or steady?
        Ms. Wolters. Do you know, Ethel?
        Ms. Briggs. Basically, the number of people with
    disabilities is increasing. The reason is because of
    technology. For example, a person could have had an automobile
    accident 10 years ago that would have been fatal. Today, we
    have medical technology that would keep those people alive and
    they become people with disabilities.
        Mr. Porter. I just had the son of one of my former chiefs
    of staff severely injured in an automobile accident, both head
    injuries and internal injuries, and they said 10 years ago he
    never would have had any chance. He's a 14-year-old boy. Two
    weeks later he is up walking around. He still has, obviously,
    very severe problems resulting from the accident. But they said
    he would never have survived, so that is very understandable.
        I would like you, Ms. Wolters, because you are going to
    know more about this than anyone, to look at the direction of
    the life of people with disabilities, first in the United
    States and then worldwide, and tell me whether we are going in
    the right direction--not in terms of policy; I know you deal
    with policy. I want to know the results. Are their lives easier
    or better? Are we moving in the right direction? Do you
    understand?
        Ms. Wolters. Yes, I think I understand your question; and
    the quick answer to that is, yes. We are moving in the right
    direction, because the other direction was so bad.
        And there is one thing that we cannot change, and that is
    attitudes. Some of that is changing, but some of the attitudes
    towards people with disabilities are still discriminatory, are
    still in ways that thwart us. I think that laws can help change
    those attitudes without a doubt; and the laws that are in place
    right now have helped us amazingly in many ways. At 42 years
    old, I can tell you that when I went to a segregated school
    through 12th grade, there was no law to protect me. And now
    there are laws to protect people who are going through the
    education system.
        Therefore, I was not given the education and the
    opportunities that I should have been given. I survived
    nonetheless, but it is amazing to me the opportunities that
    young people now have that I did not have as a young person.
    And so, I can only tell you that things are, yes, definitely
    getting better.
        Is there a lot of room for improvement? Of course, there
    is.
        Mr. Porter. Look worldwide for me, because we have a
    population worldwide that is increasing very rapidly. We have a
    lot of places on the planet where there is not any substantial
    level of health care that could help people. What is happening
    to other people, outside the United States? I suppose to kind
    of pinpoint it, Canada would probably be similar to the United
    States or maybe even better, and in Europe it would probably be
    good, but other places not.
        Ms. Wolters. It is amazing to me in the last several years,
    there have been numerous international conferences related to
    disability issues in places that I would never have imagined
    would even be thinking about these issues.
        They are looking to us as the experts, the United States
    and NCD as well. It says to me that there is movement, there is
    evidence that there is empowerment and that there is awareness.
    I think that from a physical accessibility standpoint, things
    have definitely gotten better.
        From a treatment issue, I think that there are some
    cultural problems that none of us can get around that are very,
    very disheartening, that are very much a cause of concern about
    how other countries treat children with disabilities and that
    is disheartening. All we can do, and what we are doing, is work
    to make sure they have the proper information to make sure they
    understand that children with disabilities will grow up to be
    great members of their society.
        Mr. Porter. It seems to me that this country is predominant
    in so many ways at the moment, that we have great opportunities
    to change the mind-set of the world in many different ways; and
    this is an area where we can reach out, and I am sure you are
    doing exactly that, to try to change everyone for the future so
    that people with disabilities will have a better life. It seems
    that the United States can project that kind of leadership.
        Ms. Wolters. Your comment is so timely, Mr. Porter. As we
    speak, the National Council is holding a 2-day conference on
    international issues related to people with disabilities over
    at the Washington Marriott, which is where I will be going when
    I am done here and why our chairman is not able to be here.
        Mr. Porter. We did not hold this hearing at a very timely
    place, I am sorry.
        Ms. Wolters. We were in town anyway, so we are happy to be
    here.
        Mr. Porter. You talked about IDEA, and we have jurisdiction
    in this subcommittee over funding for IDEA, and we have put
    substantial increases in IDEA funding that we hope will be very
    helpful to young people with disabilities in school.
        There is one thing that I want to pass along. We are such a
    litigious society that often people go to an attorney right
    away when they have a problem. I would make a suggestion that
    you put out on your Internet site, or however you communicate,
    that very often the first place that people ought to go is to
    their Member of Congress.
        We had a case in my own district, one of our school
    districts was not providing the kinds of access and
    opportunities, and there was a discriminatory attitude toward a
    young person with a disability in one of our high schools. We
    called them up, got the superintendent and talked to him
    directly. The whole thing turned around without it costing $1.
    They understood that we were watching them, that they were not
    complying with the law in providing the kind of services they
    should. It turned it around completely.
        I think Members of Congress can save a great deal of
    resources, a great deal of time, and get results very fast
    because most of us do not sit on the sidelines. We want to help
    people who need our help. It is a human thing and a political
    thing, both. And I think that--tell people when they have a
    problem, go see their Member of Congress, because they have
    staffs that know these issues, and we are not afraid to tell
    people when we think they are wrong.
        Ms. Wolters. I appreciate that, and your district is lucky
    to have somebody that is as concerned as you are about this
    issue.
        Mr. Porter. Well, I am lucky to have a staff like I have.
        I think the most high-level case involving the ADA recently
    is the Casey Martin case, where you have had a decision that
    this young man, who has a disability with his leg--he has a
    rare blood disorder or circulation disorder--has been ordered
    by the ninth circuit to be provided a cart so that he can
    compete in professional golf tournaments. You are probably
    aware of this.
        There is another case in the seventh circuit that was
    brought by another individual against the United States Golf
    Association, which is the one that handles amateur
    competitions, and that case went the other way.
        And right now, my understanding is that the ninth circuit
    is seeking certiorari in the Casey Martin case to have the case
    reviewed by the Supreme Court.
        Do you get involved in this by way of discussion within the
    Council or even by way of providing an amicus brief in the
    court taking a position on behalf of the disabled individual?
        Ms. Wolters. Yes, we have. Not in this particular case.
        Mr. Porter. But you do this kind of thing?
        Ms. Wolters. Yes, Mr. Chairman.
        Mr. Porter. Why not in this case, just as a matter of
    curiosity?
        Ms. Wolters. I think partly because of staff resources. It
    was not one that was brought to our attention by our
    constituencies. While it is, I think, an important matter,
    there were several other cases that some consumers thought were
    probably more legally challenging that we have been involved
    in.
        Mr. Porter. I tried to say at the beginning this may not be
    the most important case, but it is a case that is fairly high
    level in the press.
        Ms. Wolters. I understand.
        Mr. Porter. And I thought maybe you might be involved in
    it.
        Information technology is changing our whole economy, and
    maybe the whole world, in profound ways that we probably do not
    fully recognize or understand yet. But one of the ways that it
    is allowing people to work is to stay at home and work at a
    computer.
        How is this likely or how is it affecting people with
    disabilities who often have had transportation problems, access
    problems and the like?
        Maybe this is a salvation for many people that will allow
    them to be fully employed, gainfully employed and earning a
    good income where they might not have had that opportunity
    before. Are you seeing that, or am I missing something?
        Ms. Wolters. It is a double-edged sword, Mr. Chairman. You
    are right. Many, many people would believe that a bird in the
    hand is worth two in the bush. To be able to have a job, to
    have the employment, to have the money to be able to spend on
    health care, et cetera, is certainly the primary goal.
        But imagine the isolation. Imagine the isolation that
    people with disabilities would feel working in their home day
    after day after day.
        I have some feelings about taking the Department of
    Transportation off the hook. The Department might say all these
    people with disabilities are going to work at home, so you do
    not have to provide transportation. The same applies to taking
    businesses off the hook by saying you do not have to provide
    reasonable accommodation because you can go work at home.
        To a certain degree, it gives us boundless options; to
    another degree, it limits us incredibly.
        Mr. Porter. You see, that is what people without
    disabilities do not quite understand, because I did not see
    that; and now when you say it, of course, I see it very
    quickly. Yes, the isolation would be a very negative thing.
        Well, it may help on the income side. I don't think it
    should let the Department of Transportation or others off the
    hook in any way, because people without disabilities do not
    stay at home, they go out and do things; and people with
    disabilities obviously need to do that also, and they still
    need the access and the transportation to go about the rest of
    their lives, beyond the employment part.
        Ms. Wolters. I would think that the technology would be
    able to help people with disabilities to be more integrated
    into the work force.
        Mr. Porter. Yes. Staff has prepared a number of questions
    that are important on the budget. Some of them, you have
    already addressed in your remarks. I think I am going to submit
    the rest of these for the record and let you get to your
    conference.
        Ms. Wolters. Thank you very much.
        Mr. Porter. Thank you very much for the job that you are
    doing there, and we are going to do our best to provide the
    resources you need.
        Ms. Wolters. We appreciate it.
        Mr. Porter. Thank you.
        The subcommittee will stand in recess until 2 p.m.

                                               Thursday, April 6, 2000.

                          ARMED FORCES RETIREMENT HOME

                                   WITNESSES

    DAVID F. LACY, CHIEF EXECUTIVE OFFICER/CHAIRMAN OF THE BOARD
    BRIGADIER GENERAL JAMES F. HENNESSEE, DEPUTY DIRECTOR, U.S. SOLDIERS'
        AND AIRMEN'S HOME
    CAPTAIN JESSE H. VASQUEZ, MSC, USN, DIRECTOR, U.S. NAVAL HOME

                                 Call to Order

        Mr. Porter. The subcommittee will come to order. We
    continue our hearings on the appropriations for fiscal year
    2001 with the Armed Forces Retirement Home. We are pleased to
    welcome Mr. David F. Lacy, the CEO and Chairman; Major General
    Donald C. Hilbert, U.S. Army (Retired), and Captain Jesse H.
    Vasquez, MSC, USN, Director, U.S. Naval Home. Gentlemen, we are
    glad to see you.
        You have a wonderful advocate on this subcommittee in Mr.
    Cunningham, and Mr. Bonilla as well; and they are going to look
    after you, as I am.
        Good to see you. Please proceed.

                           Introduction of Witnesses

        Mr. Lacy. Thank you, Mr. Chairman.
        Honorable members, I am pleased to appear before the
    committee today to testify on behalf of the Armed Forces
    Retirement Home. You have my prepared statement, which I ask to
    be entered into the record. I am accompanied today by
    representatives of our two facilities. On my left, is Captain
    Jesse H. Vasquez of the United States Navy, who is the Director
    of the United States Naval Home in Gulfport; and on my right is
    General James F. Hennessee, U.S. Army (Retired), who is the
    Deputy Director of the United States Soldiers' and Airmen's
    Home here in Washington, D.C.
        General Donald C. Hilbert, U.S. Army (Retired), was unable
    to be here today. He is the Director of the United States
    Soldiers' and Airmen's Home, but because the hearing had to be
    rescheduled, he was unable to be here. We are sorry about that.

                               Opening Statement

        First of all, I cordially invite each member of the
    committee to visit our homes 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 you have the
    opportunity to chat 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. prisoners of war 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 the World War II and Korea.
        Our doors are always open to you. Please come and visit
    with these heroic veterans. They are indeed living treasures of
    this great Nation.
        In order to support these distinguished veterans, we are
    requesting a $60 million operations and maintenance budget for
    fiscal year 2001. These funds will provide a continuum of care
    to support 1,770 residents of which 280 are in long-term care.
        Our capital outlay fund request for fiscal year 2001 is
    $9.8 million, the bulk of which is for the third phase of
    construction of the United States Naval Home's health care
    facility. Construction begins in fiscal year 2001, and is
    scheduled for completion in fiscal year 2003. The existing
    long-term care unit was designed around 1970, and the assisted
    living units were originally independent living units. Neither
    setting meets current retirement home standards nor do they
    meet standards for handicapped accessibility.
        The fourth and final phase of the health care facility will
    be a part of the capital request in the fiscal year 2002 budget
    at a cost of $6.3 million. We appreciate your continued support
    for this multiyear project. The remaining capital request this
    year supports capital repairs and replacements at the U.S.
    Soldiers and Airmen's Home.

                           EFFICIENCIES AND ECONOMIES

        Members of the AFRH board, the homes, and the two local
    oversight boards have sought out efficiencies and economies of
    operation by internal analysis, outsourcing, and by
    implementing sharing agreements. During the period of April
    through October 1999, the AFRH underwent a joint inspection
    spearheaded by the Department of the Army. It was the Army
    Inspector General's conclusion that the AFRH provides excellent
    residential, social, and health services to its residents who
    are predominantly satisfied with the care they receive.
        The AFRH is following up on the recommendations that result
    from this inspection. Currently, we are in the process of
    conducting a most efficient organization study that was
    recommended by the inspection team. The scope of this study
    includes reviewing processes and procedures, organization,
    structure, and staffing of the entire Armed Forces Retirement
    Home. The study is scheduled for completion in August of this
    year.
        The audit of the Armed Forces Retirement Home fiscal year
    1997 financial statements was conducted by an outside firm,
    Brown and Company. The home received a qualified opinion, which
    is a notable accomplishment among Federal agencies. We are
    currently working with the outside audit firm to review our
    1999 fiscal year financial statement. This audit actually began
    very recently.

                              ADDITIONAL REVENUES

        As you know, a large portion of the income to our trust
    fund is tied to the active duty force size, which has
    significantly reduced in the last decade after the Cold War
    ended. This, in turn, had decreased the revenue on our trust
    fund. We must now realize some increase in income so that the
    Armed Forces Retirement Home trust fund will not become
    insolvent. If the trust fund does not receive positive
    financial intervention, we project that the trust fund will
    become insolvent in approximately 2006. In addition to the cost
    efficiencies described above, the Armed Forces Retirement Home
    is taking many steps to increase revenue.
        We continue to seek additional venues of funding by methods
    such as our recently created Armed Forces Retirement Home
    Foundation. In March 2000, the AFRH Foundation obtained
    eligibility to participate in the Combined Federal Campaign
    nationwide for the year 2000.
        We also anticipate that the retired military voluntary
    allotment program that we have established will provide the
    AFRH trust fund with a steady increase in contributions in the
    upcoming future. Last year, we received approximately $141
    thousand dollars from retired military members through the
    voluntary allotment program.
        As you know, we are seeking to generate income from our
    excess 49 acres of land at the United States Soldiers' and
    Airmen's Home. The AFRH has received an appraisal report from
    the Millennium Corporation, which conducted the appraisal of
    the land. The AFRH is currently studying the options for the
    best and most economic disposition of this land by lease or
    sale.
        The AFRH is anxiously awaiting the decision of the
    Department of Defense to implement the 1995 congressionally
    authorized increase in active duty pay assessment from 50 cents
    to $1. The increase in the deduction from 50 cents to $1 and
    the lease or sale of the 49-acre parcel of land are critical to
    the future financial health of the AFRH trust fund.
        In closing, I again ask you to remember the distinguished
    veterans who served our country well when we needed them
    themost. It is now our duty and moral obligation to be there when they
    need us the most.
        Mr. Chairman, we will be happy to respond to your questions
    and look forward to continued support from the committee.
        Mr. Porter. Thank you Mr. Lacy.
        [The information follows:]

        Mr. Porter. General Hennessee, let me apologize. I could
    have looked up and seen that you were not General Hilbert, but
    I was reading off of the notes of my staff.
        I have to say, Mr. Chairman, that Duncan Hunter, who is a
    very good friend of all of ours, goes out to the home
    frequently, as you probably realize, and keeps us posted on
    what is happening there, and often tells us about the people
    that you described in your opening statement that are residents
    there.
        And we keep up--I have not been out for some number of
    years, but we keep up through Duncan as to what is happening,
    and he helps us a great deal.
        Let's talk for a minute about the augmentation of the 50-
    cent increase in enlisted active duty pay deduction. Why has
    that not been implemented by the DOD?
        Mr. Lacy. Well, I can't really speak for DOD. We have been
    requesting this since it was authorized in 1995. We currently
    receive about $7 million a year from the 50 cents that we do
    receive, so if we were to receive the increase, it would
    generate an additional $7 million each year.
        Mr. Porter. What is preventing us from receiving the
    increase?
        Mr. Lacy. DOD has indicated to us that they want this
    increase to be a part of a total solution to the funding
    issues. We believe that this increase, together with an
    appropriate sale or lease of the 49 acres, those two things
    together, would be able to generate a total solution for the
    long-term viability.
        Mr. Porter. Well, they have had 5 years to help you get to
    a total solution here. Congress authorized it. It seems to me
    that it is something they ought to implement and get on with
    it. That would certainly get you a long way towards the total.
        Mr. Lacy. We certainly agree. It is at a very high level
    within DOD at this point. They have continued to indicate to us
    that things are looking positive for this change, but we have
    not yet seen the change occur.
        Mr. Porter. Well, I think we ought to put a little pressure
    on them to get this done. The chairman of our committee, of
    course, was once chairman of the Defense Appropriations
    Subcommittee and keeps an active interest there. I think maybe
    Duke and I ought to talk to our chairman and see if we cannot
    apply a little pressure to get this thing done. It would help
    you a great deal.
        Mr. Lacy. We would certainly appreciate that support.
        Mr. Porter. Fifty cents a month, I think people can afford
    that.
        The status of the property, the 49 acres, at one time there
    was--and I don't remember the details, but the Archdiocese of
    Washington, I think, is the neighbor there, and they were going
    to buy it, but haven't; or there was some agreement?
        Mr. Lacy. There was legislation structured that would have
    required us to sell it to that party. However, we were able to
    obtain a change in the legislation. The National Defense
    Authorization Act in 2000 does require us to sell or lease the
    land by the end of this fiscal year at the highest and best
    economic use. Catholic University in that legislation is given
    the option of matching the highest bid for that land if they
    choose to do so. And we are in the process of taking the steps
    to implement that law right now.
        Mr. Porter. Have there been any bids for the land, other
    than their own?
        Mr. Lacy. No, so far, we have sought the appraisal and that
    is undergoing some final study by DOD, and then we will go out
    for procurement. We are taking some initial steps. I think we
    have done the request for proposals for title search and
    environmental study and so forth. So we are getting everything
    lined up to be able to go out to the marketplace.
        Mr. Porter. If this is not a proper question, do not answer
    it, but what do you think the appraised value of the land would
    be?
        Mr. Lacy. Well, we have been advised that we need to keep
    that information closely held because it could affect the
    market.
        Mr. Porter. That is why I asked it that way. I assumed you
    might not want to share that.
        Mr. Lacy. Thank you.
        Mr. Porter. The capital outlay account asked for a decrease
    of nearly $3 million, and you alluded to this in your oral
    testimony. Why is that a decrease? Have you met the needs of
    the Naval Home?
        Mr. Lacy. The primary reason is, we completed a significant
    renovation of the Sheridan Dormitory at the Soldiers' and
    Airmen's Home; that was a multiyear capital project.
        Mr. Porter. All right. If you look down the line on
    eligible retirees and possible future residents of the home,
    what do you see?
        Mr. Lacy. We believe that there are going to be
    approximately 20 million potential eligibles. About 1.1 million
    of those would be retirees; we expect that that number of
    people will remain relatively stable.
        There is a slight dip, I think, in the year 2015. But
    basically, for the next 15 years, we expect the market to hold
    steady at that kind of level.
        Mr. Porter. And are people now being turned away or are you
    able to accommodate all who seek to live in the homes?
        Mr. Lacy. We are currently able to accommodate folks.We
    developed a waiting list when we were undergoing some renovation at the
    Soldiers' and Airmen's Home, and I would like to ask each of the homes
    to briefly respond to that question as well.
        BG Hennessee. Mr. Chairman, speaking for the Soldiers' and
    Airmen's Home, we historically have had a population of
    residents in the range of 1,900 to 2000. In this decade that
    has declined. Part of that decline had to do with our own need
    to renovate facilities from the multiperson rooms with
    bathrooms down the hall into something that was in sync with
    the modern standard. We have done that. In the process, for
    almost 2 years, we had to virtually stop entry of eligible
    persons in order not to have to displace those who were already
    in the home.
        During that period, we accumulated a large waiting list of
    several hundred. I am happy to report that we have now reopened
    the sheridan dormitory, that has a capacity of over 500, it's
    renovation had caused the waiting list. And we are in the
    process of, we believe, eliminating all or the vast majority of
    our waiting list.
        So we believe that, come mid-summer, we will have
    essentially no waiting list, but still have a population
    substantially below that which was historical.
        Frankly, we believe there are many more out there who need
    and want to come to the homes, but the adverse publicity that
    has been associated with what you heard our Chairman relate
    here today, the financial solvency issue, the homes having
    enough money for the long-term, for the future, is frankly
    causing many who call and inquire about coming to the home to
    delay making that decision because, I think understandably,
    very elderly people--our average resident's age is 76--at least
    in their own minds are casting their final lot, and they do not
    wish to cast it somewhere where they might be displaced in
    their 80s or 90s.
        We are confident that there will be a solution. We tell
    these people that. But still and all, until they can read in
    the public press that the future of the homes is not in
    jeopardy, there will be some, perhaps many, who want and need
    our services very badly, but choose not to come. We see that as
    our major problem. I should think right now we may be reversing
    that perception among elderly veterans that the homes are truly
    here to stay and that they can count on us. And we thank you
    for your support in helping, by your statement, to let people
    know that you stand behind what we do for the long term.
        Captain Vasquez. Mr. Chairman, on behalf of the United
    States Naval Home, we are happy to report that we have no
    waiting list. You would think that that is a good thing, but in
    essence it is not; because I have a total of 601 units, and I
    have 162 vacancies this morning. The reasons for those
    vacancies are identical to the ones that General Hennessee has
    just enumerated, and that is the adverse publicity on the
    impending insolvency of the trust fund would make it a very
    unwise thing for our senior citizens to make such a decision
    and risk a second displacement.
        Mr. Porter. How much money is in the trust fund?
        BG Hennessee. At the end of the last fiscal year, there was
    $102 million in the trust fund.
        Mr. Porter. And how fast are we drawing that down?
        Mr. Lacy. The deficits each year are running on average
    about $8 million to $10 million, depending on the capital
    needs.
        Mr. Porter. My final question is, is the number that was
    submitted in the President's budget the same as the number you
    submitted to OMB?
        Mr. Lacy. It is within $150 thousand dollars on the O&M
    side. OMB has been supportive. They did ask us to juggle some
    timing on capital, but which was not a problem for us.
        Mr. Porter. Couldn't you ask us for the $8 to $10 million
    from the appropriation and preserve the trust fund?
        Mr. Lacy. We could certainly do that. We have not had
    support in the past for that kind of appropriation.
    Historically, the homes have been funded from this trust fund,
    and a direct appropriation would certainly close that gap.
        Mr. Porter. Well, where does the money from the trust fund
    come in? I guess maybe I do not know the mechanism.
        Mr. Lacy. It comes from a number of sources. It comes from
    the 50 cents from the enlisted active duty service people per
    month. It comes from the fines and forfeitures from all of the
    services. It comes from fees that we charge the residents based
    on a percentage of income. Those have been increased over the
    past 3 years based on congressional authority to do that.
        Currently those fees are 40 percent for people in
    apartments and 65 percent for people in health care. And then,
    of course, we earn income off the investment of our trust fund.
        Mr. Porter. But the trust fund is kind of an invested
    checking account, in a way, because you are drawing in your
    revenues from there, except for the ones coming from Congress,
    and you are paying out your expenses?
        Mr. Lacy. And we are paying out, that is right, and we are
    self-sufficient. We have not relied on taxpayer money. All the
    resources come from that trust fund. The problem is, we have
    this gap because the fines and forfeitures and the revenue from
    the 50 cents has decreased as the forces have been downsized.
        Mr. Porter. If the 50 cents were $1, where would the trust
    fund be?
        Mr. Lacy. That would resolve the deficit related to our
    O&M. It would still leave us a couple of millions of dollars
    short for the long term and for capital needs.
        Mr. Porter. If you sold the 49 acres and put those funds
    into the trust fund and, from that, earned income, where would
    that leave you?
        Mr. Lacy. We believe that the best option for us may
    actually be to have a long-term lease and generate income from
    the lease of that land; and we would hope to be able to
    generate in the $2-to-4-million-a-year range.
        Mr. Porter. Those two things would bring you fairly close?
        Mr. Lacy. Exactly right. They would actually, for the most
    part, resolve the problem for the long term for us.
        Mr. Porter. Finally--and I know I am running over my time,
    but the increase, as we compute it, is 2.3 percent. I suppose
    if you backed out the capital expenditures, it would be higher
    than that and, therefore, higher than inflation. It just seemed
    to us, looking at the numbers, it is below the rate of
    inflation, which is obviously pretty low.
        Mr. Lacy. Well, we have held our expenses very tightly over
    the past decade. We knew when the AFRH was created in the early
    1990s, which brought the two homes together, that this funding
    stream was going to be in jeopardy, so we havetaken steps over
    the years. We are actually operating at 26 percent less FTEs than we
    were in about 1991 or 1992.
        Our O&M budgets basically ran flat in absolute dollars for
    the past 5 years--in other words, losing against inflation.
    This is one of the first years we have had a slight increase in
    O&M in 5 or 6 years and that is primarily because of required
    pay raises that the government has passed. And those have
    doubled up on us, in effect, and that is what is causing part
    of the problem.
        Mr. Porter. Let's see if we can make the year 2000 the year
    that you get over this. It sounds like you and your directors
    are doing an excellent job of managing the funds that you have
    and keeping the homes up to standard and providing the services
    that you ought to be providing. We just have to get this
    financial problem solved somehow.
        Mr. Lacy. Any support you could provide us, we would
    certainly appreciate it.
        Mr. Porter. We will do our best.
        Mr. Cunningham.
        Mr. Cunningham [presiding]. Thank you, Mr. Chairman. And
    you are absolutely right. One of your biggest supporters is
    Duncan Hunter, my seatmate right there, from San Diego,
    California. If any of that property takes out the golf course,
    though, he may oppose that. He is a big golfer.
        You know, in a very bipartisan way, we are going to take
    care of some of the other needs for our veterans. In many
    areas, in rural areas, TRICARE, other Band-Aids for veterans'
    health care that have been promised, have not lived up to the
    promise that we have offered for our veterans. And we are
    losing veterans every single day, especially from World War II.
        We will, this year, pass a bill that offers prescription
    drugs to the most needy of our citizens. We will not do it like
    the Democrats want to do and make all prescription drugs under
    the government, because we have many systems out there where
    people do not have those needs. They have insurance, they have
    the wherewithal to afford those kinds of things. And we will
    not have a big government subsidy or program that controls all
    prescription drugs. I think that is good.
        Secondly, we will have HMO reform; and again, we will not
    do it like the Patients' Bill of Rights that the Democrats
    want, because in that particular bill, it not only sues the
    HMOs--and I think the HMO, if they are guilty of some
    negligence, then they should be sued. But if you have an
    unlimited amount that you can be sued for in damages,
    compensatory damages, you can imagine what that will do to the
    cost of health care, to you or anybody else, whether they are
    military or civilian, that qualifies for that.
        The second aspect we will not allow is that under the
    Patients' Bill of Rights, you can not only sue the HMO, but if
    you have a business or a home and you hire an HMO to give your
    people health care, then the liberal trial lawyers will come
    down and sue the business who, in good faith, hired those HMOs
    for health care for their employees; and we are not going to
    allow that.
        But we are going to have an HMO reform bill this year. We
    are going to provide prescription drugs for the needy.
        I think the bipartisan support of FEHBP on the part of both
    Republicans and Democrats, the same thing that a civilian gets,
    sitting up here and working for this government, health care,
    you when you retire in the military are not afforded that.
        It is a pilot program right now. The White House kind of
    threw some cold water on it by telling people, if you get on
    this pilot program, you may not be able to get back on the
    other system when you come back, and it has been very narrowly
    confined, so that in my opinion, it has not had an opportunity
    to flourish.
        But we are going to do that, too; and I think that FEHBP,
    to keep the promise to our veterans for health care, is going
    to be a big support for the things that you are trying to do in
    the home as well, stand down for the homeless and things like
    that that have gone forward. And I like to think that in this
    decade, one of the things that we are looking at in this
    committee that the chairman champions is medical research. The
    genomics program, in which they did not think it was going to
    be until 2012 before they could map out what took Mother Nature
    millions of years, looking at our gene sequences, to determine
    what genes cause cancer, what genes cause diabetes, and those
    kinds of things; and they are doing that right now. And Dr.
    Varmus, who has left NIH, but Dr. Klausner with cancer and
    every--stem cell research, which you can take a veteran that
    has burns or that has been paralyzed, or their children that
    have juvenile diabetes, and even inject cells into that child
    that produce insulin so they do not have to get blood tests.
        These are some of the things, not directly related with the
    homes, but they affect them in a very positive way. And I am
    excited this next year and this next couple of years as far as
    what we are going to be able to do, not only for veterans but
    for the population in general.
        I think Chairman Porter asked about all the questions I
    wanted to ask as far as infrastructure and so on, and
    especially I was going to ask the question about the sale of
    the property, and I think probably lease is better. You have an
    ongoing revenue out there.
        San Diego, where I reside, has a buffer between Los Angeles
    and San Diego so that we do not become a multicity where you
    just go from one city to another, like Los Angeles, and that is
    called Camp Pendleton. If you look at Washington, D.C., and all
    of the massive housing developments that we have, and it is
    growing also like everywhere else in the country, we have a
    small area that we have birds and we have squirrels and we have
    foxes; and when you talk about the environment out there--as a
    matter of fact, those squirrels, they come up and you cannot
    swish them away. You have to take care of those little black
    squirrels that go right up your leg if they are not careful.
        BG Hennessee. Residents feed them, Mr. Cunningham.
        Mr. Cunningham. I know, and they expect to be fed when you
    are out there; and if you do not feed them, they get upset.
        So I want to commend all of you for what you do. So many
    times our veterans are left behind. I look at Ron Kovic and
    ``Born on the Fourth of July,'' how that was mistreated totally
    when he came back from Vietnam and a lot of people chastise Ron
    Kovic, but the liberals reached out to him and for the first
    time someone said, hey, come in with us. And in that kind of a
    situation, it should be our United States Government that
    reaches out to those individuals and says, hey, come on. We
    recognize what you did for your country and we are going to
    support you; and many of us feel that way.
        So I do not chastise Ron Kovic, I think he is a victim in
    many different ways and was used in many different ways. But I
    want to thank you for what you did. And anything else youwould
    like to say? Because the chairman frankly covered the questions that I
    was going to ask you. But thank you and God bless you for what you are
    doing.
        The committee will stand briefly in recess.
        [Recess.]
        [The following questions were submitted to be answered for
    the record:]

                                               Tuesday, March 28, 2000.

                         NATIONAL LABOR RELATIONS BOARD

                                   WITNESSES

    JOHN C. TRUESDALE, CHAIRMAN, NATIONAL LABOR RELATIONS BOARD
    LEONARD PAGE, GENERAL COUNSEL
    HARDING DARDEN, BUDGET OFFICER
        Mr. Porter. The subcommittee will come to order. We
    continue our hearings on the budget for fiscal year 2001 with
    the National Labor Relations Board, and we are pleased to
    welcome the chairman, John Truesdale, for the second year, and
    the new General Counsel, Leonard Page for the first time. We
    are also pleased to welcome, Harding Darden. Harding Darden is
    the Budget Officer.
        Mr. Truesdale.

                           Introduction of Witnesses

        Mr. Truesdale. Thank you, Mr. Chairman. You have already
    introduced our new General Counsel, Leonard Page and our Budget
    Officer, Harding Darden, a man on whom I rely heavily, and we
    have placed him here in the middle so he can most conveniently
    be of help to me and Mr. Page.
        Also I would like--as you know the NLRB, by practice, three
    members of the President's party and two members not, and today
    we have one of the Republican members of the Board with us, Mr.
    Peter Hurtgen.
        At the outset, I want to convey the agency's gratitude for
    your fairness to the NLRB during your years as Chairman of this
    subcommittee. Your dedication to our mission has been felt not
    only by agency staff, but by the many stakeholders whom we
    serve. And with the Chairman's permission, I will just give a
    brief summary of my statement which is submitted for the
    record.

                               Opening Statement

        I appreciate this opportunity to appear before you once
    again as Chairman of the National Labor Relations Board to
    testify in support of the agency's budget request for fiscal
    year 2001. The fiscal year 2001 budget before you request an
    appropriation of $216,400,000 so the NLRB can fulfill its
    responsibilities to protect the rights and enforce the
    responsibilities of employees, employers and unions under the
    National Labor Relations Act. This request will enable the
    agency to administer and enforce the Act effectively and
    efficiently by providing the necessary resources to, one,
    diminish the current case backlog in the field and before the
    five member Board; two, continue our information technology
    program; three, better train our staff to ensure the consistent
    and fair adjudication of cases.
        In developing its strategic plan for fiscal year 2000-2006,
    the NLRB revised its performance goals to focus on the two
    functions fundamental to the agency mission; to resolve
    questions concerning representation impartially and promptly;
    and also to investigate, prosecute and remedy unfair labor
    practice cases by employers or unions impartially and promptly.
        To repeat what I told this committee last year, my sole
    agenda as Chairman has been to intensify our efforts on the
    primary function of the five-member Board which is getting
    cases out, in particular, our oldest cases. I and my fellow
    members of the Board have adhered to my pledge to this
    committee last year to avoid political entanglements, to avoid
    proposing or commenting on substantive legislation, and to
    attack our oldest cases and reduce our pending caseload.

                            BOARD PERFORMANCE GOALS

        My colleagues and I continue working hard to get the
    Board's caseload down to a level that would befit an efficient
    professional adjudicatory organization. With this in mind, the
    Board has set ambitious case handling goals in both the fiscal
    year 2000-2006 strategic plan, and the fiscal year 2001 annual
    performance plan.
        Last year our goal was to issue all representation cases
    over 2 years old and all ULP cases over 3 years old. As
    indicated in my statement for the record, we achieved nearly 90
    percent of the goal. Our goal this year is to issue
    representation cases more than 20 months old and unfair labor
    practice cases over 30 months old. The Board's fiscal year 2001
    performance measures will strive to issue all representation
    cases that have been pending more than 18 months and all unfair
    labor practice cases pending more than 24 months in fiscal year
    2001.
        We will continue to ratchet the goals down until there is
    no case pending at the board more than 1 year by fiscal year
    2006.

                            FISCAL YEAR 2001 REQUEST

        The nature of the work of the NLRB is very labor intensive.
    Therefore, most of the budget is dedicated to personnel costs,
    77 percent, and rental payments to the General Services
    Administration, 11 percent.
        The fiscal year 2001 budget request of $216,400,000
    represents a 5.2 percent increase over that of fiscal year
    2000. The additional 10,700,000 we seek for fiscal year 2001
    would cover mandatory adjustments in employee compensation,
    complete the agency's information technology modernization
    effort, support training in case handling and use of new
    technology, and provide for an additional 55 FTE over the
    fiscal year 2000 FTE level of 1,947 to help diminish the
    current backlog in the field and headquarters.
        Mr. Chairman, the critical role of the NLRB in contributing
    to economic stability and facilitating the unimpeded flow of
    commerce is the fundamental justification for the fiscal year
    2001 request before your committee. In order for the Board to
    permanently eliminate unwarranted delays and maintain
    consistently low backlogs, it is clear that there must be
    continued cooperation and consensus in the labor management
    community and in Washington in support of maintaining a fully
    staffed and funded Board to effectively protect employee and
    employer rights and to promote the peaceful resolution of
    disputes under the National Labor Relations Act.
        The National Labor Relations Board respectfully requests
    favorable consideration by the Congress to enable the agency to
    effectively enforce the Act and protect the rights of all
    parties covered by it. 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.
        Mr. Porter. Thank you Mr. Truesdale.
        [The prepared statement follows:]

        Mr. Porter. Mr. Page.

                        Statement of the General Counsel

        Mr. Page. Chairman Porter and members of the subcommittee,
    you have my written statement for the record. I would like to
    give you a brief oral summary.
        Thank you for this opportunity to testify today regarding
    the NLRB's funding request for fiscal year 2001. I have been
    serving as the General Counsel since late last year under a
    recess appointment. The President has nominated me to a 4-year
    term. That nomination is pending before the Senate Committee on
    Health, Education, Labor and Pensions. My service as General
    Counsel is the capstone of a career in labor law and it is
    truly an honor to have been chosen for this important position.
    I will be brief because I know you are busy and because you
    have the benefit of the wisdom and service of NLRB Chairman
    John Truesdale, as well as our long time Budget Officer,
    Harding Darden.
        I came to the NLRB at an auspicious time, following a
    number of years in which the most predictable thing about the
    agency's funding was its unpredictability. We now seem to be on
    a stable path. I can well understand the corrosive effect that
    an uncertain budgetary picture has on an agency such as the
    NLRB where relatively minor fluctuations in funding can have
    profound implications for staffing levels, compensation, and
    all aspects of operations.
        Under this year's budget the agency has been able to embark
    on a multiyear stabilization program by staffing up, conducting
    extensive training and increasing investment in information
    technology. The request for fiscal year 2001 is a modest 5.2
    percent increase. This will enable the agency to meet mandatory
    pay increases and other cost factors, and more importantly, to
    continue its path to stability in staffing levels, training and
    technology.
        The Board Members and I recently had a retreat at which we
    and our senior staff identified strategic goals for the next 5
    years under the Government Performance and Results Act. We are
    revising our strategic plan accordingly and will be submitting
    it to Congress later this year. However, without stability and
    predictability in our funding, this plan would not be worth the
    paper it is written on. So again, I urge your favorable
    consideration of this request.
        Lastly, Chairman Porter, although I am a newcomer to those
    proceedings I am well aware of the support that you have shown
    the NLRB as Chairman of the subcommittee. I want to thank you
    for that support and to wish you well in your future endeavors.
    Again I thank the committee for this opportunity to appear
    today, and we look forward to answering any questions you may
    have.
        Mr. Porter. Thank you, Mr. Chairman and General Counsel.
        [The prepared statement follows:]

                           Professionalizing the NLRB

        Mr. Porter. I think it has been particularly fortunate that
    you've come out of retirement, Mr. Truesdale, to take over this
    position. The perception for Mr. Page's background information,
    the perception on this subcommittee and elsewhere in the
    Congress was that each of your predecessors tended to
    politicize this agency, and I think that led to the very
    problem that you have referred to, Mr. Page, in your testimony
    and that is the unpredictability of the funding levels as
    people saw that as the--as not proper for an agency that
    administers a law.
        Now I think we are perceiving that you are
    professionalizing the agency rather than politicizing the
    agency, and I for one want to make sure that you have
    predictable increases that allow you to do your work. We are a
    Nation of laws, and if we don't have our adjudicatory agencies
    able to do their work in time, then that breaks down our entire
    system. So I am anxious to see the professionalism that both of
    you bring to this task, the lack of politicalization that has
    occurred, at least perceived to be occurring in the past, and
    therefore we want very much to provide you the resources that
    you need to do your work properly.
        With that I am going to call on--I would tell my colleagues
    from California and New York that Mr. Dickey was here at the
    time the hearing started, although he had toleave and under our
    rules he is called on first.
        Mr. Dickey.
        Mr. Dickey. I won't take that long. Mr. Chairman, and that
    is unusual with this panel for me to say that I won't take that
    long, but I want to go over this, Mr. Chairman.
        Mr. Truesdale, I want to go over what I see as progress.
    When I took a position on this committee, we were told at the
    time that there were 32--an average of 32 section 10(j)
    injunctions that were issued being issued every month. It was
    onerous. It was putting people in court before they knew that
    they had a problem. We took out after it, and we found a lot of
    political arguments and maneuvers and I became very adamant
    about it. But all the time I was being told by industry and
    business we need this agency. And I said, well, we can't stop
    in the middle of this, and we have to push forward.
        I want to tell you that I sure appreciate what you've done.
    Chairman Porter said it better than I, but it is a privilege to
    see it come where it is supposed to be, where both sides will
    acknowledge the need and both sides are appreciative of the
    existence of an agency. Before you got here that was not the
    case, and it was frankly embarrassing that we were using this
    agency for those reasons. I think we are doing all right, and I
    have one question about salting abuse, and let me see if I can
    get that done.

                                 SALTING ABUSES

        There have been 8 hearings on salting abuses. Have you
    reviewed the record of these proceedings? Do you know about
    them?
        Mr. Truesdale. Have I reviewed the congressional hearings?
        Mr. Dickey. Right.
        Mr. Truesdale. I have read of them. I have not had an
    opportunity to read the transcripts.
        Mr. Dickey. Among other abuses reported, several salts have
    testified that unions have instructed their agents to lie,
    sabotage and generally work to destroy nonunion companies whose
    employees have no interest in the union. What steps are being
    taken to combat this clear abuse of our Nation's labor laws?

                           SECTION 10(J) INJUNCTIONS

        Mr. Truesdale. Congressman Dickey, before I answer that
    question, just so I won't forget, I appreciate very much your
    kind words. I do think there might be some disconnect between
    your figures and ours. My understanding, although this largely
    took place before I returned to the board, the high water mark
    of section 10(j) injunctions was something like 104 for the
    year. The figure you are referring to is 32 recommendations to
    the General Counsel.
        What happens is the regional directors make recommendations
    to the General Counsel vis-a-vis 10(j)'s. The General Counsel
    and his staff review them to determine whether in his opinion
    that is a proper recommendation. They come then to the Board.
    If he does not think section 10(j) is warranted, it is short-
    stopped right there. But if the General Counsel thinks that it
    is, it comes to the Board, and my understanding that the Board
    authorized something like 104, but we would be glad to supply
    that for the record.
        Mr. Dickey. When things got better I asked about it and
    they said it was down to 4 a month. That would be 48 a year.
    The complaints have died down as far as my constituents and
    their employers, and I think it is a credit to you all, and
    there is not a corresponding harm is being done as a result of
    being reasonable.

                                 SALTING CASES

        Mr. Truesdale. Getting back to your question about salting,
    as Chairman Porter indicated before, which he referred to as
    professionalizing the agency, we do think of ourselves as
    something of a labor court. General Counsel is like the United
    States attorney. We have a group of administrative law judges
    who hear the cases, observe the witnesses, resolve the issues,
    identify the legal precedent involved, and issue decisions
    which can be appealed to the Board, and we, in that respect,
    are like an appellate body. Our decisions can be appealed to
    the circuit courts and to the real courts, so I don't have any
    illusions of grandeur here.
        All of that is background to say that there are cases in
    the pipeline, which raise the kind of issues that you posed
    just then, so I don't think it would be appropriate for me,
    since we do have such cases in the pipeline and even I think
    some at the Board which raise those issues, which I think
    perhaps it wouldn't be appropriate for me to volunteer an
    opinion.
        Mr. Dickey. I withdraw the question, but you know what I
    mean.
        Mr. Truesdale. I do.
        By the way, I am pleased that you were able to be here. You
    said just before the hearing got underway that you wouldn't be
    able to stay. I am glad you were able to stay.
        Mr. Dickey. The beeper is going to get me in just a second,
    but I am listening to what you all have to say.
        Mr. Porter. Ms. Pelosi.
        Ms. Pelosi. Thank you, Mr. Chairman. And Mr. Truesdale. It
    is always a wonderful day when you are here because it is
    always interesting to hear you. Mr. Darden, thank you for your
    service to the NLRB as well.
        I am a supporter of the NLRB. I think it is very important
    for American business and American workers to have you function
    in the best possible way and with the most certainty in your
    funding stream, so that you remove all doubt what you are able
    to do. I will get right to my questions.

                             INFORMATION TECHNOLOGY

        Mr. Truesdale, how does your fiscal year 2001 budget plan
    strengthen technology to manage cases?
        Mr. Truesdale. The Case Activity Tracking System which is
    attempting to move our database into the most current efficient
    system that we can, has currently been deployed in 40 of our 51
    field offices, and we have 33 regional offices, and then
    several subregional or resident offices. It has been deployed
    in 40 of those 51 field offices, and we expect that that will
    be completed by the end of fiscal year 2000 and that it will
    have been completed in headquarters in early 2001.
        There are a number of technical aspects of our information
    technology program, which I could either supply for the record
    or turn to General Counsel Page, because it mainly involves
    information under his supervision.
        Ms. Pelosi. As you wish.
        Mr. Page. I can tell you we are spending about 6 percent of
    our budget on information technology, and I believe that is
    consistent with most government agencies. But we are about
    halfway through a 3-year program to bring our systems up to
    date. We had the 4 or 5 lean years of budgets and, no surprise,
    information technology went by-the-by, largely.
        In addition to the CATS system which we hope to have up and
    running at the end of the year, we are developing an internal
    intranet so we can connect our 50-some offices with Washington
    and assist our field attorneys in doing research and getting
    information.

                                AGENCY WEB SITE

        Part of our continuing expenditures on information
    technology also go to our Web site, which is highly regarded
    among practitioners. In fact, we are getting about 1 million
    hits a month which is really surprising. NLRB.gov is the Web
    site. It is very user friendly. It is set up very well so John
    Q. Public can get information about the agency and as I have
    said, we have had very good reports from union and management
    attorneys in the field that it is a very helpful Web site. That
    is part of what we are spending our money on. And of course,
    any time you have a national network like this, we have to
    spend a little money on security. At any given time we are
    upgrading or replacing about 25 percent on an annual basis of
    the actual hardware itself, the servers, the computer
    equipment, but we can give you a more detailed written report.
    We are getting there on information technology and with another
    good budget we will--I hate to use the word, but we will be in
    the millennium.
        Mr. Truesdale. I will add to that. While it is very
    difficult to quantify, understand that some of these
    initiatives might possibly be translated into, say, perhaps 10
    FTE that we do not need because of people can get information
    they need in the kinds of ways that General Counsel Page has
    mentioned.
        Ms. Pelosi. Doesn't it generate some work when you have all
    of those hits?

                          INFORMATION OFFICER PROGRAM

        Mr. Truesdale. I think mainly through the information
    officer program, for example, instead of people filing charges
    with us, we are able to point them in the direction that they
    ought to go. That is not our bailiwick. We would say that
    belongs to Wage and Hour or EEOC or State labor boards or what
    have you.
        Ms. Pelosi. Interesting.
        Mr. Page. You can't file charges or petitions through the
    Internet yet for many reasons. But on the information officer
    we get about 173,000 contacts a year. We are talking about
    people either calling or walking into an NLRB office, and we
    only internally convert that into a case in, I think it is 6
    percent.
        Ms. Pelosi. Is that so?
        Mr. Page. The rest are referrals to other agencies or just
    advising the individual that their complaint is simply not
    within NLRB's jurisdiction. But we do get a lot of public
    contact through the information officer approach.

                       DISPOSITION OF OLDEST BOARD CASES

        Ms. Pelosi. Mr. Truesdale, could you just go into a little
    more detail about the success the board has had in getting
    cases out this year?
        Mr. Truesdale. Well, as I indicated in my opening
    statement, we concentrated very hard last year on getting our
    oldest cases out. The goal last year, and I almost hate to say
    this because it is such a grim goal, but nevertheless, it is
    the facts that we were faced with, but our goal last year was
    to get out any unfair labor perhaps older than 3 years and any
    election case or representation case that was more than--I
    think it was 24 months. And we managed to reach that goal in
    about 90 percent--we managed to reach about 90 percent of our
    goal.
        The reason those cases were so old was because of Board
    member vacancies and turnover. It is very difficult without
    taking up the committee's time and going into the problems that
    that creates. It tends to send cases back to square one and
    creates chaos in the Board's decisional process. Our high
    watermark in our pending caseload was in February of 1999,
    which was 733 cases.
        Ms. Pelosi. What was it at the end of the year?
        Mr. Truesdale. On March 1 of this year it was 683.
        Now, the reason it didn't go down further than that when we
    knew there would be a price to pay by concentrating on our
    oldest cases, these cases were old, not only because of the
    problems of turnover and vacancies, but also because they were
    the most difficult cases. They had resisted the efforts of
    prior Boards and prior Board members to get those cases out. We
    concentrated on those. We thought we would be doing the
    greatest service by getting those cases out. We did, however,
    manage to reduce our overall caseload by 7 percent. Once we get
    more current in our caseload we will be able to do better in
    that respect.
        Ms. Pelosi. Thank you very much, Chairman Truesdale.
        Mr. Porter. Mrs. Lowey.

                                AGENCY STAFFING

        Mrs. Lowey. Well, Mr. Truesdale, Mr. Page and Mr. Darden.
    Thank you for your important work. Following up on the caseload
    that was not addressed, your testimony speaks to a continuing
    problem in NLRB regarding staffing, and my understanding is you
    had 2,085 positions at the conclusion of the Clinton
    administration, and because NLRB was targeted for cuts this
    year, you will have only 2,002 positions, and that is up
    significantly from previous years.
        Last year we gave you a significant increase to add staff
    given some very important steps in organizing the agency, could
    you testify, could you give us a better handle on what
    additional staff you would need in order to meet your goals in
    closing these cases?
        Mr. Truesdale. Our target, our goal, with the money that
    Congress gave us for this year is to reach an FTE of 1,947 by
    the end of this fiscal year. We currently, as of today, have
    about 1,830 FTE. Hiring people is not something we can snap our
    fingers and they appear. We got our budget from Congress at the
    end of November this year. We embarked on hiring. Of course
    that is in the middle of the law school year. There are a
    number of technical problems in authorizing for 1,947 FTE by
    the end of fiscal year 2000. Our goal by the end of fiscal year
    2001 is--2,002 FTE by the end of fiscal year 2001. That is 55
    additional FTE that we are seeking in this budget that we are
    presenting to you today. So we are moving towards that figure
    in making progress with the money that Congress has given us.
        Mrs. Lowey. You said that you are moving toward the 2,002
    figure?
        Mr. Truesdale. Right. First that 2,002 is for fiscal year
    2001. That is the next year.
        Mrs. Lowey. Right.
        Mr. Truesdale. This year the funds that Congress has given
    us is to hire up to 1,947, and that is the figure that we are
    en route to as of now.
        Mrs. Lowey. Is the 2,002 figure adequate to address your
    goals?
        Mr. Truesdale. We believe that it is.

                         FILING CHARGES ON THE INTERNET

        Mrs. Lowey. In another area, you have been handling cases
    that are getting weightier in terms of the paper that is filed.
    Can we do anything besides provide resources for staff to
    lessen your load? Is the weight of the material that is
    submitted to you adequate? I was particularly interested in Mr.
    Page's comments that you can't file charges yet on the
    Internet. I would be interested in both. Is all of this
    paperwork absolutely essential, and are you movingtowards a
    time when you can possibly file charges on the Internet?
        Mr. Truesdale. I am going to leave that last question to
    General Counsel Page, but the weighty cases that we are talking
    about isn't really a problem of pieces of paper like charges,
    it is a problem of the records that are developed in the
    litigation of cases. Of course the parties are the ones that
    develop those records under the eye of the administrative law
    judge, but I think perhaps the cases are more difficult,
    perhaps they are more keenly challenged, however we might put
    that.
        But filing charges over the Internet is not going to
    resolve that problem. It just may make it easier for someone to
    file a charge, but today they can mail it in. It is a piece of
    paper. It doesn't contribute to the weightiness of cases.
        Mr. Page. If I may add to that, our real workload is case-
    driven, or in many cases, the number of election petitions that
    are filed and from all indications we still anticipate a volume
    of about 6,000 petitions for elections per year in fiscal year
    2002, and about 30,000 unfair labor practice charges.
        Obviously, if we have an adequate staff that is the best
    way we can deal with our backlogs and develop a current
    inventory on the processing of cases and deciding them at the
    Board level.
        Internet charges could be a problem. As I indicated,
    information officers receive about 173,000 contacts from John
    Q. Public. And only about 6 percent of those are actually
    translated into some sort of agency action. Our statute only
    protects individual employees who are engaged in protected
    concerted activity. Many members of the public believe that we
    are some sort of a just-cause agency when it comes to
    employment discipline and discharge. So we have to disabuse
    them of that concept. In addition, a lot of the members of the
    public think we are the one agency that deals with all labor
    matters, whether it is a Fair Labor Standards Act or Social
    Security concerns, so a lot of what we do are referrals to
    other agencies.
        I think we would have to be very, very careful before we
    think about filing charges through the Internet. We might get a
    lot more paper than we--or at least electronic transmissions
    than we can possibly deal with.

                              CASE INTAKE PATTERNS

        Mrs. Lowey. With regard to the 30,000 unfair labor charges
    that you do get, I am assuming that is yearly; is that correct?
        Mr. Page. Yes.
        Mrs. Lowey. I would be interested in the pattern. Are they
    from a particular part of the country? Are there particular
    industries? Could you discuss an analysis of those charges?
        Mr. Page. Well, a lot of the charges are of course
    surrounding election campaigns or petitions. Of course we are
    driven by what unions are doing in this area and we are looking
    at this constantly, and we are shifting resources between
    regions to accommodate that. We have, at the moment, 33
    regions. We are downgrading Peoria, recently announced, so we
    will have 32 regions and that is just an indication of how we
    are reacting to some of these shifting patterns.
        But in addition, we will also get charges where unions and
    employers are not able to resolve their contract disputes and
    there are strikes and lockouts. That is the other opportunity
    where we get some business.
        Mrs. Lowey. I am not worried about you getting adequate
    business. But I wonder if there are 30,000 cases a year, are
    there patterns? Are they coming from particular unions,
    particular parts of the country, and my next question and
    following up is going to be are there actions or is this your--
    maybe it is not your role that you would take to head it off,
    or is your responsibility just to react once the case is
    abroad?
        Mr. Page. When a petition is filed, we have to react.
        Mrs. Lowey. I know that. Are there patterns, do you see
    repeated actions in a particular part of the country or with
    particular unions or management?
        Mr. Truesdale. We can supply for the record because it is
    in our annual reports where these charges are filed by State.
    We do have those records by State. I don't believe that they
    will show any particular pattern. Although a particular State
    may be more industrialized than another rural State and have a
    greater incidence of cases. But other than that, I don't think
    that there would be any particular pattern, but we can supply
    for the record, I believe we can supply--I know we can supply
    by State and I also believe that we can supply how they are
    filed by industry, manufacturing and so forth. We will be glad
    to supply that for the record.
        [The information follows: FY 1999 data not yet available.]

        Mr. Truesdale. But as for your question, can we head it
    off, no. We don't have the authority. If an unfair labor
    practice was something you could see taking place across the
    street, we can't go over there and stop it. We approach totally
    according to who comes to us and files a charge, who comes to
    us and files an unfair labor practice, so it would be beyond
    our authority to go out. We can't, for example, go to a plant
    and have some kind of an educational mediation program. That
    would get us into almost instant trouble, I think.
        Mrs. Lowey. Thank you.

                           ENFORCING THE RULE OF LAW

        Mr. Porter. Thank you, Mrs. Lowey.
        Well, whether you are called an adjudicatory body or a
    judicial body or a quasi-judicial body, you are part of arule
    of law. You are what takes violence off the streets and political
    influence out of the equation and sets objective standards to judge
    actions by, and you are an important part of our judicial system in
    adjudicating, in the first instance, a lot of disputes that would end
    up exactly in those areas and did end up in those areas. We respect
    that and we want to encourage you.
        I would say right now there is something that may be
    happening regarding the rule of law that all of us ought to be
    concerned about. It has nothing to do with you, but out there
    there is a little boy, Elian Gonzalez, who has been adjudicated
    by the court to be returned to his father in Cuba, and whether
    you agree with that decision or not, it is going to be a
    decision of a court, and there is going to be a request on the
    community to deliver him according to that decision or to
    appeal the decision.
        It seems to me very important to this country that we send
    messages to the community that the court's order has to be
    obeyed. I have already sent a message to our two--there is
    actually more--representatives in Congress that represent areas
    in Florida that are highly populated by the Cuban American
    community that this is very, very important that we observe the
    law.
        I think this country sort of sets the standard for the rest
    of the world, and if we don't live according to law, many
    others won't and many others don't and we are trying to get
    them to move in our direction and protect basic human rights
    and one of which is to organize and collectively bargain and
    exist in a free labor and free society. I have some questions
    about workload.

                             CASE INTAKE PROJECTION

        According to your budget justification, 33,000 unfair labor
    practices were filed with the NLRB in 1999, an increase from
    fiscal year 1998. For fiscal year 2000 and fiscal year 2001,
    you are projecting 36,000, which is a 9 percent increase. Am I
    correct so far?
        Mr. Truesdale. I thought we were projecting a stable intake
    of cases.
        Mr. Page. I thought that was 30,000 charges and 6,000
    election petitions for 36,000 cases.
        Mr. Porter. All right. So the number of unfair labor
    practices would be going down?
        Mr. Page. I think it is about level.
        Mr. Porter. Is the 33,000 ULPs for 1999 correct?
        Mr. Page. No. It is 27,000.
        Mr. Porter. 27,000 charges. And you are projecting it going
    to 30,000?
        Mr. Page. About 30,000. Again, we view it as almost level
    with the last several years. It has been hovering in that
    range.
        Mr. Porter. So it is more or less level?
        Mr. Page. Right.

                              FIELD RESTRUCTURING

        Mr. Porter. Then that question doesn't apply.
        Your budget justification notes that in November, you
    announced restructuring initiatives affecting six field office
    locations. What efficiencies do you expect from this
    initiative, how will it enable you to reduce your backlog of
    cases and where are the six affected offices located? Will any
    of them be closed?
        Mr. Page. Let's start first with the Peoria region which is
    being downgraded. What will happen there is the senior regional
    director and the assistant director and the regional attorney,
    those positions will be filled out of St. Louis, an adjoining
    region, but the office physically will stay there. What we
    obtain by downgrading that office is, of course, relief in the
    annual salaries of the higher executives at that office, and
    perhaps some efficiencies by simply having a somewhat smaller
    office in Peoria. But the Peoria region or the office will
    still be there to deal with the public in that area, receive
    charges and petitions.
        Mr. Porter. Why are you downgrading the office?
        Mr. Page. Primarily caseload. Let me--since I know from
    personal experience, the Caterpillar cases gave that office a
    lot of work for a number of years, and now that that dispute
    has settled, it just didn't seem to us that they had an
    adequate caseload to justify being a full flown region.
        Mr. Porter. In each of these office restructurings, you
    have made the same kinds of decisions?
        Mr. Page. My predecessor established a restructuring
    committee that looked at a number of our smaller offices and
    considered several other locations for possible restructuring.
    But late last fall, we recommended that Peoria is the one that
    should be downgraded. The other particular offices we saw some
    justification for keeping them at their level.
        Mr. Porter. Again, I have some other questions for the
    record, and many of the questions were already asked. But
    again, we are very encouraged by the professionalization of
    this office. We do want to provide the kinds of resources that
    you need to do your work effectively and efficiently and
    prepare for the future, in other words, the technologies that
    you need to do it even better and we appreciate the fine job
    that you are doing.
        Mr. Truesdale. Let me say again how much we have
    appreciated the support and assistance you have given to us
    during the years, and I would like to echo what General Counsel
    Page said, all best wishes to you in the years to come.
        Mr. Porter. Thank you so much. The subcommittee will stand
    in recess until 10:00 a.m. tomorrow.
        [The following questions were submitted to be answered for
    the record:]

                                              Thursday, April 13, 2000.

                         SOCIAL SECURITY ADMINISTRATION

                                    WITNESS

    KENNETH S. APFEL, COMMISSIONER OF SOCIAL SECURITY

                           Introduction of Witnesses

        Mr. Porter. The subcommittee will come to order. We are
    continuing our hearings on the independent agencies before the
    subcommittee with this morning the Social Security agency. We
    are delighted to welcome Commissioner Kenneth Apfel, and, Mr.
    Commissioner, you do a marvelous job there. You have done a
    marvelous job in every assignment you have had in the
    government, and it has been for us a real pleasure to have
    worked with you and your people during the time that I have
    been Chairman and you have been Commissioner. So we are happy
    to see you today.

                               Opening Statement

        Mr. Apfel. Thank you, Mr. Chairman. It is an honor to be
    before the committee and an honor to see my colleague Tony
    McCann sitting next to you. I also hold him in very high
    regard, as I do you, Mr. Chairman.
        I am pleased to be here today to present the President's
    fiscal year 2001 appropriation requests for the Social Security
    Administration (SSA). Accompanying me is Yvette Jackson, Deputy
    Commissioner for Finance, Assessment, and Management.
        This budget is about providing financial security for older
    Americans and for American families after the death or
    disability of a wage earner. More than 90 percent of our total
    FY 2001 budget of $461 billion is permanently appropriated and
    will be paid in monthly benefit payments to 45 million Social
    Security beneficiaries.
        But our annual budget request is also about providing
    quality service each and every workday to millions of claimants
    and beneficiaries. The budget requests before you today cover
    our program administration costs and our general fund-financed
    programs.
        This year's funding requests are especially vital because
    we are now preparing for a rapid and unprecedented increase in
    agency workloads. The baby boomer generation is aging, with
    many of these 76 million men and women now in their late
    forties and early fifties. We estimate that new retirement and
    disability benefit claims will increase by 23 percent over the
    next 10 years, or roughly double the level of increase in the
    past decade. SSA is working hard to prepare for these coming
    challenges.
        Let me briefly outline three areas of emphasis in the
    administrative budget request now before you: efforts to
    strengthen our strategic management, ensure program integrity,
    and continue to make improvements in our solid and reliable
    public service delivery.
        I believe that we can influence the direction of change
    only if we have a long-term vision of where we want to go. The
    anticipated workload increases, together with future customer
    expectations, rapid change in information technology, the
    retirement wave facing our agency's own workforce, and an era
    of limited government resources, create a compelling need to
    develop an organizational ``vision'' that looks beyond our
    current 5-year planning horizon. I have, therefore, created a
    ``2010 Vision'' initiative that will outline our view of
    service in the future--what work we will do in 2010, and how we
    will do it. This 2010 Vision will describe how SSA should
    respond to trends in our external environment, such as
    increased information technology. And the 2010 Vision
    initiative will shape SSA's Strategic Plan, and drive all of
    our budgeting and performance planning.
        The second area that I would bring to your attention is
    SSA's program integrity efforts. The public rightfully expects
    us to be vigilant stewards of its tax dollars. SSA understands
    this obligation. We have a zero tolerance policy toward fraud
    and abuse. Over the last 4 years we have doubled the
    investigative staff of our Office of the Inspector General
    (OIG). The FY 2001 budget supports further anti-fraud efforts
    by OIG, and by our field offices across the country. We have
    specific and strong initiatives to prevent overpayments in the
    Supplemental Security Income (SSI) program, safeguard the
    integrity of our disability programs, and improve agency debt
    collection practices. I would point out that about 10,000
    workyears are now dedicated to continuing disability reviews
    (CDRs) and redeterminations of SSI income. This represents
    about a doubling of staff resources over the past few years.
        A third area of emphasis is our efforts to maintain and
    improve service delivery. For several years, in response to a
    request from this subcommittee, SSA's annual budget has
    included specific workload and performance commitments
    commensurate with the funding levels requested. In FY 1999 we
    met or exceeded our commitments for 800-number service and for
    periodic CDRs and SSI redeterminations processed. But, as I
    indicated in the FY 2000 SSA operating plan, some workload
    processing goals have now been reduced from levels in the FY
    2000 budget plan, including service goals for the 800-number
    and processing goals for disability claims, hearings, and SSI
    redeterminations.
         The challenge of maintaining service levels and striving
    to meet expectations in a time of growing workloads is creating
    very real stresses and strains on our organization. The
    President's budget request now before you will allow us to
    ameliorate the situation through several initiatives. For
    example, the President's budget request will support
    technological enhancements to maintain telephone service
    performance at the FY 2000 levels, increase benefits paid
    through direct deposit, and expand electronic service delivery.
    As of this month, in fact, our electronic services included an
    on-line retirement planner that allows individuals to
    interactively compute estimates of their future Social Security
    retirement benefits.
        The President's administrative budget request for SSA is
    $7.134 billion. Reductions to this request may lead to lower
    levels of service than are now provided. That service includes
    answering 57 million calls to our 800-number with a 92 percent
    5-minute access rate, completing more than 2 million SSI non-
    disability eligibility redeterminations, and processing more
    than 2 million disability claims and holding about 580,000
    hearings.
        This budget request is fiscally prudent and supports our
    continuing efforts to provide the best public service possible,
    by what I honestly consider the most dedicated workforce in
    government.
        Let me also note that, as requested by this Committee, I am
    providing information on the Commissioner's FY 2001 budget
    prepared last fall, as required by law. In this budget, I
    requested $7.356 billion for SSA's FY 2001 LAE account. This
    requested level of funding would allow for a moderate increase
    in staffing to handle increased workloads and improve service.
    And my budget request would intensify our efforts to prepare
    for the agency's own anticipated retirement wave by bringing on
    new staff that could be mentored by experienced employees.
        Before closing, let me voice my very strong support for the
    President's $35 million FY 2000 supplemental appropriation
    request for SSA. This request will fund one-time costs for
    implementation of the historic legislation signed by the
    President on April 7 eliminating the retirement earnings
    testfor retirees who are at or above the normal retirement age.
        Mr. Chairman, I again want to thank you for this
    opportunity to present SSA's budget request to this Committee.
    With your approval, I will submit for the record full written
    testimony discussing the appropriation request in greater
    detail, and I will be happy to answer any questions you may
    have.
        But before closing, Mr. Chairman, I wanted to indicate
    that, as you pointed out, this is probably my last time
    appearing before you in your role as Chairman of this
    Committee. I must tell you that the commitment to this agency
    that we have had from you as Chairman has been very, very
    strong and has been noticed. Your commitment to push us as you
    have on Porter commitments, and establishing formal mechanisms
    to be able to measure our performance and benchmark that
    performance against what we actually do, has improved the
    agency and how it works. When I am gone, when you are gone,
    when your staff is gone, I believe these will be legacies that
    will be part of our future, and will help us as an agency serve
    the American public in a much better way. So, I regret seeing
    you leave as our Chairman and all I can say is it has been a
    real honor working with you over this time.
        Mr. Porter. Thank you for those very generous comments.
        [The information follows:]

        Mr. Porter. I am going to have to call a recess for this
    vote. Hopefully I will bring back some other members of the
    subcommittee with me, and we will have some very tough
    questions for you. Stand in recess briefly.
        [Recess.]

                              RETIREMENT BENEFITS

        Mr. Porter. The subcommittee will come to order.
        Mr. Commissioner, we get the National Institutes of Health
    here, and the Directors all come to testify, and I get to get
    free medical advice from them, but now I am about to turn 65,
    and it just occurred to me that since we have passed this
    repeal of the offset for earnings after 65 and before 70, that
    I might be able to be able to draw Social Security beginning in
    a few weeks. Is that true?
        Mr. Apfel. That is true. You could start whenever you
    wanted to at age 65, if you wanted to.
        Mr. Porter. Something is wrong with this. What am I
    supposed to do a few months prior to reaching 65, notify the
    nearest Social Security office that I am about to reach that
    pinnacle?
        Mr. Apfel. You will also be getting a letter from SSA
    indicating there have been changes to the retirement earnings
    test and to call us if you want to claim benefits. And you can
    also get an assessment as to what your benefits would be now,
    starting at age 65. Your work will not reduce your Social
    Security benefit.
        Now, given your years of Federal service, there is an
    offset for part of your Social Security because of the civil
    service pension that you have accrued and that you will start
    collecting when you retire. So that will have to be taken into
    account to determine exactly what the right dollar amount is.
        Mr. Porter. But there is no offset while I am still working
    and not drawing a pension.
        Mr. Apfel. That is correct, there is no offset while you
    are still working. To help clarify this, if you decided, Mr.
    Chairman, not to claim benefits until you were, say, 70, your
    Social Security benefit would be a lot larger than it would be
    if you started before age 70. This is called the delayed
    retirement credit. If you don't collect benefits early, you, at
    your age, would receive about a 6 percent increase each year
    that you delay your retirement benefits until age 70. For many
    people that is still a good enough reason not to claim benefits
    early, and it really depends on every person's individual
    circumstances. The delayed retirement credit will be going up
    from 6 percent a year within the next roughly decade to 8
    percent a year. At that point in time, unless someone expects a
    fairly short life expectancy, receiving the delayed benefit may
    very well be to their best advantage.
        I can't comment about whether you should in your own
    personal circumstance, claim benefits starting at age 65. But,
    you can get that information from any local SSA office and
    determine what your civil service and Social Security benefits
    will be. Both will continue, if you want to collect both, if
    you continue to work after age 65.
        Mr. Porter. Sounds to me like I shouldn't. At least if I
    have some kind of life expectancy, it sounds like--you are
    telling me it would be 30 percent higher if I waited until age
    70, or roughly.
        Mr. Apfel. I would not in a public hearing give you that
    kind of public advice, but we could talk about it right
    afterwards if you wanted.
        Mr. Porter. We have one of your offices right here in the
    building, and they tell us anything we need to know. They are
    very good at that. I thought I would ask.
        Mr. Apfel. I am very pleased to hear they are very good at
    responding to your questions. We try to do that all around the
    country.

                             MEASURING PERFORMANCE

        Mr. Porter. Mr. Commissioner, again, you have focused in
    your testimony upon performance measures and your willingness
    to work with the subcommittee to help fashion them, and I know
    that the goals are often difficult for the agency to reach. Yet
    over the years technology and changes in business practices may
    have made some of the standards we set several years ago
    outdated. For example, one of the standards for800-number
    service is percentage of callers who successfully access the 800-number
    within 5 minutes of their first call. In this day and age, I would
    think that time to access the 800-number would be measured in maybe
    seconds rather than minutes. Have you done anything--for each of these
    standards--telephone waiting time, on-time appointments, disability
    claim processing and so on. Do you have a specific company or
    organization that is world class and uses these standards, what is
    world-class for these functions today? Have you measured that?
        Mr. Apfel. There is a series of different performance
    measures that you have indicated. There is no one single
    standard for disability processing or even for 800-number
    service, but there are a number of private sector entities that
    have different standards, and we have had conversations with a
    number of them. Indeed, this summer we are holding a conference
    with the private sector to discuss how we have measured our
    customer input and how we could improve those measures using
    some private sector examples. This is one of our steps to try
    to improve how we measure customer service.
        How do we determine these world-class standards? Part of it
    is really directly related to the Porter commitments. We
    receive customer input, but it has to be balanced against our
    resources to be able to assess what is practicable to establish
    as a standard. Over time, we look internally within the
    organization. We have improved our standards over time. If we
    look at the hearings process improvement plan we have tried to
    improve processing times of appeals in disability claims, and
    we are also looking at the 800-number as well as other areas to
    improve.
        I point out the 800-number because I think it is a very
    telling example of what is good quality service. When we were
    surveyed by Dalbar a number of years ago, we were rated as one
    of the very best in the world at that point in time. It wasn't
    just access that they looked at. They also looked at quality of
    information. We didn't rate as highly on access as we did on
    what we did when people got through. We were very, very good
    about the quality of product that we provided when an
    individual got through. So our access was somewhat lower. It
    has improved considerably since the time of the Dalbar study on
    access. But you also have to be able to measure what happens
    when someone gets through.
        Let me give you three numbers which I think are important.
    An individual calls our 800-number and gets through, and we
    handle that individual in that first call. We complete their
    business. Satisfaction rates are 98 percent. If somebody can't
    get through to our 800-number and, once they do, we can't
    handle their concern on that call, their satisfaction rates are
    47 percent. Now, here's the third number. If someone has
    trouble getting through but, finally does get through, and we
    handle their problem in that very first call, their
    satisfaction rates are 85 percent. So, clearly just focusing on
    the length of time would be a mistake, and having all of our
    emphasis on reducing or improving the 95 and 5 or improving
    busy rates is one variable, but it needs to be only one
    variable.
        It is very clear that the public, from our surveys, wants
    to know how quickly it can access us. But once you get in, can
    we deliver? By and large we do, but we need to measure all of
    those things so that we can provide a very high-quality product
    to the public.
        Mr. Porter. I don't see them as alternatives. You want to
    do both because 98 percent is pretty darn terrific.

                                   PEW SURVEY

        Mr. Apfel. It is remarkable. Today in the paper was a new
    Pew survey that just came out on customer satisfaction. I
    looked at it thinking, okay, I am going to have a hearing
    before Mr. Porter today. I better read this article very
    carefully. And it is pretty clear that the Pew survey showed
    some very solid numbers: for our beneficiaries about an 82
    percent customer satisfaction standard; for the payroll
    offices, the businesses that deal with us, 77 percent
    satisfaction; less with the tax-paying public, 57 percent. Now,
    they have less contact with us, but really we need to think
    about that. Our customers aren't just our beneficiaries. Our
    customers aren't just the payroll offices that are providing
    receipts for the system. It is also the American public, the
    tax-paying public. They are our customers as well.
        This is one of the reasons why our Social Security
    Statement, I think, is so important for the American public. We
    are mailing 125 million this year to say here is what Social
    Security is, here is roughly what you are going to get out of
    the system, and here are the challenges that it faces. We've
    received a very positive response. What we have got to do is
    build up customer satisfaction. Our customers are not only the
    payroll offices. They are not only the beneficiaries, but it is
    also the tax-paying public. So we have got to do all three of
    those, and they all looked pretty good in that survey today.
        Mr. Porter. I like the way you think. I think you are
    exactly right.
        Ms. DeLauro.

          TAKING ADMINISTRATIVE BUDGET OUTSIDE THE CAPS AND OFF-BUDGET

        Ms. DeLauro. Thank you very much, Mr. Chairman.
        Mr. Commissioner, thank you. Good to see you this morning.
    Sorry I was late.
        There has been some discussion lately of taking the Social
    Security administrative expenses outside of the caps and off-
    budget. Let me just get your sense of that, what you think
    about that, and how would you see something like that working?
        Mr. Apfel. Ms. DeLauro, there are a couple of different
    issues here. One is whether Social Security administrative
    costs are considered on-budget or off-budget. The second issue
    is whether they are inside or outside of the caps.
        Now, the new budget resolutions call administrative
    expenses that are directly related to Social Security, off-
    budget. I think this is a good change. The Administration
    supports it.
        The second issue is whether the administrative costs should
    be outside of the caps that you deal with on a yearly basis.
    The Administration has not taken a position formally for or
    against this, but, I can tell you as Commissioner, I support
    the notion of taking Social Security administrative costs
    outside of the caps. I think the pressures that we are under
    are going to be very, very real in the future. At least half of
    our financing comes through the payroll tax, and I believe that
    we are going to be under pressure as future waves of retirees
    come in. Taking SSA's administrative costs outside the caps
    will provide both relief to this Committee--the committee
    wouldstill be responsible for determining our funding level--but if SSA
    were outside of the caps, it would relieve some of the pressures for us
    in terms of providing quality service to the American public. So I
    personally support the notion of taking SSA outside of the caps.

                  ACCOUNTABILITY FOR FUNDING OUTSIDE THE CAPS

        Ms. DeLauro. What do you do with that in terms of--is that
    then emergency spending? What is the methodology of
    accountability?
        Mr. Apfel. The accountability, I believe, would still come
    through the Appropriations Committee to determine on an annual
    basis what our administrative costs should be. Being outside of
    the cap would enable the Committee to take a more clear picture
    of that. Given the fact that half of SSA's administrative
    resources are coming from the payroll tax to fund our
    organization, it seems to be legitimate. There is an analogy
    here to some extent to HCFA and to the unemployment insurance
    areas as well.
        Again, I want to reiterate for the record, the
    administration has taken no position here, but I must say as
    Commissioner I support the idea because we are under enormous
    funding restraints. We lost some resources again last year in
    the budget. We face enormous challenges in the future. And it
    is very hard to compete against the Head Start program and NIH,
    as we do currently.

          IMPACT OF PROPOSED SOCIAL SECURITY PROGRAM CHANGES ON WOMEN

        Ms. DeLauro. My concern is how do you build in the
    monitoring or accountability if it is just then--we just--it
    doesn't fall into any structure. But you made your point about
    the Appropriations Committee and where then one can have some
    ability to say things or--this is meeting the goal or we are
    looking at exploding costs, and then no way to deal with that.
    But thank you for your comments.
        Let me just say it this way. Have you conducted an analysis
    of the impact that proposed changes to the Social Security
    System could have on women? And if you can discuss briefly the
    implications and then give us a more detailed analysis for the
    record.
        The reason why I ask this is I find I spend a lot of time
    just, you know, in the district, the way other Members do, in
    talking to all kinds of groups. I just find that there is a
    real lack of understanding in the public about women and Social
    Security and what changes to Social Security can mean for
    women. And I do the best I can in trying to get around and talk
    about these things, but I think we need to engage in a public
    education on the issue, especially when you are dealing with
    pay inequity for women and what that translates to in later
    years with regard to Social Security and with regard to
    pensions and everything else, and how, in fact, while there
    might be difficulties at the moment, and I have been in groups
    with younger women, older women who complain about it, but they
    have no idea what can befall them if some of the changes that
    are being discussed were made to the Social Security System. So
    let me ask you to comment.
        Mr. Apfel. I think this is a critical issue and we are
    doing everything we can to educate the public. Indeed, Barbara
    Kennelly, our Associate Commissioner for Retirement Policy----
        Ms. DeLauro. Great lady.
        Mr. Hoyer. Where is she from?
        Mr. Apfel. I am not sure. Maybe Connecticut.
        Ms. DeLauro. The great State of Connecticut.
        Thank you, Mr. Hoyer.
        Mr. Apfel. Our Associate Commissioner for Retirement Policy
    has spent a great deal of time on the issue of women and Social
    Security. Women face special challenges like lower pay, more
    years out of the labor force, and they rely more on Social
    Security than men. We also look at 5 percent of aged married
    women are poor, but roughly 20 percent of single elderly women
    are poor; 22 percent divorced; 20 percent never married; 18
    percent are widows. The poverty rates for women are
    significantly higher than they are for men. Widows make up
    about two-thirds of the poor, aged population of women.
        So there are very special issues here, and we have done
    what we believe is appropriate to get information out about the
    issues of women and Social Security.
        You had asked for some specifics on the implications of
    various proposals. We have provided that to the Congress, to
    the Senate, and we will provide that for the record here as
    well. There are about five options that have been looked at.
    One is the normal retirement age and whether it should be
    raised. That is one option that is out there. Actually an
    increase in the retirement age is a relative positive for women
    as opposed to cost-of-living adjustments. If COLAs are reduced
    because of longevity for women, there is a negative impact for
    women.
        Computation years. We provide benefits based on the highest
    35 years of earnings. Given the fact that women are out of the
    labor force for a number of years, many times more often than
    men, increasing the number of computation years has a negative
    effect on women compared to men. Meanwhile, across-the-board
    cuts in Social Security would mean a larger dollar cut for men
    because of the higher Social Security payment, but it is a
    larger cut in total income for women because of their reliance
    on Social Security in total. So we have explored a number of
    these different options and can provide that for the record,
    which we did over in the Senate.
        [The information follows:]

        Mr. Apfel. Also, we have done work on exploring
    enhancements to the Social Security benefit for widows and for
    low-income workers, which are primarily women; and for SSI
    program changes to the general income exclusion. An individual
    can receive SSI, but if they receive Social Security, they lose
    most of the SSI benefits. So that benefit has now been frozen
    for many, many years.
        I also can provide information for the record on three
    different proposals that are out on looking at ways to enhance
    benefits for women. Overall, this is a critical issue, I
    believe, for the country over the course of the months and the
    years ahead as we move on this system. Sixty percent of our
    beneficiaries, adult beneficiaries, are women. We are a women's
    program. It affects the lives of everyone, but particularly
    women, particularly widows. We will provide this for the
    record, and I support all the efforts you are making to
    increase our education on this issue.
        [The information follows:]

        Ms. DeLauro. Thanks very much. I appreciate your efforts
    and those of my colleague and good friend Barbara Kennelly. I
    think we have a unique opportunity through our offices and the
    people that we reach. This is absolutely at the heart of what I
    believe our jobs are all about is to provide people with this
    kind of information in any way that we can and--I speak for
    myself--I can, which we can get this to the broadest--and we
    can do it district by district. That is the advantage of why we
    are here is to make this information available or have the
    kinds of forums and so forth where the material can be
    presented and people can just understand it. They can decide
    what conclusions they come up with. But I think that we need to
    be at the center of--particularly on this system which has had
    just an unbelievable effect on people's lives, and we cannot
    afford to be cavalier in the way we--you haven't--cavalier in
    the way we approach its future. Thanks very much.
        Mr. Apfel. Thank you.
        Mr. Porter. Thank you, Ms. DeLauro.
        Mr. Hoyer.

                 COMMISSIONER'S AND PRESIDENT'S BUDGET REQUESTS

        Mr. Hoyer. Thank you, Mr. Chairman.
        Mr. Commissioner, you requested, as I understand it, $7.356
    billion in your budget. You received approximately $7.1
    billion, am I correct, for the administrative budget, $7.134
    billion; am I correct? I didn't want to start with a hard one.
        Mr. Apfel. That is the President's request, yes.
        Mr. Hoyer. You asked for $7.356 billion. That is a $200
    million difference.
        Mr. Apfel. Yes.

                        RESOURCES, STAFFING, AND OUTPUT

        Mr. Hoyer. You referred in your statement to staffing
    levels. I have been very concerned for the last 18 years I have
    been on this committee as we have seen Social Security staff
    levels decrease very substantially. I am not sure--I don't have
    the figures in front of me, but there have been very, very
    substantial reductions, certainly since the 1981, 1982, and
    1983 levels. I want to ask you specific questions, but I want
    to ask them in that context of whether you have enough people
    to do the job as we expect.
        And you talked to the Chairman about response levels and
    the different satisfaction levels, depending on whether or not
    responses were prompt and accurate. Would you describe your
    staffing, how that is linked to performance, and apply specific
    examples? In other words, what is the difference between your
    $7.356 billion and the $7.1 billion that you have requested?
    What price are we paying in terms of service and performance?
        Mr. Apfel. Those are very key questions, Mr. Hoyer. One of
    the tremendous improvements in establishing performance
    commitments and performance standards is to be able to link
    resources, with staffing, with output. At so much money, we can
    have so much staff, and we can do so much for the American
    public. At less than that amount, we will have fewer staff, and
    we will do less service for the American public. With more
    resources, we will have more staff and be able to improve our
    service to the American public.
        Given that, what I would like to do is specify some of the
    targets you had asked me about. The Commissioner's budget
    request does provide an added couple hundred million dollars
    primarily for staffing with which we would see about a couple
    percent increase in workyears over the current levels and about
    a 1 percent increase in full-time equivalents. My budget
    proposes an increase in staffing for two reasons: one, to
    prepare for our internal retirement wave as we start seeing a
    number of people retiring from the agency; and two, to increase
    our performance in a number of areas like increasing the amount
    of disability cases that we will handle--and I can provide that
    information for the record and increasing our 800-number
    service access. We are currently at 92 percent 5-minutes access
    to the 800-number. I would be proposing that we go back up to
    95 percent access through the added resources.
        In addition, more program integrity activities. We proposed
    that we increase the redeterminations that we do for SSI to
    look at overpayments and whether payments should be changed;
    increasing fraud and abuse prevention and detection activities
    from basically 2.1 million in FY 1999 to get us up to almost
    2.3 million in FY 2001. So, clearly, more resources would mean
    a larger number of redeterminations, better telephone service,
    less wait times in our field offices, shorter disability
    backlogs, and more appeals handled throughout the year.
        Mr. Hoyer. Explain to me again the 2.3; what is that
    number?
        Mr. Apfel. Those are redeterminations. This is part of our
    integrity activities.
        Mr. Hoyer. Two hundred thousand additional cases you could
    handle on redeterminations?
        Mr. Apfel. That is exactly right. So there are a number of
    specifics that we will provide for the record.
        [The information follows:]

                         REDETERMINATIONS AND INTEGRITY

        Mr. Hoyer. Those 200,000 cases would be carry-overs, so
    they would be pending longer?
        Mr. Apfel. They would be pending longer. It is very
    important that we continue to expand our integrity activities.
    We really have two hats in Social Security. One is direct
    customer service. The other is ensuring that we are providing
    high-quality integrity services to the American public. That is
    why it was so important to expand continuing disability
    reviews, the reviews of people on disability. Redeterminations
    are that same kind of device to determine whether the
    individual still has the same financial needs to be on the SSI
    rolls. So this is one of our integrity functions. It is very,
    very critical. We have tried very hard to expand. Added
    resources means more redeterminations. It means a higher
    integrity program.
        Mr. Hoyer. If you could submit for the record some sort of
    a more precise outline of the cost of not doing the extra 200
    thousand in terms of service. You also might comment in your
    answer on the impact on morale on existing employees who are
    stretched to do more with less resources, people resources.
        Mr. Apfel. If I could, I will answer that now. On the
    redeterminations, currently we bring back in about $7 for every
    $1 invested in redeterminations. So it is highly cost-
    effective. Continuing disability reviews currently bring in
    about $6 for every $1. It is actually now $12, but it is going
    to be going down to $6 overall as we get more people through
    that system.
        The pressure on our agency, Mr. Hoyer, is very real. We
    face very strong workload constraints, and those workloads are
    growing, and the morale--I am so proud of being the
    Commissioner of Social Security because of how hard the people
    in Social Security work to do their jobs. But the constraints
    are real, and the pressures are real, and that means that
    service can deteriorate unless we provide the resources that
    are necessary.

                     TURNOVER RATE AND THE RETIREMENT WAVE

        Mr. Hoyer. What is the turnover rate at the GS-9 and below?
    You may not have that specifically, but what generally is the
    turnover rate?
        Mr. Apfel. The turnover rate at Social Security--and we
    will have to get it for the record--is relatively low
    throughout the country because, I believe, of the commitment to
    SSA as an organization. But that turnover rate--and I will
    provide this also for the record--is going to significantly
    increase in the next 5 to 6 years. We have a retirement wave
    that is coming at us in the next few years that is very major.
    Our median age is somewhat higher than the rest of the Federal
    Government. If we don't start preparing now to replace the
    individuals who are going to be leaving in the next 3 and 4 and
    5 years, we will see significantconsequences for service to the
    American public. So we need to be flattening that retirement wave and
    getting individuals in, trained, and prepared to deal with the new
    workloads.
        [The information follows:]

                 SOCIAL SECURITY ADMINISTRATION TURNOVER RATES

        Approximately 42 percent of SSA's permanent employees
    (full-time and part-time) are at grade 9 and below. In FY 1999,
    SSA lost about 1,700 permanent employees at these grade levels.
    This represents an annual attrition rate of 6.3 percent.
    Included in that total are nearly 400 losses due to ``early
    out'' retirements. Excluding the impact of early outs, the
    annual attrition rate for these grades was 4.9 percent.
        For SSA's total permanent workforce at all grade levels, FY
    1999 attrition was 6.0 percent based on about 3,800 losses.
    Excluding about 1,400 early out retirements, the loss rate was
    about 3.8 percent.
        Included in the 3,800 losses in FY 1999 were nearly 1,200
    regular retirements. This was an increase of more than 200 from
    the number of employees who retired in FY 1998. We expect the
    number of regular retirements to increase steadily over the
    next decade and to more than double by FY 2007 from the FY 1999
    level.

                      IMPLEMENTATION OF THE TICKET TO WORK

        Mr. Hoyer. The Ticket to Work and Work Incentives
    Improvement Act, a great accomplishment in this last Congress.
    Will the Social Security Administration be able to get the
    ticket program up and running by January 1?
        Mr. Apfel. We are moving expeditiously. We will meet all
    targets that are in the legislation. Again, this is a 3-year
    phase-in, but there is $58 million requested in the President's
    budget for return-to-work activities. We intend to have the
    contract awarded for the program manager, and, the proposal is,
    if funded, to have our work incentive outreach grants to the
    community funded next year as well. This will be phased in over
    3 years, but we are right on schedule to continue this process
    to meet the requirements and the law. I think it is a very
    important piece of legislation.
        Mr. Hoyer. My time is up.
        Mr. Porter. Thank you, Mr. Chairman.
        Mr. Apfel. If I could add just one other point on that.
    This year we are absorbing about $10 to $20 million in our FY
    2000 budget because the legislation was not enacted until after
    the appropriation was done. So one of the other areas we have
    talked about, resource constraints, we are absorbing $10 to $20
    million to start the implementation now. Very, very important
    to do, but I would point out that is another one of our
    resource constraints that we are under.
        Mr. Hoyer. Thank you.

                                UNCASHED CHECKS

        Mr. Porter. Mr. Commissioner, several short questions.
    Uncashed checks. Your budget projects an increase from $10
    million in fiscal 1999 to $17 million in fiscal 2000 and a
    decline to $14 million in fiscal 2001 for uncashed checks. Why
    would this be so erratic, given the fact that the percentage of
    direct deposits has grown from 63 percent in 1996 to 77 percent
    in 1999?
        Mr. Apfel. Why does the number bounce around? The actual
    unnegotiated checks amount depends on three figures: one, the
    size of the check; two, the amount of checks there are that
    aren't coming through direct deposit; and three, interest
    rates. Those are the three variables that are out there.
        Clearly the size of the check has gone up some. The number
    that is coming out through paper is going down, which is good,
    and the interest rates are, as we all know, somewhat uncertain.
    We have always requested more than is necessary for
    unnegotiated checks for a reason. We don't want to be in a
    position if interest rates pop up to find that we don't have
    enough resources for it. So, money lapses each year in our
    request. Money lapses at the end of each year, $2, $3, $4
    million, and probably it is better to be safe than sorry on
    that amount of money.
        In FY 1998, we spent, actually obligated, about $12 million
    for unnegotiated checks. In FY 1999, it was down to $10
    million. We requested about $17 million in FY 2000. So it
    didn't make sense to have that much of a buffer, we felt. So we
    reduced the request down to $14 million for FY 2001, as you
    pointed out. That still gives us a buffer. So what we are
    finding, in other words, is the amount that we are actually
    expending is declining some, and that we had asked for too much
    this last year. So we have reduced that amount, but it still
    gives us a buffer for the future just in case interest rates
    come up higher than we expect.

                              ELECTRONIC COMMERCE

        Mr. Porter. Do I presume that the ultimate goal of the
    Social Security Administration would be, assuming the
    technology exists for most people to conduct everything over
    the Web and through electronic commerce, deposits all would be
    automatic, the applications would all be done over the Internet
    access to the Social Security Administration and the like? Is
    that sort of where you might be 20 years from now?
        Mr. Apfel. I hope where we might be is a lot sooner than 20
    years from now, Mr. Chairman. In terms of checks, our goal is
    all checks should be direct-deposited. There are a number of
    individuals that are reluctant to receive their check
    electronically. Those numbers, as you pointed out, have
    increased significantly over the last few years, and I
    anticipate will continue to. As our education shows, that it is
    better for the American public. It is safer. There are no
    stolen checks. It is cheaper. So our goal is to increasingly
    move in the direction of electronic service on checks.
        That is true also in our service delivery system. What we
    need to be able to do is touch the American people as they want
    to be touched and served. That means some individuals are going
    to need to go into our offices in Illinois, Maryland, etc. to
    receive service. Some are going to want to use the 800-number,
    and some are going to want to use the Internet.
        Think about it this way: Ten years ago we didn't have an
    800-number. Now we have an 800-number. We have recently brought
    up our Web site. This year we will receive 26 million office
    visits, roughly 60 million phone calls, and 10 million hits on
    our Web site. That number is going to grow dramatically in the
    future as we do more retirement planning, and as we start to
    find ways to use the Internet to actually provide some level of
    service. But that will never replace, I believe, ever, for the
    rest of my lifetime, face-to-face service with the American
    public in places like Fargo, North Dakota, and in your
    district, and in Maryland.
        Mr. Porter. But it should become much less.
        Mr. Apfel. All three services need to be provided, and we
    need to meet the public where they prefer. Electronic commerce,
    Ibelieve, is one of the answers in meeting those dramatic
    increases in workloads that we will face in the next 10 to 15 years, as
    the baby boomers retire. Remember, it is not just the baby boomers
    retiring. It is baby boomers moving into their disability-prone years,
    which is their fifties. So our disability cases, which are over half of
    our workload, represent a very substantial amount of work. Disability
    is going to grow as well as retirement. So finding ways to do more of
    this through the Internet, through our 800-number, and through our
    field offices is going to be important. It will become one of the three
    tools of our main service delivery system over time.

                               INTERNET SECURITY

        Mr. Porter. You have answered the premise to my question.
    The premise was if we--how do you assure that you have the
    security measures that you need for a Web site so that people
    know that their information is confidential and won't be shared
    by others or used against them?
        Mr. Apfel. This is a very central issue to us. Ever since
    the creation of Social Security, the privacy of our records has
    been at the core of what we do as an agency. As we move into
    the Internet, there are a whole series of new questions that
    come up. The Committee remembers 3 years ago we tried to
    provide our Personal Earnings and Benefit Estimate Statement
    on-line. There were concerns about privacy, so we pulled back
    that service. We hadn't created the right balance between
    safety, privacy and access to information.
        Our new retirement planner is a way that we found to do
    this without affecting individuals' records. We provide them
    with a calculator, and they make their own calculations on
    their own computer. But as we move into the future on this
    issue, privacy is going to be a continually important issue.
        In the area of our business customers, we believe it will
    be cost-effective to use Public Key Infrastructure (PKI)
    technology to ensure that the individual--the company
    responding with their records--will be accessing us with data
    that we believe is entirely private. That is cost-effective for
    businesses over the short term, for us to be able to move in
    that direction.
        For individual customers, PKI is probably too expensive
    right now, but those costs are dramatically being reduced. We
    ought to be able to get some information, preliminary
    information, through the Web before we cross over into private
    information. Then we should bring the person into our offices
    to verify that they are the individual. We can't move forward
    on full Internet applicability until we have absolutely solid
    privacy systems in place. In the next 2 and 3 and 4 years, we
    will test several privacy systems and would like to brief this
    Committee on what we are looking at in this area, but only
    after we can ensure that our security system is safe and it is
    appropriate and cost-effective. We can do it now with
    businesses. It is going to take longer with individuals.
        Mr. Porter. Thank you, Mr. Apfel.
        Mr. Hoyer?

                           WORK INCENTIVE SPECIALISTS

        Mr. Hoyer. Thank you. I want to go back, if I can, to the
    work incentive bill. You may have referenced this in some of
    your answers. What progress has been made on implementing work
    incentive specialists both--particularly to work--and the Work
    Incentive Improvement Act? This is, as you know, one of the few
    provisions in the law that is effective upon enactment.
        Mr. Apfel. We are very excited about the work incentive
    specialists within our system. We are moving forward, starting
    this summer, in a number of sites around the country to test
    out the roles and responsibilities of the specialists in our
    offices. I will provide a listing for the record of the actual
    sites that we are going to begin in around the country. There
    are a number. There is somewhere in the vicinity of about 52, I
    believe, and I will give you that list.
        [The information follows:]

        Mr. Hoyer. None running at this point, starting this
    summer?
        Mr. Apfel. Within 2 months we will be starting. Our goal is
    to have a number of these up and running through the course of
    this year to significantly expand this function in our next
    budget. We will basically have $9 million for the employment
    specialists' payroll activities in the FY 2001 budget.
        The real question we need to determine here is: How many
    work incentive specialists are we going to need around the
    country? I don't know the answer to that yet. We need to find
    out as this new program unfolds what our responsibilities will
    be in those offices. I think if we look at the Social Security
    Administration field office structure--claims reps, service
    reps--this is going to become one of the other key roles. As
    the Social Security disability system moves from not only
    handling cases but also to helping people move off our
    disability rolls, part of our mission internally, part of the
    culture of the organization, needs to change and that is going
    to involve the new specialists developing that mission.
        Our commitment this year is pilots all around the country;
    next year we'll expand, but I can't tell you yet what FY 2002
    holds. I think we need to get the experience under our belts
    over the next year and a half about how the cultureof our
    organization changes and how we can provide better service to the
    public.

                                 CULTURE CHANGE

        Mr. Hoyer. My next question was going to be on the culture,
    on the mind-set of how we are going to make all of these
    requirements work together to facilitate those with disability
    moving into the work force. Historically we have had
    counterproductive philosophy that if you--we wanted you to
    work; as soon as you worked, we dropped all your benefits,
    obviously a huge disincentive for people to work. Well, on a
    number of pieces of legislation, we have tried to jettison that
    philosophy. And I would be very interested in your conclusions
    as to how the mind-set of the folks who administer these laws
    is changing, because although we have made changes to the law
    sometimes, we don't change the mind-set as well, we don't
    accomplish the objectives of the legislation.
        Mr. Apfel. And, Mr. Hoyer, that is the mind-set of the
    organization and the mind-set of the disability beneficiaries
    themselves. I have gone all around this country and talked with
    individuals with disabilities on our rolls. Their central fear
    is losing their health care coverage. That is one. Secondly,
    that fear of if I do go back to work and get off of the
    disability rolls, am I going to have to start all that red tape
    all over again to get back on? That is going to be incredibly
    hard.
        So implementing the new legislation is not only about the
    ticket, which would help people provide the rehabilitation
    services and incentives to be able to return to work. It's also
    about continued health care coverage, and, third, an easy on/
    off system so if someone does go off the rolls because of work,
    and they find themselves not being able to work, they can apply
    back for benefits and be put back on immediately while we
    assess their case again so they don't have that long period of
    time waiting for benefits to be restored. For an individual
    with disabilities, that fear of the unknown is enormous.
        Now, that is how the individual, I think, will be helped.
    What we need to be able to do--and that is why I think these
    work incentive outreach grants are so important for us to
    have--is to get the community-based organizations helping us,
    partnering with us to provide incentives and get people excited
    about testing-out going back to work. Our work incentive
    specialists need to be helping, working with them to try to
    create a climate for our beneficiaries to be able to test-out
    going back to work in increasing numbers.
        It is culture change for us. It is a legal change which is
    taking place. It is resources that we would hope we would get
    to be able to implement this year. It is culture change for us
    as an organization, and then it is ultimately culture change
    for individuals. It is a better climate for them to actually
    return to work.
        Mr. Hoyer. Thank you very much.
        Thank you, Mr. Chairman.
        Mr. Porter. Mr. Hoyer and I have been filibustering here so
    we could await the arrival of Mrs. Lowey.

                           SOCIAL SECURITY STATEMENT

        Mrs. Lowey. Well, I have to tell you, Mr. Chairman, I am
    most appreciative, and I appreciate, Commissioner Apfel, all
    the good work you are doing. It is a pleasure to be here.
        I have been very interested in the public reaction to the
    arrival in the mailboxes of the Social Security Statement. I
    think this is an invaluable tool, particularly young people who
    can use this to plan their retirement.
        I have two questions. Number one, what is the reasoning; as
    a result of the reaction, are you planning to modify the
    statements at all? Is there additional information that you
    should be putting in there? I think it is so important that
    people understand the reality of what this really is and the
    impact on their lives, and perhaps you could discuss it.
        Mr. Apfel. Well, one of the things that I have been the
    most proud of as Commissioner of Social Security is the Social
    Security Statement. It has received an overwhelming positive
    response from a group of our customers, the taxpayers. Not our
    beneficiaries, because they are not getting Statements, but by
    the 125 million people who are working in this country. The
    response has been overwhelmingly positive from workers and
    overwhelmingly positive from retirement planners in helping
    them to work with the public to enhance retirement savings. We
    received an overwhelmingly positive response throughout the
    public, and I am thrilled about it.
        Our preliminary data are showing an increased knowledge
    about Social Security, how it works, what the key features of
    Social Security are; also, an increased knowledge that people
    need to be doing more for their own personal retirement
    planning, which to me is the single most important variable
    here. It is not only what Social Security is, a valuable
    foundation, but what it isn't; it is not the only thing
    necessary to live an adequate life in retirement.
        I can provide this for the record--I just had a briefing on
    this yesterday. It hasn't gone public yet, so by the time the
    hearing record gets done, we can provide it for the record. I
    can provide information on the number of people who have read
    the Statement and said, ``I am going to change my financial
    planning to provide more by way of private savings and pensions
    to prepare for my future.'' That is significant, if Americans
    can start using this as a financial planning tool and also can
    start thinking about what else they need to do for their
    retirement. And so I am extremely pleased with the results to
    date.
        [The information follows:]

                   MODIFICATIONS TO SOCIAL SECURITY STATEMENT

        Mr. Apfel. You also asked, Mrs. Lowey, about whether there
    will be modifications in the future. We expect about every year
    to make modifications to strengthen the Statement. What we hear
    over the year what people need, and we would like to be able to
    make modifications to that Statement. We have already made some
    modifications. We added more information about the long-term
    problem of solvency that Social Security faces, to be able to
    use it as a device to tell Americans not only what Social
    Security can provide, but also that there are real challenges
    out there that we need to face in this country. That was a very
    good improvement. We will be looking at others in the future.
        The General Accounting Office has just made some
    recommendations. I should point out the General Accounting
    Office views our Statement as much improved, that it meets its
    purpose of basic information, but they did make some
    suggestions we will be looking at this year to improve it as
    well.
        I would say there are some who would like to see us add
    rate of return information in on the Social Security Statement.
    I think it is inappropriate on the Social Security Statement. I
    don't think rate of return is an appropriate calculation for
    Social Security because it is asocial insurance program. So
    there are some things we will be doing with the Statement, but there
    are also things that, under my tenure, we certainly will not.
        Mrs. Lowey. I am not sure, I think you just kind of put in
    there a statement about the concerns of the solvency of Social
    Security. Certainly in this Congress there are big differences
    as to how you solve the problems, so what did you put in there?
    And if you think you are opening a hornet's nest, you can
    respond to me in writing, but I just wonder.
        Mr. Apfel. We thought it was very important to add to the
    Statement several factors: one, that as of 2015 under
    intermediate projections, revenues coming into the system will
    start to be less than the outlays going out of the system, and
    that by 2034, the Trust Fund will be exhausted and we could pay
    only about 71 percent of benefits. Those all need to be updated
    for the new actuary's reports. So we have that information in
    there.
        We also point out that the benefits are based upon current
    law projections, and that if there are law changes in the
    future, that could affect what the benefit structure would be.
    It is not the right place to get into the pros and cons of
    various solvency proposals, but it is to alert the public that
    there is a doubling of the aging population in the next 20
    years. They need to be aware that there will be changes to the
    system. It is within that context that we made those changes,
    and those changes have been widely, positively received.

     EFFECT OF ELIMINATION OF RETIREMENT EARNINGS TEST ON DIFFERENT INCOME
                                   CATEGORIES

        Mrs. Lowey. Obviously you can tell by my reaction I have
    questions about that, and perhaps we can discuss it further,
    but I think there are various levels of expertise on the part
    of the people who are reading these statements, and although
    you want to give them information, since the information
    changes depending upon the health of the economy, I just wonder
    the validity of including that information. But we will discuss
    that.
        I am delighted with the whole report, and I think it is a
    great idea.
        Since we have lifted the Social Security earnings
    provision, I would also be interested, and you can respond to
    me in writing, is what percentage of the people are in
    different income categories and how that will be affected by
    the raising of the limits on--outside income for those on
    Social Security. I think that will be very interesting to see
    what percentage of the people are still getting Social
    Security, and although they may have incomes of $100,000,
    $200,000, $300,000, as we look at these numbers, I think it
    would be very relevant. I would be most appreciative of that.
        Mr. Apfel. I will provide that for the record.
        [The information follows:]

     Effect of Repealing the Retirement Earnings Test by Income Categories

        The table below describes the effects of the repeal of the
    retirement earnings test by income category. The first column
    divides the total number of families with persons age 65-69
    into ten equal categories by income. The second column consists
    of the 1999 income levels (unearned and earned) for those
    categories. The third column describes the share of net
    benefits (the increase in Social Security benefits minus the
    increase in Federal personal income tax on those benefits) for
    each income category.
        If the retirement earnings test exempt amount for
    beneficiaries age 65 or over had been eliminated in 1999, the
    aggregate increase in net benefits would have been distributed
    as follows:

    ------------------------------------------------------------------------
       Income decile (families with       1999 income        Share of net
           persons aged 65-69)             (dollars)      benefits (percent)
    ------------------------------------------------------------------------
    1st..............................            0-9,952                  0
    2d...............................       9,953-15,145                  0
    3d...............................      15,146-19,684                  0
    4th..............................      19,685-24,519                  1
    5th..............................      24,520-29,916                  0
    6th..............................      29,917-36,108                  4
    7th..............................      36,109-43,503                  3
    8th..............................      43,504-54,699                  9
    9th..............................      54,700-75,484                 23
    10th.............................      75,485 and up                 59
    ------------------------------------------------------------------------

                 RESULTS OF CUSTOMER SATISFACTION INDEX SURVEY

        Mrs. Lowey. I know the bell is ringing, and my colleagues
    were kind enough to wait for me.
        I would also be interested in the University of Michigan
    business school American Customer Satisfaction Index Survey,
    and perhaps you can tell us how you scored.
        Mr. Apfel. Well, one of the recent reports that just came
    out by the private sector on our service to the public came out
    a few months ago, the American Customer Satisfaction Index
    Survey. The survey is conducted by the University of Michigan
    working with Arthur Andersen and the American Society for
    Quality. And we were very pleased with the results. We received
    an 82 percent positive response, which put us at the highest
    level of all government agencies and about 10 percent above the
    private sector. So we were very, very pleased with the results
    from the survey.
        They were looking in this first year of the survey at our
    retirement beneficiaries, and we thought it was important to
    move beyond retirement. So this year we will be looking at not
    only retirement, but also our survivors beneficiaries and
    disability beneficiaries. More and more of our customers will
    be assessed through this system. I think it is quite important
    that we do that, both that we continue to get customer
    reaction, and that, two, we use the private sector to help us
    show how good a job we do with the American public.
        Some of the statistics that were in the report--and I will
    provide them for the record because I don't have all of them in
    front of me--but our customer service and courtesy and
    knowledge levels were 86 percent, very, very high. One of the
    statistics, regarding how we do about timeliness and
    appropriateness of payments, we scored a 94 percent. There is
    almost no one that receives anything in the nineties in these
    results.
        So we have done very, very well in the report, but the
    reality is that we do face, as I said to Mr. Hoyer, significant
    challenges in the future to be able to continue to meet
    customer demands. Customers' expectations are growing over
    time--more desire for the Internet, more desire for immediate
    service in the 800-number--and if we are not ready, we could
    see those numbers decline. I don't want to see that happen. I
    want to see our numbers improve. We are proud of what we have
    done, but we have got a lot more to do.
        [The information follows:]

               American Customer Satisfaction Index (ACSI) Survey

        SSA received a rating of 82, one of the highest of all
    participating Federal Agencies and 10 points higher than the
    comparable private sector index.
        The survey is the only uniform, cross-industry measure of
    the quality of goods and services available in the United
    States. It is produced through a partnership among the
    University of Michigan Business School, the American Society
    for Quality, and Arthur Anderson. The survey focused only on
    SSA customers who are receiving retirement benefits. Retirement
    beneficiaries are the Agency's largest customer base, including
    27.6 million beneficiaries.
        The table below summarizes SSA scores from the survey,
    including the overall index of 82 percent and the score of 94
    percent given SSA for timeliness of monthly benefits. According
    to ACSI, this is a remarkable achievement for SSA as few scores
    reach the high 80's, much less the 90s.

    ACSI Results

                                                                     Percent
    Monthly Benefits (Timeliness).................................        94
    Information (Clarity and Usefulness)..........................        79
    Customer Service (Accessibility, Courtesy, Professionalism)...        86
    Customer Expectations (Expected Quality)......................        73
    Perceived Quality (Experienced Quality).......................        86
    Beneficiary Trust (Confidence in Future Service)..............        79
    Customer Complaints...........................................         8
    SSA ACSI index Rating.........................................        82

                     PREPARING FOR INTERNAL RETIREMENT WAVE

        Mrs. Lowey. Just quickly, because we are running out of
    time, the last question was exactly related to your last
    comment. I understand that the administration is facing your
    own retirement wave in terms of employee retirements just about
    the same time that your workloads are expected to increase with
    the baby boomers. In fact, Ben Cardin, our colleague, raised
    this issue during the floor debate on the supplemental last
    month. I don't know if we have time. You could tell us how you
    are addressing this issue, or you can respond, Mr. Chairman, to
    us in detail. Maybe just take a minute or so.
        Mr. Apfel. I will, Mrs. Lowey.
        Mr. Cardin had proposed, and then withdrawn, an amendment
    to fund the Social Security Administration in the year 2000 at
    the Commissioner's budget request level. That would have
    enabled us to bring on a number of new employees to better
    prepare for the retirement wave that will be hitting us. If we
    look at our retirement wave internally, it is a daunting task
    that we face. We see the number of people who will be leaving
    our agency starting 3 and 4 and 5 and 6 years from now.
        We have done two things. One is we have tried to flatten
    that retirement wave by establishing an early-out program to
    enable people to retire earlier so we don't have a surge 3 and
    4 and 5 years from now. At the same time we have also tried
    everything that we can to bring on new people in our agency to
    be ready to deal with this workload that is going to be coming
    our way. What is interesting is these young people I am seeing
    in our agency now are going to be the heart of our organization
    in 5 and 6 and 7 years as this retirement wave passes, so we
    need to get them in as early as possible to get them trained
    with new technology to be prepared to deal with the new
    challenges that we face, and that is what that resource is
    going to help us do.
        Mrs. Lowey. Thank you very much.
        Thank you for your patience, Mr. Chairman.
        Mr. Porter. Thank you, Mrs. Lowey.
        Mr. Commissioner, as I said at the opening of the hearing,
    you do an absolutely marvelous job. You had probably one of the
    most important jobs in the world. You handle a lot more money
    than Bill Gates, probably a lot more money than most countries
    in the world. You have this ongoing need to keep up
    technologically with all of the developments. You have
    expectations that are huge among your customer base. You have
    quasijudicial determinations to be made. You have court cases
    arising out of that. You have got one of the most interesting
    jobs around, and you get paid about one half of 1 percent of
    what Bill Gates makes and probably work harder than he does.
        We admire the work that you did, and we admire the work
    that your people do, and I think the culture and spirit of your
    agency reflects your own determination to get things right, and
    we really appreciate your good work there, Ken. Thank you so
    much.
        Mr. Apfel. Mr. Chairman, thank you very much. It has been
    the honor of my life to be the custodian of this program, and
    it has been an honor to work with you over the years, and I
    hope that continues in whatever capacity you find yourself.
        Mr. Porter. Thank you, sir. So do I.
        We will have to stand in recess for this vote.
        [Recess.]
        [The following questions were submitted to be answered for
    the record:]