[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 
   OVERSIGHT OF THE SMALL BUSINESS ADMINISTRATION'S ENTREPRENEURIAL 
                         DEVELOPMENT PROGRAMS
=======================================================================

                                HEARING

                               before the

      SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT & GOVERNMENT PROGRAMS

                                 of the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                     WASHINGTON, DC, MARCH 2, 2006

                               __________

                           Serial No. 109-40

                               __________

         Printed for the use of the Committee on Small Business


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
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                      COMMITTEE ON SMALL BUSINESS

                 DONALD A. MANZULLO, Illinois, Chairman

ROSCOE BARTLETT, Maryland, Vice      NYDIA VELAZQUEZ, New York
Chairman                             JUANITA MILLENDER-McDONALD,
SUE KELLY, New York                    California
STEVE CHABOT, Ohio                   TOM UDALL, New Mexico
SAM GRAVES, Missouri                 DANIEL LIPINSKI, Illinois
TODD AKIN, Missouri                  ENI FALEOMAVAEGA, American Samoa
BILL SHUSTER, Pennsylvania           DONNA CHRISTENSEN, Virgin Islands
MARILYN MUSGRAVE, Colorado           DANNY DAVIS, Illinois
JEB BRADLEY, New Hampshire           ED CASE, Hawaii
STEVE KING, Iowa                     MADELEINE BORDALLO, Guam
THADDEUS McCOTTER, Michigan          RAUL GRIJALVA, Arizona
RIC KELLER, Florida                  MICHAEL MICHAUD, Maine
TED POE, Texas                       LINDA SANCHEZ, California
MICHAEL SODREL, Indiana              JOHN BARROW, Georgia
JEFF FORTENBERRY, Nebraska           MELISSA BEAN, Illinois
MICHAEL FITZPATRICK, Pennsylvania    GWEN MOORE, Wisconsin
LYNN WESTMORELAND, Georgia
LOUIE GOHMERT, Texas

                  J. Matthew Szymanski, Chief of Staff

          Phil Eskeland, Deputy Chief of Staff/Policy Director

                  Michael Day, Minority Staff Director

     SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT AND GOVERNMENT PROGRAMS

MARILYN MUSGRAVE, Colorado Chairman  DANIEL LIPINSKI, Illinois
ROSCOE BARTLETT, Maryland            TOM UDALL, New Mexico
BILL SHUSTER, Pennsylvania           DANNY DAVIS, Illinois
MICHAEL FITZPATRICK, Pennsylvania    RAUL GRIJALVA, Arizona
LYNN WESTMORELAND, Georgia           MELISSA BEAN, Illinois
THADDEUS McCOTTER, Michigan          GWEN MOORE, Wisconsin
JEB BRADLEY, New Hampshire

                     Joe Hartz, Professional Staff

                                  (ii)


                            C O N T E N T S

                              ----------                              

                               Witnesses

                                                                   Page
Mills, Ms. Cheryl, Associate Deputy Administrator, 
  Entrepreneurial Development, U.S. Small Business Administration     4
Wilson, Mr. Donald, President, Association of Small Business 
  Development Centers............................................     6
Zinn, Ms. Amanda, President & CEO, E Cubed and Co-Chair, 
  Association of Women's Business Centers........................     8
Pyles, Mr. Jim, Chairman of the Board, Service Corps of Retired 
  Executives.....................................................    10
Maneval, Ms. Elizabeth, Owner & Publisher, We Magazine, Inc......    11
Law, Dr. Carol, Ph.D., President, Drug Free Workplaces, Inc......    13

                                Appendix

Opening statements:
    Musgrave, Hon. Marilyn.......................................    26
    Lipinski, Hon. Daniel........................................    28
    Velazquez, Hon. Nydia (Ex Officio)...........................    32
    Udall, Hon. Tom..............................................    34
Prepared statements:
    Mills, Ms. Cheryl, Associate Deputy Administrator, 
      Entrepreneurial Development, U.S. Small Business 
      Administration.............................................    35
    Wilson, Mr. Donald, President, Association of Small Business 
      Development Centers........................................    40
    Zinn, Ms. Amanda, President & CEO, E Cubed and Co-Chair, 
      Association of Women's Business Centers....................    49
    Pyles, Mr. Jim, Chairman of the Board, Service Corps of 
      Retired Executives.........................................    58
    Maneval, Ms. Elizabeth, Owner & Publisher, We Magazine, Inc..    65
    Law, Dr. Carol, Ph.D., President, Drug Free Workplaces, Inc..    68

                                 (iii)
      



   OVERSIGHT OF THE SMALL BUSINESS ADMINISTRATION'S ENTREPRENEURIAL 
                          DEVELOPMENT PROGRAMS

                              ----------                              


                        THURSDAY, MARCH 2, 2006

                   House of Representatives
        Subcommittee on Workforce, Empowerment and 
                                Government Programs
                                Committee on Small Business
                                                     Washington, DC
    The Subcommittee met, pursuant to call, at 10:30 a.m., in 
Room 2360 Rayburn House Office Building, Hon. Marilyn Musgrave 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Musgrave, Bartlett, Fitzpatrick, 
Lipinski, Davis and Moore.
    Also Present: Representatives Velazquez and Bordallo.
    chairman Musgrave. This Committee will come to order. Good 
morning to all of you. And thank you very much for being here 
today as we conduct this oversight hearing on the Small 
Business Administration's Entrepreneurial Development Program.
    Quite often when one thinks of the types of assistance the 
SBA provides, the first thing that comes to mind is financial 
assistance. While it is true that the SBA offers a variety of 
financing programs including small business loans, fixed asset 
loans, microloans, and provides debt and equity capital to 
small businesses, another critical function of the SBA is 
technical assistance. The SBA and its partners provide 
technical assistance programs, including training, counseling, 
mentoring, and information services to more than four million 
existing and potential entrepreneurs annually.
    Overseen by the Office of Entrepreneurial Development, the 
SBA provides grants to a network of over 950 small business 
development centers, or SBDCs; 389 SCORE chapters, which match 
executives with entrepreneurs for business counseling; and over 
80 women's business centers.
    SBDCs, the largest entrepreneurial network supported by the 
SBA, offer one-stop assistance to individuals and small 
businesses by providing a wide variety of information and 
guidance in central and easily accessible branch locations. The 
program is a cooperative effort of the private sector, the 
educational community and federal, state, and local 
governments. It enhances economic development by providing 
small businesses with management and technical assistance.
    SBDC assistance is tailored to the local community and the 
needs of individual clients. Each center develops services in 
cooperation with local SBA district offices to ensure statewide 
cooperation with other available resources.
    The SBDC program is designed to deliver up-to-date 
counseling, training, and technical assistance in all aspects 
of small business management. SBDC services include, but are 
not limited to, assisting small business with financial, 
marketing, production, organization, engineering, and technical 
problems, and feasibility studies. Special SBDC programs and 
economic development activities include international trade 
assistance, technical assistance, procurement assistance, 
venture capital formation, and rural development.
    SBDCs also make special efforts to reach minority members 
of socially and economically disadvantaged groups, veterans, 
women, and the disabled. Moreover, they provide assistance to 
small businesses applying for small business innovation and 
research grants from federal agencies.
    Another important cog in this wheel is the Service Corps of 
Retired Executives, or SCORE. A 503(a)(3) nonprofit 
organization, SCORE provides a public service to entrepreneurs 
by offering small business advice and mentoring. Counselors 
work with entrepreneurs through every phase of their 
entrepreneurial venture: generating and assessing ideas, 
preparing a business plan, raising capital, and managing the 
operations and finances of a growing venture.
    SCORE partners with a wide array of companies and 
organizations, including Citibank, Ford Motor Company, Vetcorp, 
and the American Management Association, to expand small 
business outreach, services, and resources to communities 
nationwide.
    Despite the fact that America's 10.6 million women-owned 
businesses employ 19.1 million people and contribute $2.46 
trillion to the economy, women continue to face unique 
obstacles in the world of business.
    Charged with promoting the growth of women-owned businesses 
through programs that address business training and technical 
assistance, and provide access to credit and capital, federal 
contracts, and international trade opportunities, Women's 
Business Centers, WBCs, operate with the mission to level the 
playing field for women entrepreneurs.
    I am happy to get started today, but before we hear from 
our distinguished panel, I would like to yield to our ranking 
member, the gentleman from Illinois, Mr. Lipinski.
    [Chairman Musgrave's opening statement may be found in the 
appendix.]
    Mr. Lipinski. Thank you, Madam Chairman.
    Our nation continues to face an uphill battle in creating 
jobs and ensuring that we remain an economic superpower. The 
global economy presents many challenges to our domestic firms, 
but this nation has always found a way to adapt and compete.
    Small businesses, our main job creators, have proven time 
and again that when given the proper tools, they have the 
ability to spur growth by adapting to the changing needs of an 
evolving economy. Our small business assistance programs are 
there to provide these tools. And we must ensure that these 
programs are able to adjust to meet the changing needs of 
America's entrepreneurs.
    Today's hearing will give us an opportunity to identify 
ways to better serve small business owners by making sure our 
entrepreneurial development programs are evolving to meet the 
needs of the Twenty-First Century. In addition, this hearing 
will allow us to assess the impact that the F.Y. 2007 budget 
will have on the programs that serve small businesses.
    To achieve success, many aspiring entrepreneurs require 
solid management training, organizational skills, and technical 
assistance, all of which are provided by a host of SBA 
development programs. These initiatives, including the small 
business development centers, women's business centers, PRIME, 
and SCORE, have provided businessmen and women with a place to 
turn for assistance.
    SBDCs, the cornerstone of SBA's entrepreneurial programs, 
have been particularly successful in spurring entrepreneurship 
in economic development. In 2003, long-term counseling of 
clients by SBDCs generated over 56,000 new jobs nationwide. In 
Illinois, SBDCs serving their congressional district counseled 
and trained over 4,000 clients, resulting in 1,430 jobs created 
and retained in our local communities.
    SBDC funding is money well-spent. Studies have shown that 
for every dollar spent on SBDC services, the program returned 
nearly three dollars to the treasury. Long-term clients of the 
Illinois Small Business Development Center have generated a 
return of over four dollars in state and federal revenues for 
each dollar invested.
    Small business programs serve a diverse clientele. My 
state's SBDC network, by partnering with the Illinois Hispanic 
Chamber of Commerce, provides small business development and 
start-up assistance to the strong and growing community of 
Hispanic business owners in southwest Chicago and the 
surrounding communities.
    Women's business centers fill a unique role by serving the 
nation's fastest growing business sector. As the number of 
female entrepreneurs continues to grow, so does the importance 
of this program. A nationally recognized leader in supporting 
women entrepreneurs, the Chicago Women's Business Development 
Center has served over 40,000 clients since 1986. It is truly a 
model for small business development.
    We need to ensure in the coming year that new centers are 
open and existing centers are able to continue operating. 
Unfortunately, the administration's latest budget has again 
failed to make these and other programs a priority for small 
business owners.
    We continue to hear that the SBA has been able to do more 
with less. Yet, many of these initiatives have received severe 
funding cuts or even faced elimination in the President's 
budget.
    Clearly, this year's budget request is not a good one for 
small businesses. In a report issued today, we saw that out of 
100 programs government-wide that assist small businesses, 75 
are facing severe cuts or elimination.
    Not only do we need to address funding issues, but the SBA 
needs to be reauthorized this year. It is not enough to simply 
throw money at these programs.
    Small businesses face a new set of challenges when it comes 
to rising health care and energy costs as well as increased 
foreign competition. It is imperative that the SBA and its 
program evolve and adapt to meet the changing demands of 
business owners.
    The administration's failure to adequately support and fund 
these programs as well as provide for improvements will only 
limit their ability to effectively serve America's 
entrepreneurs. Our nation's small businesses deserve more than 
that.
    We all have a common interest in ensuring our nation's 
small businesses succeed. If we want to move forward, provide 
new initiatives, and strengthen existing ones, it is vital that 
we start here with SBA's entrepreneurial development programs.
    I look forward to today's discussion and look forward to 
hearing from witnesses. Thank you.
    [Ranking Member Lipinski's opening statement may be found 
in the appendix.]
    Chairman Musgrave. Thank you.
    Are there any other members that have opening statements? 
Yes, the ranking member of the full Committee is recognized at 
this time.
    Ms. Velazquez. Thank you, Ms. Chairman.
    I'm sorry I just can't be able to give an opening 
statement. I would ask unanimous consent to submit to the 
record. But I just would like to say thank you for holding this 
hearing. And it is really unfortunate that we are not doing 
this at the full Committee.
    So with that, I just ask unanimous consent to submit my 
opening statement to the record.
    [Congresswoman Velazquez's opening statement may be found 
in the appendix.]
    Chairman Musgrave. Without objection.
    Chairman Musgrave. Thank you.
    Our first witness will be Ms. Cheryl Mills. She is the 
Associate Deputy Administrator, Entrepreneurial Development of 
the U.S. Small Business Administration. Welcome to the 
Committee. We look forward to hearing from you.
    Ms. Mills. Thank you.

 STATEMENT OF CHERYL MILLS, U.S. SMALL BUSINESS ADMINISTRATION

    Ms. Mills. Good morning, Chair Musgrave, Ranking Minority 
Member Lipinski, and other members of the Committee. I am 
Cheryl Mills, Associate Deputy Administrator for 
Entrepreneurial Development. Thank you for inviting me here 
today to tell you about the work about the Small Business 
Administration's Office of Entrepreneurial Development and what 
we are doing to help serve the entrepreneur and America's small 
businesses.
    As a former business owner, I am proud to serve the 
President and to help invigorate the entrepreneurial spirit in 
this country. Small businesses are the engine of opportunity 
and the growth vehicle for jobs in America.
    Our mission in the Office of Entrepreneurial Development of 
SBA is to educate entrepreneurs interested in starting a 
business or small businesses in need of guidance on how to grow 
their business.
    The Office of Entrepreneurial Development manages a strong 
distribution channel of service centers for small businesses 
across the country. The services offered include assistance in 
preparing business plans, loan applications, GSA procurement 
requests, strategic plans, marketing plans, export advice, 
pricing plans, and competitive assessments.
    We serve these clients through our three resource partners: 
Small business development centers, women's business centers, 
and SCORE. In fiscal year '05, our resource partners trained 
and counseled over 1.1 million clients. In addition, 311,000 
clients registered for one of our 23 courses online through our 
small business training network, and over a million accessed 
the SBA Web site. In addition, since 1994, the Office of Native 
American Affairs has worked to address the unique needs of 
America's First people.
    SBA provided almost a million in grants under the Drug Free 
Workplace program. The agency will continue to promote these 
grants through our partners.
    Let me tell you about recent enhancements to our ED 
programs. First, as a part of my strategic planning process, we 
did look to identify some of the characteristics of small 
business owners of the future. We have concluded future small 
business owners will primarily be in the 18-25-year-old age 
group and the plus-50.
    Next, we focused on ensuring that all of the programs use 
the same measurement system. We have now consistent definitions 
across all programs for counseling sessions, information 
transfer, online counseling, and training. F.Y. '06 will serve 
as the baseline for measurement for all ED programs.
    To collect this information, we also updated and revised 
our management information system. The former system was 
outdated and did not have the capability of delivering 
management reports and analysis.
    We have successfully completed the first comprehensive 
collection of data using standardized definitions across all 
programs using the EDMISII system. This will allow us to do an 
analysis of service provided to clients and of user client 
demographics.
    Online development has become the most cost-effective way 
to expand and to reach new clients. The SBDCs introduced 
Microsoft Live Meeting to ten pilot sites last year. Live 
Meeting allows virtual counseling or training sessions online.
    This year we presented the WBC intermediaries with an 
opportunity to have access to Microsoft Live Meeting. A two-
year free licensing of this product has been given to the WBCs 
to introduce the virtual setting and online counseling to 
existing and prospective clients.
    SCORE has been our pioneer of online counseling. 
Approximately 34 percent of their total counseling is done 
online. We are using technology to reach existing and new 
clients in all of our programs.
    We are also reviewing and improving the oversight and 
evaluation of these programs. We have also instituted a cross-
program financial exam process that allows us to take advantage 
of the expertise of the SBDC financial examination staff to 
breakdown stovepipes and create efficiencies within the 
department.
    Our resource partners have been responsive to the 
President's initiatives for increasing assistance to the 
manufacturing sector and veteran's assistance. SCORE has 
recently launched two new Web sites focusing on veteran, 
National Guard, and reservist small business, and for 
manufacturers. SBDC lead centers offer manufacturing assistance 
and reskilling for workers whose plants are closing. And the 
WBC, for example, has a South Carolina manufacturing extension 
partnership.
    Additionally, we just launched My Biz for Women, a new 
portal for women to access business information and assistance 
available to them throughout the federal government. This Web 
site has been well received, which is an indication of the 
interest and demand for assistance from those who want to 
explore the option of owning their own business.
    We will continue to assess the needs of small businesses 
and the entrepreneurs who start and operate them. We are 
developing an interactive online tool that will allow 
prospective entrepreneurs to assess their readiness. SBA will 
provide them with a list of partner resources that they may 
contact. We expect that this will be helpful to the potential 
business owner as well as the resource partners because those 
coming to partners will be better prepared. This is a first 
step in a broad view looking to ensure that the needs of 
potential businesses are met.
    We plan to continue our commitment to small businesses and 
entrepreneurs on the path to success.
    Chairman Musgrave. If you would just wrap up, please? Thank 
you.
    Ms. Mills. Absolutely. SBA has requested $154 million for 
the F.Y. '07 ED budget.
    Thank you so much. I appreciate that.
    [Ms. Mills' testimony may be found in the appendix.]
    Chairman Musgrave. Thank you.
    I neglected to mention the time. I apologize for that. But 
if you will watch the lights if you can and we'll keep this on 
schedule.
    Mr. Donald Wilson is our next witness. He is the President 
of the Association of Small Business Development Centers. 
Welcome to Committee.

   STATEMENT OF DONALD WILSON, ASSOCIATION OF SMALL BUSINESS 
                      DEVELOPMENT CENTERS

    Mr. Wilson. Thank you very much, Chair Musgrave and Ranking 
Member Lipinski, and all the members of the Subcommittee. We 
appreciate the opportunity to be here and to testify on both 
the F.Y. 2007 budget and the issue of reauthorization.
    I would like to start my comments by mentioning the role 
that SBDCs have played in disaster relief in the Gulf Coast. 
They have played an integral part counseling and training 
thousands of small businesses that were damaged by those 
hurricanes.
    Disaster relief is not new to SBDCs, as Ms. Velazquez knows 
so well, the work of Jim King and the New York network on 9/11, 
the Red River floods in '97, Hurricane Floyd in '99 and 2000, 
Hurricane Ivan, all of the hurricanes in Florida and so forth. 
And we are constantly being recognized by various groups for 
the outstanding work that we do.
    SBA recognized the New York network and Mr. King with their 
prestigious Phoenix Award. The Department of Commerce just 
recognized the SBDC in Florida. And, yet, there is not any 
institutionalization of the role that SBDCs play in the time of 
a disaster.
    The states come to us. The local communities come to us. 
And they are hamstrung because of resources. Louisiana is a 
classic example right now. They want more and more out of us. 
We don't have the capacity to provide it.
    In the last 25 years--and this is not being partisan in any 
way. In the last 25 years, there has not been one, one, 
supplemental disaster funding proposal come from SBA that has 
asked for any additional dollars for the SBDC to address those 
needs. And when you are doing reauthorization, we would 
encourage you to look at that.
    The other issue is because of any lack of 
institutionalization, FEMA and some of the other federal 
agencies who are there are not sure exactly what our role is. 
Sometimes we're welcomed. Sometimes we're not. Small businesses 
come to the emergency disaster centers looking for assistance 
in filling out their disaster loan applications. We're not 
there because sometimes we're included, sometimes we're not.
    So in looking at reauthorization, I would encourage the 
full Committee and this Subcommittee to look very closely. 
We're there. We're the people on the ground. We are the people 
who know the local small business community. I think it is very 
vital that we begin to institutionalize that relationship.
    Speaking of relationships, I would like to acknowledge the 
tremendous improvement in the relationship between small 
business development centers and the Office of ED. And I credit 
that to Cheryl Mills, our accessibility to the deputy 
administrator, our accessibility to Cheryl, we have never had 
this kind of access before. And on a number of issues, whether 
it's the EDMIS system, goaling, and other issues, Cheryl has 
been at the forefront in working cooperatively and trying to 
resolve some of the issues that have lingered for a number of 
years.
    So we appreciate that, Cheryl, very, very much.
    Ms. Mills. Thank you very much. I appreciate that.
    Mr. Wilson. With regard to the budget, I could not have 
said it any better than Mr. Lipinski did. We're seeing 
tremendous demands on our system.
    Recent research by Dr. Paul Rogers indicates that 60 
percent, 60 percent, of small business owners have high school 
educations or less. Twenty-five million small business owners 
with high school educations or less, they have had no 
opportunity for management training. They may have great skills 
as an auto mechanic or a machinist or a baker, but they have no 
skills in management.
    Dun and Bradstreet has repeatedly noted that the major 
reason small businesses fail is not because of lack of capital. 
It's due to management decisions.
    Since 1998, our smaller population states have not had one 
dime in increase. They are being destroyed. They're laying off 
counselors. They're closing centers.
    The great manufacturing and industrial states, Ohio, 
Illinois, Michigan, Indiana, Pennsylvania, the same story. The 
census hit. The Mr. Fitzpatrick state, Mr. Davis' state, 
disastrous reductions in funding.
    This has got to be reversed. We cannot continue to 
dismantle the most powerful economic infrastructure, 
educational infrastructure, this country has, which is the envy 
of the rest of the world. They come to my office all of the 
time wanting to do it in their country. And we're dismantling 
as we lay off counselors and close centers for lack of 
resources, falling far behind even an inflationary rate.
    We appreciate the language in Congressman Manzullo's letter 
to the budget urging a cost of living increase. That will make 
us whole in terms of last year, but over the last decade and 
the last five years, it would take $110 million, which the 
Senate passed last year. And, unfortunately, we're not able to 
get it out of conference in the House.
    So I encourage you to look at the statistics, the return to 
the treasury of nearly three to one, and try to reverse the 
decline, which has been going on for the last decade.
    Thank you, Chair Musgrave.
    [Mr. Wilson's testimony may be found in the appendix.]
    Chairman Musgrave. Thank you, Mr. Wilson, very much.
    Our next witness is Ms. Amanda Zinn. And she is the 
President and CEO of E Cubed--that's Essential Entrepreneurial 
Expertise--and co-chair of the Association of Women's Business 
Centers.
    Thank you for being in our hearing today.

               STATEMENT OF AMANDA ZINN, E CUBED

    Ms. Zinn. Thank you, Chairman Musgrave and Ranking Member 
Lipinski.
    I also wanted to mention that I am the former CEO of Women 
Entrepreneurs of Baltimore, which is a women's business center 
in Baltimore, Maryland. And I was the CEO for 12 years there, 
until this past August. So, in addition to being the chair of 
the board, I also come with the experience of having run a 
women's business center.
    I appreciate the opportunity to express the AWBC's concern 
about the President's budget, but before I speak specifically 
to that, I would like to mention just very briefly some seminal 
research that has been done in the last several years about the 
women's business center program.
    The research by the National Women's Business Council and 
the Center for Women's Business Research, as well as U.S. 
Census Bureau data, and the Association of Women's Business 
Centers research has shown that the women's business center 
program has been highly effective since its insemination. 
During the three years from 2001 to 2003, the businesses 
counseled by the women's business center program generated an 
impact, an estimated impact of $500 million in gross receipts 
on an investment of $37 million in public funds. That's a 
staggering return on investment.
    Demand for the women's business center program is rising. 
Seventy-five percent of centers noted an increase in monthly 
clients served in 2004. During 2001 to 2003, the number of 
women entrepreneurs served nearly doubled, a 91 percent 
increase. During 2001 to 2003, the number of new firms created 
by women's business centers increased by 376 percent.
    Women's business centers served women of color at a far 
higher rate than their prevalence in the general population as 
well as serving women who are economically disadvantaged. 
Centers report that 67 percent of all people served have a 
household income level of less than $50,000.
    And between 45 and 60 percent of economically disadvantaged 
people entering the women's business center program were no 
longer in poverty a year or two later.
    In addition, the jobs the businesses are creating, the tax 
base that is being bolstered as well through the personal 
income tax increase, retail sales tax, personal property taxes, 
and corporate taxes, all of this to say that the women's 
business center program has been a very wise investment.
    The creation of the sustainability program back in 1996, I 
believe, was very important. There were three reasons why this 
sustainability program was so important. First, it acknowledges 
the importance of women business owners in this economy and how 
it is the fast growing sector of all small businesses. 
Secondly, it acknowledges the importance of the SBA funding as 
it helps us leverage other funds to run the centers. And, 
thirdly, it acknowledges the hard work that was spent in 
building the infrastructure of the centers of this long period 
of time. And the research has shown that the longer a center is 
in business, the stronger the center is in terms of its 
outcomes.
    In response to the President's budget, we are very 
concerned about the appropriations. We know that it will take 
$16.5 million to continue the program by funding the current 
centers and opening some new centers. The President's budget is 
only at $11.88 million, which is disastrous for our program.
    Last year we had a cut of only a half a million dollars in 
the program. And several centers had to change. Many centers 
had to lay off staff. So this reduction is even further 
detriment to the program.
    Sustainability again I would like to say is a very 
important part of our program. The sustainability centers are 
the ones that are the most productive centers. And so that is a 
very important part of our program.
    I also wanted to mention the authorization in the 
President's budget. The authorization is to decrease the 
program, the authorized amount, to 14.5 million. It is 
currently at 16.5. Obviously that again will have a very 
deleterious effect on the program. Again, in order to maintain 
the existing centers and to add some new centers each year, we 
definitely need to have a budget of a minimum of 16.5.
    The final thing I wanted to say was the performance 
criteria. Two years ago there was new performance criteria in 
place to determine what level of funding each women's business 
center will receive. And we would really very much appreciate 
the SBA sharing that performance criteria so we can share that 
with the centers so that they can help increase their funding.
    Thank you.
    [Ms. Zinn's testimony may be found in the appendix.]
    Chairman Musgrave. Thank you very much.
    Mr. Pyles, you are up next. Mr. Jim Pyles is the Chairman 
of the Board of Service Corps of Retired Executives. Thank you 
for being here.

  STATEMENT OF JIM PYLES, SERVICE CORPS OF RETIRED EXECUTIVES

    Mr. Pyles. Good morning. Madam Chairman. I am delighted to 
be here and speak on behalf of SCORE. Thank you for the 
opportunity to testify today. I would like to request that my 
written testimony be placed into the record.
    First I would like to tell you something about myself. I am 
from Elkhart, Indiana. I spent 34 years in sales and marketing 
with the Bayer Corporation. I was a co-founder of a small 
business and founding director of a local bank. I became a 
SCORE volunteer in 1996. This is my second year as board chair.
    I am here on behalf of 10,500 SCORE volunteers, who donate 
their time and talent to serve America's entrepreneurs. SCORE 
offers business counseling and low-cost workshops.
    Since its founding in 1964, SCORE has helped more than 7 
million businesses. Our volunteers donated more than 1.3 
million hours of service in fiscal year 2005. With an 
appropriation of $5 million, SCORE costs taxpayers less than 
the federal minimum wage per volunteer hour. By helping small 
businesses, SCORE supports job creation nationwide.
    Today SCORE has 389 local offices plus 800 branches. Last 
year SCORE's expert volunteers counseled more than 300,000 
entrepreneurs and provided workshops for more than 115,000 
people.
    Last year all of us were deeply saddened by the devastation 
of Gulf Coast hurricanes. Volunteers at local chapters, some of 
whom lost homes and suffered hurricane damage themselves, 
increased efforts to help.
    Baton Rouge volunteers worked at recovery centers. They 
formed a task force to meet local needs and share information 
on disaster loan programs. Many New Orleans volunteers provide 
counseling out of the Baton Rouge office.
    SCORE in Biloxi, Mississippi suffered a total loss. The 
chapter opened a temporary location to meet clients two to 
three times a week. SCORE used the internet to let people know 
recovery resources within three days of the Hurricane Katrina. 
For months SCORE updated information weekly. And we continue 
home page access to the latest recovery resources.
    Every day SCORE offers free online information on how to 
start, manage, and grow a business. Last year more than 1.3 
million people visited score.org. SCORE's 1,300 online 
counselors provide expert advice in more than 600 business 
areas.
    In addition, SCORE offers resources specifically for women, 
Hispanics and other minorities, young entrepreneurs, and 
veterans. More than half of SCORE's board and clients are women 
and minorities.
    As a veteran and former small business owner, I know how 
important SCORE mentoring is for veterans. Last year SCORE 
created an online center to assist them.
    SCORE appreciates the continued federal appropriation and 
your support in a challenging budget environment. Since 2000, 
SCORE has been level-budgeted at 5 million. Funding for the SBA 
was authorized and reauthorized in 2004. At that time, SCORE 
was authorized to receive up to $7 billion annually. In the 
following appropriate process, SCORE only received 5 million.
    To meet rising costs and to modernize our operations, we 
request that you consider authorizing the following funding: $7 
million in 2007, 8 million in 2008, 10 million in 2009. With 
additional funding, SCORE will establish a Web-based one SCORE 
system to better serve both clients and counselors. SCORE can 
become even more efficient by developing tools to better manage 
chapters and operations.
    For clients, a Web-based system would offer access to 
online learning, online advice, workshop registration, and 
face-to-face counseling. Additional funding for technology will 
make it easier for SCORE to recruit volunteers. New volunteers 
would be able to take online orientation and training. This 
will attract diverse volunteers to SCORE and expand SCORE's 
skills and abilities we then could offer to entrepreneurs.
    Madam Chairman, that's why we're here: to help local 
communities and strengthen the U.S. economy. SCORE appreciates 
the successful partnership with the Small Business 
Administration. We also appreciate the support of this 
Subcommittee and your personal support of SCORE.
    I would be pleased to answer any questions that you may 
have. And thank you for this opportunity to testify.
    [Mr. Pyles' testimony may be found in the appendix.]
    Chairman Musgrave. Thank you very much.
    Our next witness is Ms. Elizabeth Maneval. She is the owner 
and publisher of We magazine. And she is here on behalf of the 
Association for Enterprise Opportunity. Welcome to Committee.

       STATEMENT OF ELIZABETH MANEVAL, WE MAGAZINE, INC.

    Ms. Maneval. Thank you very much.
    Good morning, Chairman Musgrave, Ranking Member Lipinski, 
and other members of the Subcommittee. Thank you for the 
opportunity to present testimony on the Small Business 
Administration's Microloan Program.
    I am Elizabeth Maneval, owner and publisher of We Magazine, 
an award-winning general interest publication written by women, 
for women, about women. I am also here today on behalf of the 
Association for Enterprise Opportunity and Community First 
Fund.
    AEO is the national trade and membership association for 
micro enterprise development in the United States, with nearly 
500 member organizations nationwide. The vast majority of AEO's 
membership consists of micro enterprise practitioners, 
including over half of all SBA microloan intermediaries and 
Small Business Administration PRIME grantees. Community First 
Fund is a member of AEO and the SBA microloan intermediary that 
helped me to secure start-up capital for my small business. 
Community First Fund's mission is to drive community and 
economic development in the ten counties of Pennsylvania that 
it serves.
    The SBA microloan program played a key role in helping me 
to achieve my dream of starting a small business, which 
creates, publishes, and distributes a women's general interest 
and lifestyle magazine.
    The magazine, by the way, has been in publication for over 
four years. And it truly has become a part of the culture of 
south central Pennsylvania. I'm sure all of you are aware of 
Lancaster County and Harrisburg. Chester and York Counties are 
the primary counties that we serve.
    We Magazine is the premier voice for women in central 
Pennsylvania, which celebrates their diversity, offers valuable 
information on topics of interest to them, and provides a 
vehicle in which women and area businesses with products and 
services targeted to women can promote themselves.
    I guess you all know that to promote yourself in a 
community costs an awful lot of money. We Magazine offers a 
vehicle that is very affordable fort start-up businesses, which 
generally are women-owned businesses that want to promote 
themselves to the community in an affordable way.
    Up to 12,000 copies of We Magazine are distributed 6 times 
a year to 250 high-traffic locations in Lancaster and 
Harrisburg market areas, Chester, and York.
    We Magazine, Inc. was founded in July 2002 with the 
assistance of Community First Fund, which provided technical 
assistance and a $9,000 loan, which I needed for start-up 
capital. A short time later, the first issue of We Magazine 
premiered October 1, 2002.
    The articles reflect the trends and thoughts on a wide 
array of subjects of interest to women, including health, 
nutrition, fitness, finance, fashion, arts and entertainment, 
and personal style.
    As a one-woman-owned company, I outsource the various tasks 
involved in the production of the magazine. By outsourcing the 
photography, editing to design, printing to other individuals 
and businesses in the community, We Magazine has helped to 
support the local economy and indirectly creates jobs.
    Since the establishment of We Magazine, Inc., I have 
continued to receive assistance from Community First Fund, a 
Small Business Administration microloan intermediary, which 
provides much needed business assistance to micro entrepreneurs 
in central Pennsylvania.
    On subsequent occasions, I was able to secure two 
additional microloans from Community First Fund that responded 
to my application very quickly. This is really important. When 
I approached Community First Fund for additional money for 
capital to expand the magazine to improve the looks of the 
magazine and to offer other programs to the community, 
Community First Fund responded very rapidly to my telephone 
call, like ``Hello. It's Liz. Could you offer any more 
assistance, any more capital to me?'' And honestly within ten 
days, I was given a check.
    Other institutions that have approached, they have told me 
that I was on a fast track to receiving loan money. One year 
and four months later, I received that money. That was no help 
because by that time, I had already spent the money that I had 
saved. So I'm really grateful to Community First Fund for the 
turnaround that they provide for getting money.
    I was able to secure two additional loans. And the timing 
in which financing was obtained is frequently, which I just 
addressed, a critical matter for small businesses such as mine.
    The additional microloans were used as working capital in 
order to grow my business and maintain the continued viability 
of We Magazine by improving the quality of the publication. 
Without the SBA microloan program and microloan intermediaries, 
such as Community First Fund, I would not have been able to 
realize my dream of starting a small business that publishes a 
magazine written by women, for women, about women.
    Chairman Musgrave. Thank you very much.
    Ms. Maneval. If the Microloan program is terminated, many 
micro entrepreneurs, such as myself, would not be able to 
secure financing.
    Thank you very much for the opportunity to testify, Madam 
Chairman. And I will be happy to answer any continued questions 
you may have
    [Ms. Maneval's testimony may be found in the appendix.]
    Chairman Musgrave. Our next witness is Dr. Carol Law. She 
is the President of Drug-Free Workplaces Incorporated. Welcome 
to Committee.

       STATEMENT OF CAROL LAW, DRUG FREE WORKPLACES, INC.

    Ms. Law. Thank you very much.
    Chair Musgrave, Ranking Member Lipinski, other members of 
the Committee, fellow panelists, and attendees, thank you for 
giving me this opportunity to share with you my experiences and 
perspectives on the value of companies becoming a drug-free 
workplace and the important of the Paul D. Coverdell grants in 
helping with that effort.
    As a young social worker in Newark, New Jersey; as a USO 
director in Vietnam; while assessing homes for possible child 
abuse in Pensacola, Florida; and as a medical psychotherapist 
in Scottsdale, Arizona, I witnessed the destruction that drugs 
have on the lives of the abusers, their families, their 
employers, and their community.
    What I saw consistently was that a person with a drug 
problem is willing to give up their wives, their husbands, the 
children, the dogs, but the thing that they hold onto with 
great ferocity is their job. Is it for the money? Yes. But I 
think also it's because we as Americans identify ourselves by 
what it is that we do. Evidence the fact that probably within 
the first three sentences, the question comes up, ``What is it 
that you do?''
    If we want to intervene, the place to do it is in the 
workplace. Over 75 percent of drug abusers in the United States 
are employed. They are not in jails. They are not in welfare 
lines. They are in businesses, both big and small. Big 
businesses early on realized that this was going to impact 
their bottom line. And they got very proactive in what they 
were doing about this.
    I had the occasion to speak with the vice president of 
Tropicana who is head of their HR department. And he said what 
they had done was put up a sign on the door. And before you 
entered into their offices to make an application, it said, 
``Drug Testing Required.'' What they saw on a videocamera was 
that people would come up, look at the sign, read it, process 
what was going on, turn around, and leave.
    That in and of itself actually saved the company money, but 
what was more concerning was the fact that those people then 
were going on to small companies, the least able to protect 
themselves. They were unable and had no HR departments to write 
their policies, to get drug testing for them, to tell them what 
to do with an employee that might test positive.
    Tropicana actually gave out grants during the early '90s to 
help Chambers of Commerce help small businesses become drug-
free workplaces. The Paul Coverdell grant program through the 
SBA--and I will tell you the SBA has done great things with a 
very, very little amount of money--has given out grants. And, 
in turn, those grants have helped small companies across the 
United States have drug-free workplaces, assist them with those 
programs.
    I would like to read to you a letter that we got from one 
of the small companies. A hauling company in Milton, Florida, a 
rural community in Santa Rosa County and also the home to the 
U.S. naval station at Whiting Field, got a wake-up call when a 
fatal crash occurred not too far from their offices. Two young 
people were killed, and a third was critically injured.
    ``Given the fact that we're a business of driving, we 
wanted to make sure that our five employees, including our 
drivers, would be as safe as possible, both for themselves and 
for everyone else on the road,'' said Cassie Durbin, the 
company's office manager.
    ``The company decided to take the steps to ensure that its 
workforce was drug-free and received financial and technical 
help to create a drug-free workplace from'' us, ``a 
subcontractor through The Walsh Group. The program consisted of 
a written program, employee supervisory training, training for 
their supervisors, drug testing, and an EAP program.
    ``Several long-term employees tested positive for drugs 
when the program started. Instead of dismissing them, the 
company placed them in non-safety-sensitive positions while 
they received professional help. Today these employees value 
their jobs even more than they did before and feel that they 
have been given another chance,'' the office manager of the 
company affirmed.
    ``We understand the importance of a drug-free workplace. 
It's improved our morale and our bottom line. We also feel that 
we are making a difference in the lives of our employees, their 
families, and our communities.''
    The funding for this progressively has gotten less and 
less. At this particular time, I think there is a million 
dollars. The return on investment for this kind of funding is 
astronomical when it comes to what we get back in saving lives, 
saving families, and also in helping small businesses.
    Thank you for giving me this opportunity to address you 
today. And I will be willing to answer any and all questions. 
Thank you.
    [Ms. Law's testimony may be found in the appendix.]
    Chairman Musgrave. Thank you very much.
    I think I will just come right back to you as we start our 
questioning. Just what kind of a burden and how difficult is it 
to get a small business to implement a drug-free program? I'm 
sure that every employer wants that, but it is hard to get 
there.
    Ms. Law. It definitely is. This program has assisted many, 
many companies in doing that. What it does is give them the 
confidence that there is somebody there who knows how to write 
a policy, how to implement it, how to get their employees 
assistance.
    What we have tried to do consistently and what we have 
continued to do is to say, ``Listen, if you had a computer that 
broke down and you have invested a great deal of money in that, 
would you then throw it out?'' The answer, of course, is no.
    What we have helped them do is keep the employee, help them 
get help, help them get the testing, but I think for the 
employer, as you said, that has to wear four and five different 
hats, they're not secure in doing that. This granting process 
and the technical help that the grantees are able to give those 
small companies is invaluable.
    Before I came here, I asked my staff to look at the number 
of companies that we helped and then to look at how many stayed 
in the program over the last five years. Every one of them has 
stayed with it. I think that speaks volumes.
    And that letter that I just read to you, I will tell you 
that that is only one of countless numbers of other letters 
that we get. Last week we just had a similar situation. And the 
person is now going to see a counselor, is going to stay with 
the company, is going to have post-rehabilitative drug testing 
for two years. And so the company saved an employee, a family, 
and definitely had help in doing that.
    Chairman Musgrave. Thank you very much.
    Mr. Pyles, my next question will be for you. Do you have 
reporting requirements that you must provide to the Small 
Business Administration? Does that take a lot of effort? And 
also, just to follow up, do the Web-based applications help?
    Mr. Pyles. The answer is yes to those questions in general. 
Our new reporting system will allow us to collect data more 
efficiently and report more accurately on the activities of our 
branches and our chapters.
    Chairman Musgrave. Thank you very much.
    I wanted to ask Mr. Wilson a question about Katrina relief. 
You know, you said that SBDCs can play a major role in that, 
but it's my understanding that the major relief agencies often 
neglect to utilize them. Do you agree with that? And if so, why 
do you think that's the case?
    Mr. Wilson. Well, often the folks who come in to work with 
FEMA and the other agencies may not be particularly familiar 
with what we do and what we can do. They're also coming in from 
out of town. They don't have the familiarity with the local 
business community.
    It's one thing to pass out an application for a disaster 
loan. It's another to fill it out. One of the most important 
things--and Jim King, I believe, of New York, who worked with 
9/11 so effectively with the New York program, is here in the 
audience. And you might want to ask that same question of him.
    I believe the national rate is under 50 percent of folks 
who fill out loans who actually are successful in getting 
resources. It's not so much that the application is just 
absolutely daunting. It's that you have to reconstruct your 
financial records.
    And most small businesses when their records are blown away 
or flooded or whatever, they truly don't know how to do that. 
SBDC counselors can work very closely. And one of the things 
that was most helpful this year--and I want to thank the 
commissioner of the IRA--a number of members of Congress had a 
suggestion I made on the Senate side went to the IRS and asked 
for help in getting IRS documents from past tax years to the 
SBDC centers and SBDC counselors in Louisiana and Mississippi. 
That was extremely helpful to be able to help those clients.
    I believe that in Florida, New York, North Carolina, when 
we look back, the clients that we have helped is about a 70-75 
percent success rate in terms of the applicant receiving a 
loan. And so I know when FEMA comes in or other groups come in, 
they're trying to set up emergency centers. They may find an 
SBDC counselor, like who are you and what are you here for.
    We're here at that community to help rebuild 
entrepreneurial infrastructures, which is vital to everybody 
else, to get people back to work and everything. So if 
somehow--
    Chairman Musgrave. Well, thank you very much.
    Mr. Wilson. --we can be institutionalized, that I think 
would help tremendously.
    Thank you for the question.
    Chairman Musgrave. Thank you.
    Mr. Lipinski, do you have questions?
    Mr. Lipinski. Well, first, Madam Chairman, Ms. Bordallo had 
to leave. And she had some questions that she wanted to submit 
to the witnesses. So I will ask unanimous consent if I could 
submit these questions for the record to the witnesses.
    Chairman Musgrave. Without objection.
    Mr. Lipinski. Thank you.
    And, second, I want to right now pass over my turn in line 
to the ranking member of the full Committee, Ms. Velazquez.
    Chairman Musgrave. Yes? Go ahead. I hope you can speak.
    Ms. Velazquez. Well, what I'm going to do, I'm going to 
make two questions. And then I'm going to submit some questions 
to Ms. Mills. And I will ask that you commit yourself to send 
those responses before March 15th because we're going to have 
the administrator coming before the full Committee.
    Ms. Mills. Absolutely.
    Ms. Velazquez. Thank you.
    Chairman Musgrave. It will be done, then, in a timely 
fashion. Thank you very much.
    Ms. Velazquez. Ms. Mills, I know you are aware of the 
criticism that SBA has been under because of the poor response 
regarding Katrina and the Gulf Coast. It has been well-
documented. We know the extraordinary backlog that you face 
over 100,000 long applicants that have not been processed 
today, 6 months later, the high rejection rates of those 
disaster loans.
    Then you hear Mr. Wilson saying that they have over 1,000 
counselors that are ready to assist SBA in providing the 
assistance that the victims have. But today we are discussing 
the budget and how this budget is going to be impacted, some of 
the small business development centers, the women's business 
center. We got a cut for the small business development center 
of $1.6 million and for the women's business center of 500,000.
    I would like to ask you if SBA is willing to support 
increased funding for the small business development centers so 
that they are able to go to the Gulf Coast and provide the 
assistance that they need.
    Ms. Mills. I appreciate your question, Congresswoman. Let 
me say I think there are almost two questions there. But, first 
of all, our disaster relief, as you know, is a different 
department. And they are involved in long-term disaster relief. 
So that would be an area that they would need to address for 
you. And I would be happy to take that question back for you.
    I believe that the legislation right now certainly puts a 
constraint on SBDC counselors traveling across state line.
    Ms. Velazquez. I'm sorry? I didn't hear your response.
    Ms. Mills. I believe the legislation currently constrains 
counselors from crossing state lines in these situations. So I 
think we all need to look at that legislation and see what we 
can do to improve the legislation because we, as you know, have 
to adhere to the legislation. So that would be an area that I 
would recommend we start to look at.
    Ms. Velazquez. Would SBA support giving these counselors a 
greater role as first responders to disasters like this?
    Ms. Mills. I think, one, I support obviously the 
President's budget. I think that is certainly something that I 
can take back to the administrator.
    Ms. Velazquez. Okay. Ms. Mills, in the Committee, we 
haven't reported out too many legislations, too many bills, but 
we reported out two bills: one, Mr. Sweeney, John Sweeney, 
regarding regulation relief for small businesses; and the other 
one is from Mr. Udall that is for Native Americans.
    My understanding is that the two bills have not been 
brought up to the House floor because of SBA objections. Can 
you tell me what those objections are?
    Ms. Mills. No. I'm sorry, Congresswoman. I'm not aware of 
the objections, and I'm not familiar with the bills.
    Ms. Velazquez. Would you provide me--
    Ms. Mills. I would be happy to look into that. Absolutely.
    Ms. Velazquez. Thank you.
    Chairman Musgrave. Ms. Velazquez, you can have your own 
five minutes if you would like to continue.
    Ms. Velazquez. No. I will submit those questions for them 
to respond to me. And I really appreciate if you get those 
responses before March 15. Previously the record has been three 
months. And this way we cannot operate effectively.
    Ms. Mills. I appreciate that. I will take that message 
back.
    Chairman Musgrave. Mr. Fitzpatrick, do you have questions?
    Mr. Fitzpatrick. I do, Madam Chair. Thank you very much.
    As a representative of Pennsylvania, I will go right to 
Elizabeth Maneval and say we're proud of your business 
success--
    Ms. Maneval. Thank you.
    Mr. Fitzpatrick. --in Pennsylvania. And you certainly have 
an aspiring story. I understand why you are a supporter of the 
microloan funds. There are many in Congress who support 
microloans internationally for minorities and women. Of course, 
charity starts at home. And so we should support those programs 
here in the United States.
    You indicate in your testimony that you started with a 
$9,000 loan. How exactly did you invest that in your business 
to parlay it into the success that brings you here today? The 
$9,000 loan, how do you use it?
    Ms. Maneval. I used it to pay employees that I outsource 
generally. I have a graphic designer. I have an editor. I have 
a photographer. I have a production manager with my printing 
company. And I do my own distribution. So I have expenses with 
my car.
    I went out, by the way, and bought an energy-efficient car 
to save some money.
    Mr. Fitzpatrick. Do you like it?
    Ms. Maneval. But I also had to increase some of my 
equipment. I really wanted to increase the quality of the 
magazine. So I invested it that way as well. There's paper 
quality. There's all kinds of details that go into producing a 
publication.
    Mr. Fitzpatrick. Does your business have other employees, 
other than yourself, at present?
    Ms. Maneval. No, it does not. I outsource those services.
    Mr. Fitzpatrick. You hire printers? You hire drivers?
    Ms. Maneval. I do. And the employees that I use are all 
women except for the printer that I use. That is owned and 
operated by a family, a substantial family, in Lancaster 
County. However, the other folks, they're all women. And they 
all own their own small business. And I believe one of them has 
just received a small loan from Community First Fund.
    Mr. Fitzpatrick. Is this Community First Fund called a 
microloan intermediary? Do the community banks of sort of south 
or central Pennsylvania support that loan fund as well?
    Ms. Maneval. Absolutely. I will have to get you the names 
of the banks from the folks that I work with, but yes, there is 
a number of banks in the community that work directly with 
Community First Fund. I only know that because I approached 
them for article ideas or advertising. And they tell me that 
they're connected with Community First Fund.
    Mr. Fitzpatrick. So these are federal funds that would 
leverage in private funds as well into a microloan fund.
    I should know the answer to this question. Perhaps you can 
help me with it. Obviously the administration looks at each of 
these programs, thousands of them, across the spectrum, in the 
federal government. From a cost-benefit perspective: what 
works, what doesn't, what's the return on investment. Do you 
know what the repayment history is for microloans generally?
    Ms. Maneval. I do not, but I would be happy to research 
that and get back to you.
    Mr. Fitzpatrick. Does the SBA? Do you have any of that 
information?
    Ms. Mills. I'm sure we do. Now, you know, microloans is not 
part of entrepreneurial development. That's part of capital 
access. But I am happy to--
    Mr. Fitzpatrick. I suspect it's fairly high.
    Ms. Velazquez. No. The default rate is less than five 
percent.
    Mr. Fitzpatrick. Right. So the repayment rate is not--
    Ms. Maneval. Excuse me. I just got an answer to that. I'm 
real quick. It's less than one percent.
    Mr. Fitzpatrick. The default rate is less than one percent?
    Ms. Maneval. Yes.
    Mr. Fitzpatrick. So the repayment rate is very high?
    Ms. Maneval. Yes.
    Mr. Fitzpatrick. Which is excellent. Okay.
    Ms. Maneval. Yes.
    Mr. Fitzpatrick. Very good. Very good. A question on the 
Senior Corps Retired Executives. Is it Service?
    Mr. Pyles. The Service Corps of Retired Executives.
    Mr. Fitzpatrick. The Service Corps of Retired Executives. 
I'm a fan of SCORE. There are at least three chapters in my 
district: one in Levittown, one in Doylestown, one in Perkasie, 
all in Bucks County, Pennsylvania, southeastern Pennsylvania.
    It is interesting that these chapters are co-located with 
Chambers of Commerce. The chambers like them for the obvious 
reasons. They bring all of that business experience and acumen 
back to the table that was retired. People want to give back. 
It's good for the chambers because there is activity within the 
chambers. It's good for the chamber members because the members 
are getting great advice.
    Frankly, it's good for the executives. And it's good 
generally for the country, sort of reminds me of Alexis de 
Tocqueville and his ``Democracy in America,'' and how he talked 
about the spirit of America. And how this country was different 
than other countries because we have that sense of 
volunteerism.
    The number, I guess, that the administration has proposed 
is 5 million. You may have testified, and I apologize if you 
did, but did you have a recommended number?
    Mr. Pyles. Yes, we do. We have a recommendation of 7 
million in 2007, 8 million in 2008, and 10 million in 2009. Our 
increasing cost for our technology is constantly needing to be 
upgraded so that we can expand our services and do more 
directly with our clients and our counselors.
    Mr. Fitzpatrick. In addition to money--and funding is 
important--is there something else that we as members of 
Congress can do to help support SCORE?
    Mr. Pyles. We would like to reach out more to outlying 
areas and the rural areas, areas that we're not currently 
serving, although we have 800 branches out in those areas, but 
we need to expand more. We need to do more recruiting of our 
volunteers. And that's part of the reason we need additional 
funding.
    Chairman Musgrave. Thank you. We'll do another round if you 
would like.
    Mr. Fitzpatrick. Thank you, Chair.
    Chairman Musgrave. Ms. Moore, do you have questions?
    Ms. Moore. Yes, ma'am. Thank you so much, Madam Chair and 
Ranking Member Lipinski. Thank you so much for holding this 
hearing.
    I just want to say hello to the distinguished panel here. 
And I want you to know that I have perused through your 
testimonies that I may not have heard earlier.
    I can tell you that I'm from Milwaukee, Wisconsin. It has 
just been chosen as the sixth city for the White House urban 
entrepreneur ship project. I've gotten both feet into this. And 
I'm very excited about the potential of doing things there. And 
I don't want to waste all of my time by talking about the 
challenges and opportunities that are there.
    I just want to jump right into the question. And I guess 
I'll direct it to Ms. Mills. You are the type of person that I 
would, in fact, consider if you would consider coming out to 
visit Milwaukee and talk to some of the folks that are involved 
in this initiative.
    The question I guess that I have relates to the testimony 
of all of these distinguished panelists. You know, Elizabeth 
Maneval talks about how microloans are just the life blood of 
her operation. And, of course, the administration is zeroing 
that out. Mr. Pyles here talks about how technology is very 
important, how they want to do more outreach of rural areas. 
But SCORE, of course, is being flat-funded.
    In our town, the microloans that my good friend Mr. 
Fitzpatrick talked about being so successful, we anticipate 
that we need about $14 million more for that program, which has 
been wildly successful. And our women's business initiative in 
Milwaukee relies on those, is the biggest provider of those 
services, you're zeroing out services or flat-funding services 
all across the board.
    Now, Ms. Mills, as a person who was a small business owner 
yourself, then recruited by the--I mean, you're just the 
perfect person to be inside advocating for us. And so my 
question is, how do you make the numbers work? I mean, I found, 
you know, that people have a lot of problem with math. They 
don't know the quadratic equation, but everybody understands 
subtraction.
    And so my question really is, in your testimony, you say 
that you're ``proud to serve the President and to help 
invigorate the entrepreneurial spirit in this country.'' Small 
businesses provide about what, 95 percent of all--just how do 
you plan to invigorate the entrepreneurial spirit with these 
kinds of draconian cuts?
    Thank you.
    Ms. Mills. Well, I want to thank you first for your 
question. I am delighted that you are part of the urban 
entrepreneurial partnership program. I think that is so 
exciting. And you are one of the six pilot cities. So my 
congratulations. I know you will be involved in it. Yes, I 
would love to come out to your district.
    I am a small business owner. That is my background. I am a 
supporter of the President's budget. And I am dedicated to 
looking at cost efficiencies. And part of the administration 
and part of my decision-making ability is to look at those cost 
efficiencies.
    In addition, it is my job to make sure we are all part of 
the Twenty-First Century. So aptly put by the ranking minority 
member, Congressman Lipinski, in his opening statement is we 
have got to evolve in the Twenty-First Century.
    And oftentimes we need to take a hard look at ourselves and 
see, are we there yet? And I look at the efficiencies, and I 
say we are not there yet.
    And all of us in this room are stewards of taxpayers' 
money. We all represent the taxpayers, whether we're elected, 
appointed, or recipients of grants. And so it's all of our 
collective efforts to look for these efficiencies.
    And technology is really where we need to do some serious 
work. We're not there yet. And that is really what I would like 
to do. And that is my point.
    Ms. Moore. Ms. Mills, I don't want to be rude, but my time 
will expire and I won't get a chance to say this. You know, it 
is not without cost to become efficient. You might realize cost 
efficiencies down the line. But I'm sure Mr. Pyles would agree 
you have to make an initial investment. I can't go to Best Buy, 
you know, and get a computer without any money.
    And so, you know, I realize you work for the President, 
but, I mean, an investment is just that. You have to make 
investments. And you can't realize efficiencies, particularly 
if you are going to rely on technology to be the ways and means 
of acquiring these efficiencies, without the investment. We 
need more money.
    We want you to go in there when the door is closed and say, 
``President Bush, give us some more money.''
    Thank you. My time has expired.
    Chairman Musgrave. Thank you.
    I have a question for Ms. Mills also. SBA is supposed to 
issue a report on the Drug-Free Workplace program. And I know 
that that is due on March 31st, and it seems to be a continual 
problem. It's habitually late. Do you have any idea on the 
status of that?
    Ms. Mills. No, but I'm happy to check into that and see if 
there is any problem. And we will make sure that we get that to 
you on time.
    Chairman Musgrave. That would be wonderful. And, as we talk 
about all of these issues that are disappointing to small 
business owners when we look at the budget, I do want to say 
that the section 179 expensing that's included in the tax cuts 
is very beneficial for small businesses and helps them to grow. 
And I hope you are appreciative of our efforts on that and the 
President's agreement.
    I am going to quickly turn it over because I know we have 
votes coming up shortly and ask, Mr. Lipinski, if you have 
questions for a second round.
    Mr. Lipinski. Thank you, Madam Chairman. A couple of 
questions here.
    It concerns me greatly the budget cuts for small 
businesses. I have many small businesses in my district, many 
entrepreneurs starting out new businesses in my district.
    I want to start out by asking Ms. Mills. I had stated in my 
opening statement and Mr. Wilson also stated that the return on 
investment for SBDCs, $3 of the federal treasury for every 
dollar spent.
    Is this accurate? Do you believe that it does have that 
high return on investment that we put into them?
    Ms. Mills. Well, the SBA has--and certainly Don knows this. 
We have been very vocal about it. That really comes from the 
Chrisman study. And we have not recognized the Chrisman study 
and have not really determined the methodology is something 
that we support. So, you know, I think every report will have 
something that one can get behind or not get behind. And I 
think the agency has taken a position in the past that that is 
a report that they're not fully comfortable with, methodology.
    Mr. Lipinski. Okay. Mr. Wilson, is there anything you 
wanted to add onto that?
    Mr. Wilson. Certainly. The methodology of the Chrisman 
study has been peer-reviewed for 20 years. It has been 
published in almost every major small business journal in the 
country.
    Sates who have taken the Chrisman data, Oregon, Ohio, 
repeatedly, they use studies such as the IMPLAN modeling; REMI 
modeling, which they have used to assess whether or not state 
programs are effective. And because states invest in the SBDC 
program, we can't access a federal dollar until we raise a non-
federal dollar.
    They have studied the Chrisman data. The fascinating thing 
is all of their modeling shows that the program has a much 
higher return than Chrisman. The fascinating thing is OMB in 
its last two presentations has quoted Chrisman. More 
importantly, while the President was governor of Texas, a 
requirement by Texas law for us to be funded, we have to be at 
least revenue-neutral and the comptroller of the State of Texas 
certifies to the legislature every year that we are at least 
revenue-neutral.
    So we are completely baffled by the fact that SBA does not 
recognize the modeling in the study of Chrisman. It is a 
complete mystery to us.
    Mr. Lipinski. Mr. Wilson, what has been the response with 
the cut in federal dollars for the money that, the non-federal 
dollars, the money that SBDCs are getting elsewhere?
    Mr. Wilson. Well, I can tell you candidly that obviously, 
as you know from your own state, that in probably about 2002, 
2003, 2004, states had the sharpest decline, the sharpest 
decline, in state revenues at any time since the Great 
Depression. And, yet, most states made a heroic effort to try 
to maintain their state funding of this program because they 
recognize the contribution it makes to their economy.
    And when you realize that small businesses contribute GAO 
over 41 percent of the revenues to the treasury and then we 
look back and we see what a tiny percentage of federal funds 
are invested in small business growth and management, it just 
doesn't match.
    Mr. Lipinski. Another question, Ms. Mills, Ms. Zinn had 
talked about the performance criteria and had suggested that 
the performance criteria for the women's business centers is 
not clear that they don't know what that is. Is there anything 
that you can say about that?
    Ms. Mills. No, but I'd be happy to go back to the program 
director and find out if they have discussed it, what they have 
discussed, why it isn't clear because it's not a complicated 
criterion.
    Mr. Lipinski. Okay. Well, I would like to make sure we get 
that. I would like to hear back in regard to that.
    One other simpler question for Ms. Mills. What is being 
done to help manufacturers? Manufacturing is in a terrible 
condition in this country. My district has seen the loss in so 
many manufacturers. And we still have some, but they are 
struggling to hold on. What is being done to help?
    Ms. Mills. Well, I think, you know, my department works 
through our resource partners. And, as I mentioned in my 
remarks, I think our partners are doing things. I mentioned the 
manufacturing assistance program, of which there are 31 of the 
63 lead centers for SBDCs that are doing manufacturing 
assistance. SCORE has I believe 100 or 74 counselors or 174--
I'll have to clarify that for you--that are--I think it's 174 
counselors, who specialize in manufacturing.
    And then there is one women's business center that 
certainly is dedicated down in South Carolina, Columbia, South 
Carolina, that was set up for manufacturing assistance.
    So I think our resource partners, we continue to talk about 
that initiative. It's obviously very important to the 
President. We certainly discussed it this year with our 
resource partners. They have it on their radar screen. They're 
continuing to--
    Chairman Musgrave. Thank you very much.
    Mr. Fitzpatrick, any more questions?
    Mr. Fitzpatrick. Yes. I would like to follow up with Mr. 
Wilson on that colloquy you had with Chairman Musgrave on the 
issue of small business development centers' presence at the 
disaster relief centers.
    Mr. Wilson. Yes.
    Mr. Fitzpatrick. You spoke specifically about Hurricanes 
Rita and Katrina in the Gulf Coast, but it is an issue, really, 
for disasters throughout the country.
    Mr. Wilson. Absolutely.
    Mr. Fitzpatrick. And relief centers opened all the time. My 
understanding of the way that the centers work is it's sort of 
a bottom up approach. These disaster relief centers are chaired 
and organized at the city and county level. It's a county 
emergency management director that would organize them.
    And I have been to them, to the relief centers, after 
disasters in Pennsylvania and in my district. And the major 
governmental and nongovernmental organizations or organizations 
like the Salvation Army, the Red Cross, the county emergency 
management, individuals are coming to those disaster centers a 
day or two after, say, a flood, trying to figure out how to get 
the water and the mud and the debris out of their home or the 
business, as the case may be. And it's more of an immediate 
need they have. They're looking for a solution. And they're 
getting it mainly from those sort of nonprofit organizations.
    The SBA will be there as well because, I believe, the SBA 
has a loan, some sort of a low-interest loan, program to 
provide--
    Mr. Wilson. Absolutely, absolutely.
    Mr. Fitzpatrick. --to not just businesses but to 
individuals who need to--
    Mr. Wilson. They maintain two programs: one for businesses 
and one for homeowners.
    Mr. Fitzpatrick. I guess my question is if you're looking 
for some leadership on the federal level, or from the SBA, to 
bring in the SBDCs to the disaster relief center. But the other 
way to do it is to have the SBDCs on the local level develop a 
relationship with the emergency management directors, state to 
state and city to city. Many times these natural disasters now 
were getting good with technology and predicting when they're 
going to happen. You actually have a couple of days to get the 
disaster relief center up and running.
    The sort of emergency management folks in a particular 
locality should be contacting you, either directly or through 
the SBA, knowing what you can provide.
    Do you know what I'm saying, that there are two approaches? 
One is the top down. And as a local government guy myself as a 
county commissioner for ten years, I sort of prefer the local 
approach and get the SBDCs integrated with the emergency 
management individuals throughout the country and say, ``This 
is what we can provide for you'' because it is a complicated 
process. And if you get there a day or two after a disaster, 
people are all over the place. So they're trying to organize.
    I just want to know what your thoughts are.
    Mr. Wilson. I would concur with that. And our local SBDCs 
are usually very familiar with all of the local resources in a 
community. This is not to criticize anyone, but at times when 
you bring someone in from FEMA, often their resources are the 
ones that are the largest resources and they are leading the 
effort in setting up the emergency centers. And I can tell you 
candidly that any number of state directors have had in various 
regions, not always by any stretch of the imagination, but it's 
a very uneven reception.
    Sometimes the FEMA folks will say, ``Not today.''
    Mr. Fitzpatrick. They say that to the SBDC?
    Mr. Wilson. Yes, sir.
    Mr. Fitzpatrick. So what if your advice?
    Mr. Wilson. Well, I think that Ms. Mills would be very 
willing to work with this Committee in trying to develop 
language in the statute such that when federal monies and 
centers are set up in disaster areas, that we're included as 
one of those first responders.
    Mr. Fitzpatrick. Okay. Thank you.
    Chairman Musgrave. Thank you very much.
    Ms. Moore, I don't know how you could top the other round, 
but would you like to ask any more questions?
    Ms. Moore. Madam Chair, I do have a problem. I talk a lot. 
And it's frustrating to be a member of Congress when you don't 
get to talk a lot, but I am geared up.
    Ms. Mills, I am just really excited about this UEP thing. I 
guess I want you to show me the money. You have said that we 
need to realize more cost efficiencies. What the UEP project 
really seeks to do is what the SBDCs have been doing, the women 
business initiatives have done, the SCORE has done. And UEP 
proposes to be a one-stop shopping service for all of these 
things.
    We have had a cut in SBA staff. These programs have been 
either zeroed out or flat-funded. And if we don't know if there 
is any money connected with the UEP initiative.
    Is it possible that by being the sixth city, we are going 
to see some funds come down the pike in lieu of having 
additional resources through these other services?
    Ms. Mills. You know, I really can't answer that because I 
don't know all of the structure on UEP. That is not something I 
am working on personally. I do know it's a public-private 
partnership. And I know that all parties are coming to the 
table excited about this. They are pilots. So nothing is cast 
in stone.
    And I think all voices will be heard and should be heard. 
So I think as we move forward, as in any pilot, we will see 
what we want to recommend, ``we'' being you as well, ``we'' 
being the collective we.
    Ms. Moore. So I am really happy about the private sector 
being involved. Of course, the private sector is involved in 
SCORE and numbers of other initiatives. So the cost 
efficiencies that could be realized by this one-stop 
initiative, I mean, if there is no funding connected to it, 
certainly we cannot lay claim to that as a cost efficiency. I 
mean, this is just a not funded sort of thing.
    I guess the other question since the green light is still 
on, I wanted to ask a question about the PRIME loans. These are 
investments in micro entrepreneurs to nonprofit micro 
enterprise development organizations that provide a lot of 
technical assistance. I mean, there is a lot of evidence and 
research out there that businesses survive at a much greater 
rate when they are offered mentoring technical service. And 
there's no doubt that that is important.
    Can you share with us why the President has not chosen to 
fund this initiative?
    Ms. Mills. PRIME is not one of my programs. So I'm sorry 
that it was here today. It should be with capital access. And 
so I'm sorry. But in general terms, you know, certainly you 
have heard from my partners here, SBDC, SCORE, WBC. And I know 
that they certainly give technical assistance to loan program.
    Ms. Moore. Well, there is really no doubt. Okay? I 
appreciate your answer this is not one of your programs.
    Chairman Musgrave. Mr. Bradley will be having that topic 
brought up in his subcommittee hearing.
    Ms. Moore. Okay. Good. Well, you know, Madam Chair, I just 
want to reserve the right to write to Ms. Mills and to the 
department about these programs because I can tell you that as 
an American, not just representing my district but representing 
the entire country, I know we have got to come up with a 
strategy that keeps us in the game globally.
    And there is absolutely--I don't think anybody on your 
panel or you or anybody in the administration, Democrat or 
Republican, would disagree that helping our small businesses, 
95 percent of our employers, to generate, to grow is the 
strategy. And how we do that without this being a high 
priority, you know, behind funding for terrorism and other 
things that we know we have to do is simply beyond me.
    I don't know how you grow businesses and cut funding, flat-
fund it, zero it out, not fund it in the first place and 
eliminate programs that focus on mentoring and technical 
assistance.
    I hope that you will go back and be our advocate. Thank 
you.
    Thank you, Madam Chair, for you indulgence.
    Chairman Musgrave. You're welcome. And, of course, you can 
exercise your prerogative to write to them or contact anyone at 
any time. That concludes our--
    Mr. Moore. Plane fare to come out to our district, we have 
funds for that, Madam Chair.
    Chairman Musgrave. Thank you to all of our witnesses. We 
certainly appreciate your testimony. And this concludes the 
hearing.
    [Whereupon, at 11:59 a.m., the subcommittee adjourned.]

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