[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:]



