[Senate Hearing 109-667]
[From the U.S. Government Publishing Office]



                                                         S.Hrg. 109-667 
 
                   FIELD HEARINGS FOR FISCAL YEAR 
                               2007
=======================================================================


                                HEARINGS

                               before the

                        COMMITTEE ON THE BUDGET
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               ----------                              


 January 16, 2006--CHALLENGES IN ADDRESSING THE METHAMPHETAMINE CRISIS 

  June 1, 2006--BUDGET IMPLICATIONS OF MEETING VETERANS' HEALTH CARE 
                                 NEEDS

    June 2, 2006--THE IMPACT OF FEDERAL FUNDING ON HIGHER EDUCATION 

August 30, 2006--BUDGET IMPACT OF CURRENT AND PROPOSED BORDER SECURITY 
                        AND IMMIGRATION POLICIES

                                     
                                     



           Printed for the use of the Committee on the Budget
                    FIELD HEARINGS FISCAL YEAR 2007




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                        COMMITTEE ON THE BUDGET

                  JUDD GREGG, New Hampshire, Chairman

PETE V. DOMENICI, New Mexico         KENT CONRAD, North Dakota
CHARLES E. GRASSLEY, Iowa            PAUL S. SARBANES, Maryland
WAYNE ALLARD, Colorado               PATTY MURRAY, Washington
MICHAEL ENZI, Wyoming                RON WYDEN, Oregon
JEFF SESSIONS, Alabama               RUSSELL D. FEINGOLD, Wisconsin
JIM BUNNING, Kentucky                TIM JOHNSON, South Dakota
MIKE CRAPO, Idaho                    ROBERT C. BYRD, West Virginia
JOHN ENSIGN, Nevada                  BILL NELSON, Florida
JOHN CORNYN, Texas                   DEBBIE STABENOW, Michigan
LAMAR ALEXANDER, Tennessee           JON S. CORIZINE, New Jersey
LINDSEY O. GRAHAM, South Carolina

                  Scott Gudes, Majority Staff Director

                      Mary Naylor, Staff Director


                            C O N T E N T S

                               __________

                                HEARINGS

                                                                   Page
Jamuary 16, 2006--Challenges in Addressing the Methaphetamine 
  Crisis.........................................................     1

June 1, 2006--Budget Implications of Meeting Veterans' Health 
  Care Needs.....................................................   131

June 2, 2006--The Impact of Federal Funding on Higher Education..   181
August 30, 2006--Budget Impact of Current and Proposed Border 
  Security and Immigration Policies..............................   257

                    STATEMENTS BY COMMITTEE MEMBERS

Ranking Member Conrad.......................................1, 131, 181
Senator Allard...................................................   257

                               WITNESSES

Kenneth R. Buck, Weld County District Attorney.................347, 349
Wallace Buckingham, Past Commander Department of North Dakota 
  AMVETS.........................................................   176
Birch P. Burdick, Cass County State's Attorney...................28, 30
Paul Cullinan, Chief of Human Resources Cost Estimates, 
  Cngressional Budget Office...................................288, 292
Tony Gagliardi, Colorado State Director, National Federal of 
  Independent Business.........................................350, 352
Bruce Gjovig, Director and Entrepreneur Coach UND Center for 
  Innovation.....................................................   223
Gerald H. Groenewold, Director, Energy and Environmental Research 
  Center, University of North Dakota.............................   209
Bob Hanson, Commissioner, North Dakota Department of Veterans' 
  Affairs........................................................   142
John D. Hanson, Member National Legislative Committee, Veterans 
  of Foreign Wars of the United States...........................   166
Dr. Alice L. Hoffert, Associate Vice President for Enrollment 
  Management, University of North Dakota.........................   216
Helen Krieble, President and Founder, The Vernon K. Krieble 
  Foundation...................................................353, 356
Karen E. Larson, Deputy Director of the Community Healthcare 
  Association of the Dakotas.....................................60, 65
Dr. Barry Milavetz, Associate Vice President for Research, 
  University of North Dakota.....................................   199
Governor Bill Owens, Governor, State of Colorado...............268, 274
Paula Presley, Commander, El Paso County Sheriff's Office......343, 346
Robert Rector, Senior Research Fellow, The Heritage Foundation.302, 306
Sebastian Roll, National Vice-Commander, The American Legion.....   155
Dean A. Ross, Valley City Chief of Police........................36, 39
Dan Rubinstein, Chief Deputy District Attorney and Mesa County 
  Meth Task Force Executive Board Member.......................339, 341
Wayne Stenehjem, North Dakota Attorney General...................12, 16
Dan Stenvold, VVA................................................   172
Mayor Ed Tauer, Mayor, Aurora, Colorado........................332, 335
Keith A. Ternes, Interim Chief of Police, Fargo Police Department32, 35
Warren Tobin, Past Department Commander of the Disabled American 
  Veterans Department of North Dakota............................   147
Logan Tong, Student, University of North Dakota..................   235
Rod Trottier, BIA Police Chief, Belcourt, North Dakota...........    50
Karin L. Walton, Director of the North Dakota Higer Education 
  Consortium for Substance Abuse Prevention....................114, 117
Dr. H. David Wilson, Vice President for Health Affairs and Dean 
  at the University of North Dakota..............................   194
Drew Wrigley, US Attorney, Department of Justice.................    23
Dr. Delore Zimmerman, President CEO Praxis, Inc. and Director, 
  Coordinating Center of the Red River Valley Research Corridor..   231

                         QUESTIONS AND ANSWERS

    Questions submitted by Senator Allard along with responses 
      from Paul Cullinan.........................................   364
    Questions submitted by Senator Sessions along with response 
      from Paul Cullinan.........................................   369



          CHALLENGES IN ADDRESSING THE METHAMPHETAMINE CRISIS

                              ----------                              


                        MONDAY, JANUARY 16, 2006

                                       U.S. Senate,
                                   Committee on the Budget,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 2:03 p.m., in the 
Prairie Rose Room, North Dakota State University, 1401 
Administration Avenue, Fargo, North Dakota, Hon. Kent Conrad, 
presiding.
    Present: Senator Conrad.
    Also present: Senator Dorgan.
    Staff present: Shelley Amdur, Peggie Rice, and Cathy 
Peterson.
    Senator Conrad. Let me call this hearing of the Senate 
Budget Committee to order. Let me just indicate the rules under 
which we are proceeding. This is a formal hearing before the 
Senate Budget Committee. Are you able to hear?
    [Chorus of noes.]
    Senator Conrad. Can you hear me now? Did that do it?
    [Chorus of yeses.]
    Senator Conrad. Hallelujah. This is a formal hearing before 
the Senate Budget Committee and so we will operate under the 
rules of the Senate Budget Committee. That means we have a 
witness list that will be recognized for their testimony. We 
ask those in the audience not to register either agreement or 
disagreement with the statement of witnesses. And after we have 
had a chance to hear the testimony of witnesses, we will then 
open it up for those in the audience for their questions or 
their comments or if someone wants to provide additional 
testimony.
    I want to begin with the mayor of Fargo, Mayor Bruce 
Furness. Mayor Furness has been long active in the issues of 
taking on drug abuse and specifically the threat of 
methamphetamine. Mayor Furness.
    Mayor Furness. Power, there we go. Thank you, Senator 
Conrad. And my purpose is quite simple, simply to welcome you 
to our community for this hearing. This is a very important 
hearing and we thank you for having this hearing in our 
community and in our metropolitan area. Methamphetamine is a 
huge problem I think everybody in this room is aware of and 
that's why we're all here. It is somewhat discouraged of our 
society and you'll hear expert testimony this afternoon about 
the situation here in our area.
    We've tried to take a proactive stance in this community. 
We had a--kind of a general awareness, kind of an open house 
situation, back in May of last year in which we had about 45 
hundred people come and then we did that again in about 6 
months later at the Fargo Dome in which we had about 5,000 
people come, so I think it's fair to say there is interest and 
concern among the general population about this problem.
    At those events, I was impressed with the number of young 
people that were there by themselves. I was impressed with the 
number of families that came together trying to understand this 
problem and just the general awareness and concern that people 
expressed at that time.
    It's a cause of--methamphetamine is a cause of many of our 
crime problems in our city. It is tied to the homicides that we 
have had. It's part of a public health problem as well as a 
police problem, and one of the issues that we have been working 
with as a city is the cleanup of meth labs, so once again it's 
a huge, huge problem.
    It's probably one of the most important hearings that you 
will conduct in this area. We're making some progress, as I 
think will be explained by Attorney General Stenehjem, in terms 
of what's going on in North Dakota and hopefully you'll 
understand and have a much better appreciation of what the 
scope of this problem is in our community as a result of these 
hearings. So thank you once again for being here. We really do 
appreciate it.
    Senator Conrad. Thank you so much. Mayor Furness, thank you 
for your leadership on these issues. I also want to recognize 
distinguished members of our audience who are with us today, 
including former Governor George Sinner. Thank you, Governor 
Sinner, for being here.
    Also, Judge Rodney Webb, U.S. District Judge. Thank you, 
Rodney.
    Senator Larry Robinson, State Senator Larry Robinson, who 
founded the Robinson Center, which is so important to recovery.
    Senator Judy Lee, Senator Richard Brown, Representative Kim 
Koppelman, Representative Kathy Hawken, Representative Pam 
Gulleson.
    We also have with us Tim Mahoney, a City Commissioner. I 
want to recognize all of them and thank them for being here. We 
also have with us Jeff Behrman, the resident agent in charge 
for the Federal Bureau of Investigation. Thank you for being 
here as well.
    There are many other distinguished people in the audience. 
I won't go through all of them because of time, but I do want 
to thank everyone for participating in this hearing, and I 
think all of us understand the extraordinary threat meth 
represents to our family and to our communities and how 
important is it that we confront it.
    Let me indicate that the reason for this hearing is very 
simple. As we went through the legislative process last year, 
we soon saw that other parts of the country are not as 
sensitive to the meth threat as is the Midwest. We found, as we 
battled for resources to combat meth, that our colleagues, 
especially on the East Coast, just did not have the same sense 
of urgency that those of us especially from the Midwest feel.
    In talking to my colleagues, I was asked as a ranking 
member of the Budget Committee to hold a hearing. I want to 
thank Senator Judd Gregg, the chairman of the committee, for 
allowing me to conduct this hearing.
    Just so you know, within the Senate that's an unusual thing 
to have the chairman of the committee allow the ranking member 
to conduct a hearing. That is very gracious by Senator Gregg. 
He and I have had a very positive working relationship. He 
understands how serious the threat is to the people that I 
represent and indeed to the country, so I especially want to 
thank Senator Judd Gregg for this opportunity.
    I also want to thank my colleague, Senator Dorgan, for 
joining me here today, and after I have made an opening 
statement, he will make a statement as well, and then we will 
go to our first witness, and our first witness will be the 
Attorney General of the State of North Dakota, Wayne Stenehjem.
    With that, I want to welcome all of our witnesses today. 
This is an important issue, one that requires our urgent 
attention. Make no mistake about it, methamphetamine is a 
crisis. It is a serious problem in North Dakota and it is a 
growing problem across the country.
    In the Senate, I have worked on this issue for almost a 
decade. In 1998, I secured the inclusion of North Dakota in the 
Midwest High Intensity Drug Trafficking Area, making Federal 
antidrug trafficking funding available to our State. I also 
worked to prevent the elimination of Byrne Grants and convinced 
the Drug Enforcement Agency to open an office in western North 
Dakota.
    I have also supported prevention efforts and helped secure 
4.2 million dollars for Minot State's Rural Meth Education 
Project, a project that Senator Dorgan has played such a 
critical role in pursuing. Most recently I helped create the 
Senate Antimeth Caucus to organize a bipartisan group of 
Senators. I am proud to say as of today, 48 of the 100 Senators 
have joined the Antimeth Caucus, but we all know more needs to 
be done.
    It really struck me as we went through the process this 
year of how some of our colleagues just did not see meth as an 
urgent matter. They recognized that it was a problem in more 
rural parts of the country, but they were not feeling the 
threat and so the importance of this hearing today.
    The Antimeth Caucus is focused on educating our colleagues 
about this critical matter in order to motivate them to act and 
to act now. The goal of this hearing is to explore the 
partnership among Federal, State, and local governments in 
combating the problems brought on by methamphetamine. In 
particular, we will explore what have the Federal, State, and 
local governments done so far.
    Two, what are the unmet needs in North Dakota? That is, are 
communities getting the resources that they need to combat this 
growing threat.
    Three, given the budget constraints at all levels, can we 
be smarter and more cost-efficient in our response. Over the 
past decade, the emergence of methamphetamine as an accessible, 
inexpensive, and highly addictive drug outside of urban areas 
is proven an enormous problem for large parts of the United 
States. Methamphetamine use has especially hit very hard rural 
communities.
    In a recent survey released by the National Association of 
Counties, 87 percent of the responding law enforcement law 
agencies indicated an increase in meth-related arrests compared 
to 3 years ago. In North Dakota, we saw a 91 percent increase 
in arrests.

[GRAPHIC] [TIFF OMITTED] 26823.001


    Let us go to the second chart, if we could. Simply looking 
at the number of users or arrests doesn't tell the whole story. 
The meth crisis has put an enormous strain on small communities 
and I have heard this all across the State of North Dakota.

[GRAPHIC] [TIFF OMITTED] 26823.002


    Law enforcement agencies are not only charged with tracking 
down manufacturers and users of meth, they are also impacted by 
increases in violent crime due to the violent tendencies of 
methamphetamine users and, by the way, I remember very clearly 
law enforcement people telling me their worst nightmare is to 
confront a meth user.
    Social services have increased case loads. The health care 
system is strained by treating meth users. The manufacturer of 
meth leaves behind a toxic stew of contaminants that continues 
to be dangerous long after production has stopped, and State 
and local corrections facilities face higher health care and 
other costs for incarcerating meth users and that doesn't even 
begin to get at the human toll.
    Many of us have seen these before and after photos. They 
are stunning images of the physical damage caused by meth. 
Imagine what is happening to their bodies on the inside. These 
pictures are truly stunning, these before and after pictures. 
This one a year and a half after being on meth. A person is 
devastated.
    This person, 3 months after starting a meth addiction and 
this woman two and a half years later. Absolutely destroyed.
    That is not to say we don't have challenges to overcome 
even though progress has been made. That is why we are meeting 
together here today. Here is some of the recent headlines from 
a North Dakota newspaper showing how serious this problem has 
become in our State.

[GRAPHIC] [TIFF OMITTED] 26823.003


[GRAPHIC] [TIFF OMITTED] 26823.004


[GRAPHIC] [TIFF OMITTED] 26823.005


    One headline, ``Busts fall but meth use high,'' ``Students' 
drug use sobering, indeed,'' ``60 percent of jail inmates 
thought to be connected to meth.'' Think of that, 60 percent of 
jail inmates connected to meth. ``Task force losing one officer 
in 2006.'' On and on it goes, stories of vicious assaults by 
meth addicts.

[GRAPHIC] [TIFF OMITTED] 26823.006


    Congress has repeatedly overcome opposition to funding many 
of the programs that State and local governments have told us 
are important to combating meth. Let me just go over in 2005 
Byrne/JAG funding was at 529 million dollars. The President's 
request for 1906 was zero.
    The COPS Program was funded at 499 million dollars in 2005, 
the President recommended lowering it to 22 million dollars.
    Juvenile Justice Programs funded 359 million dollars in 
2005, the President proposed no funding.
    Drug courts were at 42 million dollars in 2005. There the 
President proposed an increase to 70 million dollars.
    Weed and Seed, 61 million in 2005, the President proposed 
just about that amount.
    High Intensity Drug Trafficking Areas funded at 227 million 
in 2005, the President proposed cutting it by more than half. 
So the total in 2005 we were at 1.7 billion dollars. The 
President recommended cutting that to 252 million. Congress did 
not accept the President's recommendation, instead funded these 
programs at 1.4 billion dollars, still less than 2002 but far 
more than the President proposed.

[GRAPHIC] [TIFF OMITTED] 26823.007


    Let me just say this is a matter that involves all of our 
communities. I have been in towns where people have told me 
their own child have been diagnosed as meth addicts and people 
have told me it is destroying their families. I take this as 
seriously as any threat to our State that we see now or even on 
the horizon.
    Over and over people have come to me across North Dakota, 
people in law enforcement, people who have tried to deal with 
addicts through treatment, others in the community, just 
concerned citizens who have said they are appalled by what they 
are seeing.
    Last night I was in Grand Forks, North Dakota, and people 
told us that in the community they are seeing children 
virtually abandoned by parents who are meth addicts. Situations 
in which kids had to go to the neighbors to get something to 
eat because there was no food in the refrigerator and their 
parents were not parenting.
    People told us last night in Grand Forks you have to share 
the message here of how serious a threat this represents to our 
communities and to our families and really that is what this 
hearing is about, to try to communicate to our colleagues how 
serious this is and that we must take more aggressive steps to 
confront it.
    With that, I want to call on my colleague, Senator Dorgan, 
for his opening statement.
    Senator Dorgan. Thank you very much and thanks to all of 
you for being here. I think the point with respect to Senator 
Conrad's hearing, and I am pleased to join him, is the first 
step in determining the resources available to address these 
issues.
    The first step is in the development of the budget to find 
out how much in resources will be devoted to which functions, 
and in the U.S. Senate the two people that are key to that are 
the chairman and the ranking member and that is Senator Judd 
Gregg and Senator Kent Conrad, and so it is appropriate, 
especially in January as we begin to think about the budget 
process where our Senator will play such a key role, think 
about the resource needs and what we need to do, particularly 
in rural States, to address this issue and so, Kent, thank you 
for the priority on this.
    Let me just mention that meth, as most of you know, is 
what's called a synthetic stimulant. It is distributed under 
many different names, crank, speed, crystal, sold in powder 
perform commonly but it has been distributed in tablets or 
crystals as well.
    Meth was originally synthesized by the German and used by 
the Nazi regime for the Luftwaffe pilots, among other things, 
and also to provide to German soldiers to create more 
aggressiveness.
    Addiction to meth sets in after only a few doses. In fact, 
meth hooks about 40 to 60 percent of the first-time users and 
that describes how deadly this drug is. Forty to 60 percent of 
the first-time users are hooked on this drug and the relapse 
rate for meth addicts that undergo treatment is somewhere 
between 70 and 80 percent.
    Meth users are essentially ingesting a poison. They become 
paranoid, they become violent. Their teeth fall out. They 
cannot stop using. Nobody knows more about this than law 
enforcement because they see it every day and every night and 
they confront it.
    The Department of Drug Enforcement, the DEA, Drug 
Enforcement Agency, at one point we had a forum here in North 
Dakota. Senator Conrad and I and Congressman Pomeroy have 
worked to create at Minot State University a Rural 
Methamphetamine Education Demonstration Program and it has been 
very successful over now about 4 years and to begin developing 
outreach, not only for information but for law enforcement 
training.
    As we did that, we had a forum with Dennis Whitaker, who is 
a senior DEA official, Drug Enforcement Agency official, and he 
came to North Dakota to talk about this meth crisis and he 
brought some pictures along that I, too, will show you a series 
of pictures of one woman and it left quite an impact on me.
    I know that the Attorney General was there and others of 
you were there as well, but let me show you a woman who during 
7 years of taking meth. This is from the Drug Enforcement 
Agency. This is a woman in Florida. She began taking meth at 
about this point and was arrested and let me show you the 
second photograph.
    The second photograph is about half a year later, and let 
me show you the third photograph. And, finally, the fourth 
photograph and the fifth photograph and the last photograph. 
This over a 7-year period a woman addicted to methamphetamine. 
It destroys lives.
    The interesting thing about this deadly drug is that rural 
areas are seeing this drug move in very quickly. In North 
Dakota, I believe we have found people cooking methamphetamine 
in ice fishing houses, in abandoned farm homes. We have rural 
areas where not many people live and there are abandoned 
buildings, and law enforcement finds that that is conducive to 
people who want to go someplace out in a remote area and cook 
some drugs.
    Aside from marijuana, meth is the only widely abused 
illegal drug that can be easily produced by the actual abuser. 
And my understanding is about $100 worth of materials can cook 
about $1,000 worth of methamphetamine and so this started very 
quickly in rural States.
    And in North Dakota in 1999, not many years ago, there were 
17 meth lab busts in North Dakota. 2004 is the last year for 
which I have figures and perhaps the attorney general can 
update us on that. 1999, 17 meth lab busts in our State. In 
2004, 260 meth lab busts in our State.
    And I think that the map that Senator Conrad has included 
on the big screen shows what has happened in rural States, 
large States, States where you have rural populations widely 
distributed, and the movement of the production of 
methamphetamine and, therefore, the addiction to 
methamphetamine into those very areas.
    So let me conclude again by saying I think it is really 
important to have the first step in the process in the 
Congress, that is the budget step, to determine priorities, for 
Senator Conrad to host these hearings. Because if we don't get 
the priorities right at the first step, law enforcement does 
not have the resources in the subsequent steps throughout the 
year to do the drug busts, to deal with the drug addiction, to 
do all the other things necessary to address this problem so, 
Senator Conrad, thank you inviting me here with you today.
    Senator Conrad. Thank you, Senator Dorgan. I appreciate 
very much. I will call the first witness, who will be Attorney 
General of North Dakota, Wayne Stenehjem. Wayne Stenehjem has a 
long history of public service in North Dakota. He served in 
the North Dakota House of Representatives, he was a State 
Senator, elected Attorney General of the State of North Dakota. 
He has been very focused on the methamphetamine threat in North 
Dakota.
    A number of months ago when we were deciding to hold this 
hearing, I talked to the attorney general and asked if he would 
be the lead witness to help make the case of how serious the 
threat is and very graciously he agreed so, Attorney General 
Stenehjem, thank you very much for being here today and please 
proceed.

  STATEMENT OF WAYNE STENEHJEM, NORTH DAKOTA ATTORNEY GENERAL

    Mr. Stenehjem. Thank you very much, Senator Conrad and also 
Senator Dorgan, for being here. I want to tell you before I 
commence that I appreciate the opportunity. We've all had to 
visit about this problem and the issues as it affects North 
Dakota both in--here in North Dakota and on visits out to 
Washington.
    I know you understand the extent of the problem here. I 
hope that through the Meth Caucus that you will succeed in 
helping to get the same information out to your colleagues, 
because I think there are some of them who really do need to 
become aware of the extent of the problem.
    North Dakota is in the midst of a methamphetamine crisis. 
In a relatively short period of time, this extremely addictive 
drug has ruined the lives of thousands of men, women, and 
children in North Dakota. The devastating effects of meth are 
evident even in the smallest communities, and the impact of 
meth addiction is being felt across the State, stretching thin 
the budget of both local and State government agencies.
    You, Senator Conrad and Dorgan, have mentioned the 
statistics in North Dakota. You can see them on the chart 
behind me. I think it should be possible to see it. In 1997 is 
when we had our first meth lab in North Dakota and in 2003 we 
were up to 297.
    The impact on State resources has been overwhelming. For 
instance, in 2004, the North Dakota Department of Corrections 
reported that over 60 percent of the inmates at the 
penitentiary were either addicted or at least had used 
methamphetamine. We had to build a new women's prison in 
southwest North Dakota to deal largely by and large, 
overwhelmingly, with meth addiction.
    What has North Dakota done to combat methamphetamine? The 
State has added three criminal investigators at the Bureau of 
Criminal Investigation and one forensic scientist position at 
the North Dakota Crime Lab, both of which are part of my 
office, increasing my agency's budget by more than $513,000.
    We introduced the North Dakota Retailer Meth Watch Program 
to train retailers to help identify suspicious drug-related 
purchases.
    Implemented the Commission on Drugs and Alcohol Abuse, to 
study substance abuse in North Dakota. After a series of public 
forums across the State, and studies involving State, local, 
and tribal agencies, the commission recommended more aggressive 
laws to restrict precursor ingredients, additional options for 
addiction treatment, enhanced criminal penalties, protections 
for children exposed to controlled substances, and an 
appropriation to reimburse specialized SWAT teams.
    We enhanced criminal penalties; for example, child 
endangerment, brought felony penalties for exposing children to 
meth, to the meth manufacturing process.
    We've expanded the definition of deprived child to make it 
easier to remove children from dangerous homes.
    We provided mandatory prison terms for armed drug 
offenders, made it a criminal offense to ingest controlled 
substances.
    Treatment is the second prong. We provided flexibility 
under group insurance plans for treatment needs that are unique 
to meth addiction and provided mandatory treatment of up to 18 
months for first-time drug offenders in lieu of a criminal 
sentence, which is a program awaiting Federal grant funding 
which has been up until now denied.
    We've provided coordination at the local level of treatment 
providers and State and local agencies who address the unique 
needs of children exposed to the manufacture and use of meth in 
their homes and to bring children [sic) to justice.
    One of the unique things that we have done in North Dakota 
that has yielded positive results, perhaps the first good news 
we've seen, is the restriction on pseudoephedrine. 
Pseudoephedrine is the key ingredient in many cold medicines. 
It's the one ingredient you have to have to manufacture 
methamphetamine.
    We restricted products and require that they be kept behind 
a counter or that only one package be displayed and that under 
constant video surveillance. The purchaser has to provide 
identification. They can buy no more than two grams of the 
product in a single purchase and it includes the liquid and the 
gel-caps as well.
    Purchasers must be over 18 and they have to show, as I 
mentioned, a government-issued ID card and the retailer has to 
maintain a log of each purchase and show it to law enforcement 
when they come to ask for it.
    I want to show you, if I could go to the next chart, the 
dramatic impact we have seen in North Dakota's meth lab problem 
as a result. This is where we were headed. The red chart, the 
red bars, show where we were in 2004. We were on our way to yet 
another record year of meth labs, probably over 360, about one 
meth lab in North Dakota every day.
    Then on June 1, our new law took effect and, Karin, if you 
will show the next. The new restrictions took effect and the 
result was immediate and dramatic, and you can see that the 
number went down in the first month by 62 percent. By November 
and December, we had one and two meth labs in the entire State 
in those months respectively. The result shows that we can 
reduce and the reductions are better than 90 percent.
    States have not--States that have not enacted restrictions 
on pseudoephedrine precursors have experienced a disturbing new 
trend, meth cooks traveling from restricted States to buy or 
steal the pseudoephedrine they need to keep cooking meth.
    In fact, that is exactly what happened in western Minnesota 
after North Dakota's first law took effect. Cooks in Grand 
Forks, Fargo, and other communities in North Dakota simply 
crossed into Minnesota, South Dakota, Montana and, yes, to 
Canada to buy or steal what they needed to keep cooking.
    But home-grown meth labs are only a smart part of the 
problem. In fact, approximately 90 percent of the meth in North 
Dakota comes from out of State, not from these local meth labs. 
They come from ``super labs'' in California and Texas, for 
example, and increasingly especially from outside the United 
States, particularly from Mexico. Our drug agents and local law 
enforcement agencies are working to stem the flow of meth 
coming into the State.
    The Federal Government's assistance and support in our 
fight against meth is essential. In particular, the need to 
change both the funding levels and the allocation formula for 
the Edward Byrne Memorial Justice Assistance Grant is crucial.
    In fiscal year 2004, North Dakota received a total of 2.4 
million dollars under Byrne Grant and LLEBG funds. Under the 
JAG program, which was the combination, North Dakota in 2005 
received just 1.2 million dollars.
    And for fiscal year 2006, North Dakota will receive only 
$730,000. As a result of combining these two programs into JAG, 
North Dakota has seen a 70 percent decrease in funding. This 
reduction will dramatically affect our ability to keep our nine 
tasks forces across the State operational, and I know the two 
Senators know this but I mention it because I want it in the 
record as we have worked on this, but I want it emphasized in 
the record that this is the impact that it is having in North 
Dakota.
    Not only are funds reduced but the JAG formula allocates 
half of the funds based on population and the other half based 
on crime statistics. The formula, therefore, penalizes low-
population States like North Dakota that have successfully kept 
violent crime rates low. It is imperative that both the funding 
level and the formula be changed to ensure that the basic needs 
of rural States like North Dakota are met.
    As a result of the dramatic increase in meth activity in 
North Dakota, High Intensity Drug Trafficking Area funds have 
been used to bolster our ability to fight meth. Historically, 
our State has received approximately $575,000 annually to 
partially support the work of investigators, forensic 
scientists, and a prosecutor.
    The solution to the meth problem in this State and across 
the country is a continued partnership among Federal, State, 
and local resources. The most important steps to combat the 
methamphetamine manufacture and use are as follows in my 
opinion:
    Enact nationwide restrictions on sales of pseudoephedrine 
precursors. I know there is legislation pending. It was 
originally part of the Patriot Act that ran into the obstacles 
that it did, but I'm told that that legislation will be given 
priority early on this year. I can't overemphasize that in the 
States that have enacted restrictions like we have, Oklahoma, 
Iowa, you name it, they've all seen similar reductions in the 
number of meth labs.
    Address the importation of meth and meth precursors from 
outside the United States. We can't do that here in North 
Dakota. A lot of--the bulk of the pseudoephedrine comes from 
southeast Asia, works its way up into Mexico. Only the Federal 
Government can deal with it on that level.
    And, finally, fully fund the Justice Assistance Grant, 
including an appropriations floor, for rural States such as 
North Dakota.
    Again I appreciate Senator Conrad here, coming here for 
this important subcommittee meeting in North Dakota, and I look 
forward to continuing to work with you to tend the tide of this 
horrible, horrible drug.
    [The prepared statement of Mr. Stenehjem follows:]

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    Senator Conrad. Thank you very much. Let me just start by 
asking you the question that we get from our colleagues, who 
have been opposed to Federal resources or those who have 
advocated deep cuts. They say to us look, Senator, this is not 
a Federal responsibility. This is a matter for State and local 
law enforcement. This is a State and local problem and State 
and local units of government have to produce the resources to 
combat. The Federal Government has big deficits, growing debt.
    And the other point they make is, look, we put this money 
out across the country and some law enforcement has used it to 
buy new leather jackets and they have used it to buy equipment 
that was seen as unnecessary. What would you say to those who 
make the argument this isn't a Federal obligation?
    Mr. Stenehjem. It is a Federal obligation and it's a 
partnership, as I mentioned. The State and local agencies have 
invested enormous amounts of money from law enforcement, 
additional personnel, to the prisons, to the treatment 
programs, to the foster homes where children are increasingly 
being found in homes where meth is being manufactured or used. 
Those have strained State and local resources to the breaking 
point.
    The Federal Government has a responsibility as well. This 
is a problem of national significance, both because of the 
importation of the drugs from outside the United States but 
because we're all in this problem together, and the key thing 
that any government is obliged to do is to take care of the 
safety of its citizens, and that means that all of us must work 
together to make sure that we make this--this State and this 
nation as safe as we can, and that means eliminating the 
scourge of all drugs and in particular this one.
    Senator Conrad. Let me ask you the second part of the 
question, which is the assertion by some that money has been 
used by the States in an inappropriate way. Can you tell us how 
in North Dakota Federal funds have been used?
    Mr. Stenehjem. I certainly can and I'm proud of the way 
that we have invested that money in North Dakota. None of it 
has been wasted. We used the bulk of the Justice Assistance 
Grant in North Dakota for a variety of things, but one of the 
chief things that we do is to fund the nine narcotic task 
forces that exist all across the State of North Dakota and that 
makes probably 90 to 95 percent of the drug arrests that are 
made.
    We have a track record that I think is exemplary and 
typical of what--the way all North Dakotans are. Our law 
enforcement officers work hard. They work overtime and are 
dedicated to their mission and I do not see, nor have I heard 
any talk in North Dakota of, any of the funds that have been 
utilized here being wasted. I think we invested wisely and 
spent it appropriately.
    Senator Conrad. To your knowledge, has any of this funding 
been used for office parties, as has been an allegation? Has 
any money been used to buy new leather jackets for troopers or 
police officials? To your knowledge, has any of this money been 
used in a way that could be held up to ridicule or questioned 
as wasteful?
    Mr. Stenehjem. If that were the case, Senator, it certainly 
would have been brought to my attention and I would have taken 
action. Just the opposite is true. I know of a number of law 
enforcement officers who work overtime--who work overtime in 
ways that is not compensated because they believe that they 
need to get a handle on this problem. I couldn't be prouder of 
the local and State law enforcement officers that we have. I 
have never heard anything but good comments about the hard work 
that they do.
    Senator Conrad. How much money, Mr. Attorney General, do 
you believe should be on the Federal Government's shoulders to 
provide in this fight in a State like ours? If you were going 
to give a ballpark estimate of what are the resources necessary 
to effectively combat the scourge of meth in North Dakota, what 
share of that should come from the Federal Government?
    Mr. Stenehjem. Well, for openers what I would like to see 
invested in North Dakota is the 2.4 million dollars in the 
Justice Assistance Grant that North Dakota has historically 
received. That would be a good start. We also are going to need 
Federal assistance in treatment programs, because those are 
very expensive, and while they can be successful, the typical 
30-day intensive outpatient treatment mode doesn't work so well 
for meth. You need to have long-term residential or at least 
closely supervised treatment program. I don't have a figure for 
that.
    If I walked out of here with a commitment that the U.S. 
Congress would appropriate the $2.3 million dollars that we 
have historically received under the JAG funding, together with 
continued involvement with the HIDTA program, I would be pretty 
happy.
    Senator Conrad. Let me ask you this. In terms of the High 
Intensity Drug Trafficking Areas, has that funding been 
important to North Dakota?
    Mr. Stenehjem. It has been essential to North Dakota. As I 
mentioned, we fund our agents and chemists at the State crime 
lab. Understand that when you make an arrest you also have to 
prove the case when you get into court and that means you need 
to have scientists, and I'll tell you that the forensic 
scientists at our crime lab are overstretched. They are working 
on a serious back lab log. They work overtime as well simply to 
produce the information that we need to get into court and so 
then also one prosecutor, who works in conjunction with the 
Federal system and also is employed directly by my office.
    Senator Conrad. And how much money are you getting under 
the High Intensity Drug Trafficking Areas?
    Mr. Stenehjem. I think it's about $535,000.
    Senator Conrad. And if you were told that you were going to 
face a cut of more than half in that program, which is what the 
President recommended, what would be your message to those who 
might think that was a good idea?
    Mr. Stenehjem. Well, the message is the message I've told 
you on several occasions. We need them. These are--and I'm not 
asking simply for the Federal Government to come in here and 
take care of all of the funding for our program. We have 
invested mightily here in North Dakota on all the levels that I 
had talked about. We've stretched our resources to the breaking 
point. We're only asking that the Federal Government also be a 
part of the partnership.
    Senator Conrad. Do you have an estimate of how much the 
State is spending to combat meth?
    Mr. Stenehjem. Well, the amount that the State of North 
Dakota is spending--spends on all drugs is well in the hundreds 
of millions of dollars when you talk about the penitentiary, 
the treatment program, social services. You know, you name all 
of those things, the price tag is enormous.
    Senator Conrad. I want to thank you. I think it's very 
important to get this on the record. Senator Dorgan.
    Senator Dorgan. Just one question. Are there any 
circumstances or is there significance to our international 
border with respect to the movement of materials for the 
purpose of producing meth?
    Mr. Stenehjem. There's no question that in my mind that the 
poorest border both on the north and the south of the United 
States is a prime place where drugs can be brought across. 
There are--and I know, Senator Dorgan, you're well aware of 
this. You can go 50 to 60 miles between--between border entry, 
legal border entry, stations, and I have no doubt certainly 
here in North Dakota and I know for a fact in Idaho and 
Washington high-tech operations exist for bringing drugs in 
from outside the United States.
    Senator Dorgan. But let me ask you specifically about 
Canada, because we share the long border with Canada. You talk 
about the action taken here in the State legislature in North 
Dakota. Have our neighbors to the north, have the providences, 
taken similar action and, if so, can you describe it?
    Mr. Stenehjem. Yes. After we enacted our legislation in 
North Dakota, I traveled to Regina and to Winnipeg. In Regina, 
the premier had a four-providence task force meeting to talk 
about this very problem. I also went to Winnipeg to talk to my 
counterpart from Manitoba and to tell them that what I suspect 
will happen if they do nothing, is what happened in Minnesota 
and in Montana and South Dakota, our cookers will travel there 
to buy the precursor ingredients or, worse, our cookers will 
simply move up there.
    And I suggested to them that they would be wise in looking 
at what we did and as a result they did. They have enacted 
restrictions in Saskatchewan and Manitoba that I know of 
specifically.
    Senator Dorgan. Thank you very much.
    Senator Conrad. Let me thank the attorney general. Thank 
you for your testimony.
    Mr. Stenehjem. My pleasure.
    Senator Conrad. Thank you also for your advice to us and 
others who might testify here today. We certainly appreciate 
the effort that you went through to be of assistance to us.
    Mr. Stenehjem. My pleasure. Thank you, Senator.
    Senator Conrad. Thank you.
    I want to call the second panel: Drew Wrigley, the United 
States Attorney for North Dakota; Birch Burdick, the State's 
Attorney for Cass County; Keith Ternes, the Assistant Chief of 
4Police in Fargo; Dean Ross, the Chief of Police for Valley 
City; and Rod Trottier, the Chief of Police for the Bureau of 
Indian Affairs stationed in Belcourt.
    While they are coming to the witness table, I also want to 
acknowledge the presence of Senator Carolyn Nelson. Senator for 
Nelson is here. Thank you. The West Fargo Chief of Police, 
Arland Rasmussen, is here as well. I am told that Gary Wolsky, 
the CEO and President of Village Family Services is with us; 
Peggy Gaynor, the Director of Counseling and Disability 
Services at NDSU; Larry Anenson, the Health Educator here at 
NDSU; Gary Fischer, the Director of the NDSU Wellness Center. 
Welcome.
    Barbara Lonbaken, the Associate Dean for Student Wellness; 
Kathy Thoreson, the Vice President of Family Services of 
Lutheran Social Services of North Dakota; Bill Lopez, the 
Executive Director of ShareHouse Substance Abuse Treatment 
Center; Andi Johnson, the Director of Operations at ShareHouse; 
Connie Stevens, the Program Director of ShareHouse; and Grant 
Benjamin. Is Grant here? I believe Grant was here as one point. 
Grant is the DARE Officer at Discovery Junior High and somebody 
who has been a very good advisor to us with respect to these 
issues.
    With that, I am going to turn to our witnesses. Drew 
Wrigley has been the U.S. Attorney for North Dakota since 2001. 
He's been on the prosecuting side of this issue and has special 
perspectives that the committee is eager to hear. Welcome, Mr. 
Wrigley.

STATEMENT OF DREW WRIGLEY, U.S. ATTORNEY, DEPARTMENT OF JUSTICE

    Mr. Wrigley. Thank you, Senator. Nice to be here. Well, 
thank you, Senator Conrad and Senator Dorgan. If I could I am 
going to start out, if I might, by reciprocating the invitation 
to be here today to invite you to our offices at some point 
either in Fargo or in Bismarck to meet with our staff, and we 
would like to show you around over there. I know you've been 
there in the past, but I would like to extend that.
    We had Representative Pomeroy come by here in the last 
year; and so when it works out. I know you're busy when you're 
here, but when it works out to stop by for coffee, we would 
like to have you, my staff and I.
    So thanks again for the opportunity to sit down with you 
today and discuss our perspective in the U.S. attorney's 
office. As you know, there was some wrangling last week about 
whether I could have a statement or not and apparently I can't 
have a statement, so I have some note cards instead. I'm going 
to discuss those points and then I'm going to kind of cut it 
short because I would like to answer whatever questions that 
you have, but we do appreciate the opportunity.
    Our perspective is a little different sometimes as a 
Federal prosecutor and that makes sense when you look at 
sometimes the perspective of a neighborhood versus the city 
versus the State versus a region and then nationally, of 
course, it's going to be different.
    Just last week there was a round-robin discussion between 
the U.S. attorneys--oh, I'm sorry. How is that? Is that better? 
OK. Just last week there was a roundtable discussion with the 
U.S. attorneys on the e-mail. All 94 of us were going around 
talking about what is the No. 1 drug problem in your district? 
I said districts. Some States, like Oklahoma, have three. Here 
in North Dakota it's one but so we refer to them as districts.
    And it was different across the country, and I think your 
map is very telling for a couple of important reasons. One is: 
you look at the gray area there, heroine is still the No. 1 
narcotic being trafficked in those areas, and then you see the 
red where methamphetamine by and large--and this follows very 
closely, by the way, the discussion we had with U.S. attorneys.
    I think if you look to some of these, Minnesota, I think if 
U.S. Attorney Tom Heffelfinger were here right now he would 
say, hey, we're turning red and if Michigan--I'm sorry, if 
Wisconsin were on there, half of the State would say we're 
turning red and the eastern half would say cocaine and crack 
still, so this is a--I think a very accurate representation, 
but it's changing. I know there's a reference that you 
understand that as well.
    One thing I would like to point out wherever I talk and 
address these issues that overall I think we need to keep 
focused on that we're fighting with addiction, not meth 
addiction but just addiction of any kind, and that marijuana 
and alcohol remain far and away the most addicted substances 
that we deal with, maybe not most addictive but the most 
prevalent substances we deal with. They do the most damage here 
in North Dakota and around the Nation and we have to remain 
focused on that issue because there is a different perspective 
in each pocket around the country.
    And so in North Dakota right now we're experiencing this 
and there's no questioning it, but I always call on people 
``don't forget.'' I--sometimes you'll hear people say, well, at 
least I found out this about my kid, but I'm so thankful that 
he's just using marijuana, but then they go to the next step.
    I see Mayor Furness here. You and I have spoke about this 
issue many times. We have to remain focused on the fact we 
don't want our young people to be addicted. We want them to 
stay away from dangerous substances and I appreciate that we're 
talking about methamphetamine here today, but I always let 
people know there's hope on this narcotic and others. There's a 
lot of hope and there are times that I talk to people and you 
think they think, you know, 4 weeks from now everybody--I'll 
use Mayor Furness as my example--everyone will be using because 
it's so addictive.
    It's as though Mayor Furness is going to be using 
methamphetamine. Well, it is very dangerous. It needs to be 
addressed, but people need to recognize that there is hope.
    Right now in the United States 5 percent of the population, 
5 percent of the population, will say that they have ever tried 
methamphetamine. Point 3 percent of the population will say 
that they are--they have used methamphetamine in the last 
month.
    That's a scary statistic when you look at all the people 
that represents and the danger they are to law enforcement and 
we all know that well, but it offers hope when we have 
gatherings like this.
    I had a conversation, Senator Conrad--I don't like to admit 
this very often---with your chief of staff a couple years ago. 
We were chatting about this issue and I've spoken with Senator 
Dorgan, yourself and members of your staff on the issue to say: 
what kind of things can be done? And let me complement you.
    This is the kind of thing to raise the awareness to let 
people know that it's a serious issue and then to speak 
credibly on it so that we aren't trying to scare people into 
thinking like I said about the Mayor Furness example, but they 
know that there can be hope. They should gather hope from these 
numbers and the light that you shed on it. I appreciate very 
much and I've appreciated the conversations with you and with 
your staff over the last couple years and so those statistics 
are there and they are real. We need to talk about those 
numbers.
    Other numbers that we need to talk about, I think, are the 
meth lab numbers. They are troubling in North Dakota and 
anywhere else because of the ecological damage that can be 
done. They are troubling and--and people that are engaged in 
public policy in our State that need to be aware of them, but 
we need to be aware of the fact that in North Dakota a couple 
of years ago when we were in the hundreds of labs, people in 
the front lines of law enforcement would say maybe 5 percent of 
methamphetamine is made in North Dakota.
    Now they will say, almost universally they tell me, maybe 2 
percent of methamphetamine being used in North Dakota is made 
in North Dakota. States like Missouri had a point when they 
were saying 40 percent of the methamphetamine is being made in 
Missouri, so they have much larger labs. Now, though, you've 
seen a major shift.
    In the last years since I became U.S. attorney in November 
of 2001, I have not seen a single case, not one significant 
trafficking case that we have prosecuted, not one, where the 
methamphetamine was being made in North Dakota. It is a 
trafficking problem. People are bringing large quantities of 
methamphetamine into North Dakota from outside. A significant 
problem.
    And--and Birch and the chiefs and on down the line they can 
tell you about the problem being on the receiving end of that. 
It's no less dangerous, but we need to be talking about those 
facts for what's going on in the State and so I commend the 
State folks who have been addressing the issue because it is so 
dangerous.
    I think there was an explosion and fire in Grand Forks just 
in the last 5 months. It's very dangerous in apartment 
buildings or hotels where the people are making 
methamphetamine.
    I just want to be sure we're clear, though, about the 
quantity that is being made in the State of North Dakota, so 
it's an important issue but maybe for a little different reason 
than some people might imagine.
    I'm glad that Mr. Burdick is here today. We worked hand in 
glove on so many issues, whether it's firearms, Internet crime, 
child pornography. And narcotics is no different for our 
offices and the other State attorneys around the country.
    Just so everyone is aware, if a person--in the State of 
North Dakota, you have 53 State's attorneys offices and you 
have one U.S. attorney's office. It becomes incumbent upon us 
to work well with our--to play well in the sandbox and it's 
those relationships that we enjoy very much.
    If I'm painting broad brush, the difference might be 
dealing with retail level narcotics trafficking and use and 
then wholesale level. People bringing in massive quantities. We 
like to think of those cases as coming more within the view of 
the Federal Government and U.S. attorney's offices. But it 
wouldn't be possible if the State's attorney's offices weren't 
working selflessly on the issues and they say hey, Drew, we 
heard about this case. Contact the people in Bismarck, contact 
the folks in Fargo to say we're working on this case and we 
think this one might want to be kicked up a ways.
    Most cases will begin with the initial contact of--by a 
prosecutor of some low-level confidential informant, the next 
the execution of a warrant and some person sitting there and 
they're scared out of their mind and they're talking to Keith 
Ternes. He's nasty and so they say I want to cooperate. I want 
to help.
    And that's where most--the most important thing happens. 
Because if we're looking at a 95 to 98 percent problem with 
trafficking, we have to go up that food chain and that's only 
possible if the local and State authorities are focused on 
doing just that, as opposed to making a case themselves, 
sometimes saying let's get the feds involved in this, let's get 
it to grand jury.
    And that's one thing I want to talk about. The grand jury 
process has been critical. It is imperative to getting people 
to come into the grand jury to testify under oath. Sometimes 
they'll say ``I'm not going to testify.'' ``There's nothing you 
can do'' and then we say, ``well, there is actually--we're 
going to immunize you and then you have to go talk to Judge 
Webb if you decide you still don't want to testify;'' and 
that's unpleasant.
    In the last years we've prosecuted, I think, something 
along the lines of four times the number of perjury and 
obstruction of justice cases of people refusing to testify in 
the grand jury or lying in the grand jury. Those are things 
that, you know, people don't get too excited about that. 
Sometimes they feel bad. Make the guy's, you know, aunt testify 
again them? Yes, we did.
    We're going to do everything we can to exert pressure on 
people to testify about these organizations that they have 
knowledge of. That's been a critical component in the Federal 
response to these drug trafficking organizations, getting the 
people with some knowledge to go forward and give up the 
information, so that we can take the case out to California, to 
Washington, to Oregon and where they are producing large 
quantities of methamphetamine. That's the grand jury.
    Another thing that happens important in the Federal cases 
is that we see things are designated as OCDETF. I know the 
Senators are certainly familiar with that. That's a federally 
funded program that we sort of hang our hat on.
    Every significant trafficking organization that we 
prosecuted in the last years is a case that Jeff Behrman, his 
troops around the State and others, have made into what we call 
an OCDETF case. That's a click-in that says now it's been 
designated as OCDETF. It's done on a regional basis out of St. 
Louis but there are also State and locals involved with whether 
we are going to designate a case as OCDETF.
    Once it is, then the OCDETF program's funded federally and 
that's I know a separate little discussion here but it's--we 
need to discuss everything. That pays the overtime. That's 
going to pay the other costs associated when we have agents 
flying out to Washington working with the authorities out there 
or if they are flying out to California, wherever, Nevada. You 
know, those costs all come from the OCDETF funding, so if those 
matters come before you, I don't know.
    We discussed--I can't discuss budget matters that--except 
to say OCDETF has been critically important on some of the 
cases. I would be glad to answer questions, if you have, about 
particular cases but that then relieves the State and locals 
from having to pay overtime for their folks and travel, and 
also it puts with them the purview of Federal authorities where 
I think the use of grand jury and then just our--our 
multiregional and multijurisdictional approach of being able to 
work with the other U.S. attorney's offices throughout the 
county can all be kicked in to address what I think is really 
the white elephant in the room, the large trafficking 
organizations.
    I have several examples. Like I said, I would be glad to 
get into them if they become relevant as we go along. I think 
it's troubling as you look in the last years, not only in the 
narcotics cases, as Federal prosecutors we have tripled as far 
as number of defendants. We have tripled the number of 
defendants prosecuted in the last 4 years federally.
    Now, I know that doesn't say, well, drug traffic has 
tripled in North Dakota. I think we brought more of those cases 
into the Federal system through the cooperation of our State 
prosecutors and we have brought more of them in, and so I know 
that that doesn't address overall but, nevertheless, that 
number is there.
    That's tripled the significance and we've had in those 
years the first ever Federal mandatory life sentences for drug 
traffickers. It is not--it's not a day that people sit around 
the office giving high-fives when a 26-year-old drug dealer 
goes away for the rest of his life. We have convicted the 
person, but it's sobering, but it's necessary.
    Those are cases that we think have had an impact and we 
want to do everything that we can to increase the price of 
narcotics in North Dakota, not only as monetarily but also the 
price of doing business as a narcotics trafficker in North 
Dakota. Because, after all, it should be all of our objectives 
to create the market forces that will impose a recession and 
then ultimately a depression in narcotics trafficking in North 
Dakota.
    I'm naive enough to think that that's a real possibility, 
not just because we live in a--you know, somewhat more of a 
rural, quiet setting but because we have excellent cooperation 
between Federal, State, and local authorities. That's been 
critical, I think, in the last years.
    One last thing if I might, Senator. I don't want to 
filibuster this thing, but I would--I would point out one other 
disturbing trend and that's the use of firearms and the 
presence of firearms in so many of our cases. The Congress has 
funded--just one thing I will say. The Congress has funded 
Project Safe Neighborhoods in the last years and that has been 
critically important.
    I saw again this year just the other day that that number 
is significantly enhanced. I couldn't give you the percentages, 
but we appreciate that. Those dollars go to work with hand in 
glove to Federal, State, and local authorities to increase 
firearms prosecutions for the drug dealers, spousal abuse 
people, felons, and a host of others that nobody wants carrying 
firearms and we prosecuted those cases. We doubled it the first 
year in Project Safe Neighborhoods. Around the country, those 
cases are up 68 percent and they are significant sentences.
    In the Federal system, our sentences are lengthy and they 
are certain. They serve the sentences without the possibility 
of parole, and we believe that that provides a stinging 
deterrent to this--for purposes of this hearing narcotics 
trafficking but then also be carrying a firearm, which I think 
we all see as a disturbing trend upward. Thankfully the uptick 
in violence has not followed that in a perfect parallel, but I 
just don't know how it won't in the years ahead. Those cases 
are important and we appreciate very much the support for the 
Project Safe Neighborhoods and the firearms cases.
    Senator Conrad. And thank you for your testimony. I want to 
make clear the wrangling that the U.S. attorney mentioned 
wasn't between us and his making a statement here today.
    Mr. Wrigley. No. No, no at all.
    Senator Conrad. The wrangling involved the U.S. Justice 
Department that was reluctant to have a U.S. attorney testify 
at a budget hearing, and we understand, you know, the way that 
works, but we thought it was very important to have the U.S. 
attorney here, and I think we have benefited very much by 
having our U.S. attorney testify, because this really is a 
matter of a partnership between State authorities, Federal 
authorities, local authorities, and so we very much appreciate 
your being here. We appreciate the fact that ultimately the 
justice department relented and agreed that our U.S. attorney 
could testify.
    Next we want to call on Birch Burdick, who is our State's 
Attorney in Cass County, who has witnessed directly meth lab 
abuse and how serious it is in our community. Thank you very 
much, Birch, for being here and please proceed with your 
testimony.

  STATEMENT OF BIRCH P. BURDICK, CASS COUNTY STATE'S ATTORNEY

    Mr. Burdick. Thank you, Senators Conrad and Dorgan. In 
November of 2004, three guys lured another guy into an 
apartment to discuss a drug debt. That debt was worth a few 
hundred dollars. At the end of the evening, those three 
bludgeoned the fourth to death with a hammer. That--that case 
took place not in New York City and not in Chicago. It took 
place just three blocks from my home and a few blocks from the 
campus where we're meeting right now.
    It's evidence of the nature of violence that comes with 
drugs and particularly with meth because those three folks 
indicated that they had been using meth that night. Thankfully 
it's not a common occurrence here but it's not unique either.
    Some statistics for you. As Cass County's State's Attorney, 
my office handles everything from traffic tickets to murder, 
and I've seen the greatest growth over the last several years 
in our drug cases. Since 2000, our drug cases have doubled in 
number and in the last year, in 2005, we had over 1,100 cases. 
The North Dakota legislature has responded to this concern by 
increasing the severity level of drug crimes and implementing 
significant penalties and the attorney general discussed those.
    For example, every meth charge is a felony. There is no 
misdemeanor meth charge. If you, for example, posses 50 grams 
of methamphetamine, which is about the size of a (indicating) 
golf ball, that will entitle you to exposure to a life 
imprisonment penalty as a maximum. Facing ever more aggressive 
prosecution and incarceration, defendant's efforts to contest 
these charges, of course, have increased and so I increased our 
staff from one full-time attorney working on drugs to three. 
They do nothing but drug cases, and I formed them into a 
dedicated drug team with dedicated support staff to go with 
them.
    Yet the impact on our criminal justice system can't be 
measured by the drug charges alone. As you know, it may lead to 
things like increased robberies, burglaries, thefts, assaults, 
domestic violence and, as was mentioned earlier, murder, but 
it's not just the impact on the criminal justice system.
    A particularly disturbing impact of meth use is its 
contribution to child abuse and neglect, and kids exposed to 
meth at home have related medical issues but our understanding 
of the long-term effects of those medical issues is uncertain 
at this point. Here and around the country social service 
agencies have seen a significant increase in their case loads 
as a result of meth use in homes and so their out-of-home 
placements for children have increased.
    A recent study here in the Cass County area indicated that 
at least 34 percent of the social services cases had some 
direct tie to methamphetamine use. This drug complicates and, 
in fact, lengthens the possible reunification of children with 
their families, and if it's possible to reunite those two 
together, the recidivism issue that goes with methamphetamine, 
the relapse into use, may, in fact, neutralize the value of 
reunifying those and we have to pull the children out again 
altogether.
    In addition, we may, in fact, prosecutor those parents for 
endangering their child, and the attorney general mentioned 
that there have been new laws passed with regard to that and we 
are implementing them here.
    We have had as a result of Byrne Grant funding in the past 
a drug task force that's local to our area and it includes the 
local law enforcement agencies and our State's attorneys 
office, and the funding that came with that has helped support 
a half of one drug prosecutor. That's a half of the three that 
we now have there is supported by that funding.
    It's not a lot of funding, but it's very welcome and 
needed. It buys time in the courtroom, time to prosecute these 
cases, and time to go after the drug assets that are 
accompanying those cases and pull them back from the users and 
abusers and put them back into our justice system.
    Beyond incarceration, we've also made some progressive 
efforts to deal with low-level drug offenders. We have here a 
juvenile drug court and an adult drug court, which concentrate 
on treatment and rehabilitation for users who are not dealers 
and manufacturers.
    There's been some talk about the treatment needs. We know 
in the addictive meth world treatment is extremely important in 
helping to reduce recidivism and recidivism is a particular 
problem with meth use. Unfortunately, the treatment that we've 
seen in speaking with enforcement providers is often long in 
duration and good results may be tough to achieve absent 
incarceration or inpatient treatment and so the cost of that 
treatment is very high. And while the public and private 
efforts to address that treatment are growing, they don't seem 
to be nearly enough.
    There are some additional aspects on the system besides the 
jails, the prosecutors, the police, and the foster care system. 
It tears at the very fabric at the lives of the drug users and 
all those people that they come in contact with. Not only does 
it drain their financial assets, not only do they forfeit their 
liberty and endanger their health, but they lose their careers 
and leave their families to fend for themselves.
    And while we may be unable to gauge, another potential 
impact of drug use that concerns me what are these drug users' 
children doing when they have to face the choice about drug 
use, given the kind of footsteps that they've had to follow?
    Law enforcement has made, and continues to make, real 
inroads in cutting down labs, but as we know the borders of our 
State that show so boldly on a Rand McNally map mean nothing to 
the passage of drugs, and we've seen a lot of those drugs come 
from Texas, from California, the Pacific Northwest. We believe 
they are coming from Canada, again originally from Mexico as 
well, and so this is a blend of concerns.
    It's a shared responsibility between law enforcements and 
the courts here in North Dakota and at the Federal level, and 
it's with that responsibility, that shared responsibility, that 
we ask Congress to consider the assistance it provides to the 
States.
    That Byrne Grant funding has been important to us and I 
thank you for your focus and Senator Dorgan's focus on meth in 
the past and in coming here today. I urge you and the rest of 
Congress to consider increasing the funding levels that are 
available to State and local agencies for combating the meth 
problem and then for helping us seek and implement treatment 
solutions in our State. That assistance, through increased 
grants and programs, is needed and is a valuable investment in 
our communities.
    [The prepared statement of Mr. Burdick follows:]

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    Senator Conrad. Thank you very much. Thank you for a 
special perspective from a State's attorney.
    Next we'll go to Keith Ternes, the Assistant Chief of 
Police in Fargo, who has been named the interim chief beginning 
on January 23rd. Congratulations, Keith, on that announcement.
    Mr. Ternes. Thank you.
    Senator Conrad. We look forward to hearing your testimony 
and what it is like to be in the front lines.

 STATEMENT OF KEITH A. TERNES, INTERIM CHIEF OF POLICE, FARGO 
                       POLICE DEPARTMENT

    Mr. Ternes. Well, first on behalf of law enforcement in 
both Fargo, West Fargo, Cass County, and really the immediate 
surrounding area, I want to thank both of our Senators for 
taking the time out of your schedule to come here to Fargo to 
address such an important issue.
    You know, as the world contemplates and discusses the 
possibility of pandemic associated with the medical phenomena 
of the bird flu, we in America law enforcement continue to 
discuss the real pandemic presently infiltrating our 
communities in the form of methamphetamine.
    Addressing the issues surrounding methamphetamine use has 
quickly found its way to the top of the priority list for 
police administrators across the country. Because of its 
association with criminal activity beyond just drug crimes, law 
enforcement agencies recognize the need to remind vigilant in 
our fight against meth, but with our already limited resources 
it is becoming more and more difficult to stay ahead of this 
problem.
    The Fargo Police Department presently has a total of 127 
sworn officers to police a community that is rapidly 
approaching a population of 100,000 residents. Of these 127 
officers, seven are specifically dedicated to investigate drug 
trafficking and other narcotics-related crimes. But as you'll 
see, the ever increasing number of meth-related cases calls for 
my consideration of dedicating even more officers and more 
resources to the fight against meth.
    In 2002, the Fargo Police Department investigated 132 meth-
related cases, including seven cases where the drug was being 
manufactured in a laboratory.
    In 2003, 160 meth-related investigations were conducted and 
four labs were discovered, and in 2004, 230 cases were 
investigated and seven labs uncovered.
    Last year, 354 meth-related investigations were conducted; 
however, no labs were associated with any of these cases. The 
good news appears to be that the laws associated with the over-
the-counter sales and the securing of the precursors used to 
manufacture meth appear to have had an impact on the viability 
of setting up makeshift meth labs here in Fargo, but the near 
tripling of meth-related investigations over the past 4 years 
is staggering and a solid indication that the problems 
associated with meth are far from resolved.
    Senator Conrad. Can I stop you right there? I tell you as I 
have been listening it really struck me the attorney general 
showed how the discovery of meth labs is down dramatically 
since the law passed here and you have had new tools to deal 
with the precursors. That is the message that I heard from part 
of the attorney general's testimony, but it would not be right, 
would it, for people to conclude from that the problem has been 
reduced, because really what I hear you saying is the actual 
investigations for meth violations has gone up dramatically, 
even though the number of meth labs being discovered in our 
State is down dramatically.
    Mr. Ternes. Yeah, there's no question about that, Senator. 
I think clearly with the leadership of the North Dakota 
legislature we have taken the steps necessary to make it more 
difficult to manufacture this stuff, but what that's done to 
some extent is it's displaced the problem where it's being made 
and the number of users continues to go up at a phenomenal 
pace.
    Senator Conrad. And where do you think the stuff is coming 
from?
    Mr. Ternes. Well, I don't think there's any question that 
quite a bit of the methamphetamine that we see come into Fargo-
Moorhead comes from clearly out State and probably out on the 
West Coast. Fargo being right at the intersection of two major 
interstate highways makes for a fantastic place for traffickers 
to bring the methamphetamine into our community.
    Senator Conrad. So that really does make it in part a 
Federal responsibility, doesn't it?
    Mr. Ternes. Well, I don't think there's any question, and 
as has already been pointed out, I think on both a State and 
local level we are dedicating the resources necessary to 
address this issue on a local level, but it transcends that. 
The meth problem is clearly being transported into our area.
    Senator Conrad. All right.
    Mr. Ternes. I think the bad news in all of this, however, 
is that both violent crime and property crime is clearly on the 
rise in the Fargo area as a result of methamphetamine use. Last 
year in the Fargo-Moorhead area, in an area that on average has 
between one and two homicides occur here every year, we had two 
homicides occur in a relatively short period of time and both 
were as a direct result of persons either using or otherwise 
trafficking in methamphetamine.
    Burglaries and thefts are also on the rise here in Fargo. 
Many have a direct connection to methamphetamine. Defendants, 
suspects, and informants in many of these cases acknowledge 
using the proceeds from the sale of stolen property to either 
purchase and in some cases redistribute methamphetamine.
    Law enforcement agencies in and around Fargo, and really 
throughout North Dakota, continue to need the support, 
financial and otherwise, of our elected officials in order for 
us to continue our efforts toward addressing the problems 
associated with methamphetamine.
    The collaborative efforts that law enforcement agencies 
across the region are currently engaged in continue to be an 
extremely effective strategy. However, it's going to take more 
than just simple cooperation, and the sharing of the already 
existing resources that we have, to make a real impact on this 
methamphetamine crisis.
    [The prepared statement of Mr. Ternes follows:]

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    Senator Conrad. Thank you very much, Chief. We appreciate 
you being here very much.
    Next we will hear from Dean Ross, who is the Chief of 
Police in Valley City. I know, Dean, that you had a scheduling 
conflict so especially appreciate your being here today. Dean 
has a special perspective because he represents a smaller town.
    Mr. Ross. That's correct.
    Senator Conrad. One that has serious resource issues in 
combating the threat of meth. Thanks again for being here.

     STATEMENT OF DEAN A. ROSS, VALLEY CITY CHIEF OF POLICE

    Mr. Ross. Thank you. And I think no matter what the 
scheduling conflict is I think this subject is so important 
that we have to be here, and I appreciate the fact that both 
Senators are here and they'll share this information with 
anybody in Washington.
    First of all, I think we'll wake up the senators and 
representatives on the East Coast eventually because it's 
spreading their way and they are going to see the devastating 
impacts that the drug has had on their areas as well as it 
already has on ours, so they're going to see this impact 
shortly.
    Now, I don't think the East Coast people are slower than we 
are. It's just that they seem to like cocaine a lot better at 
this point apparently, but meth is going to get there, there's 
no doubt about it, and it's the most--in my career, it's the 
worst drug that has ever hit the market. It's no question 
unequivocally the worst.
    Senator Conrad. And why?
    Mr. Ross. Because of the devastating and violent effects 
that the meth has and the severe addictive qualities that it 
has on the people. I think that the violence that we're 
seeing--I mean we--Valley City lies under the radar when it 
comes to violent crime, and we fly under the radar on a lot of 
things, but we're not under the radar anymore. We're above the 
radar. We're right in line. We're being red right now because 
in April of 2003 we suffered a triple homicide and it was meth 
related and another fourth attempt was made on a fourth 
individual.
    Meth paraphernalia and meth was found at the residence, so 
now you're talking a town of 7,000 people who's having the 
devastating effects that are being transpired around the Nation 
apparently, but people say it shouldn't happen here. It is 
wrong. It is happening here, and I think 2 months later we had 
a brother shoot his own brother in the street. Meth 
paraphernalia was found there.
    So 2003 was probably the worst year in the--not probably. 
It was definitely the worst year in Valley City's history as 
far as violent crime.
    In between that now though, a 22-year-old young, robust 
male that's--thinks he's being chased by a police helicopter. 
Well, obviously I put in for a police helicopter in my budget, 
but they don't give me one. So it turns out it's a medical 
chopper that's coming in to do an airlift to Fargo, but he 
thought he was actually being chased by this police chopper. 
The unfortunate sad ending to this is he swallowed the meth 
that he had with him and it burst in his stomach.
    And in a small town you see there's a lot of variety of 
things you do as well. My wife and I transported this young man 
down to the autopsy in Bismarck and that is not a situation 
that you ever want to deal with.
    So the people on the East Coast, the Congressmen, the 
representatives, the senators, the representatives, they will 
wake up to the fact, and what we've done is we've actually--we 
brought people in. I mean we brought them in from California 
telling us that we need long-term care. That's what they are 
telling us. We need at least a year-long program to treat the 
meth addicts because short-term care doesn't work.
    What also we've done we've brought in speakers. We're doing 
more community awareness. We brought a pastor in from Minnesota 
telling how his son shot himself right in front of him, broke 
into a--broke into their gun cabinet and shot himself and 
killed himself. So this is a tragedy. I mean this drug is--like 
I said, it's the worst one, but what are we going to do about 
it?
    We're building a jail in Valley City. We're building a 
multicounty jail. I mean but is that the answer? Definitely 
not. Incarceration--I think our senator from Valley City has 
done a very good job in starting to get the State legislature 
to look at the Robinson Recovery Center. It's a $500,000 
project to throw into the mix where I just have information 
from him where we can--who can submit names for this because 
that 20-bed facility is going to fill up in just no time. It 
will be full by the end of the month from what I understand.
    So that--that's one of the things, but more--more important 
another statistic we're flying by is one of the charts that you 
showed and that is the loss of our drug task force agent. Now, 
he's sitting out in--in the audience, Joe Gress is, and he's 
losing his job in 12 days. We have 12 days to utilize him 
because of funding cuts that were put on by the Federal 
Government.
    Now, we--we are already sharing. I know your question, 
Senator Conrad, was what are the States and cities doing? Well, 
we're--we increased our share of the funding level to 35 
percent of that drug task force officer. He only earns 22 
hundred dollars a month. He's not a very high-paid officer. You 
know, they should be earning a lot more than that, but they are 
willing to go out there and do the job for 22 hundred dollars a 
month. We're funding 35 percent of that and the Byrne/JAG grant 
is funding the rest.
    I haven't seen any abuse in the system. You can tell your 
colleagues back in Washington that I haven't seen any abuse in 
the system in our State anyway as far as what Attorney General 
Stenehjem related to. I haven't seen any leather jackets. My 
guys want leather jackets, but we aren't buying them for them. 
So, anyway, there's been no abuse that I've seen.
    I have put together a program, you know, a situation where 
community awareness is very important. They are burning down 
garages in our city, they are burning down garages in other 
areas. This is a devastating drug that has long-lasting impacts 
for all of us and what's the answer.
    You know, in addition to the drug task force that we're 
going to lose, a lot of the funding also goes to abused persons 
outreach centers in the State, and as you know as I've 
described, meth--this meth violence wasn't only that. It was 
also domestic abuse violence that goes with that and that's a 
part of the funding that that goes for, too, with that Byrne 
Grant that we are affiliated with in North Dakota, so now 
you're taking out both of this--both of these.
    If you zero out that line item, that's going to be my big 
push for your office, both of yours, to get that at a funding 
level that is not based on the formula as Attorney General 
Stenehjem pointed out but it's based on a floor in there that 
North Dakota would receive their fair share and that's so 
critically important.
    Senator Conrad. What would you say to my colleagues who say 
look. This is not a Federal responsibility. This is a State and 
local responsibility and besides that this is just money that 
is being wasted. You give it to these local police department 
and they are spending it in inappropriate ways. How would you 
answer that?
    Mr. Ross. Well, I would say, you know, there's checks and 
balances in regard to all of that spending and there's have to 
be--there's an audit of the situation where you can look at 
that and say what are they spending that on.
    And I happen to sit on a Byrne Grant committee in Bismarck 
and we are--we very--we scrutinize each and every grant that 
comes through and we scrutinize to see what they spend the 
money on so----
    Senator Conrad. To your knowledge, has any of this money 
been spent frivolously?
    Mr. Ross. No, not at all. Not at all. Not in this State. I 
can't vouch for other States but certainly not North Dakota. I 
think it's been--that's been our crutch to keeping this drug 
task force going in the State.
    Just think. At the end of 2006 with no money left for any 
drug task force across the State, there's going to be a lot of 
law enforcement officers looking for work and there's going to 
be a lot more--the enforcement aspect isn't going to be there 
because a lot of daily, routine patrol is very important in 
catching them, but continuing with the flow of the 
investigation is done basically mainly by the drug task force 
people.
    Senator Conrad. OK. Thank you. Anything you want to----
    Mr. Ross. Thank you for your time.
    [The prepared statement of Mr. Ross follows:]

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    Senator Conrad. Well, you have been really an excellent 
witness. Thank you very much.
    Next is Rod Trottier, the Chief of Police with the Bureau 
of Indian Affairs stationed at Belcourt. Welcome. Thank you 
very much for being here.

 STATEMENT OF ROD TROTTIER, BIA POLICE CHIEF, BELCOURT, NORTH 
                             DAKOTA

    Mr. Trottier. Thank you very much. I'm very honored to be 
here, Senator. It's something relatively new to me that I've 
never done before, so I am honored and look forward to it.
    Good afternoon. My name is Rodney Trottier. I'm a member of 
the Turtle Mountain Band of Chippewa. I work for the Bureau of 
Indian Affairs Office of Law Enforcement Services. I'm the 
Chief of Police of the Turtle Mountain Band of Chippewa 
Reservation located in north central North Dakota. I have 
served in this position since December 1999.
    I have had the privilege of serving as a law enforcement 
officer in various jobs for approximately 30 years. During this 
time, I've seen many challenges faced by the communities that I 
serve as a law enforcement officer. The Turtle Mountain Band of 
Chippewa is a small land base compared to many other Indian 
country jurisdictions. While there are only about 140,000 acres 
of trust land, there are over 11,000 tribal Indians that come 
under my jurisdiction. We have a relatively large population 
living in a relatively small area.
    According to our recent Bureau of Indian Affairs report, 
the unemployment rate is roughly 68 percent. Unemployment and 
related social problems have contributed to the trafficking, 
manufacturing, and use of methamphetamine and other illegal 
drugs. Over the past 10 years, I have never witnessed a threat 
to our community as great as the one posed by the use of 
methamphetamine.
    Use of methamphetamine has contributed to an increase--
increased criminal activity, including aggravated assaults, 
domestic violence, burglaries, theft, and traffic facilities. 
In recent years, my officers have executed numerous search 
warrants, which have resulted in the recovery of stolen 
property that was destined to be traded for methamphetamine.
    My police department has a great relationship with the 
Turtle Mountain Band of Chippewa on law enforcement matters. We 
recently through the tribe was able to obtain funding for two 
tribal drug investigators and the tribe then assigned these 
officers to work with my department.
    These two additional positions have allowed us to conduct a 
proactive approach toward the investigation of methamphetamine 
and other illegal drugs. This partnership has been very 
beneficial and effective in the enforcement of tribal, State, 
and Federal laws. These two positions were also hired under the 
Byrnes funding.
    We have also forged effective partnerships with the United 
States attorney's office; the Drug Enforcement Agency; the 
Federal Bureau of Investigation; the Bureau of Alcohol, 
Tobacco, Firearms and Explosives; the State of North Dakota's 
branch of criminal investigation; and county law enforcement 
officials. Due to our proximity to the Canadian border, we also 
work very closely with the United States border patrol and the 
Royal Canadian Mounted Police.
    I am proud of our accomplishments during these past several 
years. Because of the strong effective partnerships that we 
have developed, many criminals have been successfully convicted 
in tribal, State, and Federal courts. Law enforcement efforts 
have resulted in many significant seizures of methamphetamine 
and some drug dealers from our reservation are now serving very 
long sentences in Federal prison.
    Had it not been for the proactive partnership with our 
fellow law enforcement agencies, these accomplishments may not 
have occurred. Despite our best efforts, methamphetamine 
remains a significant threat to our proud community.
    One of the most disturbing tends we are seeing is an 
increase in the number of child abuse complaints which are 
being reported. We have committed law enforcement staff to work 
with child welfare officials in situations where the reported 
abuse is related to illegal drugs.
    According to child welfare stats for our reservation, in 
2005 there were approximately 677 abuse and neglect reports 
filed and of this amount 207 were related to illegal drugs. 
Examples of the types of reports made include parents using 
illegal drugs and neglecting their children, children using 
drugs, and highly toxic methamphetamine labs located in homes 
where children are present.
    Perhaps the most tragic have been several recent reported 
cases of infants being born already addicted to 
methamphetamine. Due to the increasing alarm due to the harmful 
effects it is having on the reservation, our tribal officials 
have declared war on methamphetamine. The Bureau of Indian 
Affairs Office of Law Enforcement Services recognizes the 
seriousness of the methamphetamine epidemic in Indian country.
    Last Friday our national deputy director, Christopher 
Chaney, expressed to me his concern about this threat. On a 
national level, the Officer of Law Enforcement Services is 
forging ahead with more effective partnerships with the DEA, 
FBI, and other Federal, tribal, State, and local law 
enforcement agencies in order to combat methamphetamine.
    Methamphetamine does not care whether it is located on 
reservation or off reservation. It does not care whether the 
victims are Indian or not. I firmly believe that we must not 
allow a safe haven for drug dealers in any part of our State. 
Methamphetamine affects all communities in North Dakota and you 
must work together to fight this epidemic.
    In the spirit of community policing, I am committed to 
making sure that our citizens are informed about our activities 
to protect them. I will be implementing a weekly police report 
on our local FM radio station where we will report weekly crime 
stats. We will end each short program representing issues of 
concern and will encourage public input.
    Additionally, I will be initiating a tip line so that 
people can provide anonymous tips to the police. I know the 
public has a lot of information that will assist us in our 
battle against methamphetamine. This simple process will give 
citizens a safe and confidential avenue to report criminal 
activity.
    I am dedicated to public service for our community and will 
be working hard to fight methamphetamine. The citizens of 
Turtle Mountain Band of Chippewa are resilient and proud. 
Working together we will overcome the menace cased by this 
dangerous drug. Again, thank you.
    Senator Conrad. Thank you very much for your testimony.
    I just wanted to briefly ask each of the witnesses three 
questions. One is to characterize the seriousness of the 
threat. In terms of drugs, is this the most serious threat that 
you confront? How would you characterize the threat that we 
face with meth?
    The second question I would like to ask each of you do you 
have the resources that you need?
    And the third is have you seen waste of taxpayer dollars in 
pursuing those who traffic meth, those who are meth users, and 
other criminal activity associated with meth? So those are the 
three questions I would like each of you to address.
    We will start with the U.S. Attorney, Mr. Wrigley. If you 
could tell us seriousness of the threat, do you have the 
resources you need, have you seen waste of taxpayer dollars.
    Mr. Wrigley. Thank you, Senator. As to the issue of the 
seriousness--and I hope everyone appreciates when I put the 
statistics out there before it wasn't to say that they weren't 
serious. It's just to say it's something to get our arms around 
and I feel confident about, but in terms of being with people 
who have this addiction--I'm going in my tenth year as a 
prosecutor, I'm going on my fifth as U.S. Attorney--I haven't 
seen anything like it.
    I had a case--I tried a case last summer where we had eight 
or nine witnesses that were--several came from the wrong door 
into the courtroom. I mean they were all defendants in custody, 
some others were not in custody but they had addiction problems 
of their own and dealing with people who fought in some cases 
to overcome addiction, others who are still in the grip of it. 
In terms--I've not seen anything like it either for the--
especially the people addicted to narcotics. These folks, I 
think, are the most dangerous. Thank you.
    Senator Conrad. Resources. Have you have the resources you 
need?
    Mr. Wrigley. In our office--you know, it's been interesting 
as you mentioned before and I know Attorney General Stenehjem 
mentioned too. You know, we do have a time where resources are 
becoming a challenge at the Federal, State, and local level. In 
our office in the last years--I'm not criticizing the Congress. 
I'm just pointing out--we've seen a diminution of those 
resources somewhat cut each year. I seem to recall that I 
mentioned Congress cut the President's request for DOJ. It was 
in my notes but it's possible I never have to that.
    During that timeframe, our caseload has skyrocketed and so 
we've had to find ways. Thankfully the judges here in North 
Dakota and the Federal system have been amenable to us using 
videoconferencing so we've saved a lot of time on travel so we 
get more time back. We save money so we can put those resources 
into other--other things.
    And so at a time when we've tripled, almost tripled, not 
quite but almost tripled, our caseload, there has been somewhat 
a reduction, so I won't be able to believe that we are, you 
know, somehow short in those regards. The department has been 
very supportive of our efforts here in the North Dakota U.S. 
Attorney's office and I know that's one subset of what you're 
addressing, but to address that we've--we feel we've been 
supported well to the challenge.
    Senator Conrad. And have you seen a waste of taxpayer 
dollars?
    Mr. Wrigley. No, I--I haven't, but I--I sure would echo 
what Attorney General Stenehjem was pointing out and the chiefs 
and State's Attorney Burdick and the others are--are talking 
about with respect to fraud. I think any of us if we had seen 
these things we would have discussed it. We would have brought 
it to the folks that needed to have that addressed to them. No, 
I have not seen it.
    Senator Conrad. OK.
    Mr. Wrigley. I never can say what does or doesn't exist 
everywhere, but I've certainly not--I think we do things like 
you do in a lot of areas just more efficiently.
    Senator Conrad. Birch, seriousness of the threat, do you 
have the resources you need, have you seen taxpayer dollars 
wasted?
    Mr. Burdick. As to the seriousness, I think the breath of 
the impact both that it has on the individual and on their 
extended family and friends and the growing, exponential 
growing, nature of this, the trends upwards are so high that I 
don't think that we have a crime that is as serious for those 
reasons alone, and the ability to back away from it to solve 
the problem because of the addictive nature of the drug makes 
it the most serious, I think, that we've have.
    As for resources, we've been applying considerable 
resources toward the drug prosecution effort but in some sense 
costs us in other areas. The more people we apply toward drugs, 
then we are taking them from other resources. I think maybe the 
resources are most important as far as law enforcement but, you 
know, as we give more resources to law enforcement, they 
produce reports and where do they come? To Drew and to me and 
so we've have to do something once we get them.
    As for a waste of taxpayer dollars, I've seen no dollars 
putting leather coats in closets. I've seen it put in 
investigator's feet on the street and prosecutors in the 
courtroom and that's it.
    Senator Conrad. OK. Keith.
    Mr. Ternes. Well, first to speak to the seriousness of the 
issue, I think--I think we've all readily acknowledged the 
threat that this poses to our communities as a whole. Somebody 
mentioned earlier that, you know, this is a public health 
issue. It's a public safety issue, it's a child welfare issue.
    And so the whole issue of methamphetamine is the threats in 
the areas of threat that it poses to our individual communities 
is--is overwhelming, and I don't think it holds any boundaries 
whatsoever.
    But let me just speak just for a second just from the 
threat just from the line level police officer, because I don't 
think--at least in my 19 years of law enforcement, I don't 
think that there has been another issue that I've seen that has 
posed the threat to police officers as this one does.
    The violence associated with meth, the guns associated with 
meth, the people that are using and trafficking in meth are 
desperate people, and the safety threat that they pose to the 
officers investigating in these cases is really beyond anything 
that I think we've seen as a law enforcement community in North 
Dakota by far.
    The resources--and I can only speak to the Fargo Police 
Department. You know, I indicated that I have seven officers 
right now that are specifically dedicated to tackle the meth 
problem. Staffing and personnel is always going to be a 
challenge in an organization our size, but when we are 
confronted with some of the issues as we are now--as an example 
in the last four or 5 years, really in the wake of 9/11, the 
Fargo Police Department has continuously struggled to maintain 
staffing, if for no other reason than the fact that we have so 
many people that have military obligations.
    And as we sit here today, I have upwards of eight officers 
that are fulfilling those military obligations, so basically 
I've lost the staff that I have assigned to my narcotics unit.
    And so from a personnel standpoint, we--we have struggled. 
We are struggling today. We will continue to struggle to have 
the personnel necessary to tackle this issue, and I can only 
reiterate what others have said, and that is in terms of waste 
I have seen no evidence whatsoever that suggests that agencies 
who have been provided with financial support have wasted it in 
any way, shape, or form.
    Senator Conrad. OK. Dean.
    Mr. Ross. Well, as I said earlier, I believe that the 
seriousness of the threat is absolutely extreme category. It's 
the worst that it's ever been in my career in law enforcement. 
I said that before and I can't say it enough and I'll say it 
again, over and over and over again, because it is the worst 
drug that's hit the market.
    And for the reasons that are--for not only the reasons of 
how addictive it is, but there's always violence that goes with 
it it seems like. Whether it be you can--a simple thing like 
syringes that are laying around in the home for the kids to--
when we've conducted search warrants, there are syringes laying 
in the homes.
    When I have--everyone I started a scrapbook on what our 
police officers took away for firearms. I never--I had never 
done that before. It's always gun related also. You go into a 
house and there's always weapons. There's always weapons in the 
home and for that reason alone, plus it's killing people. I 
mean how much more extreme can it be? I mean other drugs have 
done that. Meth has by far surpassed all of those in my 
opinion. As far as the resources, very clearly our community 
shares a drug task officer. Like I said, we're losing ours and 
we have shared this with Stutsman County and some other 
surrounding counties because of the regional concept that we 
have more people available. We have one in Valley City, but 
that would give us a utilization of like four. I mean we're 
sharing the costs and putting it into a pot and making it work.
    And if I go to my city commission, we have one person under 
the COPS Universal Hire Program. That is the retention period 
of 1 year that we need to--in order to--I mean I know that when 
this time limit is up I'm going to have to fight to keep my one 
officer on that COPS Program after that retention period.
    And beyond that, our--you know, you look at our city, a 
smaller community. We have 45 percent tax-exempt property and 
people are bellowing about how--our property taxes the way it 
is. So I think that we face a major issue in resources as far 
as if we can't get the Federal funds to--I mean I'm not saying 
that the city wouldn't go along with it. They are very 
cooperative in the fact that they will share the cost, but I'm 
not sure that they'll bear the whole cost and that's the sad 
part. They are putting some costs forward through--into the 
jail facility as I said.
    And as far as waste, unequivocally no. There is--I have 
seen no waste. When--when on the Byrne committee, they've gone 
down to eliminating everything besides basically personnel and 
the costs that are associated with it on the grant, on the 
grant funding. When you go to the task force, they've taken 
extreme cuts on everything other than personnel. I mean they 
want the bodies out there. That's what they want. They don't 
get anything else, but they get paid for the bodies. That's 
what it's all about.
    Senator Conrad. OK. Rod.
    Mr. Trottier. Thank you. I think that the serious threat 
is--in my opinion it's still the greatest demand. We talked 
earlier about, you know--and it's fantastic, you know. We have 
to brainstorm, you know, with this thing constantly. I mean the 
bad guys are out there trying to find ways around, you know, 
defeating law enforcement. I think we just have to keep going. 
We have to try to figure out their new ways.
    We cut it down to where the meth labs--and I agree with the 
attorney general in that. Even in our area, we've seen very few 
meth labs. At one point I think 4 years ago we were rated third 
in the State of North Dakota in that particular area for the 
amount of meth labs. It's real hard-pressed but the demand is 
still very strong, and as long as that demand is there, they're 
going to get it.
    I--I think that--you know, they always say it's a poor 
man's drug, but I think the accessibility of that particular 
drug is a lot easier than having to go beyond our exterior 
boundaries of this country to get it, such as cocaine and 
heroine and that type of thing.
    I think the super labs I think are alive and well and they 
are growing and I really think that what I spoke about earlier 
and I think everybody I think the theme here is always 
partnership because of the resources being so tight. That's the 
theme. We're going to have to work together. There can't be any 
boundary lines, even as far as Canada is concerned.
    As far as the latter two, I guess I'm not in a position to 
answer those questions. I can speak on behalf of the tribe I 
think. On behalf of two positions that I have employed under 
the Byrnes funding and the tribe in and of itself actually, I 
think, put in a good amount matching on that particular fund 
this year, but even that with the cuts that had to come down 
we're only going to have those two gentlemen probably until 
September and we've had them about 10 years and they've done an 
excellent proactive work for us and I really hate to see them 
gone in September. Thank you.
    Senator Conrad. Waste?
    Mr. Trottier. No, I don't see no waste. As with Chief Ross, 
I was on the Byrnes committee myself about 4 years ago, served 
1 year on it, and, you know, it--I mean the money was tight. It 
was--you know, it was cut a little bit every year and you had 
to do the best with what you had. I am not aware of any waste.
    Senator Conrad. Senator Dorgan.
    Senator Dorgan. Well, thank you very much. This has been a 
really interesting panel with different perspectives on the 
same issue and let me just say I think I speak for Senator 
Conrad, having watched his work on this as well. I think the 
Byrne Grant Program has been just one of the most successful 
programs we have had out there. It allows local enforcement 
folks to describe their priorities and use these funds with 
minimum strings attached and use them to address the 
significant priorities they have, so I think it is a program 
that works. It makes no sense to be cutting that program.
    Senator Conrad. I want to talk to you just a moment about 
victims because meth users can come in all shapes and sizes and 
ages, and I had a forum in which a young mother from a 
community in northern North Dakota talked about her high school 
son, outstanding quarterback on the high school football team, 
became addicted to meth and it just literally destroyed him. In 
and out of prison. It was just a horrible story to hear.
    I want to ask you about methamphetamine in high schools in 
North Dakota and then methamphetamine in colleges, and the 
reason I'm asking the question I think, you know, while the 
consumption of meth is a crime, there is also a victim here 
with respect to young people and others who are addicted to 
this deadly drug.
    And I assume that most of you would say there are far too 
few opportunities for addiction treatment in our State and 
across the country, but let me ask you if I might, particularly 
in law enforcement, perhaps Drew and Birch as well, what about 
high school? What about kids? At what level are we seeing meth 
and hearing about addiction to meth?
    Mr. Ross. Well, I think from our standpoint we're seeing 
it--it started out as a drug that was predominantly the 30- to 
40-year-olds, right in that area, were using it. That age limit 
has gone way down very fast. We've now had juvenile referrals 
on 14-year-olds that are using it too. So what used to be the 
drug of--it seemed like they took from cocaine they were using 
now and they are changing to meth, but the age limit is going 
way down. We have from 14 to 15.
    Our age of people that we have actually caught with the 
drug is from 14 to 80. So there's an 80-year-old out there and 
I thought they would know better but apparently they don't 
either. So we're hitting--we're hitting a wide spectrum, but 
age is progressively going down and that's the scary part. It 
really is.
    Senator Conrad. Chief Ternes.
    Mr. Ternes. Well, again I think the good news is this, and 
that is we have an officer in each of the public high schools 
and the junior highs here in Fargo; and although we do see some 
drug activity in the school setting, it's minimal at this 
particular point. However, I agree with Chief Ross that this 
drug knows no bounds in terms of rich or poor, old or young. I 
think that's due primarily to accessibility and really it's 
fairly cheap to purchase.
    But in terms of how it's currently affecting our--our young 
people, as I mentioned earlier our property crimes are on the 
way up and substantially so because teenagers, young adults, 
who, you know, aren't making or aren't involved in high-paying 
jobs, at least at this point, are basically--those are the 
people that are breaking into cars, stealing stereos, stealing 
whatever they can find and turning around and selling those 
things and then using the proceeds to go ahead and contribute 
to their meth habit.
    So there's no question that, you know, of the three or 400 
cases, meth investigations, that we're involved in a 
significant number of those do involve young adults in our 
community and, you know, if we don't find a way to provide them 
with an out in the form of some type of treatment, that 
situation is never going to get any better.
    Senator Conrad. And finally let me just ask perhaps Drew 
and Birch as well. If the relapse rate for meth addicts is 
somewhere between 70 and 80 percent following treatment, at 
least that is what we are told, it is such a deadly addictive 
drug that the relapse rate is weigh up there, 70, 80 percent. 
If that is the case, is there any expectation that we can 
effectively address this problem without substantially more 
treatment opportunities available for meth addicts?
    Mr. Burdick. Senator, I think the treatment is critical. A 
survey that was done at the United States Counties indicated 
that they put--meth users fit into two profiles, one, high 
school and college-age students and white and blue-collar 
workers in the 20 to 30 age and working in the rural and 
emerging urban areas.
    Our information doesn't seem to indicate anything different 
than that very thing. We have, as I indicated, focused on 
implementing both juvenile and adult drug courts here to help 
focus on that and to help realize that it's not just punishment 
for the--for the sort of low-level users of drugs.
    You want to get them a measure of punishment but also some 
treatment to get them off--off the drug and hopefully stay off 
the drug, and the fact that it's such a problem to relapse just 
concentrates how much attention we need to focus on the 
treatment aspect of it.
    So I would agree that is where we need to be spending 
money, both on figuring out what the appropriate treatment 
programs are and figuring out how to develop and deliver those 
within our communities.
    Mr. Wrigley. Thank you, Senator. Again, our perspective is 
a little bit different here, not because it disagrees but 
because it's just a different perspective. When I--when I first 
became U.S. attorney, then Attorney General Ashcroft and the 
President in a few meetings with U.S. attorneys since then, 
closed and open door, have directed the U.S. attorneys into 
this administration to really focus on the trafficking cases to 
where we are--in our office here in North Dakota we don't 
prosecute anybody who isn't part of a significant trafficking 
organization.
    And where our standard might adjust a little bit our 
thresholds would mainly be in Indian country where we have that 
predominant responsibility that a State's attorney might have 
elsewhere, so we see some adjustments there, but by and large 
these are significant traffickers.
    They are members of a conspiracy, but I think you raise a 
really important point on this, the issue of--and it's not lost 
on anybody up here--of the victimization, recognizing we're 
dealing with victims a lot of times.
    I know Attorney General Stenehjem and others who have 
talked about this issue in North Dakota have always coupled it 
in with the idea of treatment and recognizing that we have an 
obligation on demand reduction. That's not something maybe the 
prosecutors talk about every day of the week, but boy do we 
realize that in this one if we're going to do these market 
things I discussed before, that demand has to be addressed and 
I--if I could just briefly point out.
    I had a trial last summer where in my closing comments I 
was addressing the fact that we had quite a cast of characters 
and one of the young women was just--I mean she was sort of a 
mess and the jury had heard all sorts of things, and I let them 
know at the end in my closing remarks that the events that they 
were now familiar with might not make that victim the mother of 
the year. She had been an addict and she had all sorts of other 
issues going on, but the defendant's criminality was clear.
    In that case, Senator, the defendant, there was testimony, 
went to her to get her to continue to deal for him. He opened 
his pants. He forced that young woman to strip naked and to 
perform an oral contact on him, and he threatened to then beat 
her if she did not follow his precise instructions with what to 
do with the natural consequences of that act.
    He then tossed a small bag of methamphetamine at her and 
told her, you know, you're going to continue to deal for me. 
All of which is noxious enough, but when you add in that she 
was 7 months and visibly pregnant, it was just about more than 
the people in the courtroom could take. That's--you know, I'm 
not going to say that's a common circumstance, but things like 
that that make all of us in law enforcement that have been 
watching this for years sort of sit back and think.
    Well, what I said in the beginning is also true. Numbers of 
people, alcohol and marijuana affects more, but when you get 
down to the individuals who hinder that thing, that kind of a 
circumstance, I wish it were completely rare but it's not.
    Senator Conrad. I know we are running behind but, Rod, 
could you just finally point out on the reservation from the 
perspective of the BIA at what age are you seeing meth use?
    Mr. Trottier. Just like the previous chiefs--chiefs have 
said, it's about the same age. We're seeing it younger and 
younger all the time. One of the biggest things that we're 
seeing in law enforcement is the community is being so 
desensitized by it. You know, I don't know if that's the proper 
word to use, but we're seeing more police officers assaulted, 
we're losing respect of these young people, teachers, parents.
    Unfortunately, we have an area where we have a lot of 
single mothers raising children and they've--they've lost 
control, 13, 14-year-olds, and that's been a big issue that 
we're seeing and it puts such a huge, huge emphasis on all the 
people serving programs in our community to some respect raise 
them families and children.
    It's getting to the point where--as a matter of fact, I'm 
trying to schedule a meeting with about 30 plus individuals 
here--people serving programs--hopefully this month, and I'm 
hoping to get everybody indoors so we can explain how meth is 
affecting each and every one of our programs just on the 
reservation.
    At the very least if it falls through at the end of the 
day, at least we've had an opportunity to hear what every one 
of us the problems we're having and hopefully if I can keep 
them in there that afternoon and we can maybe funnel them down 
to some sort of resources that we can all pool together within 
our own community to try to combat this, whether it be 
education, you know, juveniles.
    I'm on the road constantly in my car. We have no local 
facilities and the tribal court is sending these young people--
I bet I'm on the highway three or four times a week in and out 
of the State and it's just very difficult. Thank you.
    Senator Conrad. Thank you. I want to thank very much this 
panel. I appreciate very much your taking the time to be here 
and present what I think is very important testimony. And I 
must say the things I have heard from law enforcement and from 
prosecutors about the toxic nature of this drug and how 
absolutely devastating and destructive it is to families and 
communities I do not think we face a bigger threat than meth. 
It is just a disaster and we have to do everything we can to 
take it on.
    I thank each and every one of you for testifying and what 
you do every day to be part of this fight. Thank you very much.
    Mr. Wrigley. Thank you, Senator.
    Mr. Burdick. Thank you.
    Senator Conrad. Our third panel is made up of Karin Walton, 
the Program Director of the North Dakota Higher Education 
Consortium for Substance Abuse Prevention, and Karen Larson, 
the Deputy Director of the Community HealthCare Association of 
the Dakotas, formerly the Director of the Division of Mental 
Health and Substance Abuse Services in the North Dakota 
Department of Human Services. Thanks very much. Both Karens. 
Karen and maybe it is Karin.
    Ms. Walton. It's pronounced ``Karen.''
    Senator Conrad. You pronounce it ``Karen.'' Thank you very 
much the two of you for being here. I appreciate it. You know, 
one of the great issues is can we treat people? Can we treat 
them effectively and successfully, and so I am delighted that 
the two of you are here.
    Karen Larson, again the Deputy Director of the Community 
HealthCare Association of the Dakotas, formerly the Director of 
the Division of Mental Health and Substance Abuse Services, has 
worked in the field for, as I understand it, over 25 years, and 
she is someone that can tell us about effective meth treatment 
options as well as remaining challenges. Thank you.

STATEMENT OF KAREN E. LARSON, DEPUTY DIRECTOR OF THE COMMUNITY 
             HEALTHCARE ASSOCIATION OF THE DAKOTAS

    Ms. Larson. Thank you very much, Senator Conrad and Senator 
Dorgan. It's my pleasure and my honor to continue to stay 
involved in this particular aspect of my career, even though I 
have moved on to a much broader based level of health care. I 
constantly keep in mind that primary health care involves 
treatment for substance abuse as well as mental health 
treatment and so it's a wonderful chance for me to talk with 
you.
    You know, I--I've been a lifelong resident of North Dakota. 
I'm a registered nurse. My background in addiction has involved 
being Director of Nursing at Heartview back in the old days of 
it being a pretty well-known 91-bed inpatient treatment 
facility.
    I wish that it and a lot of our other inpatient treatment 
facilities were still viable and present, but we do have 25 
residential treatment programs in the State of North Dakota 
among our licensed treatment providers and I'll talk to you a 
little bit about that.
    You know, one of the things I think that we have to 
recognize when it comes to treating methamphetamine addiction--
and I believe this to the very depths of my being--is that when 
I first began working in the treatment field we basically 
ascribed to what I call, ``When all you have is a hammer, 
everything looks like a nail.''
    Back in 1979 when I began working in treatment, we 
basically followed what is known as the Minnesota model for 
giving--for providing treatment, groups, lectures, some 
individual therapy, a strong emphasis on the 12-step model of 
recovery and exposure of patients to the 12-step programs so 
that they could continue with that. Aftercare was added also.
    But we also know now through terrific research that's been 
done by the National Institute on Drug Abuse. In the words of 
Alan Leshner, who is the former head of NIDA, ``no matter what 
the drug, is a brain disease and it matters greatly that we 
understand that.''
    Now, in that context when I began in 1979, the predominant 
drug of choice certainly that entered Heartview was alcohol. We 
were seeing some marijuana. In the 1980's we saw some, a mini 
explosion, but nothing to the depth that we've seen with 
methamphetamine, of cocaine with some of the oil field 
expansion that took place at that time.
    We have been ill prepared in this State to really face and 
address the real issues of an illicit drug entering the State 
and causing the damage that it has caused. It has taken the 
State of North Dakota by complete surprise, because I think we 
believe that we have been immune to all of those nasty street 
drugs and at least it isn't drugs when our kids were drinking.
    We also know that there are some very, very important 
pieces of research that are supporting this chronic progressive 
fatal disease as it pertains to methamphetamine or any other 
addiction. We need to understand and we know through a 
longitudinal piece of research that the best treatment is 
matching the person and their symptoms and their drugs of 
choice--more often than not more than one drug of choice--to 
the right type of treatment, for the right length of time, at 
the right intensity.
    Now, that takes us far away from the belief that everybody 
has to go through the same kind of treatment in order to 
recover, and it takes us into much more appropriate diagnosis 
treatment and followup. We also know that this is a chronic 
relapsing disease, addiction itself is, (methamphetamine, 
particularly) because of the complete damage that is done 
during usage to the production of and availability of certain 
brain chemicals that cause us to think straight, to behave 
appropriately, and to feel good.
    One of the processes of addiction is that once you complete 
and interfere with the production of those brain chemicals your 
brain forgets how to produce them so you need to go to the 
external product, methamphetamine, to continue to find that 
feeling of well-being.
    We also know that one of the problems that we failed in the 
addiction treatment community and that has had a devastating 
effect, particularly with methamphetamine, has been the 
reimbursement of treatment for shorter and shorter periods of 
time.
    It's been interesting as we have really been able to 
scientifically relate the nature of the chronic relapsing 
nature of addiction and particularly of methamphetamine 
addiction, is that on conversely we have seen a reduction in 
the reimbursement and the reduction in funding for treatment of 
the appropriate length of time.
    Unfortunately, I think what has happened for many people 
and especially those in the private sector, who rely on third 
party or self pay, is that we see approval for the lowest level 
of treatment available if the person has never had treatment 
before and what we have developed is what I call a ``fail 
first'' kind of approach to treatment.
    That does contribute to the amount of relapse that we're 
seeing because we have not placed the person in the appropriate 
level of care for the appropriate length of time. We have 
placed them in the level of care that can be paid for.
    I think it's also important to know that we do have 
research based principles of what constitutes effective 
treatment. Not only does the 12-step model continue to work, 
but we also know that there are certain individuals for whom a 
much more cognitive approach is appropriate and we also know 
that it is important to understand the acute withdrawal and the 
post-acute withdrawal syndrome that happens, especially as 
you're detoxifying from the effects of methamphetamine, before 
you move into a fully formed addiction treatment program that 
is requiring you to think, learn, and retain information.
    The National Institute of Drug Abuse does have on its Web 
site and there is attached to my testimony a listing of those 
principles of effective treatment. I would submit to you there 
are some that are particularly important to pay attention to 
when it comes to methamphetamine.
    Treatment for methamphetamine addiction has to be readily 
and easily accessible, and I'm sure that most law enforcement 
people will tell that that sometimes is a real struggle. 
Treatment must be available in licensed treatment facilities 
that do have the ability to address the unique needs of clients 
with methamphetamine addiction.
    Treatment needs to be available in corrections facilities, 
either directly offered by those facilities or through a 
contract with a local treatment provider, so that the symptoms 
and needs of that individual can be addressed as soon as 
possible. Indeed, drug courts and corrections-based treatment 
have demonstrated that ``coerced treatment'' is effective, 
which again is really flying in the face of some long-held 
beliefs of 25 years ago.
    Treatment must address both the acute withdrawal phase, and 
the post-acute withdrawal phase which generally will last for 
up to 2 weeks. Acute withdrawal with methamphetamine is more 
emotional and behavioral than it is physiologically 
challenging, unlike that withdrawal from alcohol. The post-
acute withdrawal and initiating abstinence phase, generally can 
last anywhere from 6 months up to a year. You heard talked 
about earlier today that year-long treatment might well be the 
need if that person's symptoms do require that kind of 
attention.
    Now, I'm not telling you that somebody has to be in an 
inpatient facility for a year. What we do know is that it is 
important to help people be able to move back toward more 
normal lifestyle through step-down, step-up kinds of treatment 
so that they can attempt to try living straight in less 
restrictive environments.
    Treatment approaches must be research based. We have gone 
past the conventional wisdom and the experimental nature of 
treatment as it evolved, and much to North Dakota's credit I 
think we have a huge and long history of very, very excellent 
treatment and treatment provider credentialling that we cannot 
dismiss, but we need to continue to develop that in light of 
this methamphetamine issue.
    The Matrix Model is one that has been funded by NIDA has 
been deemed to be quite effective it certainly utilizes a 
number of the principles of treatment that most of the 
treatment providers in North Dakota utilize.
    Senator Conrad. Can you tell us what the Matrix Model is?
    Ms. Larson. The Matrix Model is a model of treatment that 
was basically developed for those who were stimulant abusers 
and, of course, methamphetamine is in the stimulant category. 
It began, however, with cocaine and crack and has been applied 
with great success to the methamphetamine-addicted people.
    Actually, it is an outpatient model, but it is also very, 
very adaptable to a residential model, and residential 
treatment is more of a social model of treatment, less heavily 
reliant on medical input and medical personnel. It includes a 
lot of case management, oversight, supervision, and 
understanding the phases of recovery and so actually the case 
manager will work very closely with the client to make sure 
that they are getting up, getting to their meetings, getting to 
their lectures, to their group therapy sessions, also learning 
in a habilitation way new skills that they probably never had 
in the course of their addiction. How do you balance a 
checkbook, how do you responsibly apply and interview for a 
job, all of the necessary living skills that people are not 
very prepared to do when they leave treatment.
    They also rely very heavily on using not only the Minnesota 
model--the 12 steps do figure into this--but they also use a 
cognitive approach that help people learn how to think and do 
critical thinking. ``If I do this, this will happen''; and this 
is an extremely important element of methamphetamine treatment 
and recovery so that the addicted person has the ability over 
time to learn to kind of do some self-talk and to understand 
that the cause and effect, the behavior versus the consequence, 
that relates to their lives as well as to their addiction and 
their illness.
    It also does concentrate very heavily on understanding the 
nature of craving that takes place. I would say in no other 
drug do we see so such physiologically-based craving for taking 
that drug being so overwhelming that it almost supersedes all 
of the executive functions of the brain that makes sense to you 
or I. People will just do things that don't make any sense to 
us because their craving is so profound. Part of that is 
related again to the fact that their brain chemicals are not 
being produced and the craving kicks in.
    I've talked a little bit about the habilitation and also 
about the step-up and step-down aspect of treatment. That has 
to be a component of methamphetamine treatment so that people 
can begin to learn how to live sober outside of the confines of 
a residential program.
    We are very, very fortunate at this time that the North 
Dakota legislature did provide some funding to begin a 
residential methamphetamine addiction treatment program. That 
contract was provided to ShareHouse here in Fargo. ShareHouse 
has a long, long history of providing excellent residential 
care to people with really profound addictions to a lot of 
different substances. It's named the Larry Robinson Recovery 
Program and that is a credit to Senator Robinson's championing 
of funding for this program.
    I think that one of the things that will be the most 
important--and I know Bill and Andi are here. I was just 
telling them how excited I am because they are going to be 
providing us with some outcome and some basic clinical research 
that tells us in using the Matrix Model in combination with the 
residential treatment program what kind of outcomes they are 
seeing, what kind of needs they are seeing in addition even to 
what--what their contract will allow them to do, so we'll have 
some actual field research that will really help us 
immeasurably.
    Now, that's one specialized methamphetamine addiction 
treatment program. All of our licensed addiction treatment 
providers, of which we have well over 70 in the State of North 
Dakota, some of them offering very limited and low-level care, 
do know and understand how to treat methamphetamine addiction. 
The real issue is adequate reimbursement to pay for the kind of 
treatment that people need.
    We are fortunate in the State of North Dakota that private 
insurance, especially those group insurances, do provide for 
some reimbursement for addiction treatment. The State's public 
funding basically relies on the Substance Abuse Prevention and 
Treatment Block Grant that comes from Health and Human Services 
and also from some State funding.
    One of the problems that I did note during the time that I 
was the Director of the Division of Mental Health and Substance 
Abuse is that that Substance Abuse Prevention and Treatment 
Block Grant funding was somewhat static. We were grateful for 
it, but that quite a lot of additional funding was put into 
demonstration grants that lasted three to 5 years. In many 
instances every time the grant went away, the program went away 
because there was no way of sustaining the funding.
    And while I'm a true advocate for research-based effective 
treatment, I also see that there is a necessity for us to be 
sure that we have adequate funding both on the public side of 
things as well as on the private site of things. Addiction and 
methamphetamine addiction is no different, are significant 
public health problems, and we need to have adequate resources 
so that we can provide the treatment.
    The chronic relapsing nature of this illness, whether it's 
methamphetamine or other substances, means that we have to 
restyle how we approach the length of our involvement with 
people and be able to intervene quickly whenever a relapse 
takes place.
    I always use the example that if I were taken to the 
hospital today diagnosed as a diabetic, taught all the things 
that I was going to need to manage that illness, would you 
expect I never had to darken the doorway of the health care 
system again? Absolutely not. I make the same case when it 
comes to addiction and in particularly to methamphetamine 
addiction.
    [The prepared statement of Ms. Larson follows:]

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    Senator Conrad. Thank you very much. Really excellent 
presentation.
    And now Karin Walton, Program Director of the North Dakota 
Higher Education Consortium for Substance Abuse Prevention. 
That is a mouthful.
    Ms. Walton. Yes, it is a mouthful.
    Senator Conrad. She has extensive experience as a licensed 
addiction counselor. Welcome.

  STATEMENT OF KARIN L. WALTON, DIRECTOR OF THE NORTH DAKOTA 
   HIGHER EDUCATION CONSORTIUM FOR SUBSTANCE ABUSE PREVENTION

    Ms. Walton. Thank you, Senators Conrad and Dorgan. Thank 
you for the opportunity to be here today, and for the record, I 
am Karin Walton, the Director of the North Dakota Higher 
Education Consortium for Substance Abuse Prevention. This is a 
new initiative in addressing college substance abuse in North 
Dakota and we're very excited about that.
    I appear before you today to talk about drug prevention, 
and I believe that my testimony is very timely and will support 
what has been shared in other testimony today and also will 
bring to the table possibly a challenge or a call to action.
    A recurring discussion revolves around the types of 
approaches that are most effective in reducing drug use and its 
related problems. Traditional approaches have focused on 
individuals. That is, providing interventions or treatment to 
those who are at highest risk or educating youth to resist peer 
pressure or fining and arresting those who break the law.
    However, these approaches alone have not proved evidence to 
support changes in behavior or appear to produce only temporary 
results rather than long-term behavior changes. So because of 
this, there's the need to identify other ways to understand 
prevention strategies. These individually based approaches may 
be complemented by a broader individual--or a broader--excuse 
me--environment; therefore, increasing the likelihood of long-
term reductions in methamphetamine use and related problems.
    The environmental management approach supports the need for 
prevention efforts to focus on health issues in a broader 
context. There cannot be the focus on just one aspect of 
prevention, but prevention in a collaborative effort at the 
local, State, and Federal level.
    Senator Conrad, it is important to be reminded that young 
people are individuals who rarely wake up one morning who say, 
``I'm going to use methamphetamine,'' and they don't go from 
Little League Baseball to big league drugs overnight.
    Tobacco, alcohol, marijuana, and inhalants, these are the 
drugs that children usually use first and are called gateway 
drugs because children learn to accept and embrace the high. 
They use drug-attainment skills and drug-taking habits and 
learn how to lie, cheat, sneak, and steal to get the drugs.
    And once a young person gives himself or herself permission 
to use any harmful drug, it is so much easier the next time to 
do the same and the next time after that and so on. So the use 
of any gateway drug is a strong predictor for future use of 
other drugs. Thus, preventing any use of any gateway drug by 
any young person is absolutely critical.
    It's also important to remember that it's not just meth, 
not just alcohol, not just marijuana, or not just tobacco. 
Rather we need the identification of a broader societal problem 
across all substances. For instance, when we do meth 
prevention, we are also doing tobacco prevention, other drug 
prevention, alcohol prevention, crime prevention, STD 
prevention, injury prevention, violence prevention, sexual 
assault prevention, and the list goes on and on.
    Prevention efforts require a focus on understanding and 
preventing child and adolescent health and behavior problems. 
It seeks to identify risk and protective factors for health and 
behavior problems across multiple domains, to understand how 
these factors interact in the development of prevention of 
problem behaviors and then to test comprehensive prevention 
strategies, which seek to reduce the enhancement of strengths 
and protective factors in families and schools, peer groups and 
communities.
    And I would like to direct your attention to the guiding 
principles for prevention in my written testimony, which 
outline the elements of effective prevention programs according 
to the National Institute of Drug Abuse.
    One of the chief lessons taught by nearly two decades of 
prevention research is the need for a comprehensive approach, 
one that not only addresses the specific educational needs of 
individuals but also seeks to bring about change at the 
institutional, community, and public policy level.
    This approach is grounded in the firmly established 
principle that the decisions that people make about alcohol and 
other drugs, including meth, will be shaped by the physical, 
social, economic, and legal environment that in turn can be 
shaped by a committed group of prevention and health advocates, 
governmental leaders, higher education officials, State 
administrators, law enforcement, city leaders, medical 
personnel, teachers, parents, students and many, many others.
    This comprehensive approach represents and supports a shift 
in thinking about prevention, however. It suggests new 
leadership roles for State administrators, campus officials, 
community members, parents and students as they attempt to 
reduce problems associated with alcohol and other drugs.
    Clearly, addressing the methamphetamine epidemic and the 
related consequences in North Dakota is not something that one 
entity can handle alone. We've heard that today. Top 
administrators, especially State leaders, must exercise their 
leadership to help build strong coalitions to protect our 
communities.
    In order to accomplish this, however, there need to be 
resources available to continue the efforts that have been 
successful in North Dakota in reducing access to producing the 
products that contribute to the manufacturing of meth, 
increased law enforcement to support penalties for possession, 
and the development of affordable treatment.
    I respect your insight, Senator Conrad, to the fact that 
getting rid of labs doesn't get rid of the drugs. We didn't--we 
learned our lesson really well in the 1930's during the 
prohibition of alcohol. I think 10,000 people in New York City 
went through treatment in the last year of prohibition, so I 
appreciate your leadership, Senators Conrad and Dorgan, for 
bringing this important crisis to the Federal table. Thank you.
    [The prepared statement of Ms. Walton follows:]

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    Senator Conrad. Thank you very much. I am going to call on 
Senator Dorgan for any questions he might have of this panel 
and then I will close it out with my questions, and so I would 
turn to Senator Dorgan for his questions.
    Senator Dorgan. I do not have a question but your 
testimony, the description of these programs and the 
description of the problem and some of the solutions, is really 
excellent. I really appreciate hearing new things and I do 
think there are victims here.
    We talk about users but that there are victims here, and 
the key words are prevention and treatment and we can do a lot 
of things, but if someone is dreadfully addicted to this 
devastating drug and we don't help, we don't find a way to help 
that person shed that addiction, all of the other problems that 
result from continued use and the behavior of continued use 
will inevitably show up on our doorstep the next day, the next 
week, the next month.
    The work that you do is probably less noticed then and less 
discussed then the work of law enforcement and prosecutors, but 
it is critically important work and Senator Conrad and I and 
others in the Congress have felt that you have to also devote 
substantial attention to this issue of addiction.
    I think our prosecutors talked about that as well because 
for them it becomes a revolving door of people in and out. So I 
just want to thank you both for coming and thank you for 
waiting a long time to testify, but your testimony was well 
worth it. Thank you very much.
    Senator Conrad. Thank you, Senator Dorgan. You know, I 
think one of the most important messages that can come out of 
this panel is the notion that it is hopeless to treat people is 
not right. It is not hopeless. It is difficult and it is 
challenging to treat people effectively but the fact is there 
are treatment regimes that are proven to be successful. Am I 
right in that assertion?
    Ms. Larson. Senator Conrad, you're absolutely correct, and 
earlier on in the methamphetamine crisis as it was occurring, 
we've had a lot of talk and a lot of conventional wisdom, well 
intended as it was, is that there's no recovery, there's no 
hope, and there's no possibility, but thanks to the efforts of 
the National Institute on Drug Abuse, thanks to the efforts of 
treatment providers who were willing to really kind of back up 
and kind of rethink how--how they delivered treatment, we know 
that there are people who are in recovery.
    I think that one of the things that's so important for all 
of us to understand is that like all chronic relapsing 
progressive diseases is that people do relapse, whether it's 
alcoholism, whether it's other drugs of abuse, whether it's 
other chronic illnesses. That those illnesses have a life of 
their own characterized by remission and exacerbation, and what 
we need to do is to have a treatment system that is really, 
really able to move in as early as possible to understand the 
dynamics of relapse and impending relapse and to intervene 
early, rather than waiting until people are really at the 
bottom of----
    Senator Conrad. So even if somebody relapses, that isn't 
hopeless either.
    Ms. Larson. Absolutely not. Absolutely not.
    Senator Conrad. They may have several relapses. Doesn't 
mean that you can't recover.
    Ms. Larson. Right.
    Senator Conrad. A couple of things that you said, Karen 
Larson, that I wanted to followup on. One is you talked about a 
cognitive approach. That a cognitive approach might be more 
successful with some. What does that mean, a cognitive 
approach?
    Ms. Larson. Well, the cognitive approach to treatment is 
really based on the fact that as a part of the addictive 
process, and even indeed in some other behaviors that lead to 
criminality and lead to criminal behavior, really are the 
result of errors in thinking.
    And I remember hearing a particular presentation from a 
social scientist out of California, who talks about people with 
sociopathy and the inability to kind of--
    Senator Conrad. Think straight.
    Ms. Larson. Or think straight but also to discern right and 
wrong, and errors in thinking mean that you are not able to 
understand that if you take a particular action it is going to 
lead to particular consequences and so the cognitive approach 
to treatment, which is woven into the Matrix Model, for 
instance, really works very hard at helping clients to learn 
how to think differently, to apply different solution, problem-
solving approaches to their lives so that they in turn can 
learn how to make better choices when they are on the outside.
    Senator Conrad. The second thing that you said that really 
caught my attention was this notion of craving. You know, I 
have referenced conversations we had in Grand Forks last night 
about parents who really abandon their children. I mean they 
are not feeding them. They are not caring for them. They have 
just basically abandoned their kids. You know, that goes 
against such deep parental feelings. What is going on that 
could lead somebody to do that?
    You talked about this overwhelming craving. So how do you 
deal with that? Are there drugs that people take or what is 
done to offset that powerful craving that these people 
experience?
    Ms. Larson. Well, first of all, you have to get people into 
treatment and again understand the brain biology that you have 
lost the ability to produce dopamine and serotonin and other 
endorphins, and those are the things that make you and I feel 
well, be in balance, to be able to function normally.
    Senator Conrad. To have a sense of well-being?
    Ms. Larson. Absolutely.
    Senator Conrad. So what do you do about that here?
    Ms. Larson. As a result of that as you take that drug away, 
you have somebody who is in the acute phase going to go into 
real crash mode. The only effective medication approach that we 
have to date, as it pertains to methamphetamine, is to use some 
low-dose antidepressants in the early acute phase of withdrawal 
to try and balance out some of that.
    Senator Conrad. Offset that.
    Ms. Larson. Right.
    Senator Conrad. I see. Do you give them serotonin?
    Ms. Larson. Well, unfortunately, we don't have the ability 
to give them those chemicals to replace those chemicals. They 
are naturally occurring in the brain function and right now 
there's a tremendous amount of research underway for 
pharmaceutical kinds of supports to all kinds of addictions but 
for methamphetamine, unfortunately, there isn't anything in 
particular yet in replacement.
    Senator Conrad. So it is only antidepressants or something 
that can in some way tamp down that?
    Ms. Larson. Right.
    Senator Conrad. OK. I wanted to ask you both what is the 
single most important thing the Federal Government can or 
should do in terms of treatment, because that is basically what 
this hearing is about. My colleagues on the Budget Committee, 
their responsibility is to divvy up the pie. Where are the 
resources going to go? What is the message that we need to 
deliver to them about what the Federal Government could or 
should be doing on this front?
    Ms. Larson. Well, there is always the need for more funding 
for adequate treatment, and by that I mean that we have to get 
away from this--I like to say that what we've haveten into in 
terms of treatment for this disease is that we are treating a 
long-term chronic disease as though it's an episodic acute 
event.
    And so we need to actually do some work in understanding 
the number of people who need the longest length of treatment 
and then perhaps less treatment using the principles, using the 
understanding of symptomatology, using the findings of Project 
Match, which is the longitudinal study on outcome versus types 
of treatment, but then we also need to, I think, very, very 
seriously address in the Substance Abuse Prevention and 
Treatment Block Grant whether there is adequate funding for 
treatment and whether some of what is seen as not the 
demonstration project treatment does need to be diverted into 
the more long-term funding for States.
    Most people, especially with methamphetamine addition, lack 
any kind of resource to be able to pay for that treatment. Some 
people do have private insurance. Most of that is limited in 
the length of stay that is often needed.
    So we need to be sure that there are enough funds that 
allow the kinds of treatment that will ensure the best outcomes 
in the long run. We have to--I think that if we were able to 
provide long enough treatment and treatment involvement, even 
if it is almost a once-a-week drop-in after six, seven, 8 
months of treatment for the person who is making good progress, 
that in the long run we would see a reduction in overall costs 
to the system than it is costing us to provide that kind of 
treatment.
    Senator Conrad. So the notion is that you get somebody and 
you have an acute treatment and then they emerge and it is 
over, you are done with them, that is just the wrong model?
    Ms. Larson. It is.
    Senator Conrad. What you are saying is, yes, you have to 
treat them acutely, but then you have to followup and that may 
be a very long life enterprise.
    Ms. Larson. And, Senator Conrad, I think that one thing 
that I would very much like to see and it didn't happen while I 
was working in the division but was beginning to be talked 
about. I think we see some of it emerging in the--in the 
Robinson Recovery Center is the funding of something called 
therapeutic community.
    And therapeutic community is really a residential approach 
to treatment that does take the person to the point of self-
sufficiency where they are working as they are involved in 
treatment, and I know ShareHouse has done some of that approach 
for quite some time but it, really embraces the person to learn 
how to live normally without drugs or alcohol. I would like to 
see us be able to have funding for more of that.
    Senator Conrad. OK. Karin Walton, what would you say is the 
single most important thing the Federal Government can or 
should be doing with respect to treatment?
    Ms. Walton. Funding is always the key answer to that and, 
you know, in the area of prevention, which I'm testifying in 
support for today, it's usually the lowest funded area. At the 
same time, you cannot measure prevention alone. We can only 
measure how it impacts enforcement and treatment, and as those 
numbers go up and down, then we're looking at whatever 
prevention efforts have helped to impact that.
    You know, I believe a strong State infrastructure will 
equal Federal funding. North Dakota has not received Federal 
funding from several grants, Expansion Grants, Access to 
Treatment Grants, the Statewide Initiative Prevention Framework 
Grant, and we're talking millions of dollars. There is also one 
other one that I can't--I'm not recalling.
    Ms. Larson. Methamphetamine Grant.
    Ms. Walton. Methamphetamine Grant that we have not received 
funding, you know, despite some of the statistics that we have 
compared to--to national. And when we look at the funding that 
is cut for law enforcement and treatment, that's going to 
impact the entire realm of prevention as well, so I think it's 
very important.
    Senator Conrad. Let me just tell you that that map tells a 
big part of the story in terms of funding. I tell you, you 
know, we started this methamphetamine, antimethamphetamine, 
caucus and it was really striking. We have almost a totally 
different reality. I come home. The thing that people talk to 
me about, threat of methamphetamine.
    My colleagues from those States that are in gray and the 
light brown it is just almost not on their horizon. It is not 
on their experience. It is not what people are talking to them 
about, and we have these discussions and debates on a number of 
committees, both the Appropriations Committee and the Budget 
Committee, and our colleagues from the East almost thought it 
is a made-up deal, you know. That was kind of their reaction. 
That this is just a way of funnelling funding to more rural 
parts of the country. That's kind of the way they looked at it.
    You know, they do not hear anything about methamphetamine. 
What are you talking about? So that is why this hearing is 
important, and I think it also very important this message that 
treatment and prevention are a very important part of this 
overall effort. In fact, ultimately I have now concluded we are 
not going to be successful only focusing on law enforcement 
prosecution.
    If we do not treat these people over time and treat them 
successfully, this problem is not going away. It is not even 
going to be dramatically decreased because this is such a 
vicious, vicious drug. And prevention, if ever there was a case 
an ounce of prevention is worth a pound of cure, this is 
probably it.
    Somehow we have to get the message out to people do not 
even try this stuff for God's sake. It is so destructive. It is 
so damaging, and you may not only take yourself down, you may 
take your family down and you may take your children down.
    You know, I just had somebody a week ago come to my office 
in Washington, and he was involved in education in North 
Dakota, and he said I am seeing something that is so alarming 
because I am seeing women with children increasingly go to 
meth, and whether it is from boredom or what is causing people 
to try it I do not know, but he said it really is alarming and 
the people get on this stuff and they quit taking care of their 
kids.
    Now, that is serious, serious business, and, you know, in 
my experience there is almost nothing more powerful than a 
mother's attachment to her children. You know, that is deep in 
the genetic code, and it tells you something about the really 
horrible affect of this drug when a mother would abandon her 
children.
    So this is something we have to get across to people. For 
God's sake don't take this stuff, don't try it, and that's just 
something we have to as a society try to send a very clear 
signal on.
    Again I appreciate very much your taking the time to 
provide testimony to the committee. With that we'll adjourn the 
hearing of the Senate Budget Committee.
    [Whereupon, at 4:37 p.m. the committee was adjourned.]


SENATE BUDGET COMMITTEE PUBLIC HEARING REGARDING BUDGET IMPLICATIONS OF 
                  MEETING VETERANS' HEALTH CARE NEEDS

                         THURSDAY, JUNE 1, 2006

                                      U. S. Senate,
                                   Committee on the Budget,
                                                Fargo, North Dakota
    The public hearing was held at 2:30 p.m. at North Dakota 
State University in the Prairie Rose Room.
    Present: Senator Kent Conrad, Bob Hanson, Warren Tobin, 
Sebastian Roll, John Hanson, Wally Buckingham, Dan Stenvold, 
and James Mueller.
    Staff present: Jim Esquea.

             OPENING STATEMENT SENATOR KENT CONRAD

    Senator Conrad. Let me bring this hearing before the Senate 
Budget Committee to order. Let me thank all of you for being 
here. Let me thank the witnesses in advance for their testimony 
here today, and let me indicate that I believe this hearing is 
critically important to lay on the formal record once again the 
justification for the funding needs for our nation's veterans.
    All of us know there has been over the last 12 months some 
significant controversy with regard to especially veterans' 
health care and the proper and appropriate funding level. I 
deeply regret that within the other body what has always been 
the case was not permitted this year. And that is, the 
testimony of some of our most respected veterans' organizations 
on the question of what the needs were of their membership.
    I see that as a significant breach, and I hope in some 
small part that this meeting, this hearing, will once again 
indicate the profound respect we have for our nation's veterans 
in the Congress of the United States and that we are taking 
very seriously the recommendations of those groups who once 
again have provided an independent budget, one that is an 
objective assessment of the needs of our veterans. Not one 
driven by any political agenda but one that is based on need. 
That I think is critically important to remember.
    Last night I had the privilege, along with General Haugen, 
of presenting Woodrow Wilson Keeble's family with the medals 
that he earned in the Second World War and in Korea. He was in 
Guadalcanal. He was in some of the fiercest battles, including 
the last major offensive in the Korean War.
    He is the most heavily decorated North Dakota veteran. He 
is somebody that won the Silver Star, two Bronze Stars, four 
Purple Hearts, the Distinguished Service Cross. He is truly a 
remarkable man.
    In one confrontation, he personally took out four machine 
gun men and then proceeded to take out seven other enemy 
combatants all in one engagement. He is now under consideration 
for the Medal of Honor, and I was able to announce last night 
that the Secretary of the Army yesterday has recommended that 
he receive the Medal of Honor. That, of course, is this 
nation's highest military award.
    North Dakota has a very proud tradition of service. North 
Dakota has produced ten Medal of Honor award winners, more than 
any other State with the exception of New York, and in truth 
one of New York's should have been one of ours, Teddy 
Roosevelt, who if anybody was able to ask him he would tell you 
his life and experience in North Dakota is what contributed to 
his conduct on the battlefield.
    So we have a proud tradition and it goes beyond medal of 
award winners. Today, North Dakota ranks No. 1 in National 
Guard membership per capita and at various times has ranked No. 
1 in per capita National Guard mobilization during the wars in 
Iraq and Afghanistan. And with all of these men and women in 
harm's way, we have had many, too many, make the ultimate 
sacrifice.
    Tonight I will be at a memorial service for a young man who 
paid the ultimate sacrifice in Iraq. Tomorrow there will be a 
funeral here in Fargo. So we ask much of our men and women in 
uniform and it is our duty to provide them with the proper 
training, knowledge, equipment, and ultimately the health care 
that they have been promised.
    Let me join veterans in expressing deep concern over the 
news just this past week as we learned that personal data, 
names, dates of birth, Social Security numbers, of millions of 
veterans were comprised by our own Federal Government. USA 
Today headlines tells it all: Data on 26.5 million veterans 
stolen. Now veterans will be saddled with the extra burden of 
monitoring their bank accounts and credit cards to make certain 
someone hasn't stolen their identity.

[GRAPHIC] [TIFF OMITTED] 26823.167


    The Department of Veterans Affairs failed in assuring that 
this sensitive data was protected. I find this regrettable and 
those who are responsible should be held to account.
    We must also ensure proper funding for veterans health 
programs. Let's go to that second slide, Jim.
    Since 1999, enrollment in veterans' health care programs 
has increased 79 percent. Let me say that again because I think 
this is lost on some of my colleagues and they must understand. 
Enrollment in veterans' programs has increased by 79 percent. 
So one of my colleagues said, well, funding is up 
substantially. Yes, funding is up but funding is not up as 
rapidly as enrollment is up and not up as rapidly as demand for 
resources is up.
    This is the critically important point that needs to be 
explained and that is one reason we are holding this hearing 
today to make on the record, and let me once again indicate 
this is a formal hearing before the Senate Budget Committee and 
this becomes a part of the official record.
    In 1999, as this chart shows, 4.3 million veterans signed 
up for health benefits. That number jumped to 7.7 million last 
year. The veterans who seek care from the VA are aging, have 
lower incomes, and require more complex medical care. On 
average a veteran who receives health care from the VA will use 
the VA system ten times over the course of a year.

[GRAPHIC] [TIFF OMITTED] 26823.168


    Let's go to the third chart if we could, Jim.
    More veterans not only need medical care but they generally 
have a tough time making ends meet. I am strongly opposed to 
proposals in the administration's budget concerning veterans' 
health care.
    The budget proposed to cut veterans discretionary funding 
by 10 billion dollars over 5 years.
    Two, to impose a $250 enrollment fee on Priority 7 and 8 
veterans, resulting in VA treating 200,000 fewer veterans. Let 
me just say when veterans signed up, when they came into the 
service, nobody said to them there were going to be different 
categories. Nobody said to them some would get treated one way 
and some would get treated a different way. That was not the 
promise that was made, and we have an obligation to keep the 
promise and the promises that were made.
    No. 3, the administration to propose increasing the drug 
co-payments from $8 to $15 for Priority 7 and 8 veterans.
    And, fourth, to suspend enrollment of new Priority 8 
veterans into the VA health care system altogether.

[GRAPHIC] [TIFF OMITTED] 26823.169


    Those were the proposals we received from the 
administration. The administration has pursued spending and tax 
policies that have now put us at record levels of deficit and 
debt. Because of these deficits, the Congress is under 
tremendous pressure to make substantial cuts in spending, but 
funding cuts in veterans programs are a bad idea.
    Let's go to the fourth chart if we could.
    In North Dakota, there are special challenges to providing 
the best possible medical care to veterans. Some of these 
issues include limited availability of specialized care, long 
distances to reach care centers.
    Fifty percent of our State's vets live over 100 miles from 
the nearest city-based center. You know, this is different than 
in more urban parts of the country and those differences have 
to be recognized and respected.

[GRAPHIC] [TIFF OMITTED] 26823.170


    Let us go to the fifth chart if we could, Jim.

    [GRAPHIC] [TIFF OMITTED] 26823.172
    

    There is good news. Here is a list of just some of the 
accomplishments we have achieved in Washington for our veterans 
here in North Dakota.
    $12 million to improve the Fargo VA Medical Center. This 
has been a special passion of mine. Ever since my Uncle Curry 
was in the VA Medical Center here and I visited him on one very 
hot July day and it was over 100 degrees on his ward, and I 
thought to myself if I was ever in a position to somehow 
improve this condition I would do everything I could to change 
it.
    1.6 million dollars to fund transitional housing for 
homeless veterans and five new outpatient clinics for veterans 
that are completed or in development. And those five are in 
Williston, Dickinson, Jamestown, Devils Lake, and Grand Forks.
    The commitment that we have from the VA now is that three 
of these clinics will be open before the end of this year. I am 
delighted by that. This has also been a long-term project.

[GRAPHIC] [TIFF OMITTED] 26823.171


    I look forward to the testimony of the witnesses here 
today. Among the issues I hope you will address are what are 
the biggest challenges you see in providing North Dakota 
veterans access to timely and quality medical care and given 
our budget constraints what should the priorities be?
    Thank you all for being here. Again I want to emphasis this 
is a formal hearing under the rules of the U.S. Senate and so 
the rules that are applied in Washington will apply here. That 
is we request that nobody indicate either their agreement or 
disagreement with any statement of the witnesses. The witnesses 
should feel completely unencumbered and feel that they have the 
absolute right to express themselves fully and honestly without 
fear of retaliation.
    I thank again the witnesses for being here. I am going to 
turn to our first panel and, Bob Hanson, thank you so much for 
being here. I appreciate very much you have taken the time to 
participate. This is important to us that we have the very best 
record that we can construct here today because it will be 
based on this record that we are able to meet the complaints of 
some who have said we should reduce the funding that we have 
proposed.
    With that, Commissioner Bob Hanson, the Commissioner of 
Veterans Affairs for North Dakota. Welcome.
    Mr. Hanson. Thank you, Senator, and it's certainly an honor 
to be here and share ideas, concerns, and perhaps some of the 
solutions.
    I think your hearing here today is just another example of 
what we in North Dakota have come to expect from you because of 
your continued concern for the welfare of our veterans. And on 
behalf of the State's nearly 60,000 veterans and their 
families, we appreciate it.
    The VA's mission, as I've been told, is to care for the 
veteran and their family, and the proposed budget for veterans' 
health care and associated needs does not, as it appears to me, 
live up to the VA's mission. However, it is somewhat of an 
improvement over past budgets.
    First, let me make it clear on the record that the Fargo 
VA's Medical and Regional Centers, benefits centers, are two of 
the finest, most caring, concerned, and efficient VA entities 
in the entire United States.
    They truly care for the veterans and the veterans 
especially who utilize the Fargo system. I have the highest 
respect for the staffs here and the work they do.
    The concerns that I will express today are not associated 
in any manner with staff at the Fargo VA Regional facilities, 
but they are directed toward issues and policies, not 
individuals, and especially not the Fargo VA.
    My concerns basically are seven areas, mandatory funding, 
access for health care for veterans in rural States, 
cooperative agreements/veterans convenience, eligibility for 
care, and providing the necessary care with the best 
professionals in the field and comfortably reimbursing veterans 
for their travel costs.
    Now, I fully realize that many of the issues I'm bringing 
forward will not be funded at this go-around and but we hope 
something will happen in the future.
    First of all, mandatory funding. I don't think there's a 
veteran in this country who wouldn't agree that this is 
probably the top priority that needs to be addressed. Caring 
for the health care needs of our veterans is, in my mind, the 
cost of war. A cost of war which will continue until such time 
as there are no longer any more veterans. It's a price we as a 
nation pay for peace and it must be treated as such.
    Some of us are allowed through the door, while others are 
shut out. Mandatory funding of health care for all veterans, 
for all veterans, is necessary and I am hoping it will be a 
priority concern of Congress and the administration regarding 
Veterans. But, above all, the reason for it is because it is 
the right and proper thing to do.
    Access is my second concern. It's no secret that veterans 
in rural States do not have the access to VA health care as 
those in more populated States. The VA is addressing this issue 
through the use of community-based outreach clinics and 
outreach clinics, and thanks to you and the other members of 
our delegation North Dakota veterans will have access to three 
new outreach clinics opening in three different geographical 
areas in our State by the end of this fiscal year, two more, 
like you said, coming on board by the end of next fiscal year.
    And we appreciate the work that VISN 23 has done and the 
Fargo VA individuals have done for helping this come to 
fruition. However, it's still common for veterans to travel 300 
miles or more, one way, to receive care at the Fargo VA, which 
leads me to my next concern.
    That's cooperative agreements and veterans' convenience. As 
primary care is becoming more accessible in our State, we must 
seek the same for specialty care.
    I'm at a loss to understand why a North Dakota veteran must 
travel hundreds and even thousands of miles to receive VA care 
when the same care is available in their local community at a 
good facility, health care facility, there or at a nearby 
community.
    For example, I was told of a cardiac patient who went to 
the emergency room in a western North Dakota hospital, a well-
known hospital. He was admitted to the emergency room and was 
then required to be transferred to a VA hospital over 1,260 
miles away in St. Louis, which is because that was the closest 
VA bed available. That is not looking out and caring for the 
veteran or his family.
    Another example I was told about involved a veteran from 
central North Dakota who was sent to the Minneapolis VA to have 
one of his knees x-rayed. Now, why do we send someone to 
Minneapolis?
    Another example is a good friend of many of ours, an Agent 
Orange victim, had cancer in Minot, was required to come to 
Fargo for his treatment virtually every week while the same 
care could have been given in Minot. Life is precious and the 
time that one has left when you know that you don't have a lot 
of time shouldn't be spent having to mess with government 
bureaucracy and I think we can do better.
    I would encourage the establishment of more cooperative 
agreements with medical facilities throughout the State so a 
veteran would not have to travel great distances to receive the 
care to which they have earned and to which they are entitled.
    I would encourage a review of the current reimbursement 
rate of 11 cents per mile but, you know, that's not really true 
either because there's a $3 deduct for each way.
    My next issue that I have concerns about is eligibility for 
care. I don't believe access to VA health care benefits should 
be selectively applied to veterans. Veterans, for example, in 
our State veterans' home are denied access to any VA health 
care, primary VA health care, or prescriptions simply because 
they are a resident of a veterans' home.
    It's also my belief all Category 8 and all of the 
categories, all 8 categories of veterans, should not only be 
eligible for VA health care benefits but also should receive VA 
health care benefits if they so desire. The inclusion of these 
veterans for VA health care benefits is only fair.
    The next one is providing necessary care using the best in 
their selected field. Every war is different, including the 
current one. The traumas suffered by our current service 
members, both physical and mental, are going to have long-
lasting effects, which in some cases will never be cured. We 
must commit to providing these individuals with the best 
professional, most compassionate, and easily accessible care 
available. We need a strong commitment, funding commitment, for 
our Vet Centers program.
    Our North Dakota Vet Centers are doing an excellent job of 
helping our veterans in need with the resources they have. Our 
mental health units need to be adequately staffed to provide 
veterans with timely access and care.
    The VA should be funded at a level allowing the continual 
development of, and allowing for, the kind of adaptive 
equipment and vehicles which meets the needs and desires of our 
younger veterans. The prosthetics and sensory aids services and 
rehabilitation services at our Fargo VA are outstanding in 
assisting the veterans, but it is important we do all in our 
power to stop the growth of homeless veterans as well.
    One of our goals as a nation should be nothing less than to 
make sure no veteran shall ever go homeless. Our Fargo VA has 
an outstanding Homeless Veteran Program with a committed staff 
second to none.
    Believe it or not, I understand my proposals will cost some 
money, lots of money. However, the commitments that have been 
made by our nation's veterans deserve no less, and we all need 
to look to the future for the possibilities to meet their 
needs.
    The independent budget has been forthright and pretty much 
on target. The preparers of these budgets have worn, or are 
wearing, the uniform of our nation's armed forces, and I 
encourage you and your colleagues to listen closely to those 
who prepare this budget. These individuals know firsthand the 
needs of our nation's veterans.
    The last issue I feel must be addressed by Congress is the 
identity theft problem. News released today stated the stolen 
data also included, in many cases, phone numbers and addresses. 
This serious security breach needs to be handled in a swift, 
responsible manner in the best interests of the veteran. As of 
now supposedly, supposedly, no medical records were 
compromised. I'm hoping that this is true and that measures 
have been and are being taken, if not already in place, to keep 
the same type of theft from occurring.
    The veterans have fulfilled their commitment. It's now time 
for the United States of America to fulfill their own 
commitment. I would like to end my presentation with this 
veteran's quote that I came across recently. ``The military 
taught me how to kill. But not how to forget.'' We must not 
forget our veterans. Thank you.
    [The prepared statement of Mr. Bob Hanson follows:]

    [GRAPHIC] [TIFF OMITTED] 26823.174
    

    [GRAPHIC] [TIFF OMITTED] 26823.175
    

    Senator Conrad. Thank you, Commissioner Hanson, for that 
very compelling and important testimony, and I thank you for 
providing it to the Senate Budget Committee.
    Warren Tobin, the outgoing Department Commander of the 
Disabled American Veterans and the Stutsman County Veterans 
Service Officer is also here to testify.
    Warren, thank you so much for taking the time to come here.
    I want to again emphasis to people who are here that this 
becomes part of the formal record of the Senate Budget 
Committee and will be used in the discussions and the debate 
that will follow, both in the conference committees of the 
budget and in the floor debate on the question of the 
appropriate level of funding and the priorities for that 
funding, so this testimony here today has a critical 
importance.
    It assumes an even greater importance because of the 
unfortunate circumstances where very respected organizations, 
veterans' organizations, were prohibited and prevented from 
testifying in what I deeply regret occurred in the other body, 
but we're having a chance here for those veterans' 
organizations to be heard and to lay on the record the vital 
needs of our veterans.
    Warren, thank you for being here.
    Mr. Tobin. Thank you very much, Senator, Mr. Chairman, and 
Members of the Committee.
    On behalf of Disabled American Veterans, DAV, Department of 
North Dakota, I wish to express my deepest appreciation for the 
opportunity to present testimony for this committee's hearing 
on the budget implications of meeting veterans' health care 
needs.
    Mr. Chairman, I understand my written testimony is already 
available for record, and with your concurrence I would like to 
present oral testimony to amplify the written record.
    Senator Conrad. Without objection Mr. Tobin. As history has 
demonstrated, the discretionary funding of VA programs, 
primarily in the health care arena, has resulted in shortfalls. 
Over the years, policymakers have instituted ``temporary'' 
measures to help in reducing areas where the health care is 
underfunded.
    For example, a few years ago, temporary co-payments for 
medical appointments and prescriptions were instituted to help 
pay for the cost of VA medical care.
    These so-called temporary measures have obtained a 
permanent status and, approximately, 3 years ago these payments 
were increased due to the increasing costs of providing for 
health care.
    Even with increased payments from sick and disabled 
veterans, funding needed over the years has not kept pace with 
medical inflation, let alone the increased demand for services 
as your chart indicated.
    The enrollment for VA medical care increased 161 percent 
between fiscal years 1996 and 2005. Funding, however, only 
increased 34 percent during that same period when adjusted to 
1996 dollars.
    My home county in Stutsman County is no exception. In 2000, 
the VA spent approximately 1.6 million for medical care and in 
2004 expenditures were a little over 2.1 million dollars. This 
is an increase of 32 percent in the 4-year period for which the 
data is available and not enough to cover the increased demand 
for services and the medical inflation.
    Last year, the administration submitted an amendment to its 
fiscal year 2006 budget request to address an additional 1.9 
billion funding shortfall. As depicted by this funding 
amendment, the areas requiring additional funding reveal 
fundamental changes in both the practice of medicine and the 
age of the veteran population seeking health care from the VA.
    Such changes must be addressed by Congress and the VA to 
ensure, among other things, the best stewardship of our 
taxpayer dollars, the maintenance of the VA's high quality of 
medical care, the provision of that medical care be provided in 
a timely manner, and the accessibility to that care by sick and 
disabled veterans.
    Access to VA medical care is a primary concern to North 
Dakota veterans and many veterans across the country. As a 
County Veterans Service Officer, an important duty I have is to 
assist veterans in obtaining access to the VA medical and 
health care.
    I'm a coordinator for our Jamestown DAV van, which is a 
portion of the DAV Transportation Network, and I'm occasionally 
a volunteer van driver. I'm extremely--I'm extremely proud of 
North Dakota's DAV transportation program. Last year, our 
State's volunteers spent 10,238 hours driving 2,528 veterans 
across 255,608 miles. Our program ranked second only to New 
Mexico averaging 101 miles driven per veteran served.
    I would like to take this opportunity to share with you 
just a few examples of transportation and access, which will 
help you understand the importance of this issue. We are 
anticipating the opening of an outreach clinic in three 
communities this year. These clinics would provide primary and 
mental health care to our historically underserved veteran 
population in a more efficient and effective manner.
    The veterans in my area are eagerly anticipating the 
opening of a Jamestown outreach clinic. This clinic will help 
veterans in my local area with primary care needs.
    However, we are concerned that no decision has been made 
regarding inpatient services when VA is well aware that 63 
percent of the over 55,000 North Dakota veterans far exceed the 
60-mile driving distance to Fargo VA Medical Center. 
Furthermore, 68 percent must drive 120 miles or more to receive 
tertiary care.
    We still anticipate having many veterans traveling to 
specialty care clinics at the Fargo VA Medical Center and 
throughout the VA network. One of my colleagues in the 
northwestern portion of the State tells me that there is a 
veteran who must travel from his home to Iowa City, Iowa, for 
neurological treatment. That is a distance of approximately 
1,000 miles one way.
    I would add to that example the circumstances surrounding 
the travel of two of my county's veterans.
    Both of these veterans frequently need treatment at the St. 
Paul VA Medical Center for service-connected conditions, and I 
think Mr. Hanson mentioned my first one, and that individual, 
that veteran, is employed full time and for a 15-minute or 30-
minute appointment must take a day of sick leave from his job.
    On one occasion, he took a day of sick leave and drove 700 
miles round trip for an x-ray of his knee. No other activity 
that day was either needed or required or scheduled.
    In the second instance, the veteran has extreme difficulty 
walking and his vision is impaired. For him an appointment at 
the VA St. Paul Medical Center requires two bus tickets, one 
for himself and one for his seeing companion, a 10-hour bus 
ride each way and at least 2 days away from home. By the way, 
this gentleman is 82 years old and this is quite a hardship on 
him.
    Recognizing that VA medical facilities are unable to 
provide specific treatment and cannot provide treatment 
economically due to geographic inaccessibility, current law 
allows certain veteran patients to be authorized to receive 
treatment from non-VA health care providers at VA expense.
    Specifically, current law limits the VA in contracting for 
private health care services to instances where the VA 
facilities are incapable of providing necessary care for 
veterans, when VA facilities are geographically inaccessible to 
a veteran for necessary care, where medical emergency prevents 
a veteran from receiving care in a VA facility, to complete an 
episode of VA care, and for certain specialty examinations to 
assist the VA in adjudicating disability claims. The VA also 
has authority to contract for services in VA facilities for 
scarce medical specialists.
    Beyond these limits, there's no general authority in the 
law to support any broad contracting for populations of 
veterans. The judicious use of fee basis privileges is what I'm 
talking about is one method to improve access to specialty and 
tertiary care.
    In recent years, we have seen a trend to limit the issuance 
of fee basis cards, privilege cards, to recall cards from 
disabled veterans that have already been issued and to deny the 
bills for care for authorized users at the Fargo VA Medical 
Center.
    I was not given the specific figures on that, but I was 
told by my fellow Stutsman Service Officers and we know of 
several hundreds of cases of this happening in the last two or 
3 years.
    The DAV's position on contracted or fee-based careis well-
known. The DAV believes that the best course for most enrolled 
veterans in VA health care is through the continuity of care in 
facilities under the direct jurisdiction of the Secretary of 
Veterans Affairs.
    For the past 25 years or more, our organization has 
consistently opposed a series of proposals seeking to contract 
out or to privatize VA health care to non-VA providers on a 
broad basis. Ultimately, these ideas were rejected by Congress.
    We believe such proposals ostensibly seeking to expand VA 
health services into broader areas serving additional veteran 
populations at less cost, or providing health care vouchers 
enabling veterans to choose private providers in lieu of VA 
programs, in the end will only dilute the quality and quantity 
of VA services for all veteran patients.
    We believe the VA contract care for eligible veterans 
should be used judiciously and only in specific circumstances 
so as not to endanger VA facilities' ability to maintain a full 
range of specialized inpatient services for all enrolled 
veterans, particularly while the VA is operating in a resource 
constrained environment.
    We further believe that the VA must maintain a critical 
mass of capital, human, and technical resources to promote 
effective, high-quality care for veterans, especially those 
disabled in military service and those with highly 
sophisticated health problems, such as blindness, amputations, 
spinal cord injury, or chronic mental health problems.
    In closing, the members of the DAV of North Dakota 
sincerely appreciate the committee for holding this hearing and 
for its interest in improving benefits and services to our 
nation's veterans. We deeply value the advocacy this committee 
has demonstrated on behalf of America's service-connected 
disabled veterans and for their families.
    This concludes my testimony and I would be happy to answer 
any questions you may have.
    [The prepared statement of Warren Tobin follows:]

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    [GRAPHIC] [TIFF OMITTED] 26823.177
    

    [GRAPHIC] [TIFF OMITTED] 26823.178
    

    [GRAPHIC] [TIFF OMITTED] 26823.179
    

    Senator Conrad. Thank you very much, Warren. I think it is 
very important for this to be a part of the record and I very 
much appreciate your taking the time to be with us today.
    We are also joined on the first panel by Seb Roll, the 
National Vice Commander of The American Legion. Seb, I 
appreciate you, too, joining us and providing your testimony. 
Please proceed.
    Mr. Roll. Thank you. Senator Conrad, it's an honor for me 
to appear before you to present The American Legion's view of 
VA health care. The American Legion has a proud tradition of 
advocating on behalf of America's veterans. This testimony 
reflects our continued commitment to ensuring VA is capable of 
meeting its obligations to all of America's veterans and their 
families.
    Each generation of veterans has earned the right to timely 
access to quality health care and transitional programs 
available through the Department of Veterans Affairs. The 
American Legion will continue to work to ensure that VA is 
indeed capable of providing ``care for him who shall have borne 
the battle for his widow and his orphan.''
    With young service members continuing to answer the 
nation's call to arms in every corner of the globe, we must 
now, more than ever, work together to honor these sacrifices. 
As veterans of Operation Enduring Freedom and Operation Iraqi 
Freedom return home, they are turning to VA not only for health 
care but also for assistance in transitioning back to the 
civilian world.
    VA must be funded at levels that will ensure that all 
enrolled eligible veterans receive quality health care in a 
timely manner. As National Vice Commander of this great 
organization, I stand ready to work with you to accomplish this 
task.
    VA budget. Recent revelations that VHA's budget requests 
for fiscal years 2005 and 2006 contain shortfalls in funding 
came as no surprise to The American Legion. After visiting VA 
medical facilities across the nation, we knew that the funding 
recommendations we presented last year more accurately matched 
the actual budgetary needs of the VA than the President had 
recommended or Congress enacted.
    The American Legion thanks Congress for ensuring the 
emergency supplemental appropriations to cover these shortfalls 
so that the VHA is not forced to further ration care and delay 
much needed maintenance and acquisition. VA medical care must 
be adequately funded in order to ensure facilities are staffed, 
equipped, and maintained at a level that will allow all 
veterans to be treated in a timely manner.
    The VA is now in the process of establishing outreach 
clinics in Jamestown, Dickinson, and Williston. While we are 
certainly appreciative of the efforts you and the rest of the 
congressional delegation have made to bring these clinics to 
reality, we have concerns. First and foremost is the funding 
mechanism. We understand that the funds to open and operate 
these outreach clinics will come from existing funds within the 
VISN.
    At a time when the entire VA system is woefully 
underfunded, we find it disconcerting that this VISN will now 
have to redirect funds from its existing facilities in order to 
fund the outreach clinics. This is simply another example of 
why there needs to be mandatory funding of the VA health care 
system.
    Proposals to improve the VA budget by charging veterans an 
annual enrollment fee and increased co-payments for 
prescription drugs is not the solution to inadequate funding. 
Balancing the VA budget on the backs of veterans and their 
families is wrong. Neither is preventing previously eligible 
veterans from enrolling for the VA health care the solution.
    The American Legion adamantly believes that closing VA's 
doors to a select population of veterans is wrong. Ensuring VA 
is funded at levels that allow all eligible veterans to receive 
care is the solution. Assured funding. In an effort to provide 
a stable and adequate funding process, The American Legion 
fully supports assured funding for the veterans medical care.
    Under the current discretionary funding method, VA health 
care funding has failed to keep pace with medical inflation and 
the changing needs of the veteran population.
    VA has been forced to ration care by denying services to 
eligible veterans. VA had to forgo the modernization of many of 
its facilities and the purchase of necessary state-of-the art 
medical equipment.
    VA is subjected to the annual funding competition for 
limited discretionary resources.
    Additionally, the current discretionary funding process 
leaves VA facility administrators without a clear plan for the 
future.
    The American Legion strongly supports legislation that 
would establish a system of capitation-based funding for the 
VHA.
    Annual funding would be without fiscal year limitations, 
meaning that any savings VHA realized in the fiscal year would 
be retained rather than returned to the treasury, providing VHA 
with incentives to develop efficiencies and creating a pool of 
funds for enhanced services, needed capital improvements, 
expanded research and development and other purposes.
    The Veterans Health Care Administration is now struggling 
to remain its global preeminence in 21st century health care 
with funding methods that were developed in the 19th century. 
No other modern health care organization could be expected to 
survive under such a system. The American Legion believes that 
health care rationing for veterans must end. It is time to 
guarantee health care funding for all veterans.
    Medicare reimbursement. The American Legion believes that 
Congress should allow VA to bill, collect, and retain third-
party reimbursement from Medicare on behalf of Medicare-
eligible veterans treated for allowable nonservice-connected 
medical conditions.
    Nearly all veterans pay into Medicare for their entire 
working lives. However, when they are most likely to need 
medical services from the hospital system designed specifically 
for them, they must turn elsewhere because VA cannot bill 
Medicare. This is wrong, and it is something that Congress can 
and should correct.
    Additionally, all third-party reimbursements, co-payments, 
and deductibles should be added to the budget, not counted as 
an offset against it as they are received by treatment of 
nonservice-connected medical conditions.
    The American Legion firmly believes that making VA a 
Medicare provider and designating VA medical care as a 
mandatory funding item within the Federal budget would enable 
VA to fulfill its mission to care for those who have borne the 
battle.
    CARES. Over the past 4 years, The American Legion has 
carefully followed the progress of the Capital Assets 
Realignment for Enhanced Services process. We have participated 
at each stage of the process by gathering information on VA 
medical centers throughout the country to make certain medical 
services were not ignored in an attempt to downsize the VA 
health care system. We did this with the help of Legionnaires 
at both the department and post levels who care about the 
quality and timeliness of medical care for veterans.
    To successfully implement the CARES decision, VA has 
estimated that it will require an infusion of 1 billion per 
year for the next 6 years, with continuing substantial 
infrastructure investments well into the future. The CARES 
implementation must take into consideration the VA's role in 
emergency preparedness, organizational capacity for special 
emphasis programs like mental health, long-term care, and 
homeland security.
    Funding for CARES construction, estimated at approximately 
6 billion when plans were announced in May of 2004, has failed 
to be provided in the Federal budget.
    The American Legion has supported CARES on three 
conditions. One, that veterans are included in the 
decisionmaking. Two, that funding be provided and, three, that 
the end result is better health care for veterans. The American 
Legion asserts that now is certainly not the time to reduce VA 
facility capacity when there are more than 500,000 newly 
discharged veterans from active duty after service in Iraq and 
Afghanistan. Nearly 150,000 of these new veterans have poured 
into the VA health care system, which led to the 1.5 billion 
shortfall in VA funding last year.
    Increased need for PTSD services. Senator Conrad, another 
key issue of concern is The American Legion's dedication to 
ensuring that VA is capable of meeting the mental health care 
needs of both the current population of veterans seeking care 
and the new generation of veterans returning from Iraq and 
Afghanistan.
    As the Global War on Terror continues, casualties are 
mounting and the ability of the Nation to take care of those 
who have fought bravely continues to be tested.
    We must not fail. History has shown that the cost of war 
does not end on the battlefield. Service members do not all 
suffer from obvious injuries such as amputations, gunshot 
wounds, and other severely disabling conditions. The estimation 
has been as high as 30 percent of those serving in Operations 
Enduring Freedom and Iraqi Freedom will suffer the hidden 
wounds of traumatic stress and other psychiatric conditions due 
to combat exposure and the rigors of the battlefield.
    VA's special committee on PTSD was established 20 years ago 
to aid Vietnam veterans diagnosed with PTSD. Since its 
establishment, the committee has made many recommendations to 
the VA on ways to improve PTSD services.
    A February 2005 GAO report pointed out that the VA delayed 
fully implementing the recommendations of the special 
committee, giving rise to questions regarding the VA's capacity 
to treat veterans returning from military combat who may be at 
risk for developing PTSD while maintaining PTSD services for 
veterans currently receiving them.
    In September 1904, GAO also reported that officials at six 
of seven VA medical facilities stated that they might not be 
able to meet an increased demand for PTSD services. 
Additionally, the special committee reported in its 2004 report 
that sufficient capacity is not available within the VA system 
to meet the demand of new combat veterans and still provide 
services to other veterans.
    The additional support being provided nationwide by the Vet 
Centers is proving invaluable in assisting veterans. The 
mission of the Vet Centers is to seek out veterans suffering 
life readjustment problems related to their combat experience 
or as a result of sexual assault or harassment while on actual 
duty--active duty.
    Vet centers serve veterans and their families with 
professional readjustment counseling, community education, 
outreach to special populations, and work with community 
organizations. Today, 206 Vet Centers are located in 
communities throughout the United States, District of Columbia, 
Puerto Rico, Guam, and the United States Virgin Islands. 65 
percent of the 737-member clinical staff are veterans and of 
those over 40 percent are combat veterans.
    Vet Centers are an invaluable resource to veterans and the 
VA. Given the protracted nature of current combat operations, 
repeated deployments, and the importance of retaining 
experienced combat servicemen and women in an all volunteer 
military, it is essential to promote the readjustment of 
servicemen and women and their families. The American Legion 
continues to be an unwavering advocate for Vet Centers and 
their most important mission.
    Over the past 3 years, the Legion's System Worth Saving 
Task Force has completed site visits at every VAMC. During 
these visits, we took special notice of mental health services 
provided and the ability of the facilities to balance the 
current demand for care along with the recently returning 
veterans who are now turning to VA for mental health treatment.
    Like the GAO report, we found that many facilities were 
increasingly concerned with their ability to handle an 
increasing mental health workload.
    Our site visits revealed a critical shortage in the funding 
of VA health care. A number of facilities reported having to 
convert capital improvement dollars to health care dollars in 
order to meet the service demands of the current veteran 
patient population. The shifting of these funds has resulted in 
the delay of needed infrastructure repairs resulting in huge 
maintenance backlogs at facilities.
    Theft of veteran data. Frankly, Senator Conrad, it is 
incomprehensible that millions of veterans and their family 
members are now at great risk of identity theft due to the 
actions of the VA's employee. While this may not appear on the 
surface to be directly related to health care, it is.
    First and foremost, we have to ask how the VA will maintain 
the integrity of a veteran's health care record. With the 
information that was stolen, a person could assume the identity 
of a veteran and simply secure VA health care services or, 
worse yet, gain access to veterans' medical treatment records.
    Someone with the right information could request a copy of 
a veteran's VA health care record. How in the world is the VA 
going to know that they aren't releasing those records to 
someone who has stolen the veterans identity? I doubt they can 
and that is very disturbing.
    As you know, Senator, many of our veterans suffer from some 
type of mental disorder, such as PTSD, STD, depression, and so 
forth. The theft of these records has caused them immeasurable 
anxiety and may never be able to be taken care of. Why in the 
world has nobody been fired at the VA over this? Our veterans 
have suffered enough already and now, because of some VA 
employee's negligence, they are suffering again.
    Senator Conrad, this nation crossed a new threshold on 
September 11, 2001. American's sense of invulnerability was 
forever changed by a newly emerging global threat. The need for 
a strong, forward thinking national defense has become 
paramount. In the face of this new threat, the Nation once 
again turned to a generation of young men and women dedicated 
to the defense of our freedoms and liberties. With that 
dedication comes a national obligation to ``care for him who 
shall have borne the battle and for his widow and his orphan.''
    Together we can work to ensure that a strong, forward 
thinking Department of Veterans Affairs will be available to 
provide for this new generation of veterans.
    The brave men and women who are serving in our armed forces 
in Iraq and Afghanistan and throughout the world deserve no 
less. Thank you.
    [The prepared statement of Sebastian Roll follows:]

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    Senator Conrad. Thank you. That is very important 
testimony. We appreciate it very much. I just wanted to say on 
the last point that Mr. Roll made, we do have now the 
resignation of Michael McLendon, the deputy assistant 
secretary, who learned of the burglary within hours of the 
crime but did not immediately tell top-ranked officials. I have 
been told the deputy assistant secretary for policy, this 
gentleman has resigned.
    The assistant secretary for policy and planning has been 
placed on administrative leave, so finally there are some 
actions to hold accountable to those. It was totally 
inexplicable as to why this man took these files to his home.
    You know, what kind of security policy is in place that 
would allow millions of files to be taken out of secure VA 
headquarters, taken to the personal home of someone? For what 
purpose was that done and what security procedure is in place 
that would ever allow such a thing? And now we learn the 
information today that not only in many cases not only names 
and social security numbers but also now we find out that the 
phone numbers and addresses.
    It is unbelievable and everyone who is responsible for this 
has to be held to account and that should be the standard that 
we apply. Those who are responsible, not only the person who 
took those home he has to go and he is going. He is being 
removed, but in addition to that anybody who allowed a policy 
to be in place in which records could be taken from the 
headquarters, that is just unacceptable. That is irresponsible 
and those are people who ought to all be removed.
    Let me ask you a set of questions that I would like each of 
you to answer because they are important for the record of the 
Senate Budget Committee. No. 1, I would ask each one of you do 
you support the independent budget levels called for by the 
joint work of veterans organizations?
    Commissioner Hanson, would you support the independent 
budget levels?
    Mr. Hanson. Senator, yes, I would. I think it's a good 
start. It's better than what the administration has proposed; 
although, I think it should be a building block because we have 
so much more to do.
    Senator Conrad. Well, that is a very good point. I want to 
say I want to commend the organizations that have come up with 
the independent budget. I mean I have special responsibility 
for budgeting to my colleagues. I know how much work, 
extraordinary amounts of work, go into preparing these budgets, 
and for these veterans organizations to take on the task 
themselves to produce an independent budget I think deserves 
special consideration, and I just want to thank them publicly 
for what they have done.
    Warren, would you support the budget levels called for in 
the independent budget?
    Mr. Tobin. Senator, on behalf of Disabled American Veterans 
nationally, that we--we are--our organization is part of 
crafting that document and has signed on and certainly we fully 
support the independent budget.
    Senator Conrad. I appreciate that.
    Seb, would you speaking on behalf of The American Legion 
support the budget levels called for in the independent budget?
    Mr. Roll. I'm sure we do. I don't know how many hours and 
days that The American Legion, Department of American 
headquarters, spends on this budget, but through the years I've 
always felt that we were more accurate than anybody else on the 
budget process about what the American Legion has set up for a 
budget, what is needed in years to come. Absolutely.
    Senator Conrad. I want to just say that I believe that is 
the case. You know, some have said, well, that is gold plated. 
No, it's not gold plated. I mean I think honestly you could 
justify several billion dollars more given the extraordinary 
demands on the system.
    Let me just say I have been doing some research on what we 
are finding from Afghanistan and Iraq. For those who have 
sought care from the VA, 37,618 have been diagnosed with a 
psychiatric disorder. 37,618.
    Close to 1,300 have been diagnosed with psychiatric 
disorders, classified as having symptoms of posttraumatic 
stress disorder, PTSD, which many of you referred to in your 
testimony.
    I have heard repeatedly from officials in the veterans 
organizations and Veterans Administration Hospitals that they 
do not have sufficient resources to deal with these very large 
numbers of people who come back deeply troubled so that has to 
be addressed, and I am glad that each of you talked in your 
testimony about that issue.
    The second question I want to ask each of you because again 
this is critically important for the record. As you know in the 
Federal budget, there are two types of funding, there is 
discretionary funding and there is mandatory funding. 
Discretionary funding is precisely that. It is discretionary. 
Congress appropriates those funds every year and the results 
are dependent on the appropriations process.
    Mandatory funding is precisely that. It is mandatory. It is 
based on the need and the funds are provided to meet the needs. 
So, for example, social security is a mandatory program. All of 
those who qualify for social security get the compensation that 
is provided for under law.
    Medicare is a mandatory program. All those who are eligible 
get the service levels and the benefits that are outlined in 
the law. It is not dependent on the amount of appropriations 
provided for by the Congress every year.
    As all of you know, veterans medical care is under 
discretionary funding. My argument with my colleagues is that 
while it is classified as discretionary, it is not 
discretionary. It ought to be mandatory. It ought to be 
required because the promise has been made.
    The question is are we going to keep the promise or not? If 
our intention is to keep the promise, then the funding ought to 
be described as mandatory. It is not a discretionary matter on 
whether we are going to keep this promise or not. It is not 
discretionary.
    I would just ask each of the witnesses in turn do you 
support a mandatory funding criteria for veterans funding?
    Commissioner Hanson.
    Mr. Hanson. Senator, absolutely! I think if one sort of 
compares it to at least the veterans of my era there was 
nothing discretionary about whether we were going to go to war 
or not. We were drafted and it was mandatory, and it's like our 
servicemen now who are serving in the guard. If their unit is 
called, it's mandatory. They don't have the discretion to say I 
don't want to go.
    I think that it is just absolutely necessary to be 
mandatory. There is nothing discretionary in my mind about 
providing health care to our veterans.
    Senator Conrad. Warren?
    Mr. Tobin. Thank you, Senator. I would like to confirm what 
was in my written and oral testimony that definitely the DAV is 
highly supportive of mandatory funding under various criteria 
for our VA health care and for other VA programs and certainly 
with emphasis on the disabled veterans.
    Senator Conrad. And, Seb?
    Mr. Roll. Well, Senator, I feel the VA has been short on 
budget since the existence of the VA. I have never known where 
they had an excess dollar and I think we are going to stay that 
way until we have mandatory funding.
    Senator Conrad. Well, I thank you for that. It is very 
important that this be on the record because, as you know, this 
is a continuing controversy.
    The third question I would like to put to each of you and 
that is the question of Medicare reimbursement. It seems fairly 
straightforward to me. The question is should veterans who are 
Medicare eligible, who are in the VA system, should the VA 
system be able to get Medicare reimbursement just as any other 
health care provider would be able to do?
    Commissioner Hanson, what would your answer be?
    Mr. Hanson. Absolutely!
    Senator Conrad. Warren?
    Mr. Tobin. Yes. Our organization is in support of VA being 
able to get reimbursement through the subvention program for 
Medicare.
    Senator Conrad. And, Seb?
    Mr. Roll. Senator, I fully support it. I just want to 
mention that I live 110 miles from Bismarck and I'm on 
Medicare, but I like the VA doctors. I like the VA system, so I 
feel as long as I'm willing to drive 110 miles to come and see 
the doctor of my choice my Medicare should go to that doctor.
    Senator Conrad. All right. I thank you all for those 
answers.
    Before I call the second panel, I would ask each of the 
witnesses if there is anything that they would like to add for 
the purposes of the record, and before I ask you to respond, I 
would just say to each one of you I think you have provided 
very important testimony to this committee. I personally 
appreciate your taking the time to come and provide these views 
to the committee. That is very helpful to the Budget Committee 
to have this information and I hope will be used in an 
effective way in the debate to come.
    Commissioner Hanson, anything that you would want to add?
    Mr. Hanson. No, Senator. I think either you or the others 
here explained everything to my satisfaction and I agree with 
everything that has been said.
    Senator Conrad. Warren, anything you would want to add?
    Mr. Tobin. I believe that the record has already covered 
everything that I would want to say today.
    Senator Conrad. All right. Thank you very much.
    And, Seb?
    Mr. Roll. Yeah, I think I want to cover a little bit that 
wasn't quite covered in here. You know, it makes a person feel 
bad. I had a young Iraqi soldier come up to me the other day on 
Memorial Day and he said, Seb, you know, I feel really bad 
because I got wounded over in Iraq and I got a 30 percent 
disability he says and I still serve in the National Guard and 
he says now they want to take that 30 percent away from my 
guard pay.
    It was sad. It's sad when you hear this from a young 
soldier. It's--it's--how do you answer a young soldier that 
way? It's--you just thank him for his service and let's hope 
some of this gets better and I just said, well, we're trying to 
change that and I said let's hope our government sees and does 
better for you on that.
    Senator Conrad. Very good. Thank you. I thank this entire 
panel. I appreciate very much the contributions each of you 
have made here today.
    Let me now call the second panel, John Hanson representing 
the North Dakota Veterans of Foreign Wars. He's the Legislative 
Commander for the Veterans of Foreign Wars. Wally Buckingham 
from AMVETS and the North Dakota Administrative Committee on 
Veterans Affairs and Dan Stenvold, the State President of 
Vietnam Veterans of American. Again welcome to the three of 
you. I very much appreciate your attendance. I also want to 
recognize that the National VFW Commander is here, James 
Mueller, from O'Fallon, Missouri.
    Mr. Mueller. Yes, sir.
    Senator Conrad. Thank you very much for being here, and at 
the end of this panel if you would like to say anything for the 
record, we would certainly welcome that.
    Mr. Mueller. I thank you for that opportunity. I appreciate 
that.
    Senator Conrad. You bet.
    With that, then we will turn to the second panel and we 
will begin with John Hanson, North Dakota Legislative Commander 
for the Veterans of Foreign Wars. Welcome, John. It is nice to 
have you here.
    Mr. Hanson. Thank you, Senator Conrad. I would like to 
thank you for the invitation to submit testimony for this 
important hearing on veterans' health care legislation. The VFW 
is this nation's largest organization of combat veterans, with 
over 2.3 million men and women across the country and in our 
auxiliaries.
    We are happy to support Senate Bill 1537 that would 
establish six centers for Parkinson's disease research and two 
Centers of Excellence for Multiple Sclerosis.
    VA research has been at the forefront of many medical 
breakthroughs and increased emphasis on preventing, treating, 
and curing these two diseases is extremely important. This 
legislation would consolidate system-wide research done on 
those conditions and would help streamline research and, 
perhaps, improve effectiveness. Since a large number of highly 
qualified doctors are drawn to the VA, in part, for the ability 
to conduct world-class research, these centers could help 
recruitment.
    We should also keep in mind that any benefits and 
breakthroughs these centers would generate would not just 
affect this nation's veterans, but all of American. It's a win-
win for everyone.
    Senator Conrad, I would like to thank you for being a 
cosigning for Senate Bill 2433, which recognizes the growing 
problems that many rural veterans face and offers an ambitious 
solution. Section 2 could create an Assistant Secretary for 
Rural Veterans within the VA.
    Section 3 would mandate demonstration projects for 
improving access to care in rural areas by creating 
partnerships with other government agencies and private health 
care providers.
    And Section 4 would create a specific pilot program to 
improve care for veterans in highly rural or geographically 
remote areas.
    Section 5 would improve the travel reimbursement for 
veterans to VA facilities.
    And Section 6 would create from one to five Centers of 
Excellence for rural health research, education, and clinical 
activities.
    We appreciate the intent of this comprehensive legislation. 
As a nation-wide organization, many of our members face the 
problems that this legislation aims to solve.
    We strongly support Section 5, which would increase the 
travel reimbursement for veterans seeking care at VA 
facilities. This is badly needed as the mileage rate has not 
been increased in many years, and the deductible means that 
most veterans receive no travel assistance at all. This section 
would increase the rate to the fair rate provided to Federal 
employees. It is the proper thing to do.
    We have several concerns, however, with sections 3 and 4. 
While we understand that in some areas it is the only 
alternative, we are concerned that this bill's reliance on fee-
based care is overly broad and that it would adversely impact 
the VA's budget and its ability to provide care to all 
veterans. Although we completely agree that more must be done 
to help these underserved veterans, relying primarily on fee-
basis could be a dangerous precedent and shirks the VA of its 
responsibility to care equally for all veterans.
    We feel that many of the problems faced by rural veterans 
are wrapped up in larger funding problems that the VA has 
encountered in the last few years. Although we appreciate--
appreciative of the budget increases, sufficient funding has 
not been provided for all veterans seeking care. Proper 
funding, we believe, would fix some of these problems.
    We happily support Senate Bill 2005, Healing the Invisible 
Wounds Act. This legislation, which aims to improve mental 
health services for veterans, especially those in the National 
Guard.
    Section 2 mandates that any decision the VA makes to change 
regulations for posttraumatic stress disorder would require the 
notification of Congress and a 6-month wait before 
implementation.
    Section 3 mandates counseling and readjustment services for 
National Guard members returning from a combat theater.
    Section 4 increases the funding for Vet Centers to be used 
on counseling and readjustment services.
    We strongly support Section 2. With the VA's ill-fated PTSD 
review fresh in our memory, as well as the investigation about 
the Institute of Medicine lingering, it seems the VA is 
predisposed to weakening veterans' benefits with respect to 
PTSD. This is an intolerable situation that does more to harm 
veterans by attaching a stigma and discouraging those who truly 
need help from receiving the care and benefits they need to 
lead productive lives.
    Sections 3 and 4 are some important parts of meeting the 
needs of veterans. Despite VA's recent actions, we must 
encourage more veterans to avail themselves of VA services. 
VA's mission is to make veterans whole, and effective mental 
health treatment is an important part of that.
    By actively screening returning National Guard members, we 
can efficiently help those who need treatment and assist them 
as they transition back into daily life.
    War certainly is difficult, and the types of conflict our 
men and women are facing are unique. We need to ensure policies 
are in place that are adaptable to the current needs of 
veterans, and this legislation is a step in that direction.
    VFW is glad to support Senate Bill 2736. This legislation 
would create at least five VA centers for rehabilitation for 
veterans with amputations or prosthetic devices. At a time when 
war dominates the headlines, it is clear that it is necessary.
    Thanks to improvements in technology, many servicemen and 
women are surviving blasts and injuries that would have killed 
them many years ago, but their survival is coming at a heavy 
physical price. The VA has been long on the forefront of 
prosthetics and amputation research, but the current conflicts 
are greatly increasing demand for these types of services, 
which allow these service members to easily transition back 
into productive society. Losing a limb is not a death sentence, 
and the uplifting examples that so many men and women provide 
is powerful evidence of that.
    The VFW we also support Senate Bill 2753, which would 
authorize a $10 million grant program for caregiver assistance 
to expand services available to veterans for noninstitutional 
care services.
    As the veterans' population ages and as there continues to 
be reticence to fully fund long-term, institutional care, these 
types of assisted services, such as adult day health care and 
hospice care, will prove to be invaluable.
    We are pleased to support Senate Bill 2762 where this 
legislation makes some needed changes in how the VA provides 
long-term care.
    Section 2 of the legislation would require the VA to report 
to Congress prior to making changes to the per diem program 
used to help fund State homes and the long-term care they 
provide. State homes are an integral part of VA's total long-
term care process, and requiring this report will hopefully 
prevent the elimination or reduction of these critical payments 
for budget-based reasons. We cannot pinch pennies while the 
number of veterans needing services of these kinds of essential 
services climbs.
    Section 3 would require VA to provide medications for 
veterans with service-connected disabilities regardless of 
whether they reside in a VA facility or a State home. While we 
continue to oppose VA using State home beds to supplant its 
statutory obligation to provide long-term care, it only makes 
sense that, if the VA is going to use State home beds in this 
way, it affords them the same benefits. It is, in short, part 
of the full costs of care.
    And Section 4 would still allow VA to treat certain health 
care facilities as State homes for purposes of providing long-
term care to veterans. In rural or remote areas, especially, 
this could be helpful to VA. We support the concept, but we 
must watch to ensure the same levels of care are being provided 
and that vigorous oversight is maintained to ensure that the 
facilities are up to VA's high standards.
    Mr. Chairman, I think you for the opportunity to provide 
testimony.
    [The prepared statement of Mr. John D. Hanson follows:]

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    Senator Conrad. Thank you, John, for that very excellent 
testimony.
    Next we'll hear from Wally Buckingham, who represents 
AMVETS and North Dakota Administrative Committee on Veterans 
Affairs. Welcome, Wally. Thank you for being here.
    Mr. Buckingham. Thank you, Senator Conrad, for asking me to 
attend this meeting today.
    I appreciate your holding this hearing in North Dakota.
    The budget for veterans' health care and associated needs 
appears to me to be inadequate. I will share some of my 
concerns. Without a doubt the major concern facing VA health 
care is the absolute need for mandatory funding. It is my 
belief that the mandatory funding could result in less dollars 
being spent over a long period of time. Veterans deserve to 
know that health care will be available now and in the future.
    I have a lot of concern about veterans in western North 
Dakota who travel long distances to receive health care. Can 
you imagine getting up in the morning and getting in a van and 
they say, ``Settle down now and relax. In 6 hours we'll have 
you to your doctor.'' That has to be unbelievable! These 
clinics are a step in the right direction but I think got a 
long ways to go.
    I'm a veteran of World War II and I have lived through five 
wars, and there's no doubt that we are going to continue to 
have wars and we're going to continue to have a larger increase 
of veterans, and mandatory funding is the only way we're going 
to take care of those veterans.
    PTSD, among other things, the new veterans of today are 
much more disabled than they ever were in any other war and 
they are going to take a lot of care for many years. PTSD is 
nothing new. In World War II they had it but they called it 
different things, like shell shock and battle fatigue and 
everything else, and it takes a lot of care.
    I volunteer at the VA hospital and I see those veterans 
every day up there and I have for like 10 years. The care is 
much better than it was 5 years ago, a lot better, but they got 
a lot further to go.
    Those--the staff at the VA hospital give better care than 
any hospital I have ever been in. They are outstanding, but 
they have to have funds if they are going to keep to operate.
    I think that I'm probably more proud of that VA hospital 
than any other place I've ever been. If you go up there and 
look, the rooms are beautiful. It's a beautiful building and it 
has really made a difference, but we have to have more 
mandatory funding, and that's about all I have to say.
    I would just like to see mandatory funding and no more 
categories. We don't need categories. When I went into the 
service in World War II, they didn't ask you what category you 
were.
    Senator Conrad. There is almost something un-American about 
it. I agree with that.
    Mr. Buckingham. Thank you.
    Senator Conrad. Thank you very much, Wally. Dan, welcome. 
Good to have you here.
    Mr. Stenvold. Thank you, Senator. It's good to be here.
    I would like to thank you for the opportunity to be here 
and I would also like to extend greetings from my national 
president, John Rowan, to you and your wife. He knows you both 
well he says.
    Senator Conrad. He does indeed.
    Mr. Stenvold. I asked our president what I should talk 
about today and he told me to represent VVA the way I always 
have and to have fun with it.
    I can't talk about the billions in dollars that are needed 
for VA funding because they are just too many zeros in a 
billion for me to comprehend, but what I can talk about is the 
personal problems that veterans are having in this State 
because of the lack of funding. I also want to talk about the 
problems that I personally had.
    I left Vietnam in 1971 after serving three tours with the 
Army artillery. At that time, I thought my fighting days were 
over. Then about 3 years ago, Agent Orange started to take over 
my body and the battles began. It was a 3-year process for me 
to get the health care I needed, but I'm one of the lucky ones. 
I got it.
    I have several friends whose names are on the wall in DC, 
but I have lost more friends to Agent Orange and PTSD. Friends 
like Tom Laferty from here in Fargo, John Coyne from Minot, 
both highly decorated Marines from the Vietnam war. Both lost 
their fight with Agent Orange and both had to fight the VA for 
everything they got, which was too little too late.
    Bob was talking about John, because I talked to his wife 
and she said I could use his name, but John is the veteran that 
had to drive from Minot to Fargo for his chemo and his 
radiation treatments. He always said the biggest slap in the 
face from the VA was the 11 cents paid for his mileage. He 
called it a joke.
    There's a veteran--I'm from Park River. There's a veteran 
in Park River by the name of Dave Daley. He's a Gulf War 
veteran. On the good days, he can walk with one cane, on a bad 
day it's either two canes or he stays in bed. He has Gulf War 
Syndrome. He shakes so bad that he has a hard time feeding 
himself or drinking water from a glass.
    He fought the VA to get help. At first the VA said it was 
other medical problems not related to his military service. 
Then there was no funding for Gulf War Syndrome. After 3 years 
of fighting, he's now getting the help that he needs.
    I have a letter in my possession from the family of Dennis 
Borgen from Lakota, North Dakota. He retired from the Navy 
after 28 years of military service. He had a massive stroke in 
March of 2001 while in Reno, Nevada.
    His family wanted him moved back to Lakota where he is a 
patient at the Good Samaritan Center right now. He just found 
out that because he didn't spend 3 days in the hospital in 
North Dakota before being admitted to the Good Samaritan Home 
in Lakota he now owes CHAMPUS/TRICARE something like $87,000 
that he doesn't have. He needs our help and I hope something 
can be done for him and his family.
    Senator, I could go on and on with stories like this, but I 
think you get the picture. The VA system is broke in more ways 
than one. It's not getting the funds it needs to take care of 
the veterans and the whole system, according to a lot of 
veterans, is not veteran friendly. There's no excuse for a two, 
three, or 4-year wait for some veterans to get the health care 
or help that they need.
    Why can't our government just live up to its promises it 
made to us before we put on the uniform of this great nation? 
We have homeless veterans in the streets. We have children that 
go to bed hungry every night. There are thousands of veterans 
that need health care and they are not getting it because there 
are no funds available. Yet we send billions of dollars out of 
this country to countries all over the world very day.
    We send it to countries that hate us with a passion. I 
don't get it. Let's start taking care of our own, forget about 
always be politically correct and do what's right for a change.
    [The prepared statement of Dan Stenvold follows:]

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    Thank you, Senator.
    Senator Conrad. Thank you. That was just excellent. Just 
excellent. I appreciate so much the testimony of this panel.
    I would like to ask you the three questions I had asked the 
previous panel, and I do this and I know some of you already 
have said very clearly in your testimony your answers to these 
questions, but I hope you will understand I am trying to create 
a record here that we can refer to very simply in debate and 
discussion and that is why I ask these questions once again.
    First of all with respect to the independent budget, John, 
would you support the levels of funding called for in the 
independent budget?
    Mr. Hanson. Yes, I would.
    Senator Conrad. And, Wally?
    Mr. Buckingham. Yes, I would. Definitely!
    Senator Conrad. Dan?
    Mr. Stenvold. VVA nationally does.
    Senator Conrad. So it is very clear all three witnesses on 
this panel have said unequivocally and clearly that they 
support the levels of funding provided for in the independent 
budget.
    On the second question, would you support making VA funding 
mandatory rather than discretionary? John?
    Mr. Hanson. Senator Conrad, mandatory funding is the only 
way to go. Discretionary you never get there, and when you set 
it right where you need it, then you know you're going to have 
it.
    Senator Conrad. Very well. Wally?
    Mr. Buckingham. Yes, unless the veterans are not a part of 
the other citizens. If mandatory funding is needed for 
Medicare, why isn't it needed for the veterans care? It seems 
to me like it should be the same Senator Conrad. You know, I 
think I will use that quote or that question that you have just 
asked in the debate. I think that sums it up as well as anybody 
could.
    Dan?
    Mr. Stenvold. And VVA nationally supports mandatory health 
care for veterans.
    Senator Conrad. Well, I think you for that.
    The third question is the question of Medicare 
reimbursement. Should VA be able to get compensation from 
Medicare for providing health care coverage to those who are 
both Medicare eligible and eligible for VA benefits?
    John?
    Mr. Hanson. Senator Conrad, I agree they should support the 
Medicare reimbursement. I'm not quite ready to go that far yet, 
but I do hope they support that Senator Conrad. All right. 
Wally?
    Mr. Buckingham. Yes, I very much support it.
    Senator Conrad. Thank you very much.
    And, Dan?
    Mr. Stenvold. Yes. So does VVA.
    Senator Conrad. Well, I appreciate that from the three of 
you. Let me just say that I have not asked questions that are 
non-budget related questions. I have made a statement here with 
respect to what happened in the Veterans Administration with 
the theft of these records. I have not asked questions about 
that because that is not in the jurisdiction of this committee, 
but I want you all to know the reason that I have not asked 
questions is because that is not strictly in the jurisdiction 
of the Budget Committee, but I think that all of us have 
indicated in one way or another how concerned we are about this 
theft.
    I must say when I heard it I could not believe it. 
Honestly, I thought it had to be some kind of a mistake. How 
could it be possible that an employee at whatever level would 
have the authority to take to his personal residence over 25 
million records? How could that conceivably be possible? And if 
any of you want to comment on that separately, you are welcome 
to do that Mr. Stenvold. I would like to ask a question, 
Senator. According to anything I could find on the Internet, 
right now we have approximately 25.2 million veterans that are 
alive and yet they said when those records were stolen it was 
everybody that was released from the military after 1975. That 
doesn't make sense. The math does not add up.
    Senator Conrad. No, the math does not add up, and I can 
only assume that the press reports were in error.
    Mr. Stenvold. OK.
    Senator Conrad. And I would say I would not be shocked with 
press reports being in error, having been subjected to a number 
of errors of reporting in my career.
    Wally.
    Mr. Buckingham. I have no comment other than the fact I was 
released before 1975, so I'm not real nervous.
    Senator Conrad. John, anything?
    Mr. Hanson. Well, Senator, on that one, too, I was out of 
the military before 1975 but still again, you know, it's pure 
shock at how it could ruin the lives of so many people, you 
know, depending on what information was actually released and 
what's going to happen to it and where is it going to go to and 
what are people going to do with it once they receive it.
    Senator Conrad. Well, I want to say this; that very 
dedicated law enforcement is on the trail. FBI, I have been 
assured, has assigned some of their top people to this matter 
and we all hope and pray that these records are recovered and 
they have not been tampered with, they have not been used.
    I think we all can conjure up a worse-case scenario, but I 
think we all have to hope that law enforcement is able to get 
these records back.
    I would ask each of the witnesses if there is anything they 
would like to add for the record?
    John, anything that you would want to add?
    Mr. Hanson. Yes, I would. I was down at the VA 2 weeks ago 
for an appointment. I know usually the appointments only last 
only ten or 15 minutes, and if anybody had one 2 weeks ago on 
Wednesday, I'm sorry I took your appointment away from you, but 
going to the VA and sitting down with the doctor my experience 
in the past 15, 20 minutes. Two and a half hours later I looked 
at my watch and I said, ``Do you have any other people to see 
today?''
    I was really happy that we actually sat down and got down 
to the point of what we're getting to and was really shocked, 
and my wife said, ``You spent all that time at the VA?''
    And I said, ``Yes, I did.'' And I said it's turning around 
and they are coming back, and I know a lot of that is thanks to 
getting funding and being able to support us, and I would like 
to thank you for supporting North Dakota and the veterans of 
North Dakota. Thank you.
    Senator Conrad. Thank you, John.
    Wally, anything that you would want to add?
    Mr. Buckingham. No, I have nothing to add.
    [The prepared statement of Wallace Buckingham follows:]

    [GRAPHIC] [TIFF OMITTED] 26823.189
    

    Senator Conrad. Dan?
    Mr. Stenvold. I have been fortunate that this is my sixth 
year as President of VVA and our national headquarters are in 
Silver Springs. When I go out there, I hear nothing but great 
things about you and your two other colleagues from North 
Dakota about supporting veterans. That means a lot to us.
    Senator Conrad. Well, thank you. I appreciate that more 
than I can say. Many of you know that my wife is one of those 
people who ran away from home and joined the Navy and served 
during the Vietnam era and claim----
    Mr. Stenvold. Shawn has a membership card for her for VVA. 
She's----
    Senator Conrad. And you know she spent a lot of time at 
NDSU at the vet club and you know that, but she became an 
intelligence photographer and she had a marvelous experience in 
the Navy. It is something she is intentionally proud of and, of 
course, my uncles all had proud records of service as so many 
North Dakotans have, and we are proud of your service and we 
respect very much what our veterans have done. Thank you so 
much. I thank this panel.
    And I would say now again I want to indicate we are 
especially pleased to have the National Commander of the VFW in 
our presence, Mr. James Mueller. I hope I am pronouncing that 
correctly.
    Mr. Mueller. That's fine, sir, yes.
    Senator Conrad. Who is from O'Fallon, Missouri, if I'm not 
mistaken.
    Mr. Mueller. That's right, sir.
    Senator Conrad. If you would like to come to the witness 
table, we would welcome your testimony. I can tell you this is 
a special treat to have you in our presence. We are delighted 
that you are here.
    Mr. Mueller. Thank you, Senator. First of all, I would like 
to express my deep appreciation for taking time out of your 
busy schedule to come here today, too, and for what you do for 
our veterans.
    Right now we have World War II veterans. We have 3.5 
million World War II veterans that are left and that's going to 
change dramatically over the next 5 years. There's going to be 
a lot of care demanded of the VA with our older veterans 
getting up in age where they are 82 and 87 years old and also 
with our young soldiers coming back from Iraq and Afghanistan.
    When I served in Vietnam, because of what happened over 
there, I made a promise and a pledge that if I made it back 
that I would do whatever I could to serve veterans and their 
family and that and I didn't know it was going to lead me to 
this position.
    When I came back, I joined my local post and we visited the 
VA, and going over everything else I really had a problem going 
into the spinal injury ward, and for awhile I couldn't go back 
because I felt like I couldn't do enough to help our veterans 
and what they are going through. I realize you can't give up 
because they need our help and I want to thank you for your 
sincere efforts on what you do and what our fellow comrades do 
out here.
    First of all speaking for the VFW, I have a problem 
sometimes understanding how the VA works and what it does. On 
some occasions it will treat and give different care and in 
different hospitals. I can't see why one hospital will treat a 
patient and the other VA facility will not.
    For example, like in St. Louis, they'll treat--they will 
not treat tendinitis there but you go to Columbia and they will 
treat and they can recognize tendinitis up there.
    The VFW very much supports the independent budget process 
and I think over the last couple years I think the independent 
budget process fund by what's been reported here are more 
accurate on some of those things and, yes, the VFW supports 
mandatory funding and, yes, we support Medicare reimbursement.
    I'm glad to see that you're coming here to take time to 
listen to the veterans of North Dakota. There is a lot of 
problems that are taking place and especially with rural health 
care issues.
    I'm glad to see that the CARES programs is going to be 
having five clinics to cut down on some of the travel. It's an 
undue burden for our veterans to have to travel so far and 
spend so many hours when some of these are in such poor health, 
so I thank you about what's been doing on that part of it.
    I would like to address a little bit about what's taking 
place in the break of security of the VA, and I know you're not 
here just to hear a lot of that, but it's incomprehensible that 
this took place, like you said for an employee to take this 
home, but what's more hard to understand is that the Secretary 
of the Veterans Affairs was not informed of this until almost 3 
weeks after it happened and the FBI was not called in.
    I too--I agree on the letter that I sent to the secretary, 
hand delivered, that called for people to either be fired or 
held accountable for what's done, and I would ask and I would 
hope that Congress does that.
    What I have a problem now is that there's not information 
forthcoming from the VA regarding what is in those records. 
Does it affect people before 1975? There's no information being 
put out. I understand that the VA was supposed to notify the 
veterans, but I understand that they haven't done that because 
they don't have enough envelopes to send out to do this. We 
need to hold them accountable and hold their feet to the flames 
for this breach of contract and that it never happens.
    At a time in our history in the United States when we have 
such--since 9/11 terrorism done, we need to be more accountable 
to everybody and be more careful on security data what's handed 
out. I feel it's been a lack of leadership by the VA on this 
information.
    I again thank you for taking the time to be here, what you 
do, what position you hold, and taking care of our veterans and 
I thank you very much for that.
    Senator Conrad. Well, let me just say that it is an honor 
to have you at this hearing. It is an honor to have you in 
North Dakota.
    Mr. Mueller. It's a pleasure.
    Senator Conrad. I hope that we have extended our warmest 
North Dakota welcome to you.
    Mr. Mueller. I look forward to visiting this weekend with 
comrades from the VFW.
    Senator Conrad. Well, it is wonderful that you are here. 
Let me just conclude by saying there are so many things that 
are inexplicable about this loss of records. What you have said 
is really completely unacceptable; that the secretary himself 
was not informed for weeks and as a result law enforcement not 
informed.
    I mean everybody knows in law enforcement getting the 
information as rapidly as possible is the best thing to being 
able to solve a crime. That weeks went by, you know, that 
leaves the trail a lot colder than it might otherwise have 
been.
    Mr. Mueller. Yes, it does, sir.
    Senator Conrad. And, honestly, I think the response of the 
VA thus far and I have acknowledged now that one man is being 
removed, another man has submitted his resignation, another is 
on administrative leave, that's not enough to me for a breach 
of this magnitude.
    I think the secretary himself should be held accountable 
and responsibility for a leadership failure of stunning 
proportion, and I'm not saying that he played any direct role, 
but he is the man in charge. The man in charge ought to be held 
to account for the policies that were in place that would have 
allowed such a breach to occur. How is it conceivably possible?
    I used to be a tax commissioner for the State of North 
Dakota. We would never have allowed anybody to take the tax 
file of the State of North Dakota home. In your wildest 
imagination nobody would think they could do such a thing.
    Well, again I thank you. I hope I pronounced your name 
correctly. Is it Mueller?
    Mr. Mueller. Yes, Mueller.
    Senator Conrad. Do you pronounce it that way?
    Mr. Mueller. Sir, I would just wish that the VA would come 
forward with more information on this of what's taken place. 
We've gotten a lot of calls and I'm sure some of the other 
comrades out there who's affected.
    I had one lady call me and wanted to know about her World 
War II dad, who is 87 years old. If somebody calls and they say 
they are from the VA, should he give out information? I think 
the VA needs to come forward with more information of what's 
taking place and how to handle it, and to expect our veterans 
then to do their own credit checks I think is unacceptable.
    I think the VA, which is ultimately the government, should 
stand some of the cost of this and be responsible for some of 
this.
    Senator Conrad. Well, I think you make a very powerful 
point. Let me just for the record read into the record that the 
civil servant, the senior career data analyst who lost the 
information and took it home, has now been terminated.
    That Michael McLendon, the deputy assistant secretary for 
policy, has submitted his resignation and will leave the 
department at the end of this week.
    That Dennis Duffy, who is the acting assistant secretary 
for policy and planning, has been placed on administrative 
leave. That those actions have all been taken. I don't find 
them sufficient. Clearly all of those actions were necessary 
but they are not sufficient.
    This is a breach of really a stunning proportion, and you 
are quite right in terms of information. We have just gotten 
more information today that tells us, as I have indicated, that 
not only social security numbers and birthdays but now they 
have added the additional information just received today that 
phone numbers and addresses as well. I hope that this isn't 
another one of these cases where the information dribbles out 
and we find even more serious things.
    I pray that we don't find persons, people's, individual 
medical records are at risk of revelation as well. Very stern 
action has to be taken because you've got to hold people to 
account. You have to send a very clear signal that this is 
unacceptable and people will be held accountable.
    Mr. Mueller. Sir, before I go, just recently on the budget 
when I testified up on the hill, there's also talk about 
cutting 149 employees out that adjudicate claims.
    Right now we have a backlog of over 880,000, and to do that 
I think is unacceptable. That is making people wait longer and 
longer to help get benefits when they so desperately need it 
and everything else, and I think that's one thing I wanted to 
include in my remarks about that, about trying to cut back on 
employees that handle and adjudicate claims. With the backlog 
that we have on claims, it is take two and 3 years to get some 
of these claims processed and that.
    Senator Conrad. Well, I thank you very much for raising 
that issue. It is obviously very important when you cut back on 
the number of people who adjudicate claims you cut back 
dramatically on the claims that final determinations are made.
    Mr. Mueller. Yes.
    Senator Conrad. Now, that means people are in effect denied 
what they legitimately are entitled to simply because of delay.
    Again, thank you so much. It has been an honor to have you 
here and I appreciate all the witnesses today.
    I think the testimony has been excellent. I think we have 
strengthened the record of the Senate Budget Committee in a 
significant way here today. Thank you very much and this will 
bring to an end this hearing of the Senate Budget Committee.
    [Whereupon, at 4:10 p.m. the hearing was adjourned.]


SENATE BUDGET COMMITTEE PUBLIC HEARING REGARDING THE IMPACT OF FEDERAL 
                      FUNDING ON HIGHER EDUCATION

                          Friday, June 2, 2006

                                       U.S. Senate,
                                    Committee on the Budget
                                          Grand Forks, North Dakota

    The public hearing was held at 2:30 p.m. at the University 
of North Dakota at the Energy and Environmental Resources 
Center building.
    Present: Senator Kent Conrad, Dr. David Wilson, Dr. Barry 
Milavetz, Dr. Gerald Groenewold, Dr. Alice Hoffert, Mr. Bruce 
Gjovig, Dr. Delore Zimmerman, Logan Tong, and Gary Moore.
    Staff present: Shelley Amdur.


            OPENING STATEMENT OF SENATOR KENT CONRAD

    Senator Conrad. The hearing will come to order. I thank you 
all for being here. I would like to indicate that this is an 
official hearing of the Senate Budget Committee and so we will 
be under the rules of the Senate just as if we were in the 
hearing room in Washington.
    That means when witnesses testify that we have no outside 
interference and no indication of support or disagreement with 
the statements of the witnesses. We want witnesses to feel that 
they have the absolute right to express their views fully and 
freely without fear of intimidation or reaction.
    I want to indicate that this hearing was deemed necessary 
because we are now in conference between the House and the 
Senate to work out the budget for next year, and we have heard 
from a number of our colleagues that they wanted more evidence 
in the record as to the tangible benefits of higher education. 
What difference is higher education making in the economic 
lives of the people in our country?
    I thought there is no better place to come than right here 
to the Energy and Environmental Research Center at the 
University of North Dakota to make the case in the official 
record, as to the tangible benefits on higher education and the 
difference it is making for the economic opportunity in our 
communities, in our States, and in our country. That is really 
what this hearing is focused on. And, it is happening at a 
critically important moment. Because the House has now taken 
action on its budget. The Senate took action on its budget some 
months ago.
    We are now in what is called the conference period; that 
is, when the conference committee, and I am a member of that 
committee, works out the differences between the House proposal 
and the Senate proposal. That is why I think this hearing takes 
on a special importance.
    Let me first indicate that when I was growing up, I was 
raised by my grandparents. My parents were killed when I was 
young. My grandmother was a school teacher, and I have told 
this story before on this campus. Gerry has heard it. My 
grandmother was about five feet tall and we called her Little 
Chief. We called her Little Chief because she commanded 
respect, and she commanded respect because of her character and 
her determination. I do not think in my life I ever met anybody 
with a more profound respect for education.
    She was a school teacher. She had graduated from University 
of Minnesota, and also went to college in New York. At a time 
when very few woman had the opportunity or the privilege to get 
a degree and even education beyond that, that was a rarity. She 
had such a profound respect for education.
    She always used to tell us in our household there are three 
priorities. No. 1 is education, No. 2 is education, No. 3 is 
education, and we got the message.
    My cousins and my brothers, 13 of us in our generation, 
every single one of us has an advanced degree. And, it was 
because of the absolute determination of my grandparents that 
that happened. They were people of middle-class means, but they 
set aside funds to help everybody get an advanced degree 
because they believed that's the way you had the greatest 
chance of taking advantage of your God-given talent. My 
grandmother was right about many things and she was certainly 
right about that.
    One of the things we need to emphasis is that investing in 
a first-class educational system is one of the very best ways 
we can take advantage of opportunity in this country. If we are 
going to remain the world's leader, we have to be the leader in 
education, in research, and in training our workforce. We will 
not remain No. 1 if we are not number one in education, in 
training, in research, and in developing an entrepreneurial 
spirit.
    We know, it does not take a school to form an 
entrepreneurial spirit. We have seen lots of examples of people 
who are great entrepreneurs who did not have advanced 
education. But what we do know is that we need that 
entrepreneurial spirit matched with people who do have advanced 
training and advanced education. It is that kind of partnership 
that sparks economic opportunity.
    Let me turn now to just a number of slides that we think it 
are important to get in the record. First, the annual Federal 
investment at UND has grown substantially since 2001, rising 
from $45 million in 2001 to $66 million in 2005. These are 
Federal dollars well spent.

[GRAPHIC] [TIFF OMITTED] 26823.202


    Let us go to the second slide. The Federal investment at 
UND makes up a significant portion of the University's total 
budget. From 2001 to 2005, UND received over $290 million in 
Federal assistance, which was about 20 percent of its total 
budget during that period of time.

[GRAPHIC] [TIFF OMITTED] 26823.203


    Let us go to the third slide. The breakdown of those 
Federal dollars was as follows: $154 million for grants and 
contracts, $94 million in targeted Federal funding, and $42 
million for student aid.

[GRAPHIC] [TIFF OMITTED] 26823.204


    Let us go to the next slide. North Dakota has received 
significant Federal investments in education. I might add that 
NDSU has also had a very significant, even larger, share of its 
budget coming from Federal sources because it is a land-grant 
university.

[GRAPHIC] [TIFF OMITTED] 26823.205


    While there have been significant Federal investments, it 
is important to remember that students are still struggling to 
afford higher education. Average tuition and fees at 4-year 
public colleges and universities have increased substantially 
over the last few years, climbing from just over $3,760 in the 
2001-2002 school year to almost $5,500 in the 2005-2006 school 
year. I am hearing from many sources as I go across the State 
that that is putting increasing pressure on students and their 
families.
    I think it is undeniably the case, especially for those 
families who have a number of children. We all know that 
tuition and fees do not cover the full cost of someone's 
education for a year. All of the other attendant costs are 
added to it, and this is creating growing pressure on the 
students and their families.
    Let us go to the next slide. At the same time, the budget 
that has been proposed by the President for the next year 
proposes to freeze the maximum Pell Grant award at $4,050 for 
the fifth year in a row. That I think most objective observers 
would say is simply inadequate. If we don't provide more 
assistance, many students simply will not be able to afford an 
advanced education or they will have to interrupt their 
education in order to secure more funds.

[GRAPHIC] [TIFF OMITTED] 26823.206


    Let me go to the sixth slide. We must decide as a society 
what we value, what is really important to us and where we want 
our Federal dollars invested. I would argue that the proposal 
from the administration to freeze the maximum Pell Grant award, 
while leaving in place and continuing tax cuts for the very 
wealthiest among us, represents the wrong priorities for our 
nation.

[GRAPHIC] [TIFF OMITTED] 26823.208


    Let me just put in perspective the comparison here. The 
cost for the tax cuts for those earning over $1 million a year 
in 2007, the tax cuts for just that group, will cost over $41 
billion for that year alone. It is stunning, $41 billion for 
just the tax cuts for those earning over $2 million a year.
    By comparison, it would cost 1/20 of that amount to fund 
the maximum Pell Grant award at $4,500 instead, of the proposed 
freezing it for the fifth year at just over $4,000.
    Let's go to the final slide. These are proposals that are 
in the President's budget for higher education for next year. 
In addition to freezing the maximum Pell Grant award for the 
fifth year, the budget from the administration freezes funding 
for other key student aid programs, including Supplemental 
Educational Opportunity Grants, Work-Study, and TRIO Student 
Support Services.

[GRAPHIC] [TIFF OMITTED] 26823.209


    In addition, the budget before us eliminates not just cuts, 
funding for TRIO Upward Bound and Talent Search, Perkins Loans, 
Leveraging Educational Assistant Partnerships, for GEAR-UP, 
Teacher Quality Enhancement Grants, Byrd Honors Scholarships, 
and vocational education. All of those programs are zeroed out. 
No funding.
    Now, these are choices that are going to be made in the 
next weeks in Washington. What are our values? What are the 
things that we hold dear? What are the things that are 
important? I am known in Washington as a deficit hawk, somebody 
who believes that deficits do hurt us in the long-term and 
that, over time, it is critically important for us to balance 
our budget. But within that context, I believe education should 
be our top priority because I see it as an investment in our 
future.
    If we aren't the best trained and the best educated, we 
will not long remain the strongest nation in the world. So 
that's the challenge before us. What are our priorities? What 
are the things we value, and what are the things we are going 
to invest in?
    With that, I want to turn to our very distinguished panel. 
I have asked all the witnesses be made a part of one panel. If 
somebody needs to leave, as I know that there are many pressing 
things people have to do after you've testified, we would 
certainly understand that.
    Let me welcome this panel, Dr. David Wilson, Vice President 
for Health Affairs and Dean of the School of Medicine and 
Health Sciences; Dr. Barry Milavetz, the Associate Vice 
President for Research at the University of North Dakota; Dr. 
Gerry Groenewold, the Director of the Energy and Environmental 
Research Center; Dr. Alice Hoffert, the Associate Vice 
President for Enrollment Management; Mr. Bruce Gjovig, the 
Director and Entrepreneur Coach for the Center For Innovation 
and Director of Technology Incubator and Rural Technology 
Center; and Dr. Delore Zimmerman, the President and CEO of 
Praxis, Incorporated, of Grand Forks.
    We also are joined by two TRIO students, Logan Tong and 
Gary Moore. Gary is a veteran. We are delighted to have them. 
We are delighted to have all of the witnesses.
    We would like to start with Dr. Wilson. We have asked each 
of you to hold your testimony to 7 minutes or thereabouts. We 
are not going to be too strict about that, but we would very 
much like to have your testimony and then be able to ask 
questions when all have provided their testimony.
    With that, a special welcome to you, Dr. Wilson. Thank you 
for being here.
    Dr. Wilson. Thank you, Senator Conrad.
    Senator Conrad and Members of the Committee, my name is Dr. 
H. David Wilson. I am the Vice President for Health Affairs and 
Dean at the University of North Dakota School of Medicine and 
Health Sciences. I'm pleased to have the opportunity to submit 
this testimony to the committee.
    The University of North Dakota, the School of Medicine and 
Health Sciences, Grand Forks, and this region would not be the 
same without the tremendous impact our Federal support has upon 
all of us. The economic impact of UND upon this region is about 
one billion dollars. At the outset, let me thank you, Senator 
Conrad, for your personal hand in helping to accomplish this.
    The ability to secure Federal dollars allows our university 
to attract and maintain outstanding teachers, scientists, and 
other scholars to make for an intellectually stimulating 
university and community. The university then helps to produce 
the future physicians, lawyers, business tycoons, teachers, 
nurses, scientists, and other talented people to make a better, 
more vibrant North Dakota, America, and world.
    The Federal support that has come to the School of Medicine 
and Health Sciences has been essential to achieving our track 
record of helping to meet the health care work force needs of 
the State. Looking across the State, the school has produced 
over 45 percent of North Dakota physicians, 91 percent of 
physical therapists, 62 percent of occupational therapists, 45 
percent of clinical laboratory scientists, 88 percent of the 
cytotechnologists, and 75 percent of the physician assistants 
for our State.
    As impressive as this is, we know we can and need to do an 
even better job in the future to help ensure a strong, stable 
health care delivery system for our State.
    I want to focus on just a few Federal initiatives that 
greatly benefit the medical school.
    The ability of our school to compete for EPSCoR dollars 
from the Federal and State government has allowed us to attract 
and give startup money to new scientists for our school. 
Without those dollars, we could not compete with the more 
wealthy States and put together competitive research labs for 
North Dakota. Today, we have recruited some of the best and 
brightest scientists and they are successful.
    To give you just one example, because of EPSCoR money, we 
recruited Dr. Mike Ebadi, one of the foremost Parkinson's 
disease researchers in the world. He then recruited five 
outstanding young neuroscientists, again greatly assisted with 
EPSCoR funds.
    This led to a new sophisticated neuroscience research 
laboratory devoted to neurodegenerative diseases followed by a 
10 million dollars COBRE (Centers of Biomedical Research 
Excellence) research project focusing on diseases like 
Alzheimer's disease, Parkinson's disease, and other related 
conditions.
    I must point out that about 75 percent of these moneys from 
the Federal Government helped to attract postdoctorate level 
research technicians and other people and provide good jobs and 
people that end up benefiting our community not only with their 
tax dollars but also with their intellectual capacity making 
this a better place to live.
    Our Center for Rural Health is heavily dependent upon 
Federal support. With these Federal funds, the center has 15 
programs that reach the far corners of the State. The State of 
North Dakota is affected by these moneys. The center also 
operates national projects, including the highly successful 
Rural Assistance Center, which serviced over a quarter of a 
million visits to its Web site this last year alone.
    The Rural Assistance Center, the only such facility in the 
nation, serves as a repository for all information related to 
rural health and other areas for our entire country. It has 
been utilized by individuals in several foreign nations as 
well. I want to thank you personally, Senator, for working hard 
to help maintain funding for these vital units.
    Our Center for Health Promotion and Prevention Research is 
another example of Federal support doing great things for our 
State by developing models that promote health and will be 
useful not just for North Dakota but for other rural States; in 
fact, for every State in the union.
    Dr. Vogeltanz-Holm and her colleagues are working in eight 
schools across North Dakota assessing third graders to 
encourage our youth to eat properly and exercise to avoid 
obesity, a major problem in our nation, and their project is 
working. They are also working with youth to choose not to 
smoke and to avoid dangerous drugs like methamphetamines.
    I would like to quote from a summary of one representative 
school, the Burlington North Dakota Elementary School. And I 
quote, The great news is that after only 1 year of CATCH, the 
name of this program, our children have increased their 
knowledge about healthy eating, increased their consumption of 
fruits and vegetables, and their level of vigorous daily 
physical activity. They have also decreased their consumption 
of fats and sweets and the number of our children in the 
overweight category has also decreased from 20.9 percent to 
13.3 percent; however, there is still a lot of room for 
improvement. Our children need to be eating more fruits and 
vegetables every day and some need to limit the time they spend 
in front of the television or playing video or computer games, 
end quote.
    While we have excellent federally supported initiatives 
underway, I do not want you to return to Washington thinking 
that all is well in North Dakota. We understand the difficult 
choices Congress must make when it comes to the budget, but the 
wrong choices, which you've pointed out, will make it much more 
difficult to adequately address our State's health care needs 
in the long-term.
    The loss of Title VII dollars and other needed support is a 
crisis for us and, frankly, for the nation. Ensuring a 
competent and adequate supply of health care professionals is 
critical. Let me give you just one example and I could share 
many.
    The President's fiscal year 2007 budget zeroes out the 
Geriatric Education Centers Program. North Dakota was just 
recently added to the small set of Geriatric Education Centers 
across the country. Having just completed our first year of 
this 5-year initiative that involves training health 
professions programs across the State, the Federal program is 
now slated for termination.
    This means we will lose over 1.7 million dollars that could 
have helped to bring better care and research needed for our 
elderly population. Given the graying of America, this is the 
wrong time to be pulling funds from programs designed to train 
health professionals in geriatrics.
    There is also a set of rural-specific safety net programs 
that are at risk of being terminated, yet are critically 
important to North Dakota. These programs, managed by the 
medical school, put resources directly into the health 
infrastructure of North Dakota's rural communities.
    For example, the Rural Hospital Flexibility Grants Program 
supports quality improvement and emergency services among other 
efforts and, like the GEC program, is slated to be eliminated. 
When quality of health care has taken on such significance in 
terms of our ability to measure and improve the care that 
patients receive, we need to ensure that our rural hospitals 
and communities aren't left behind. In fact, this is an area 
where significantly more resources to support information 
technology and staff education are extremely important.
    We are also concerned about the decline of rural 
representation on the Medicare Payment Advisory Commission. 
Given the influential nature of MedPAC's recommendations to the 
Congress, we need to ensure that an appropriate number of 
people at the table understand the strengths and challenges of 
delivering health care in rural communities.
    We've seen a recent erosion of that much needed voice for 
rural health and inadequate representation can put our rural 
health care systems in North Dakota, and other States similar 
to us that are highly dependent upon adequate Medicaid 
reimbursement, at risk.
    With regards to special populations, our INMED program is a 
national model of success in attracting and educating American 
Indians into medicine. A loss of $500,000 for the INMED program 
has markedly reduced the number of Native American high school 
students and middle grade students that we can bring to our 
campus during the summer to encourage them, No. 1, to go to 
college and, No. 2, to choose medical careers.
    This loss occurs in spite of the fact that when it comes to 
health care, the American Indians are one of the most 
underserved populations in the nation. With these and other 
programs that I don't have time to mention, I'm sure it's clear 
we have a lot at stake.
    You mentioned the problem with tuition, and I can tell you 
while medical school tuition is still below average for our 
region, we've had to increase it to now a bit over $18,000 per 
year. It's projected that our incoming class of medical 
students for this fall when they graduate will have a debt of 
$125,000 or thereabouts to contend with.
    I can tell you this makes it increasingly difficult to 
attract students to go into family medicine and other low-
paying specialties like pediatrics. I'm a pediatrician, and I 
think that makes it very difficult for us particularly to serve 
the rural health care needs of the nation.
    In closing, on behalf of the School of Medicine and Health 
Sciences and the entire university, I thank you again for the 
opportunity to submit this testimony to the committee and we 
would welcome any questions that you may have.
    [The prepared statement of Dr. H. David Wilson follows:]

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    Senator Conrad. Thank you, Dr. Wilson, for an excellent 
testimony. It is exactly what I am looking for here today. I 
think you have provided substantiation in a very clear and 
compelling way of the contribution that Federal dollars are 
making for the institution, and the contribution the 
institution is making to the State.
    The testimony you provided in terms of the number of 
physicians in our State that come from the university, as well 
as all the other health professionals, is precisely what our 
colleagues are looking for.
    With that, I welcome Dr. Milavetz, the Associate Vice 
President for Research.
    Dr. Milavetz. Senator Conrad and Members of the Committee, 
my name is Dr. Barry Milavetz and I am the Associate Vice 
President for Research at the University of North Dakota. I'm 
pleased to have the opportunity to submit this testimony to the 
committee. The Vice President for Research, Dr. Peter Alfonso, 
is unable to testify today because of a prior commitment.
    I would like to briefly discuss the important role that 
Federal funding plays in research at the University of North 
Dakota and also its economic impact on the five State North 
Central Region encompassing North Dakota.
    I will do this by sharing with you a short PowerPoint 
presentation.
    As you indicated before, sponsored programs at the 
University of North Dakota have increased from approximately 45 
million dollars in fiscal year 2001 up to about 80 million 
dollars in fiscal year 2005. And of that, approximately 38 
million dollars in 2001 and now 60 million dollars in 2005 
comes from Federal funds.
    We also track, however, sponsored programs through 
expenditures, and although the curves are essentially the same, 
the actual dollars vary somewhat. It looks on this curve as if 
we had a bad year in 2005 and, in fact, that is more apparent 
than real. We track numbers monthly and I can tell you--I'm 
very happy to tell you, in fact--that this year looks like it's 
going to be a banner year in part due to the help of our 
senators. We are very close to having $100 million dollars in 
sponsored programs this year. If not a hundred, we will be very 
close to it.
    As you pointed out----
    Senator Conrad. That has a nice ring to it, right?
    Dr. Milavetz. It does. 100 million dollars is nice.
    As you pointed out--and we track these numbers also year by 
year--approximately 70 to 75 percent of year to year actually 
is Federal dollars.
    The economic impact of this research dollars is tremendous, 
both at UND, within the city, North Dakota, and the North 
Central Region. The bottom line is that approximately 80 
million dollars of research done through the University of 
North Dakota comes out to be about 163 million dollars in total 
economic output. That includes about 1,584 jobs, of which about 
724 are right here on campus.
    As a legislator, I'm sure you're interested in knowing that 
that also equates to about 5.9 million dollars in State and 
local taxes and about 25 and a half million dollars in Federal 
taxes, not inconsequential amounts.
    One of the programs I would like to emphasize is the EPSCoR 
program. EPSCoR is an acronym. It stands for Experimental 
Program to Stimulate Competitive Research. It was initiated 
through the National Science Foundation in the early 1980's. It 
has now grown to include a number of other Federal agencies, 
including the NIH, NASA, DoD, and DoE as well as others. As you 
can see here these are the present awards to the University of 
North Dakota from each one of these agencies. It's quite a 
substantial sum of money.
    The EPSCoR program is particularly important to us because 
what it's primarily designed to do is to build infrastructure, 
and it does this by building infrastructure in terms of 
hardware and as well as building infrastructure through the 
development of human resources. It builds hardware by supplying 
equipment, startup packages, faculty seed grants, graduate 
student assistantships, all of which contribute directly to 
being able to do research.
    It also supplies equipment so that we can set up centers. 
One of the centers that we have here on campus is called the 
Sunrise Project, which is for sustainable energy. It has also 
allowed us to build a high-performance computing center.
    The development of human resources is also significant 
because it allows us to give undergraduate students that come 
from smaller colleges, including tribal colleges, the 
opportunity to do research. This is an opportunity that they 
otherwise would not have.
    I'll briefly discuss a couple of the more successful 
aspects of this program. Through North Dakota EPSCoR, we have 
been able to hire 100 researchers in North Dakota.
    That is not just at UND. It also includes NDSU, but the 
overall program is very effective in that way.
    I also point out the EPSCoR program benefits all education 
in the State of North Dakota. It's not just at the two flagship 
universities. And also equally important over 550 graduate 
students and over 675 undergraduate students have had the 
opportunity to do scientific research through this program.
    I just briefly would like to mention a couple of the major 
research projects presently being funded by the Federal 
government. Within the College of Arts and Sciences--and this 
is actually a joint project also with the School of 
Engineering--we have the Sunrise Project, which is a 
sustainable energy research project, primarily targeting things 
like alternative energy sources, use of biodiesel, biojet fuel. 
That's funded to the tune of about 2 million dollars.
    Within the School of Engineering, there are also programs 
in special coatings and a new award that was just received 
about 2 months ago to develop remote sensing with real time 
video cameras on UAVs and things like target acquisition that's 
being funded to the tune of about 6.7 million dollars.
    The School of Aerospace Sciences is becoming a Center of 
Excellence for UAVs. They recently received an award of one 
million dollars.
    Within the School of Medicine, as Dean Wilson has pointed 
out, there's approximately 35 million dollars that's focused on 
the area of neurosciences. This is a good example of the 
synergism that the Federal Government awards allow us to 
undertake. We have a neuroscience building. Within that 
building, we have a PET scanner, a positron emission tomography 
scanner and a cyclotron to make the radioisotopes necessary for 
the PET scanner. And also with in COBRE and INBRE awards, we 
can hire the faculty members, postdocs and graduate students to 
actually do the research.
    As Dean Wilson pointed out, this research primarily is 
targeted for neurodegenerative diseases, such as Parkinson's 
disease and Alzheimer's disease, but it also has a major focus 
on addiction, primarily cocaine addiction.
    Within the School of Nursing, I'm very happy to report, we 
have been awarded a building grant. The photograph is an 
architect's rendering of the new building. The Northern Plains 
Center for Behavioral Research, that's going to be a 
multidisciplinary research center for primarily nursing but 
also aviation and psychology.
    And, finally, I'll just mention the Northern Great Plains 
Center for People and the Environment was recently awarded--
actually it's about a year now, a year ago--a 32 million dollar 
grant to fund what was formerly the National Sciences 
Foundation's DC-8 Flying Research Platform, which is now being 
flown out of the University of North Dakota.
    On behalf of the Vice President for Research at the 
University of North Dakota, I thank you again for the 
opportunity to submit this testimony to the committee and would 
welcome any questions that you may have.
    [The prepared statement of Dr. Barry Milavetz follows:]

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    Senator Conrad. Thank you very much. That was very 
important testimony and, again, it was right on point with 
respect to what we are seeking to get here today, which is 
specifics. You have provided them in significant detail, and 
they will be very useful. I appreciate it very much.
    Dr. Groenewold, welcome. Thank you for hosting us for this 
hearing of the Senate Budget Committee. I think this is a first 
to have a formal hearing of the Senate Budget Committee at this 
location, so thank you very much.
    Mr. Groenewold. Thank you. Senator Conrad and Members of 
the Committee, my name is Gerald Groenewold, and I am the 
Director of the Energy & Environmental Research Center at the 
University of North Dakota. I'm very pleased to have the 
opportunity to submit this testimony to the committee. My 
comments will be largely focused on research and ultimately 
technology commercialization, standing back a bit initially and 
looking at it from a fairly broad perspective.
    From the dawn of civilization, humans have been 
experimenting and accumulating knowledge to ensure their 
survival and improve their lives. Today, we are continuing that 
time-tested practice in organized scientific research 
supporting our goals and aspirations.
    Research is absolutely inseparable from societal values and 
institutions: in other words, to set priorities, to make 
informed choices, and to realize progress. The great strength 
of a representative democracy and a market economy is freedom 
of choice. However, this choice can only be exercised 
effectively where there are good choices to be made and choice 
is exercised wisely.
    As Mark Twain once said and I think it's relevant here. 
``There is nothing more frightening than ignorance in action.``
    In an ever increasingly and technological complex society, 
these choices and decisions are becoming more and more 
difficult; thus the need for practical focused research has 
never been greater and promises to increase into the 
foreseeable future.
    I believe that the Federal Government has a fundamental and 
ever increasingly critical role in the support of research. 
Research is a shared responsibility of both industry and 
society at large, represented by government. In a market 
economy, industry without government support cannot be expected 
to invest large amounts of money in researching the 
technologies needed by society, many of which will not reach 
commercial application because of technical and financial 
risks.
    Research supported by industry alone typically results in 
the development of a select group of technologies that minimize 
risk while still advancing the developing company's competitive 
advantage. These marginal advances in technology can then be 
marketed under patent protection to provide incremental 
improvements in cost and efficiency with guarantees to the 
user. Advances under this model are so gradual that they cannot 
address national policy and technological priorities.
    On the other hand, commercialization of new technologies is 
the responsibility of industry guided by clear and consistent 
government policies.
    It is my hope, and that of everyone at the EERC, that 
Federal funding for research at our nation's universities can 
be significantly enhanced. However, there is a critical caveat. 
I believe, we believe, that if our nation is to address 
essential policy and technological issues in a timely manner we 
must significantly enhance our focus on practical market-driven 
research, which emphasizes government/industry partnerships.
    The EERC represents a unique model that integrates Federal 
and industry funding for technology development from basic 
applied research through engineering development, 
demonstration, and commercialization, sometimes called RDD&C.
    EERC and its Federal and private sector partners have built 
a closely coupled relationship between the frontiers of 
scientific knowledge, technology development, and commercial 
practice that provides practical market-driven solutions to 
critical barrier issues impeding the development and 
commercialization of the truly advanced technologies that 
achieve quantum improvements and in various technological 
areas.
    An essential feature of the EERCs model is that industry 
buys into the early stages of research and development to 
ensure the activities are market-driven.
    As a result, industry partners have a vested interest in 
the intellectual property and an incentive to then demonstrate 
and commercialize the technology. It's my hope that the EERCs 
model can be replicated throughout our nation.
    I'd like to give a few examples of our model and what it is 
doing and why the Federal investment is so critical.
    In the last 19 years, we have had nearly 900 clients here. 
They have come from 47 countries and all 50 States.
    The key to EERC's that business development has been the 
Federal dollar, which has been utilized to leverage cofunding 
through partnerships with a wide variety of clients from all 
over the world. Seventy plus percent of our clients are repeat 
customers.
    We have ten Centers of Excellence here. None would be here 
without the Federal cornerstone funding. That is the 
cornerstone that has allowed us to grow through the co-funding 
and partnerships to develop critical Centers of Excellence, 
which are in most cases second to none in this country, in some 
cases the world.
    Last fiscal year, we had 405 active contracts here.
    Eighty-three percent were with private sector partners, but 
the majority of the funding was still Federal. The Federal 
funding is critical to bring the private sector partners here 
and thus develop relationships and joint ventures, which lead 
to very practical technology development.
    Last year, last fiscal year, 69 percent of our proposals 
were funded. That's a very high success ratio, one of the 
highest I know of in the country. It's because the work is very 
practical. It is all market-driven.
    This year to date during fiscal year 1906, and we have 
about a month left, we have 415 active contracts, the total 
value of those contracts is 132 million dollars thus far this 
year.
    The world is noticing. Last year we had almost seven 
million hits on our Web site, 6,983,000 or something like that. 
We are currently employing about 300 people, 286, 19 positions 
advertised right now, 18 are new. We fully anticipate being 
near 500 to 550 in five years.
    If we sustain the growth rate we're at right now--and this 
is our fourth consecutive record year--we will be providing 
employment, direct and indirect, for approximately 1,200 people 
in the greater Grand Forks area within 2 years.
    None of that, none of that, would be possible without the 
Federal cornerstone funding. Currently we have 18 technologies 
in the EERC Foundation, which are moving toward commercial 
deployment. We signed an agreement with a company in New Jersey 
last week, and I'm looking at another agreement next week.
    Senator Conrad. Can I stop you on that point, because I 
know from conversations I just had with my colleagues, that it 
is of special interest to them. Can you just repeat the 
testimony you just provided? As I heard you say it, you have 18 
technologies that are in the EERC Foundation and they are ready 
for commercialization.
    Dr. Groenewold. That's correct. They are moving--they are 
moving toward commercialization. Technically they are ready. 
The corporate partners are in discussions with us. In almost 
all cases we have corporate partners who are interested in the 
technology.
    Senator Conrad. Are any of them technologies that you could 
talk about or are they in a stage where you can give an idea of 
what kinds of technologies?
    Dr. Groenewold. Senator Conrad, I can. I can give you an 
idea. Yes, I can, Senator. It's a wide range of technologies 
focused on new, innovative, extremely clean energy production 
technologies, including remote site power generation. There are 
number of environmental control systems, in particular mercury 
control, things such as that, that are in those packages.
    Senator Conrad. That is very useful because it is exactly 
what my colleagues have asked me to bring back, specific 
examples of how Federal investment is impacting the economy in 
a positive way, and, with energy so much the focus now, that is 
of special interest to my colleagues.
    How are Federal dollars affecting practical solutions to 
the energy challenges the country faces?
    Mr. Groenewold. We have a requirement that every Federal 
dollar be leveraged with nonFederal funds and it can't be in-
kind. It has to be in cash. That is necessary in our definition 
of peer review--someone in the private sector voting with their 
dollars for what we are doing. So what needs to be understood 
is that process in that there is, in the initial stages of 
research, what I would call basic applied research, and the 
only entity that tends to support that kind of work is the 
Federal Government. The federal government has a unique and 
fundamental role, no pun intended, to support the more 
fundamental, the more basic research.
    You're familiar with our Cooperative Agreement with DOE. We 
voluntarily, in 1989, broke that agreement into two pieces, a 
basic applied piece, Federal money only, looking at new ideas 
and concepts that might have commercial potential. The ones 
that look really promising and have significant commercial 
potential, we then take to a joint venture program. We bring in 
joint venture private sector partners.
    So in all cases the Federal--the initial Federal funding, 
if you will--the starter kit, is the catalyst that has 
initiated every one of those programs.
    Senator Conrad. And, without it, I assume none of these 
technologies would be advancing to a commercialization stage.
    Dr. Groenewold. I don't know if I could say none would, 
Senator, but, Senator, I am doubtful. I'm doubtful.
    Senator Conrad. Would some have made it on their own 
because of private sector support?
    Dr. Groenewold. In some cases, but generally the private 
sector is reluctant, my testimony indicated earlier, to fund 
that kind of work.
    Senator Conrad. One might say that at the very least, 
without Federal support, these technologies would not be at the 
same stage of development and ready for commercialization.
    Dr. Groenewold. In all sincerity, Senator, I think we would 
be almost a decade behind in almost all of them .
    Senator Conrad. A decade behind?
    Dr. Groenewold. A decade, uh-huh.
    For clarification, commercialization of energy and 
environmental technologies is a long-term process. We consider 
ten years to be typical for taking a good idea to commercial 
deployment. That's pretty fast. Once in awhile it's less. So 
with the hesitance on the part of the private sector alone to 
invest in high risk research, many of these things probably 
would never happen or, if they had, it would be much later.
    Senator Conrad. OK.
    Dr. Groenewold. Anyway, in summary, it is my belief that 
enhanced Federal investment in practical market-driven 
research, development, demonstration, and commercialization is 
the cornerstone of a successful and dynamic future for our 
country. The EERC is a proud partner in these efforts and looks 
forward to facilitating further advancement in this regard.
    I leave you with a quote from H.G. Wells. ``Human history 
more and more becomes a race between education and 
catastrophe.`` Education, in the broadest sense of the term, 
must win. Federal investment in knowledge is fundamental to 
achieving that goal.
    On behalf of the EERC, I thank you again for the 
opportunity to submit this testimony to the committee and 
welcome any questions.
    [The prepared statement of Mr. Gerald H. Groenewold 
follows:]

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    Senator Conrad. Thank you very much. It was very useful 
testimony to the committee and especially timely given the 
discussions that are underway.
    Dr. Alice Hoffert, the Associate Vice President for 
Enrollment Management. Welcome.
    Dr. Hoffert. Thank you.
    Senator Conrad. It is good to have you here.
    Please proceed with your testimony.
    Dr. Hoffert. Thank you. Senator Conrad and Members of the 
Committee, my name is Dr. Alice Hoffert, and I'm the Associate 
Vice President for Enrollment Management at the University of 
North Dakota. I'm pleased to have the opportunity to submit 
this testimony to the committee.
    The purpose of the University of North Dakota, the reason 
we exist, is to provide students with high-quality, accessible, 
and affordable educational programs through the doctoral and 
highest professional degree level and to serve the public 
through high-quality research and public service programs 
linked to learning.
    In order to meet this purpose, this university is committed 
to preparing students to lead rich, full lives, and to enjoy 
productive careers and to make meaningful contributions to 
society by providing them with a high-quality educational 
experience solidly grounded in the liberal arts.
    The mission of enrollment management at the University of 
North Dakota is to achieve and maintain a student recruitment, 
enrollment, retention, and completion rate that's appropriate 
for this university.
    In order to met this mission, the Federal partnership and 
financial support for both Student Financial Aid and the Trio 
Programs are critical components.
    The mission of Student Financial Aid is to provide need-
based financial assistance to students who otherwise would be 
able to--unable to attend the university.
    During this past year, 67 percent of UND's student body 
received financial aid. It is not possible to meet the needs of 
students and this mission without the Federal investment of 
funding provided for Student Financial Aid.
    The largest source of student aid at the University of 
North Dakota is the Federal Government. Last year the the 
Federal Pell Grant program alone provided over 6.6 million 
dollars for over 26 hundred low-income students at this 
university.
    In addition, the Federal Supplemental Educational 
Opportunity Grant Program provided almost a million dollars for 
1,300 students. Additional Federal student aid was made 
available in the form of over one million dollars for the 
Federal Work-Study Program, which allowed almost 3,000 students 
to work in and off-campus programs. As a result of the Federal 
Carl D.
    Perkins Loan Program, almost 4 and a half million dollars 
in student loans were provided to over 2,400 of our students.
    Senator Conrad. Let me just stop you there, because we have 
a proposal from the administration to eliminate Perkins loans. 
What would be the consequence of that?
    Dr. Hoffert. If that program were eliminated, this past 
year the collections that resulted from that program, over 4 
and a half million dollars went to student loans. The federally 
insured student loans are not keeping pace in any way to 
provide the revenue that our students need in order to continue 
their education.
    So the Perkins loan for 2,400 of our neediest students 
allowed the institution to provide dollars we wouldn't 
otherwise be able to provide, and those are the students who 
don't have many other options. Our Perkins dollars are used for 
our neediest students.
    Senator Conrad. Do you have any sense of how many of those 
students you would lose if the Perkins Loan Program was 
eliminated as the administration has proposed?
    Dr. Hoffert. Let me answer it a different way. If I were a 
needy freshman student at the University of North Dakota, I 
would need about $13,000 to go to school for 1 year.
    Senator Conrad. 13,000?
    Dr. Hoffert. 13,000 to cover my cost of attendance.
    In order to do that, the Federal Pell Grant limitations, 
the SEOG, the Supplemental Educational Opportunity Grant, 
limitations----
    Senator Conrad. Of course, that's being frozen.
    Dr. Hoffert.--would not come one-fourth of the way to meet 
that cost. Then I can borrow money from the Federal Stafford 
Program, which is a tremendous program, but as a freshman I 
would only be able to borrow $2,625.
    How would I pay for the rest of those dollars that I need 
for that education?
    As a low-income student, I obviously wouldn't have those 
resources myself, nor would my family have those resources. So 
what we would be saying to these students then, and it's a 
public policy issue, we would be saying you do not have the 
right to access an education at this university or at most 
universities or most colleges.
    Senator Conrad. That's a pretty sobering assessment. Of 
these 2,400 students, do you think some significant number of 
those students would not be able to come here if Perkins were 
eliminated?
    Dr. Hoffert. I would assure you that would be the case. 
These students would not be eligible to borrow alternative 
loans on their own. Those alternative loans are based on their 
credit or their credit history, which they are unlikely to have 
any, or their families, which again by definition of being low-
income students they wouldn't have access to.
    Senator Conrad. Remind me of what the Stafford limit goes 
to in the second year.
    Dr. Hoffert. For freshman and sophomore it's--for freshman 
it's 2,625 and I apologize for not knowing the numbers beyond 
that. It is minimal.
    Senator Conrad. Is it stepped up?
    Dr. Hoffert. It is.
    Senator Conrad. So it is somewhat of a step-up?
    Dr. Hoffert. It is for sophomores, juniors, and seniors.
    Senator Conrad. I trust the staff can get that for us to 
remind me what it is. I have seen those tables, but it would 
helpful for me to have what happens the second, third, and 
fourth years. Obviously, we have people who are already going 
to school here and it would be extremely unfortunate if we had 
people that were already in school, perhaps doing well in 
school, and they couldn't continue their educations because 
these loan funds were not available.
    Dr. Hoffert. Thank you. The University of North
    Dakota's commitment to low-income, first generation 
students is demonstrated by our participation in all five of 
the federally funded TRIO Programs. The TRIO Programs were 
established by the Federal Government to ensure equal 
educational opportunity for all Americans regardless of race, 
ethnic background, or economic circumstances.
    As one of the TRIO Programs, Federal funds are provided to 
the UND Talent Search Program to serve low-income, first 
generation, potential college students in targeted public 
middle schools and high schools in eastern and southern North 
Dakota and northwestern Minnesota.
    In addition, Federal funds are made available to the UND 
Upward Bound Program to serve high school students from 
northern and central North Dakota and eastern Minnesota during 
the academic year as well as with a summer program.
    UND's Educational Opportunity Center Program is also 
federally funded and it exists to help residents of the 
northern half of North Dakota and a portion of northwest 
Minnesota enroll in the college of their choice. The UND 
Student Support Services Program receives funds in order to 
increase retention and graduation rates of eligible UND 
students and to foster an institutional climate that is 
supportive of the success of low income, first generation 
college students and individuals with disabilities.
    The purpose of the Federal funds received for the UND 
Ronald E. McNair program is to prepare undergraduates (juniors 
and seniors) who are first generation and low-income students 
or who are from a group underrepresented at the doctoral level 
for graduate studies.
    This is accomplished by providing opportunities to define 
goals, engage in research, and to develop the skills and 
student/faculty mentor relationships vital to success at the 
doctoral level. And as you mentioned earlier, all of those 
programs are zeroed out in the President's budget.
    And while it's important to understand the affected 
programs and recognize how critical the receipt of Federal 
student aid and TRIO Programs funding are to the University of 
North Dakota, the full message is best delivered through the 
voices of our students. One student who received Federal 
financial aid and participated in the TRIO Programs recently 
wrote, ``The McNair Program helped me find my dream job.''
    Another wrote, ``I came back to college as an older than 
average college student, a single mother with four children on 
food stamps, WIC, and housing assistance. I was also a first 
generation college student majoring in mathematics. It was 
obvious I couldn't support my family as a dental assistant, and 
I had always dreamed I could get my degree and teach. I quickly 
realized I had a lot of learning to do, and with the help of 
Student Support Services was able to get the tutoring I needed 
to finish my degree. All of us have things, people, and events 
that shape us, and for me it was the TRIO Programs.''
    Still another wrote, ``The feeling I have, after finally 
attaining a graduate degree, is hard for me to express; 
although I dreamed of it for so many years; I never believed it 
would be possible for me. I am the first member of my family to 
have finished a graduate degree; so it is also a very big deal 
for them.''
    I would suggest the words of a particular student sum the 
value of Federal funding provided in the forms of financial aid 
and TRIO Programs. This student dropped out of high school when 
she turned 17. Eight months later she found herself pregnant 
and without a high school diploma. She received her GED and 
realized that she had more potential than she thought.
    With her daughter--when her daughter was a year old, she 
went to the TRIO Programs Educational Opportunity Center to 
find out what she had to do to get into this university. With 
their help, she was admitted to the University of North Dakota.
    She writes, ``Since I've started attending UND, I feel like 
I'm really doing something to change my life and working toward 
my goal. Now I have moved back to my parents' home and my 
family or friends watch my daughter while I attend school full 
time. I no longer receive government assistance and I'm working 
part time. Because of all the support I have from family, 
friends, and other organizations like EOC, I'm able to pursue 
my dreams and fulfill my potential. Going to college was 
something that didn't seem realistic a few years ago. Now I 
know I can do it. I am so blessed to have so many opportunities 
here and I am really grateful for all the supportive people in 
my life.''
    Entire families are also impacted by the partnership 
between the Federal Government and schools such as the 
University of North Dakota. One student wrote, ``Upward Bound 
and McNair have provided the tools for me to complete and 
surpass my goal of reaching a bachelor's degree. Out of nine 
children in my family, four attended Upward Bound and one 
attended Indians into Medicine Program. Of the five, two have 
master's degrees, one has an associate's degree, and I have a 
Ph.D. I'm the first person who graduated from our reservation 
high school and tribal community college to receive a Ph.D. If 
not for the efforts of the TRIO people and their belief in me, 
I am sure I would not be where I am today.''
    These are the voices of students who have benefited from 
the Federal funding, which has provided the financial means and 
necessary programs to help make their dreams become realty. It 
doesn't get any better than this, and our delegation from North 
Dakota has stood firmly behind education and access to 
education. In a while you'll be hearing from two of our TRIO 
students and you'll hear their own voice as well.
    And for this opportunity on behalf of the University of 
North Dakota, I thank you again for the opportunity to submit 
this testimony to the committee and would welcome any questions 
that you may have.
    [The prepared statement of Dr. Alice L. Hoffert follows:]

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    Senator Conrad. Thank you, Dr. Hoffert. That was very 
powerful testimony.
    Mr. Gjovig, thank you so much for being here and we look 
forward to your testimony.
    Mr. Gjovig. Thank you. Senator Conrad and Members of the 
Committee, my name is Bruce Gjovig and I serve as Director and 
Entrepreneur Coach of the UND Center for Innovation. The center 
works with innovators and entrepreneurs to launch new ventures 
and commercialize new innovations and technologies.
    We have helped launch over 420 ventures since 1984, 
resulting in more than 100 million dollars in venture 
investment, creating something over 4,000 new jobs in the 
State. Now the center has received five national awards for 
excellence in innovation and entrepreneurship, and the Forbes 
Princeton Review ranked UND number 14 on the top 25 listing of 
America's Most Entrepreneurial Colleges.
    I am pleased to have the opportunity to submit this 
testimony to the committee. My testimony will focus on the 
importance of Federal funding for economic development through 
higher ed, specifically how Federal funds are important in 
growing entrepreneurs who are vital to our State and nations's 
future.
    Our success is due in large part because of Federal funds, 
period. The center has raised 26 million dollars for buildings 
and outreach programs over the years and 6 and a half million 
or 28 percent has come from EDA, SBA, HUD, USDA, and energy 
funds. Three and a half million dollars of HUD funds built our 
first tech incubator.
    Senator Conrad, I want to again publicly thank you for 
advocacy and support in our grant proposals in that whole 
process.
    EDA and HUD provided 20 percent of the funding for our 
second incubator and the Ina Mae Rude Entrepreneur Center was 
the first Center for Excellence designated under the new State 
program. Federal funds made these world-class buildings 
possible. This infrastructure will serve the entrepreneur 
community for decades.
    We have used Federal funds to secure a four to one match, 
including leverage of 11 million dollars from successful 
entrepreneurs supporting the next generation of entrepreneurs 
and innovators. Federal funds prime the pump to attract other 
funding. We have bootstrapped the building of a nationally 
recognized and ranked entrepreneur center with a lot of help 
from key friends, especially our Federal partners and 
successful entrepreneurs.
    Besides infrastructure, the Federal Government provides 
vital funds for outreach initiatives, projects and programs so 
we can connect the talent, technology and training of the 
university to entrepreneurs and economic developers. The center 
has received funds from EDA, USDA, SBA, and energy to provide 
assistance to innovators who could not otherwise afford 
assistance in any other way.
    Two Federal programs are the largest source of seed capital 
for innovations in the world. They are the SBIR and STTR 
programs and the 11 Federal agencies dedicating two and a half 
percent of the outside R&D budget for R&D with small 
businesses. SBIR provides over 4,600 awards each year worth 
over 2 billion dollars.
    Since 1983, small tech firms have secured 60,000 awards 
worth more than 12 billion to fund innovative research with 
small companies. Over the past 15 years, 31 North Dakota firms 
have received more than 23 million in SBIR awards. SBIR has 
provided key innovation funding to such North Dakota companies 
as AGSCO, Killdeer Mountain Manufacturing, Meridian 
Environmental Technologies, Microbeam Technologies, Phoenix 
International, Sioux Manufacturing, Harvest Fuels, Technology 
Applications Group, CEO Praxis, and many more.
    The research would not have been done in these firms 
without SBIR funds and in some cases the company would not have 
survived without SBIR funds. North Dakota would be much poorer 
without these tech ventures.
    North Dakota ranks 47th of the 50 States in population, but 
49th in the number of SBIR proposals submitted. However, North 
Dakota ranks number 4 in conversion of SBIR proposals at 27 
percent, thus we rank number 37 in total SBIR awards. We are 
fighting above our weight, but we also know we can do better 
with more proposals coming from more companies.
    A key to North Dakota's success is these two SBA programs 
for SBIR rural outreach, and they are the SBIR Rural Outreach 
Program (ROP) and the Federal and State Technology Partnership, 
also called FAST. They provided competitive grants to the 
bottom 25 States to increase participation and competitiveness 
in the SBIR program.
    Two and a half million dollars of funding, a modest amount 
for these outreach programs, was discontinued after fiscal year 
1904.
    Several senators urged the SBA to restore cuts in ROP in 
their--in fiscal year 1905 and 1906 budgets.
    Several senators sent a letter to SBA and I quote. These 
programs are critical to the cultivation of technology and 
high-tech small businesses through increased participation in 
the SBIR and STTR programs in rural and underutilized States. 
In the past, firms located in a relatively small number of 
States have been more successful in securing SBIR and STTR 
awards, but the FAST and ROP programs have helped small 
businesses in every part of the country compete effectively for 
SBIR projects. These awards not only provide R&D dollars to 
small high-tech firms, but they encourage technical 
advancement, improve overall productivity, increase economic 
growth and create jobs. Eliminating these important initiatives 
is unwarranted and unwise.
    I could not have said it better myself, so I didn't.
    The center received several SBA ROP grants between 50,000 
and 100,000 dollars per year. With that money, with less than 
100,000 dollars per year in Federal funds, we brought in more 
than two million dollars a year in SBIR awards to North Dakota, 
a return of 20 to 1.
    The few years we did not secure a SBA grant for SBIR 
outreach, the number and quality of the SBIR proposals dropped 
precipitously. There was a direct correlation. Congress needs 
to restore these SBIR outreach funds if they are serious about 
innovation in rural States and before we eventually become a 
divided nation of haves and have-nots of innovation in 
business.
    We have accessed several other Federal programs to build 
viable innovative ventures. Please refer to my handout for a 
listing of other useful Federal programs, but let me say that 
public and private investment is the mother's milk of 
innovation and entrepreneurship. That investment is too often 
too scarce, and it is vital.
    Congressmen Dan Manzullo of Illinois and Earl Pomeroy of 
North Dakota recently introduced H.R. 5198, the Access to 
Capital for Entrepreneurs Act of 2006.
    This legislation would create a 25 percent investment tax 
credit for individual angel investors to invest in qualified 
small business. The credits would be available for investments 
up to $250,000 in an entrepreneur venture. Your support of this 
legislation would be greatly appreciated.
    On the last page of my handout, I list ten reasons why 
Federal support of higher education is so important.
    Here they are.
    No. 1, creates critical infrastructure such as buildings, 
labs, incubators, tech parks, entrepreneur programs, and other 
infrastructure.
    No. 2, it develops our talent pool and their potential. 
Human and intellectual capital are vital to a knowledge, 
technology, and innovation-based economy.
    Three, it supports graduate students and enhances 
undergraduate education as it helps recruit, educate, and 
retain talent from North Dakota and around the world.
    No. 4, develops research centers of excellence.
    No. 5, funds vital outreach to innovators connecting the 
university to entrepreneurs and investors.
    No. 6, provides critical seed funding for high risk R&D, 
SBIR, and startup funds.
    No. 7, attracts State and private investment through a 
match in leverage, thus priming the pump.
    No. 8, keeps North Dakota and America competitive by 
creating new ventures, new industries, new economic engines. 
Think of the innovations alone that are going to come out of 
UAV.
    No. 9, lays the groundwork for future innovation and 
success. Basic research leads to applied research, leads to 
innovation, which leads to new industries.
    And, ten, it keeps our mature industries, like energy, ag, 
and manufacturing, competitive through innovation.
    On behalf of the State's entrepreneurs and the UND Center 
for Innovation, thank you again for the opportunity to submit 
this testimony to the committee and I would welcome many 
questions you may have.
    [The prepared statement of Mr. Bruce Gjovig follows:]

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    Senator Conrad. Thank you very much, Mr. Gjovig. For the 
North Dakota based the companies that you have listed, AGSCO, 
Killdeer Mountain Manufacturing, Meridian Environmental 
Technologies, Microbeam Technologies, Phoenix International, 
Sioux Manufacturing and the rest, how important would you say 
Federal funds have been to those companies' success?
    Mr. Gjovig. In at least 80 percent of them, they were 
essential and critical. Without them, there would probably be 
no company. Another 20 percent they would have been limping 
along. They would not be the company they are. They probably 
would not have the innovation and technology they have but they 
probably have some survivability, but many of them just simply 
wouldn't exist without SBIR, and they certainly wouldn't be the 
growing and vital companies that they became.
    Senator Conrad. If you were able to speak directly to my 
colleagues that are on the conference committee--and you know 
how it works in Washington, you have you been there--what would 
you say? We often have a very brief moment to make an 
impression on our colleagues.
    In the conference committee, we will be dealing with every 
budget issue. We will be dealing with the war in Iraq. We will 
be dealing with veterans' funding. We will be dealing with 
Social Security. We will be dealing with Medicare. We will be 
dealing with every aspect of Federal funding, funding for the 
parks of the nation, law enforcement, FBI, CIA, and all the 
rest.
    If you were to have just a brief moment to impress upon my 
colleagues, who are skeptical about whether or not Federal 
funds are actually producing tangible results, what would you 
say to them to convince them?
    Mr. Gjovig. I would let them know that since World War II 
half of the technical innovation in this country has come from 
the Federal funding. You can directly trace back to the Federal 
fundings from World War II and we are alone the superpower and 
the dominant power in the world because of innovation and 
technology, and that can be traced right back to the Federal 
incentives and taking those high-risk funds from the very 
beginning.
    And it's the magic of America in combining this research 
and technology with an entrepreneur and innovative spirit, and 
the other programs are--by itself doesn't get the job. You need 
the D, you need the C as Gerry so often talks about, and that 
in combination is what has created the dynamic economy we have.
    And we can't afford the work. We don't have a great economy 
and we can't fight a great war unless we have the innovation so 
much provided by the companies and universities that--that are 
part of this country.
    Senator Conrad. Thank you. I think that is a very good 
answer. Hopefully, when I use it with some of my colleagues, it 
will be effective.
    Mr. Gjovig. You don't have to attribute it either.
    Senator Conrad. I thank you for that.
    Dr. Zimmerman, thank you so much for being here, and we 
look forward to your testimony. Good to have you here.
    Dr. Zimmerman. Senator and Members of the Committee, my 
name is Delore Zimmerman and I'm president CEO Praxis, 
Incorporated. We are an economic strategy and development 
company here in Grand Forks and Fargo.
    As Bruce said, we are an SBIR winner, an eight-time winner 
actually over the last 10 years. The program has enabled us to 
do things we never could have done without the Federal funding 
and to penetrate new markets across the country, so I think the 
SBIR program I would say it's the fastest shipping Federal 
fleet. That's how I would put it.
    But I want to thank you for holding this hearing today on 
the impact of Federal funding on higher education. The United 
States has always relied heavily on the innovation of its 
people to compete in the world marketplace and our nation's 
universities and colleges play a key role in that part of our 
competitiveness.
    They are very important innovation-generating institutions.
    We face a serious fiscal environment in our country today, 
but there is no wisdom, absolutely none, in cutting investments 
in higher education. A world-class knowledge and learning 
infrastructure is a very vital part of competing in a global, 
knowledge-driven economy.
    A strong higher education system is critical to developing 
and nurturing an informed citizenry and sustaining a robust 
democracy.
    I would like to briefly highlight three areas in which I 
think higher education plays a key role. One, our nation's 
standard of living; two, our economy's competitiveness and 
productivity; and, three, our people's quality of life.
    There is a proven and strong relationship between the 
economy's development and use of science and technology and its 
standard of living. Research by the Milken Institute, for 
example, shows that 75 percent of the variability in a State's 
per capita income can be accounted for by its ability to 
convert its science and technology assets into economic 
development. Our higher education system, at this point, has 
been a tremendous economic generator of a middle class, but 
other countries are making strides to rival what we have worked 
very hard to build.
    On this front there is really good news in North Dakota. 
The most recent National Science Foundation's Science and 
Engineering Indicators for 2006 shows that we rank second in 
terms of academic R&D per $1,000 of gross State product. And, 
in a complete shift from the past, we rank fourth today, not 
40th, in terms of technology startups as a percentage of total 
business, which is a fundamental turnaround from the last 
decade.
    North Dakota's recent ranking among the States as having 
the third highest growth in per capita income, I believe, 
reflects our determined efforts in the last few years to better 
utilize the assets of our universities and colleges for 
creating new economic opportunity.
    Our universities and colleges, along with our K through 12 
schools, are also important assets in creating a skilled work 
force, and here again the returns are substantial. Research by 
the National Bureau of Economic Research has shown that a 10-
percent increase in workforce education results in almost an 
8.5 increase--18.5 percent increase of productivity in 
manufacturing and almost a 13 percent increase in 
nonmanufacturing industries.
    A comparable investment increase of 10 percent increase in 
investment and equipment yields a three percent gain in 
productivity, so that means that the marginal value of 
investing in human capital is about three times greater than 
that for machinery, and I oftentimes think that we've become 
too enamored with the technology and don't pay enough attention 
to the human capital dimension, which depends almost entirely 
on higher education.
    There are, of course, benefits to our society of higher 
education for which mere numbers and statistics are inadequate. 
People educated in the humanities, the sciences and the arts, 
are more likely to participate in civic affairs of their 
community, State, and country.
    They have a greater appreciation of other cultures and 
international events. Advancements in science at our 
universities and colleges have resulted in tremendous benefits 
for the health and well-being of Americans and people almost 
everywhere around the world.
    Equally important I think it's important to mention that 
the people that work in our institutions of higher education 
are tremendous assets to our communities and region. Oftentimes 
they are the leading force and the driving force behind the 
economic development of an area.
    I currently serve as a private sector member of the North 
Dakota Higher Education Roundtable and we have recently, and 
unanimously, recommended that higher education's budget 
comprise no less than 21 percent of the upcoming of the total 
State budget. A comparable commitment at the Federal level I 
think would be a wise investment in our nation's future.
    In closing, higher education in this country has always 
been a gateway for people to a better life and the return on 
investment for our country has been substantial in so many 
ways, both economic and social. In that case, I think our most 
prudent course of action is to increase that.
    [The prepared statement of Dr. Delore Zimmerman follows:]

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    Senator Conrad. Thank you, Delore.
    Dr. Zimmerman. Thank you, Senator Conrad.
    Senator Conrad. Excellent testimony and, again, right on 
point with what we are trying to achieve here today. Let me ask 
you the same question I asked Mr. Gjovig. If you had just a few 
sentences and you're in the heat of the conference committee, I 
can tell you it gets rather intense in there, and you're facing 
a very skeptical colleague, who says, Senator Conrad, this is 
just a waste of money--this is nothing but gilding the lily--
which I had a colleague say to me in a recent meeting about 
higher education spending, what would your rejoinder be?
    Mr. Zimmerman. I would say that the Federal government is 
allowing research and development on things that would not be 
done on the private sector at this point. With the nature of 
extreme capitalism, if you want to call it that right now, 
lower cost, higher value added, these sorts of things just 
aren't being done because of the timeframe that returns are 
happening, so the Federal funding is just so important to make 
these--to get these things started.
    Senator Conrad. And what is the consequence of the failure 
to get them started?
    Mr. Zimmerman. Well, we'll continue to fall behind in some 
of these areas.
    Senator Conrad. As a nation?
    Mr. Zimmerman. Yes.
    Senator Conrad. So what are the implications? We are the 
most powerful nation in the world, the richest nation in the 
world. We see China coming up very rapidly. Our indebtedness to 
the world has skyrocketed.
    We have doubled what we owe the rest of the world in five 
years, more than doubled. So that means we now owe the Japanese 
almost $700 billion. We owe the Chinese approaching $300 
billion. We owe the Caribbean Banking Centers almost $100 
billion. We owe the South Koreans almost $50 billion.
    How central is higher education to our ability to continue 
to be the most powerful country in the world?
    Mr. Zimmerman. Well, there's a lot of people who claim that 
our higher education system is our No. 1 asset and I would not 
dispute that.
    Senator Conrad. Thank you very much. I appreciate your 
testimony and the testimony of all of the others. If any of you 
who have already testified have something else that's pressing, 
we would certainly understand if you need to leave at this 
time.
    I'm going to conclude with testimony from two TRIO students 
that are with us today, Logan Tong and Gary Moore, a Veterans 
Upward Bound student.
    Logan, welcome.
    Mr. Tong. Thank you, Senator. I'm 20 years old and I'm a 
sophomore at the University of North Dakota, and it was only 
Wednesday of this week that I found out I would be talking to 
you all today, so forgive me if I stutter.
    I'm up here to tell you a two-party story about my 
experiences with life, education, and the ever-important 
pursuit of happiness.
    To begin, I was born to two lower-middle, working-class 
parents, neither of whom had more than a high school education. 
They both worked very hard to ensure I was comfortable. Yet 
despite their efforts, I was still an anxious child.
    And though my father had a very strong work ethic, he found 
himself in the tight grip of addiction, self-medicating a 
physical disability with alcohol and drugs. For as far back as 
I can remember, every would-be meaningful moment I spent with 
my dad was while he was intoxicated.
    No one, including my mother, would acknowledge he had a 
problem. Mom was off depressed and always in denial about my 
dad's unhealthy habits. She enabled him, and I continued to 
grow up with less than attentive parents. From as early as the 
first grade, I spent my afternoons and summers without proper 
supervision or daycare, due to the fact that my parents simply 
could not afford it.
    As I've already mentioned, I was a very anxious kid.
    That anxiety manifested itself into physical pain 
throughout my head and neck. It affected me daily, to the point 
where school was no longer an option. I couldn't last a day 
without getting a major headache.
    By my fourth year in high school--
    Senator Conrad. I can tell you that a lot of my days in 
Congress are like that.
    Mr. Tong. By my fourth year in high school, I had only 
earned 9 of the 24 credits required to graduate.
    My childhood caught up with me and I had to make a 
decision.
    I dropped out of high school in order to pursue a GED. 
That's when my development with the federally funded TRIO 
Programs began. I studied for my GED in the Grand Forks Adult 
Learning Center, and once a month an advisor from TRIO would 
visit the center to give presentations on very topics, 
including higher education, technology, personal finance, and 
other services TRIO has to offer.
    For those who don't know, TRIO Programs helps perspective 
and current college students use their available resources to 
succeed. From middle school to those pursuing their Ph.D., TRIO 
has a far and effective reach for young people who might not 
otherwise grasp that they can excel in college.
    I spent a year studying for my GED exams, and I proudly 
received my diploma and salutatorian honors in May of 2004. 
Still though, my involvement with TRIO was just starting. I 
used the next year to volunteer and get involved with TRIO 
Programs. I mentored high school students through TRIO's Upward 
Bound Program and spoke about my struggles to middle school 
classrooms with a fellow TRIO student.
    In August 2005, I started classes at the University of 
North Dakota. I earned a 4.0 GPA in my first semester and was 
placed on the dean's lift. TRIO helped me all the way. I 
couldn't have done it without them, nor would I have thought to 
even try.
    I'm proud to say that my involvement with TRIO continues 
and hopefully will for many years in one way or another. I've 
even taken a summer tutor/advisor job with TRIO's Upward Bound 
Program. They were kind enough to let me take the afternoon off 
to do this. I'm excited that there is an opportunity for 
students to overcome even more challenging obstacles than I 
faced and still have a good chance to succeed. I'm grateful for 
the opportunity to give back to such an altruistic program.
    In the future, I hope to continue with TRIO by applying for 
the Ronald E. McNair Postbaccalaureate Program, a program 
designed to help those planning to earn their master's degree 
or Ph.D.
    Two years ago, I was what seemed like a liftime away from 
just graduating high school. College never crossed my mind. 
Without the Federal funding required to offer TRIO Programs and 
Pell Grants, I wouldn't be here in front of you all. I wouldn't 
be able to tell you that I am succeeding.
    It is my sincere hope that the decisionmakers will hear not 
only my story but countless other stories of success shaped by 
government-funded agencies like TRIO, agencies that offer 
people the help they need and foster the dreams that so many 
dismiss as unattainable. These programs are a crucial element 
to a brighter future, a future that everyone can enjoy and take 
part in. Past, present, and future generations will all benefit 
from support of these programs. Thank you.
    [The prepared statement of Logan Tong follows:]

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    Senator Conrad. Thank you very much, Mr. Tong. You are a 
very impressive young man. I can't think of a better example of 
why a program like the one you have benefited from should not 
be eliminated, and I hope very much I can share this story with 
some of my colleagues.
    Mr. Tong. Please do.
    Senator Conrad. It is very powerful.
    Gary, welcome. It is good to have you here.
    Mr. Moore. Thank you, sir. I'm Gary Moore.
    Approximately a year ago, I retired after serving 26 years 
in the United States Air Force. I'm married. I don't know why 
she stuck with me but for 24 years she has been with me and we 
also have two sons, one of whom is working in pursuing his 
degree and my youngest son, who is currently a United States 
Army cavalry scout serving his second deployment in southwest 
Asia.
    Approximately--or through that 26 years I served two tours 
out at the Grand Forks Air Force Base, totaling up to 14 years, 
voluntarily mind you.
    Senator Conrad. We are glad to have had you there.
    Mr. Moore. And the last eight and a half years of my 
service was as a uniformed First Sergeant.
    Prior to retiring, you know, my wife came up to me and she 
said, ``Gary, what are you going to do when you grow up?`` You 
know, this was about a year before I retired. I decided I 
wanted to go into social work.
    Well, I knew I needed formal education for that.
    After I retired and going through the Veterans 
Administration, I'm also a disabled vet. They're taking care of 
the funding for my schooling, but there's more to it than just 
funding. I've got to be able to learn the information, learn 
the--obtain the knowledge to be able to perform these duties. 
That's where Veterans Upward Bound came in.
    First thing, they conducted an assessment. I found out 
something I already knew, my math was horrible. I also found 
out that for 26 years I had been writing like I was in the 
military, not in the studying world, and, ladies and gentlemen, 
let me tell you there's a big difference.
    Personally like I said, you know, I was a disabled vet. 
Could I physically go to school every day? Could I do this? And 
also a nontraditional student, which I'm finding has a 
definition of basically not 19. You know, there's a lot of 
things, you know, that go through your head at this point.
    How did Veterans Upward Bound help me out? The first thing 
that Colleen Rude did is she put me into 20-plus hours of 
hands-on math and English schooling, training, education. At 
this point today, I now understand why you want to add numbers 
and letters, algebra. I never got it before, but now I'm 
getting it.
    A lot of writing. I now write in paragraphs instead of 
bullet statements, and this morning I met with my social worker 
advisor and she assured me that I will get more training as I 
go on with my degree.
    Senator Conrad. Gary, would you be willing to have a 
consultation with my communications director right after this? 
I have been trying to convince him that this paragraphing is a 
good idea.
    Mr. Moore. I can help you with your bullets, sir.
    Senator Conrad. OK.
    Mr. Moore. Additionally and probably the most important 
part--I mean don't get me wrong. Math and English were solid. 
It's good knowledge and it's ongoing, but the most important 
part was probably the counseling, the formal and informal part, 
transitional counseling.
    You know, a lot of us in Veterans Upward Bound Programs are 
retiring, some are separate--separated troops after four or 8 
years. This is a different world out here that you live in than 
what we are used to, and if you don't believe me, go out there 
to that base for about 30 days and do what they do and see if 
that's different from what you're used to.
    They do the transition counseling with us. They would 
counsel us on the civilian world, just things that--you know, 
why are we doing this, and Colleen and her folks there would 
explain it to us, would guide us through it.
    Most importantly was how to survive academiaville, college. 
You know like I said, a year ago I walked around at the Grand 
Forks Air Force Base and I had 19 year olds, 20 year olds, 21 
year olds, my airmen, referring to me as First Sergeant, Shirk, 
Top, sometimes sir. I walk around here and these same 19, 20, 
21 year olds take the phone away and go ``Dude.`` That's a 
little different, your know. Colleen and her folks exposed us 
to those things.
    All right. And the last part of it is the veteran 
interaction we are supposed to give each other. We all have 
that bond and those things, you know, help you through this. 
Has Veterans Upward Bound made a difference? I will tell you 
today there are graduates of Veterans Upward Bound going 
through the engineering program.
    In fact, a couple of my former troops said we could sit 
there between the three of us. We couldn't get one plus one 
equals three, two, four. Well, he's out here going through the 
engineering program through the heavy math and science 
programs.
    I have other friends that have completed the physician 
assistance programs here that are out there and they are 
doctoring folks. Other students are graduates of Veterans 
Upward Bound. They have gone on to programs for underwater 
welding, who are out there as entrepreneurs in the business 
world.
    For me personally I'm pursuing my degree in social work, 
actively pursuing it. I'm doing well. My outlook is bright, my 
confidence is high, and honestly because of Veterans Upward 
Bound myself and veterans that have come before me and those 
that are going to be coming behind me we owe a debt of 
gratitude to Veterans Upward Bound because it's helping us pay 
back society or contribute in a greater manner to society.
    Thank you very much.
    Senator Conrad. Thank very much. That was just terrific. I 
tell you I could not be more pleased with the testimony we have 
had here today. I came here with a goal and hope that we would 
receive testimony that would help us in the very tough fight 
that is to come. And, believe me it is as tough a fight as I 
have ever seen because of the budget that has been set up and 
partly because of the extraordinary war funding costs that have 
been brought to us in what are called supplemental 
appropriations bills.
    The war costs were not budgeted for. There was no warning 
given to the Congress that the administration was going to come 
and ask for nearly $100 billion. That's a stunning amount of 
money, even to the Federal government, and that has soured the 
atmosphere quite dramatically in the budget world in 
Washington. As you can imagine, people are scrambling as to how 
we are going to pay for all these things, which it is made more 
difficult by the fact that we are now running very large budget 
deficits and adding very substantially to our national debt.
    This year with the budget that has been proposed, $600 
billion, will be added to the debt in 1 year. That is truly 
stunning when the debt is in the range of $8 trillion overall 
and you add $600 billion in 1 year. Over the next 5 years of 
this budget, $3 trillion will be added to the debt. Over the 
previous 5 years, we added $3 trillion to the debt.
    You can see these are stunning increases, and they are 
leading to dramatically increased budget pressure. That is what 
is happening and different people have different priorities. 
Some of my colleagues are saying higher education is nice but 
it is not essential. They say the war, that is essential; and 
rebuilding after Katrina and Rita, that is essential. On the 
other hand, higher education can be cut; people will have to 
borrow more money but somehow they will get through.
    I think today we have received testimony that will help 
persuade at least some of our colleagues that higher education 
is much more than a nice thing. It is much more than one of 
those things you would like to have but do not need to have. As 
I see, it if we do not invest resources in education, America 
is going to slip in its position in the world. We have already 
slipped financially. We have now become the biggest debtor 
nation in the world. We owe more money than any other country. 
And, I think the biggest, the single biggest, mistake we could 
make is not to continue to invest in education, technology, and 
research because that is the one place we continue to lead and 
it is what allows us to be the most powerful nation in the 
world and the richest nation in the world. To give up that 
edge, I think, would be a profound mistake, and I believe I 
have heard here today very strong evidence for that position.
    I want to thank each and every one of you for your 
testimony here today. The Senate Budget Committee thanks you 
for your contributions.
    You know, the Senate Budget Committee has already completed 
its work for the year in terms of hearings on the budget in 
Washington. But given the fact that we are going into a 
conference committee and what we are hearing from some of our 
colleagues, I thought it would be critically important to have 
today's hearing so that we would have fresh evidence to bring 
to this fight. I want to especially thank you for your 
excellent testimony.
    I know here we are on a beautiful Friday afternoon.
    I think some people in the audience here would have 
preferred to be on the golf course perhaps. I very much 
appreciate your taking the time to be here and provide these 
insights and the committee thanks you as well.
    With that, we adjourn this hearing.
    [Whereupon, at 4:06 p.m. the hearing was adjourned.]

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 BUDGET IMPACT OF CURRENT AND PROPOSED BORDER SECURITY AND IMMIGRATION 
                                POLICIES

                              ----------                              


                       WEDNESDAY, AUGUST 30, 2006

                                       U.S. Senate,
                  Committee on the Budget, Aurora, Colorado
    The Committee met, pursuant to notice, at 2:30 p.m., in 
Aurora City Council Chambers, 15151 East Alameda Parkway, Hon. 
Wayne Allard, presiding.
    Present: Senator Allard.
    Staff present: Scott Gudes, Majority Staff Director, 
Jennifer Pollom, Majority Staff, Samuel Donoghue, Majority 
Staff, and Ryan Smith, Senator Allard's staff.

           OPENING STATEMENT OF SENATOR WAYNE ALLARD

    Senator Allard. We're going to go ahead and call the Budget 
Committee hearing to order.
    I just want to take a moment here to inform those of you 
who have taken interest in this hearing to understand the 
hearing rules of a Senate Committee.
    Now, first of all, we don't allow demonstrations in a 
Senate Committee Hearing, and we would ask that there will be 
no demonstrations from the audience.
    We hear strictly from two panels today, and we will ask the 
first panel to make 10-minute statements and then there will be 
a question and response period from the Committee.
    Even though we will ask our panel members to give a limited 
statement to the Committee, their full statement will become a 
part of the record.
    The Senate Budget Committee Field Hearing is on the Budget 
Impact of Current and Proposed Border Security and Immigration 
Policies.
    Good afternoon. It is my pleasure to welcome you to this 
Senate Budget Committee Hearing on the Budget Impact of Current 
and Proposed Border Security and Immigration Policies.
    I want to thank each and every one of you for attending 
today. Today's hearing is the realization of what I've been 
saying for several months: it is time that we take this debate 
out of Washington and place it squarely in the hands of the 
American people--where it belongs.
    Taking the debate to the citizens of Colorado serves two 
purposes. First and foremost, it will allow Coloradans a voice 
in the debate, and second, it is an opportunity for 
Coloradans--myself included--to study the impact of proposed 
legislation on the future of this country.
    I thank Chairman Judd Gregg for calling this important 
hearing.
    While this is a hearing of the Budget Committee, and thus 
on the budgetary impact of legislation, the underlying policies 
we are examining--immigration--happens to be one that evokes 
strong emotions from people on both sides of the debate.
    As a United States Senator, it is my responsibility to see 
through the cloud of emotional rhetoric that often blurs a 
debate and do what is in the best interest of the United States 
and the citizens of Colorado.
    The principle which I have relied on to guide me through 
the debate is simple: the rule of law. While America is a 
nation of immigrants, she is also a nation of laws. Immigration 
laws are no exception.
    To me, upholding the rule of law means securing our 
borders, stepping-up interior enforcement, and not rewarding 
those who have broken our law, especially at the expense of 
those who are abiding by the law.
    While there has been considerable debate with my colleagues 
who disagree with me on that point, one aspect of the debate 
that I do not believe has received the attention it deserves is 
the impact on the budget of our Federal, State, and local 
governments.
    As a member of the Senate Budget Committee, it is my duty 
to ensure that the budget aspect of all legislation receives 
the attention it deserves--including immigration.
    This aspect is particularly important for the American 
people to understand because ultimately, as taxpayers, will 
bear the financial burden.
    Toward that end, in May of this year I raised a budget 
point of order--a tool that allows a Senator to require a 
closer look at the long-term budget impact of legislation--in 
response to an immigration proposal being considered on the 
Senate floor.
    While that inquiry brought some needed attention to the 
impact on the Federal budget, the U.S. Congress has not had 
sufficient opportunity to hear from our Nation's communities 
who are at the front lines of the immigration debate.
    From law enforcement to education to health care, State and 
local governments bear many of the costs associated with 
inadequate border security and interior enforcement.
    Rich Jones and Robin Baker of Colorado's Bell Policy Center 
estimate the costs of providing federally mandated Government 
services to Colorado's approximately 250,000 illegal immigrants 
is nearly $225 million per year.
    Another group, Defend Colorado Now, estimates the cost to 
Coloradan's to be in excess of $1 billion per year.
    While estimates vary, one thing is for certain: Federal 
immigration policies have real and profound impacts on States 
and communities, many of whom struggle to meet the demand for 
services from their current populations.
    Indeed, with the looming retirement of the baby boomers, 
even the Federal Government is grappling with how to pay for 
its existing obligations.
    To give you an example of how serious the issues is, by 
2030 the cost of just three entitlement programs--that's Social 
Security, Medicare and Medicaid--alone will exceed the total 
cost of Government today.
    And if you'll look up on the screen, you will notice a 
chart there that shows that in 25 years, spending on just those 
three entitlement programs will exceed the total cost of the 
entire Federal Government today. That is under current law.

[GRAPHIC] [TIFF OMITTED] 26823.243


    The next slide that we put here for you shows the mandatory 
spending, what's accounted for only a small fraction of the 
budget, today had accounted for nearly two-thirds of all 
Federal spending, and is expected to grow even more.

[GRAPHIC] [TIFF OMITTED] 26823.244


    The one-third is where we have the discretionary spending, 
and that's where a lot of the debate is in the media, and they 
talk about Congress' spending, it's all in discretionary 
spending. It's not in the majority of the budget, which is the 
two-thirds that you see growing there at a tremendous rate.
    To put this in perspective, the chart shows that 
outstanding Government promises is larger than the total net 
worth of every citizen, and then all taxes that are collected 
in U.S. history.

[GRAPHIC] [TIFF OMITTED] 26823.245


    With entitlement programs already consuming the majority of 
the budget, the Senate bill would make millions more eligible 
for benefit programs in the next 10 years. This chart shows the 
increase in the number of Medicaid beneficiaries alone.

[GRAPHIC] [TIFF OMITTED] 26823.246


    Then the next chart shows what happens with new Social 
Security beneficiaries in each year, and then the chart showing 
up now shows more on what we see as far as Medicare growth in 
beneficiaries.

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    Now, these are all charts and figures that have been put 
together by the Congressional Budget Office. The Congressional 
Budget Office is a nonpartisan agency that serves Members of 
Congress, giving them budget information that they need to make 
decisions regarding the Nation's budget.
    The next chart that we have up here, as you can tell, put 
all these programs together, and we see an alarming growth in 
programs over the next 10 years, before millions more will be 
legalized after the 10 years.

[GRAPHIC] [TIFF OMITTED] 26823.249


    The testimony that we'll be receiving today, I think it's 
worth mentioning, that the CBO expert that will be testifying 
carries the first 10 years, and then we will be hearing 
testimony from the Heritage Foundation, which will go beyond 
the 10-year period.
    And that is important as far as the Senate legislation is 
concerned, because it begins to take different action after the 
10-year period that would have an impact on your budget.
    These staggering statistics exacerbate the need to take an 
especially close look at proposed changes to our immigration 
policy that have the potential to increase the population by 
millions and increase spending by hundreds of billions of 
dollars.
    This month, the Department of Homeland Security reported 
that 11 million illegal immigrants lived in the United States 
at the beginning of this year.
    Significantly, the Department of Homeland Security reports 
that the number has grown by nearly a half million people each 
year since the beginning of this century.
    This number tells me that our first priority should be to 
secure the border. Without properly securing our borders, we 
remain vulnerable not only to illegal immigration, but also to 
those who wish to harm America, such as criminals, drug 
traffickers or terrorists.
    The House and, earlier this year, the Senate both passed 
immigration bills purporting to address the immigration 
population. The cost of implementing each, as calculated by the 
Congressional Budget Office, is shown here on this chart.

[GRAPHIC] [TIFF OMITTED] 26823.250


    The House-passed bill focuses on securing the border. The 
Senate bill, while addressing border security, also grants 
citizenship to millions of illegal aliens who already are here 
and untold millions more who have yet to enter the country.
    The Congressional Budget Office estimates that 24 million 
people will obtain legal status under the Senate bill in just 
the next two decades.
    Scholars, such as Mr. Robert Rector, who we will hear from 
today, believe that number is vastly understated and is 
actually closer to 60 million.
    My colleagues and fellow members of the Committee, notably 
Jeff Sessions, earlier this year released an impact analysis 
showing a potential increase of 217 million immigrants, or 66 
percent of today's population over the same period.
    Make no mistake about it, legal immigration can be a good 
thing. As I said earlier, America is a nation built on the 
spirit and hard work of immigrants. Recognizing that truth, 
last year America invited more than one million new permanent 
immigrants--far more than any other country.
    Because America is admired the world over as the land of 
opportunity, an untold number of the world's six billion people 
want to come to the United States in pursuit of that 
opportunity--and understandably so. Because we cannot possibly 
accommodate them all, we are forced to make tough choices. It 
is imperative that we make those decisions well informed ones.
    Today is a unique opportunity to hear from experts in the 
field as well as State and local officials who are on the front 
lines of immigration policy.
    We will hear from two panels today. The first panel is 
compromised of our own Governor Owens, Paul Cullinan of the 
Congressional Budget Office, and Robert Rector, of the highly 
respected Heritage Foundation.
    Sitting on our second panel are Mayor Ed Tauer, Dan 
Rubinstein of the Mesa County Meth Task Force, Helen Krieble of 
the Krieble Foundation, Paula Presley of the El Paso County 
Sheriff's Office, Tony Gagliardi of the National Federation of 
Independent Business, and Ken Buck, Weld County District 
Attorney.
    Before we begin with our panels, I would like to take a 
moment to thank each of the groups and concerned citizens that 
contacted my office with an interest in this hearing. The 
overwhelming outpouring of interest demonstrates just how 
important this issue is to Coloradans.
    Because we could not accommodate everyone at the witness 
table, I am inviting people in the audience to submit written 
statements, which I will bring with me back to Washington.
    Thank you again for coming.
    With that, I'd like to welcome our first panel. Governor 
Owens, thank you for your time today and your leadership on 
this issue. I'd like to begin with you, Governor.

 STATEMENT OF GOVERNOR BILL OWENS, GOVERNOR, STATE OF COLORADO

    Governor Owens. Mr. Chairman, thank you very much. And 
Senator, I appreciate this opportunity to represent the State 
in terms of this discussion. I particularly appreciate--it's 
good to see you again. Senator Allard and I served together.
    I am not a rookie at appearing before the Senator. When he 
was Chairman of Senate State Affairs in the State Senate, I 
appeared before you a number of times, so it's good to be with 
you again, Senator.
    You know, thank you for holding this Field Hearing on a 
very important subject. I believe that the purpose of this 
hearing, which is to better, perhaps, refine the costs 
associated with illegal immigration, it's a very important 
purpose. And, again, I appreciate the invitation to testify.
    I have with me today a number of the members from my 
Cabinet who are most involved in this issue.
    I'd like to particularly recognize Marva Livingston 
Hammons, who is Executive Director of the Department of Human 
Services.
    Also, Steve Toole, who is Executive Director of the 
Department of Health Care Policy and Finance, as well as 
Michael Cooke, who is Executive Director of our Department of 
Revenue.
    While many of our departments are involved with and 
impacted on the issue of immigration, these three professionals 
are perhaps those who are most in the front lines.
    You know, as we've learned here, Senator, in Colorado, 
while there are very real costs associated with illegal 
immigration, it's very difficult for a number of reasons to 
specifically quantify these costs.
    I think efforts such as this hearing will help all of us 
identify better and understand the fiscal impacts of the 
challenges that we face, not only at the State level, but also 
at the Federal level.
    It is clear that State and local governments do incur 
significant costs related to illegal immigration, often due to 
Federal mandates, often due to Federal law that requires that 
certain things be provided or, in fact, prohibit us from making 
sure that these services are only given to people who are here 
illegally.
    There are obviously significant costs associated with 
education. In Colorado, as you remember from your legislative 
days, about 42 cents out of every State general fund dollar 
goes to K-12 education. And many of the students in our 
classrooms are here as a result of illegal immigration.
    We're not allowed to ask the questions regarding whether 
they're here illegally or whether their parents are, but we 
know from a number of sources that there are, in fact, and as a 
humane State, that we provide education. We know that there are 
large numbers of students who are educated in Colorado who are 
here either illegally themself or were born to moms and dads 
who themselves are here illegally.
    The Federation for American Immigration Reform recently 
estimated in Colorado that the cost of educating students here 
illegally in 2004 was $235 million. That's an annual figure, 
almost a quarter of a billion dollars for students who are here 
illegally.
    FAIR further estimates that the cost to educate the U.S.-
born children of illegal immigrants, and these are the children 
who are citizens themselves but their parents were here 
illegally, was $329 million.
    Well, that means that the sum of those two numbers, it's 
about a half a billion dollars by FAIR's estimate that we spend 
annually in the State of Colorado to educate children who are 
here illegally or children of parents who are here illegally.
    The concern is that while we may have 250,000 persons here 
illegally today, that number has been extrapolating -expanding 
quickly. We aren't able to precisely put a number to how much 
each year, but as you mentioned, U.S. estimates are a half 
million more per year every year since 2000 nationally. 
Colorado is about 1 percent of the national population, so you 
can see that it's a significant number here in Colorado.
    Another area in which we can very precisely quantify the 
costs, involves the Corrections Department, Public Safety. 
We're able to identify the impact to our State Correctional 
System for housing those who are here illegally who are 
convicted of crimes and who are, in fact, put in our 
Corrections System.
    In Colorado prisons today, we have about 950 persons in our 
system who are here illegally and who, upon release, will be 
detained by Federal authorities for likely deportation.
    At a cost of about $27,000 per prisoner, the annual cost to 
taxpayers to house these offenders is more than $25 million.
    Another example involves Medicaid. Half of all Medicaid 
costs are paid for by the State, another half are paid for by 
the Federal Government.
    A report prepared in Colorado by our legislature's Joint 
Budget Committee, found that 41 percent of all Medicaid births 
in Colorado are to non-citizens. Forty-one percent of the 
children born with the assistance of Medicaid, paid for by 
Medicaid, are born to non-citizens. Those individuals could be 
here legally or illegally, but they are not U.S. citizens; most 
of them are actually here illegally.
    That equates to about 8,500 births annually at a cost of 
about $3,500 per birth that the taxpayers of Colorado are 
paying, just in terms of Medicaid births. That comes to about 
$30 million a year we're paying for these more than 8,500 
babies who we do pay for in terms of Medicaid. These are real 
numbers and they're real costs to taxpayers. Illegal 
immigration is one of the driving forces involved in these 
costs, and this cost is, again, increasing.
    There are some that think that 250,000 persons in a State 
the size of Colorado isn't a real problem. Well, if 250,000 
persons here illegally isn't yet a problem, is half a million? 
Is three-quarters of a million? Because right now, what we're 
seeing is these numbers increasing, we believe, significantly 
on an annual basis.
    The Pew Hispanic Center estimates that a quarter of a 
million illegal immigrants are already here in Colorado. 
Colorado is fifth in the Nation out of the 50 States in terms 
of the number of persons here illegally on a per capita basis.
    Only four States: California, Nevada, Arizona, and Texas, 
have a higher percentage of illegal immigrants impacting their 
State and local services.
    At this point, I believe it's important for me to emphasize 
that I'm not advocating that we stop providing services such as 
emergency health care. I have often said that we have to 
approach this issue of illegal immigration in a humane and 
caring manner, and as you said earlier, we are a nation of 
immigrants, but we're also a nation of laws and the challenge 
we face is how to square those two concepts.
    But my point is, that the most effective way to lower the 
costs associated with illegal immigration is to decrease the 
number of those coming across our borders illegally.
    What we need to do is slow that rate of growth and to 
finally slow the number of persons who are illegally coming 
across the borders of the United States.
    Just as Congress has been wrestling with this issue, so are 
the States. At our recent Special Session of the Legislature, I 
believe we've made some significant progress.
    I was particularly pleased by the passage of House bill 
1023, considered to be the toughest law dealing with illegal 
immigration passed anywhere in the country to-date.
    House bill 1023, which took effect August 1st, provides 
that State and local governments shall not provide public 
benefits to those individuals 18 years of age or older who are 
here illegally. This includes grants, welfare, housing, and 
unemployment.
    The key to our new law is the verification process. Before 
an individual receives any of these public benefits, they must 
prove their citizenship through a three-step process.
    First, to produce secure photo identification; second, 
complete and sign an affidavit which, under penalty of law, if 
they sign that affidavit, under many cases, if they sign it and 
it's not correct, they can be deported; and third, if the 
applicant is not a U.S. citizen, the individual's immigration 
documents must be confirmed through the Federal SAVE program.
    This process, we believe, will help ensure that only 
individuals lawfully present in the United States receive 
public benefits.
    One of the tasks mandated by House bill 1023 was the 
development of a temporary waiver process, effective until this 
coming March. Under this process, individuals who are here 
lawfully and entitled to benefits, but who do not have one of 
those required forms of identification, won't fall through the 
cracks.
    Michael Cooke, the Executive Director of the Department of 
Revenue, was charged with developing and implementing the 
emergency rules for this waiver process. She has done an 
outstanding job. She has been closely tracking the 
implementation of this process, and has provided me with the 
following data.
    This information was compiled during the first 4 weeks that 
House bill 1023 has been in effect.
    So far, 71 waivers have been processed by the Department of 
Revenue. These individuals couldn't produce one of the required 
forms of identification, but through Departmental research, we 
believe they are here illegally.
    However, the Department has also found 125 cases in which 
the applicants appeared to be using fraudulent forms of 
identification. We've referred these 125 cases to the Bureau of 
Citizenship and Immigration Services for further investigation.
    But perhaps most interesting is this statistic: Thus far, 
we've had more than 1,600 applicants who have been able to 
provide any valid form of verifiable identification, and the 
Department of Revenue has been unable to determine their 
status.
    We have asked these 1,600 individuals to return to the 
Department and provide us the additional information that we 
require to prove that they're citizens. However, thus far, they 
have not.
    Director Cooke believes that most of these individuals 
simply were trying to take a chance to see if they could get 
through our system and get the Federal benefits. We don't 
believe that most of these individuals are, in fact, citizens 
and this is a significant step.
    She also notes that the Revenue Department has seen a high 
number of questionable birth certificates. So many, in fact, 
that the Department's emergency rules had to be amended to no 
longer allow birth certificates as an acceptable form of 
identification for benefit agencies.
    In the first 3 weeks the 1023 was in effect, we found more 
than 150 seemingly fraudulent birth certificates presented to 
the Department in an effort to obtain a State identification 
card.
    I believe this should raise a serious question, both at the 
State level as well as at the Federal level, about accepting 
birth certificates alone as a way to verify a person's 
identity.
    Over the last few years, many States have seen birth 
certificates stolen. We've seen the theft of blank paper birth 
certificates, and we're now seeing some of these going through 
the process in a way to get Federal benefits, because they're 
filled out, they're sold and re-sold, and then presented to a 
State like Colorado trying to get State and Federal benefits.
    We've seen one particular county in Texas where we now 
check those birth certificates very carefully, because we've 
seen so many fraudulent certificates from this one county. 
We've seen the same thing happen from Puerto Rico.
    Since the passage of 1023, we've experienced an exponential 
growth in the presentation of these counterfeit documents. This 
is something, Mr. Chairman, that I hope the Committee would 
carefully consider, especially since under the Deficit 
Reduction Act of 2005, a birth certificate is one of the 
federally approved forms of identification that may be used to 
apply for or renew Medicaid benefits.
    So, if you have a birth certificate, you can apply for 
Medicaid or you can renew Medicaid. We believe that birth 
certificates are not by themselves a verifiable, and should not 
be a verifiable, form of identification.
    Interestingly enough, we also have seen the same problem 
with Federal passports. We found passport holders who have two 
passports in two different names. It's because the Department 
of State does not require proof of a legal name change in order 
to get a second passport in a different name.
    Even if an applicant cannot provide documented evidence of 
identity, a passport will still be issued based upon a signed 
affidavit from an identifying witness who is a U.S. citizen and 
who has known the applicant for at least 2 years.
    So I believe, in fact, the Federal Government should 
tighten up its own rules to help us at the State level enforce 
these Federal requirements.
    Also, a Federal law, the Deficit Reduction Act, is 
hampering our enforcement of House bill 1023. The Deficit 
Reduction Act actually prohibits States from imposing their own 
identification requirements in order to obtain Medicaid 
benefits, and the list of allowable federally accepted forms of 
identification is far more expansive than we have in Colorado.
    So at the Federal level, you're far more expansive in terms 
of the identification that you take compared to what the State 
of Colorado now takes.
    As I mentioned, the list includes birth certificates and 
passports, and yet we can't narrow that list, based on our 
experience, with the fraudulent passports we're seeing at the 
Federal level, the fraudulent birth certificates that we're 
seeing from around the country.
    The same problem exists involving food stamps. Federal law 
requires that the identity of the applicant must be verified, 
but it also says, and I quote, that ``no requirement may be 
imposed for a specific type of identification document.'' So a 
State can't say that you have to have a driver's license or a 
birth certificate or anything specific, because the Federal 
Government says that ``no requirement may be imposed.''
    This is actually a recipe for fraud in food stamps; it's 
one I'd ask that you look at in terms of changing Federal law.
    States should have the right to require specific forms of 
identification for these programs, and I would ask you, 
Senator, to consider helping us provide that flexibility and 
hope that this Committee will take the lead in proposing these 
changes.
    State and Federal agencies have a duty to develop 
identification verification programs that are consistent, and 
if a weak link exists it's going to be exploited by those who 
want to perpetuate fraud.
    You know, the technology does exist to make all of our 
documents secure and verifiable. In Colorado, we know this 
first-hand. The Colorado driver's license today is recognized 
as one of the three most secure driver's licenses out of the 50 
States in the country, according to a recent study done by 
George Washington University.
    Our driver's license features a ghost image of a 
photograph, we process it through a facial recognition system, 
and, Senator, what this means is if you go into one area and 
get a driver's license, come back 6 months later in a different 
office and try and get a driver's license, we put you against 
our data base, facially recognized data base of points, high 
probability you won't be able to get that second driver's 
license based only on the photo we take of you where we measure 
hundreds of points around a face to make sure that you're not 
able to come in and get that second driver's license using a 
false name.
    In addition, we require the birth certificates and all of 
those other documents. So, it is possible, and I would 
encourage the Federal Government to tighten its standards. And 
I know how concerned you are about this issue.
    Finally, the Federation of Americans for Immigration Reform 
has urged other States to follow Colorado's lead in terms of 
passing a bill similar to House bill 1023.
    In a letter I received from FAIR shortly after we passed 
1023, it States that this ``legislation is significantly 
stronger than any passed anywhere else in the country to-
date,'' and it said, and I again quote, ``this is a much needed 
enhancement of the State's role in ensuring that illegal aliens 
do not continue to drain taxpayer coffers.''
    I appreciate again, Senator, your holding this hearing in 
Colorado. I know you have a number of other distinguished 
panelists you're going to be hearing from.
    Later this afternoon, you're going to be hearing from Helen 
Krieble, who is going to address an issue that I have some 
background in, in terms of a Colorado-based plan to not only 
secure our borders, but also provide after-background checks, a 
way for people to work here legally for jobs for which there 
are not Americans willing to work.
    I would particularly ask you to pay attention to our friend 
Helen Krieble's testimony.
    And the problems associated with illegal immigration, I 
believe, are fixable. But finding and enacting the solution 
will require a partnership between the Federal Government and 
the States.
    Meetings such as this will help us forge that partnership.
    Senator Allard, thank you very much for your courtesy in 
hearing from me this afternoon.
    [The prepared statement of Governor Owens follows:]

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    The red light that has now been pulled off the podium, the 
green light indicates, and then when the red light starts 
flashing, you're past 10 minutes.
    So, Mr. Paul Cullinan, who is with the Congressional Budget 
Office, you specialize in human resource cost estimates, and 
we're anxious to hear from you, Paul.

   STATEMENT OF PAUL CULLINAN, CHIEF OF HUMAN RESOURCES COST 
             ESTIMATES, CONGRESSIONAL BUDGET OFFICE

    Mr. Cullinan. Thank you, Mr. Chairman, thank you for this 
opportunity to be before your Committee to discuss the 
budgetary and economic implications of immigration and border 
security policies.
    I 'll try to summarize my remarks fairly quickly. The major 
points I'd like to make are that immigration reform and border 
enforcement can have significant effects on Federal revenues 
and spending.
    For example, the Congressional Budget Office just recently 
estimated the Senate-passed immigration bill, S. 2611, and 
determined that Federal mandatory spending would rise by 
roughly $48 billion over the next 10 years, and revenues, 
assuming a technical change in the language, would climb by 
about $44 billion.
    In addition, the bill authorizes $81 billion in additional 
spending that will subsequently go before the Appropriations 
Committees for their approval.
    Changes in immigration policy can have significant or 
measurable effects on labor markets and the economy. In CBO's 
estimation, the immigration bills that have been before the 
Congress this year could affect economic growth, but most of 
those effects would be relatively small.
    A rise in immigration can improve Social Security finances, 
depending on what the mix of immigrants is. But, again, the 
Social Security financing shortfall is much larger than what 
can be resolved through an increase in immigration at the 
levels that are foreseen in the recent legislation.
    And, tightening border security and enhancing workplace 
compliance with immigration and labor laws will require future 
Congresses to devote significantly larger amounts of resources 
to those activities.
    My written testimony has a brief description of some of the 
major aspects of the bills. I'll pass over that.
    The effects of immigration policies on the Federal budget 
are really quite complicated and uncertain, and as a result, 
difficult to estimate.
    The uncertainties surround a number of factors: One, data 
on the immigrant population, particularly the illegal immigrant 
population, are very difficult to arrive at. Much of that is 
done through statistical imputations or matching, and we don't 
have information directly as we would from administrative 
records on many of those individuals.
    Second, many of the behaviors we have to evaluate are 
difficult to predict in advance, either for the immigrants and 
workers themselves, or for the employers.
    For example, how will employers respond to the proposed 
guest worker program in the Senate bill?
    That largely follows on to my next issue: the way the 
administrative structures and enforcement procedures are 
developed is critically important to what the ultimate 
budgetary outcomes are going to be for these changes in policy.
    CBO's review of the literature indicates that, in general, 
immigration tends to result in favorable outcomes at the 
Federal level but unfavorable outcomes at the State and local 
levels.
    That's largely because these individuals tend to have lower 
wages than the native-born population and tend to have more 
children. Thus, they end up receiving more in Federal benefits 
typically, or State and local benefits and services, than 
native-born individuals, and their lower wages tend to mean 
that they will pay fewer taxes.
    Over time, the addition of their children to the work force 
may or may not offset some of these additional costs at the 
front-end. It depends, again, on the actual characteristics of 
the immigrant population.
    The Joint Committee on Taxation (JCT) and the Congressional 
Budget Office recently estimated the Senate bill. The direct 
spending, that is, for things that would happen without further 
legislative action as a result of the bill, again, was $48 
billion over 10 years.
    More than half of those costs came from refundable tax 
credits, which are estimates provided by the Joint Committee.
    If the Act was amended to fulfill its intent, at least as 
far as the Judiciary Committee Staff indicated to us, it would 
also raise revenues by $44 billion over the period. There is a 
glitch in the language, at least in terms of JCT's evaluation.
    And, again, there are even more costs to be appropriated, 
assuming the bill is enacted and the Congress comes forward and 
actually appropriates those moneys.
    As you pointed out in your opening remarks, the CBO and JCT 
estimates have two potentially major limitations for issues 
such as immigration reform.
    First, they are 10-year estimates. That is the structure 
under which we have been estimating all of the legislation 
before the Congress for the last decade or so.
    Immigration's effects are going to be felt for decades to 
come, so it's very important to have some assessment of the 
longer view of things.
    The second thing is that we are assessing what this piece 
of legislation does, and that is limited to the direct effects 
on Medicaid, food stamps, the refundable tax credits, and other 
mandatory programs.
    The reason I point that out is that the larger number of 
immigrants could very easily encourage the Congress and State 
legislatures to have to put more resources on the table than 
currently are provided under statute.
    For instance, in the Medicaid program, benefits for the 
uninsured are largely paid out of disproportionate share 
payments, and those are very close to their caps. Therefore, 
Congress would have to come in and raise those caps if it was 
to provide more funding for those activities.
    As I mentioned before, immigration policy can have an 
effect on Social Security. CBO and the Social Security 
Administration model these changes. In general, a level 
increase in immigration tends to be favorable for the system.
    The Social Security Administration estimates that about 
one-eighth of the shortfall in the program would be eliminated 
by an increase of 400,000 in net immigration.
    It also estimated S. 2611, and it shows about half as large 
an effect for that bill. But, again, these are very sensitive 
estimates; the mix of immigrants according to their age, 
education, earnings capacities, family characteristics, will 
make a difference.
    One other aspect of the immigration policies we see before 
us is, at least in the Senate, a path for a legalization of 
those who are currently here and undocumented.
    Many of those people already pay Social Security taxes, but 
they have paid them on Social Security records that can't be 
linked to them, in essence, and therefore, if they were to 
become legalized, we would not get as much revenue off of those 
new, legal employees as we would from a new immigrant, per se.
    We're already getting a sizable fraction of those revenues, 
so the legalization for those individuals, from a Social 
Security standpoint, would not be favorable.
    With regard to macroeconomic effects, and I'll just 
summarize very quickly, an increase in the labor force, we're 
assuming about two and a half million additional workers under 
the Senate bill--would raise revenues according to the Joint 
Committee and, in fact, if we followed through with a more 
robust analysis, it would have an even larger effect on the 
economy, and therefore on revenues, as well.
    Finally, on border security and workplace compliance, one 
of the issues that I think we need to keep in mind is that 
nearly half of the people who are here illegally came via a 
legal mechanism and basically overstayed their visa. Border 
security by itself may only be addressing those who are coming 
here illegally, not those who come legally but stay beyond the 
expiration of their visa.
    Another aspect is that border security might have the 
inadvertent effect of actually encouraging people who are here 
illegally to stay. If it's harder for them to get back into 
this country, then they may decide that they won't leave at 
all. In particular, with regard to Mexico, there has been a 
significant amount of return migration, cycling in, cycling 
out.
    The other aspect is that enforcement through the employment 
verifications may be a very significant factor in this. If 
illegal workers can't find employers to hire them because of 
much more stringent employment verification, then their reason 
for coming and their reason for staying would be diminished.
    So I'll be happy to answer any questions you may have.
    [The prepared statement of Mr. Cullinan follows:]

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    Senator Allard. Thank you very much. Next we have on the 
panel Robert Rector, a Senior Research Fellow with the Heritage 
Foundation. Welcome, Robert.

    STATEMENT OF ROBERT RECTOR, SENIOR RESEARCH FELLOW, THE 
                      HERITAGE FOUNDATION

    Mr. Rector. Thank you. Thank you for having me here.
    I 'm going to speak today about the fiscal costs of low 
skill immigration with specific reference to the Senate-passed 
immigration bill S-2611.
    To kind of put the whole thing into perspective, we need to 
understand that over the last 20 years or so, the United States 
has imported some 11 million high school drop-outs from foreign 
countries, and that an addition of 11 million high school drop-
outs from abroad basically has the same sort of fiscal, social, 
and economic effect that you would have if you added 11 million 
high school drop-outs born, say, in Kentucky. There's no 
difference.
    And if we want to argue that this is, in fact, been a good 
thing, I often sort of jokingly say, ``Well, if this is such a 
good thing, why don't we encourage native-born Americans to 
drop out of high school and then we'll have all of these 
positive fiscal effects?''
    The simple reality is that the addition of 11 million high 
school drop-outs has an enormous effect in increasing poverty 
in the United States and increasing Government spending, and 
this is not offset by taxes because these people earn so little 
that they pay relatively little in Federal, State, and local 
taxes.
    Specifically, the Senate-passed bill S-2611 would grant 
amnesty and citizenship to some 10 million illegal aliens, 50 
to 60 percent of whom lack a high school degree.
    We expect that a full quarter of those 10 million amnesties 
that are given, would be fraudulent, just as they were 20 years 
ago with the Simpson-Mazzoli bill.
    The net fiscal cost of this, once you grant citizenship, 
they become eligible for a much wider array of Government 
services and benefits, and the net fiscal impact of that would 
be a cost of around $20 billion a year from the amnesty alone.
    In addition, now, those don't show up right away, because 
they don't become citizens until about 11 years after the 
passage of the bill, but the long-term costs are what is really 
important. They're very quite substantial.
    In addition, once these illegals are given amnesty and they 
become citizens, they have the right to bring their parents in 
from abroad, and the parents, after a period of time, also 
become eligible for Federal welfare benefits.
    So potentially, if you give amnesty to 10 million people, 
that's potentially 20 million poor grandparents that could be 
brought in, most of whom could be eligible for Medicaid.
    Medicaid for the elderly costs about $10,000 per person per 
year, so if even three million out of those 20 million 
potentially eligible parents came here, got onto Medicaid, 
you'd be talking about costs in the out years of perhaps $30 
billion a year.
    In addition, the bill has a now trimmed down, but still 
fairly substantial, guest worker program, which would bring in 
more low skill workers and their dependents, possibly about 
eight million of those over 20 years, and the cost of those 
individuals, based on assuming that they would pay the same in 
taxes and receive the same in benefits as native-born 
individuals with the same education and skill levels, cost is 
about $20 billion a year.
    Now, if I could just in general talk about the overall 
effects of immigration, I have a chart up here that shows that 
currently in the United States, immigrants and their children 
comprise about one out of four poor people in the U.S.
    And the reason for that is that of these immigrant 
households, close to one-third of them are headed by 
individuals that do not have a high school degree, and this is 
a recipe, as among the native-born, for poverty.
    And you can compare this to the native-born households. 
We're only about 11 percent of them are headed by people that 
don't have a high school degree.
    In the past, immigrants coming into the United States 
actually had education and skill levels better than the native-
born population, but we've very much abandoned that trend in 
the last two decades or so.
    So if we could go forward here. Now we're looking at poor 
children.
    Again, of all of the poor children in the United States, 
about a quarter of them are children in immigrant families, and 
we have the same thing here among these immigrant children, 
close to 40 percent of them reside in homes where the immigrant 
parent does not have a high school degree.
    Now, if we could just move forward here kind of quickly, a 
very important study of this; in fact, the most thorough study 
of the cost of immigration was done by the National Academy of 
Sciences. And what they found was that over the lifetime, the 
net fiscal cost of an immigrant without a high school degree, 
this would be their Government benefits minus all taxes paid in 
over the course of a lifetime, each of those immigrants costs 
the U.S. taxpayer around $89,000.
    And this is an underestimate, because it does not include 
the costs of educating their children, which would also be 
totally paid for under this analysis, by the U.S. taxpayer. If 
you put in the cost of educating the children, it's roughly 
double that.
    So let's see what the implications of that would be, that 
if we have a cost of $89,000 per high school drop-out 
immigrant, and we have close to 11 million of these immigrants 
which we've brought into the country over the last 20 years, 
the total cost of this over the lifetime of these immigrants is 
going to be close to $1 trillion.
    If you add in the costs of educating their children, it 
will be closer to $2 trillion; all of this cost borne directly 
by the hard-pressed American taxpayers.
    The simple fact of the matter is that these individuals 
absorb Government services, they receive welfare and other 
benefits, and they pay very little in taxes, because that's the 
nature of our system.
    We have a very generous system to support low-skill, 
native-born, Americans because we're a generous society. What 
we're really confronting here is whether we can afford that 
similar level of generosity for large numbers of millions and 
millions of people coming here from the Third World. And the 
simple answer is, ``No, of course we cannot.''
    This is a recipe for fiscal disaster, and in fact, these 
costs, if S-2611 were passed, the costs will begin to pile in 
at precisely the point at which the Social Security system 
starts to significantly get into financial trouble.
    Now, if I could just briefly focus a little bit on some 
specific costs to show how these costs accumulate and why some 
estimates of the costs of immigration, low-skill immigration, 
are very low.
    The total cost of means-tested welfare spending in the 
United States, Federal and State; this would be Medicaid, food 
stamps, public housing, EITC, et cetera, is $583 billion last 
year.
    Now, if we just perform a simple calculation, the whole 
population of the United States is around 300 million people, 
so let's divide the $583 by roughly 300 million people, and we 
get a total per capita welfare cost in the United States of 
around $2,000 per person.
    Now, that's an arbitrary number, because it includes 
everyone in this room and most people don't get this welfare 
spending, which is targeted on the poor and the near-poor.
    But it's a good benchmark to try to estimate what, in fact, 
the cost would be of giving citizenship or bringing in large 
numbers of low-skill immigrants who are going to have 
significantly higher per capita welfare costs.
    Now, this takes that same number, but here we've divided it 
out based on the education level of the head of the household, 
be it an immigrant or a non-immigrant household.
    And if we look at high school drop-outs, and bear in mind 
that half of the illegals are high school drop-outs, a third of 
all immigrants are high school drop-outs, the per capita cost 
here is around $4,400 per family member per year within those 
households.
    And if we were to move forward here, again, now if we look 
at the education distribution of current illegals in the United 
States and apply these normal welfare costs which accrue 
according to educational levels, we would find that once the 
illegal immigrants are given amnesty and they achieve full 
citizenship, which they would under S-2611, the total cost per 
family member, not per immigrant, but the total cost per family 
member, would be around $3,000 per year, so around $12,000 for 
a family of four.
    Now, the CBO estimates are coming in at almost one-tenth 
that, at around $400 per year. They're just way, way lower than 
the actual fiscal outlays under the welfare system. In fact, at 
$400 per year, that's a welfare per capita cost that's less 
than that of college educated Americans.
    And part of the reason for this is that CBO is forced to 
limit its analysis to the first 10 years of the bill, when most 
of the illegal immigrants who would get amnesty wouldn't 
qualify for a lot of these benefits.
    But these benefits begin to come piling in in the later 
years of the bill.
    So the reality is that the actual cost of low-skill 
immigrants are much larger than anyone anticipates.
    The National Academy of Sciences is very clear that 
immigration and the fiscal and economic impacts of immigration 
depend completely on the skill level of the immigrants that 
you're bringing in.
    If you bring in immigrants with a college education, they 
will pay substantially more in taxes than they will take out in 
Government services.
    However, in the last 20 years or 30 years, we have gone in 
exactly the opposite direction and focused on bringing in very 
low-skill immigrants. They pay very little in taxes, and will 
absorb large amounts of Government services.
    The Senate Immigration bill sort of solidifies that process 
by granting citizenship to most of the illegals that are 
currently here, and then creating a process where even more 
low-skill immigrants would be brought in in the future.
    I would say that if you looked across the globe, you would 
find probably a billion people who would love to come and live 
in the United States and live in our society, and we can't 
obviously let all of those people in.
    What that does mean, is that we can be very selective in 
terms of the people that we do and do not admit into the United 
States.
    And I would say given the enormous pressures already on the 
taxpayers of the U.S., given the enormous deficits that we see 
in the future of Government spending, we should have a very 
clear policy that those people which we select, the small 
number that are given the opportunity to come to the United 
States, should be people that are a net benefit to the U.S. 
taxpayer, rather than those that will impose a net cost on the 
taxpayer.
    Unfortunately, our current immigration system is working in 
the opposite direction, and the Senate bill will make it much 
worse.
    Thank you.
    [The prepared statement of Mr. Rector follows:]

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    Senator Allard. Thank you both for your testimony.
    Governor, you've made a lot of suggestions here to the 
Congress and to this Committee as to what could be done to help 
deal with the problem of illegal immigrants.
    What is the perhaps most single important thing we could do 
to stop the problem from getting worse here in the State of 
Colorado?
    Governor Owens. Mr. Chairman, thank you. On specific bases, 
what you could do is give us more power to set standards in 
terms of identification, in terms of making sure that current 
Federal law, which says that benefits can only go to citizens, 
that we can actually help implement that law.
    Right now, our hands are tied because while Federal law 
says that these programs are only for citizens, Federal law 
doesn't allow us to actually ask the questions to ascertain 
whether somebody is, in fact, a citizen.
    Obviously, on a macro level there is the question of doing 
a better job to make sure that people can't literally walk into 
the United States at will, while at the same time making sure 
that we have procedures in place to allow us to have those 
people, as Mr. Rector suggested and others have, who, in fact, 
benefit our country, benefit our economy, add in fact value to 
this country, that we have a system to allow them to come in 
legally.
    So that's the conundrum, and if you don't do a better job 
at the border, nothing we do in terms of reforming the visa 
system or the programs that allow us to have people move to 
this country legally will work, because people will still walk 
around that program by coming across, you know, any of our 
borders on foot.
    Senator Allard. Would you agree with Mr. Cullinan's 
comments that the Federal Government, as far as illegal 
immigrants coming in, is affected in a different way than what 
State and local governments are?
    Governor Owens. Senator, I did hear Mr. Cullinan say that, 
and noted it, that there is a different cost at the Federal 
level for illegal immigration than at the State and local 
level, and we actually do pay, in some ways, the bills are paid 
here in terms of K-12 education.
    Again, there's a Federal law that says that children shall 
be educated, and that's the humane and civil way to run a 
society.
    However, we have some urban districts in this State where 
estimates from within the district, from the district itself, 
are that about a third of its children are either here 
illegally or, in fact, their parents are.
    That's a significant cost to State and local taxpayers, as 
are the other costs that I discussed earlier in my testimony.
    So, yes, there is a significant cost. I think that Mr. 
Rector and Mr. Cullinan have also pointed out that sometimes, 
in fact, there's tax income, as well, though I concur with what 
I believe their position was, that many times it's not equal to 
the costs.
    Senator Allard. Mr. Cullinan, you are directed by the 
Congress under your Congressional Budget Office guidelines to 
estimate budgets out for 10 years, is that correct?
    Mr. Cullinan. That's correct.
    Senator Allard. And, now, under the bill that we passed out 
of the Senate, the first year that somebody here illegally 
could be granted citizenship would be how far down?
    Mr. Cullinan. Let's see, I believe it's the 11th year or 
thereabouts.
    Senator Allard. The 11th year.
    Mr. Cullinan. So they are basically outside of the window. 
The costs for those--that class of immigrant that's in the 
Senate bill is largely attributable to additional citizen 
children of those illegal immigrants.
    Senator Allard. So and then when they become full-fledged 
citizens, then they qualify for these benefits, and as a result 
of that, do you believe that your figures beyond 10 years 
underestimate the costs of these programs?
    Mr. Cullinan. If we were to go beyond 10 years, definitely 
the costs would escalate.
    But I do want to point out that not everyone would choose 
the citizenship route, as well. It appears as if a significant 
portion of those who were legalized back in the Immigration 
Reform and Control Act (IRCA) period did not, in fact, pass 
through to citizenship.
    Senator Allard. So do you think a substantial number would 
not pursue citizenship, or just a few, or do you dare speculate 
on that?
    Mr. Cullinan. The experience with IRCA, I believe, is that 
fewer than half of those did so within the first 10 years of 
being able to naturalize.
    Senator Allard. OK. On your testimony, Mr. Rector, you had 
different figures than what the Joint Budget Committee, or the 
Congressional Budget Office testified to. What would you 
attribute that to?
    Mr. Rector. Well, just to clarify one point. For most 
welfare programs, you don't have to be a citizen. You have to 
have been here as a resident for 5 years. It's only 
Supplemental Security Income where you have to be a citizen.
    So they don't have to be citizens, but they do have to have 
been legal permanent residents for 5 years.
    I would say the No. 1 difference would be that--well, that 
I'm estimating costs that are going to accrue about 15 years 
out. In fact, all of the costs in this bill come in the 11th 
year and afterward, and therefore, to have a budget analysis 
that's restricted to the first 10 years, doesn't tell you squat 
about the fiscal impact of this bill, OK?
    So, they become citizens in the 11th year or they become 
eligible for welfare, that's when all of these things will 
start to pile on.
    Secondly, I'm using all of--there are over 80 Federal 
means-tested programs. I have them all in my model to produce 
these costs. CBO is using a much smaller number of programs.
    I also have the State and local. The State and local 
governments are required, I know you're very happy, they're 
required to contribute to all of these wonderful Federal 
welfare programs. I have those mandatory State costs in there, 
as well.
    Also, I don't know how they estimated, I mean, you have to 
correct, as the National Academy of Sciences does, when you're 
modeling this, you have to correct for the under-reporting that 
occurs in, for example, census data bases and so forth so that 
you get up to the real total spending, which if you don't make 
that correction, you come out with way below what's actually 
being spent.
    I think those are the major differences, but again, I think 
that we need to understand that if, for example, you take 
someone who is here legally, it's a family of four. That type 
of family doesn't pay any Federal Social Security taxes if they 
have incomes below $25,000 a year because they get the earned 
income tax credit and the refundable child credit that wipes 
out their entire Social Security contribution.
    A family typically in the U.S. doesn't pay any Federal 
income tax, OK, if they make less than $40,000 a year. 
Meanwhile, we have this $583 billion dollar means-tested 
welfare system, it's 5 percent of the gross domestic product, 
essentially is taxed out of the upper-middle class and 
distributed in the form of cash, food, housing, free medical 
care, down to the lowest income one-third of the population.
    The problem with the Senate bill and with immigration, as 
it's currently constructed, is we're adding people to the low 
end of this equation who are by nature not taxpayers or they 
pay very little, but are very large recipients of this massive 
transfer system.
    A lot of times, people say, ``Oh, you know, well we used to 
have lots of immigration in the past, and that wasn't so much 
of a problem.'' I would emphasize that, again, immigrants in 
all previous historical periods, the immigrants have had skill 
levels at least equal to or superior to those of the natives. 
So they were raising the skill level in the population, not 
lowering it.
    But also, if you look at the peak of the late last great 
migration, say around 1900, we didn't even have a Federal 
income tax let alone a massive Federal income tax that comes in 
each and every year that's designed to take away from the upper 
end of the income spectrum and re-distribute massive resources 
into less affluent people.
    Again, there's a reason that we do that, but there's also a 
reason why, if you try to do that to an unlimited flow of 
people that are very poorly educated coming here from Guatemala 
or Mexico, that that would, in fact, be financially ruinous for 
the American taxpayer.
    Senator Allard. And back to you, Mr. Cullinan. Mr. Rector 
said he incorporated a greater number of means-tested programs 
than you do in your study. I don't know whether you've looked 
at his study or not, but would you agree with that and why the 
difference?
    Mr. Cullinan. There are several elements of that. There is 
a set of programs which are not part of our analysis because 
they're under the discretionary portion of the budget. That's 
not the bulk, but there is a significant share--for instance, 
the housing assistance, WIC, a number of programs like that--
that are funded annually out of appropriations and are not 
considered mandatory spending.
    Thus, the direct effects of the bill, to increase the 
number of potentially eligible for those programs, doesn't 
directly affect the costs of those programs.
    However, it is in all likelihood that the Congress will 
come back and consider changing the levels of resources 
provided to those programs. When that happens, we will be 
attributing those costs to that bill, not to this bill.
    Senator Allard. Do you see any shortcomings in the formula 
that Mr. Rector used to estimate costs, just off the cuff? I 
don't know how closely you've looked at his methodology.
    Mr. Cullinan. We've looked at it, and in fact, some of the 
material from the earlier estimates that he did along with his 
colleagues at Heritage.
    We did consider some of those things and modified some of 
our technical assumptions when we did the estimate for the 
Senate-passed bill.
    I haven't really looked in great detail as to those 
programs that are in there and what are not.
    One thing I would point out, though, is that the bill has a 
major increase in the number of employment-based visas, as 
well, and takes some high-tech people or highly educated people 
out from underneath the numerical limits themselves.
    So, you've got some of the bill that's going toward high-
skill people, and two big pieces are going toward typically 
much lesser skilled people, the legalization aspect and the 
guest worker aspect.
    Senator Allard. Would you agree, Mr. Rector, that your 
figures are much greater because you encompass more in your 
analysis than what Mr. Cullinan did?
    Mr. Rector. Yes, and also he does suffer under this 
handicap of being restricted to the first 10 years----
    Senator Allard. Yes.
    Mr. Rector.--which we both agree is kind of meaningless, 
because all the fiscal impacts come later.
    Senator Allard. Which is the standard policy of the Senate, 
we treat all legislation the same, and you've got to draw the 
line somewhere. In this case, we drew 10 years, which tends to 
distort the figures a little bit because of that, yes.
    Mr. Rector. And that is particularly true for the two sets 
of the two groups I just mentioned, in that they are, in fact, 
have a longer lead time to get to the State at which they would 
be potentially eligible for benefits.
    It's 11 years for the--at a minimum--for the legalization 
folks. It is a minimum of nine, I think, years for the guest 
workers, because they can't apply for LPR status, Legal 
Permanent Resident status until after the fourth year.
    So both of those groups, the costs associated with those 
groups, are going to be beyond the 10-year window.
    Mr. Rector. As you've heard me say before, this is the way 
that the Government grows. You guys never go out and say, 
``Hey, tomorrow why don't we spend $50 billion extra,'' you 
know.
    We create Government growth by creating the conditions 
under which Government is going to grow in the deep out years, 
and that's exactly what this bill does.
    It is, in fact, I've worked on welfare for 20 years, this 
is the largest expansion of the U.S. welfare system in the last 
20 or 30 years. You'd have to go back to the creation of 
Medicaid to find an expansion that's larger than this, although 
it doesn't show up for the first 10 years.
    It is true also that the bill does largely un-acknowledge, 
permit increases in immigrants, highly skilled, college 
educated, immigrants. And there's a general consensus that they 
are a fiscal positive; the taxes they will pay exceed the 
benefits.
    But, what I would say is if high skill immigrants are a 
positive and low skill immigrants are a strong negative, and we 
say, ``OK, so that's a good deal,'' that's sort of like a stock 
broker saying to you, ``I've got two stocks: One's going to 
make money, the other is going to lose money, why don't you buy 
both of them?''
    I would say that's not a really good idea, that what we 
ought to do is have an immigration policy that brings in people 
that, in fact, are not a net drag on the taxpayer and avoid 
those who are going to be a net drag on the taxpayer, and also 
avoid those who are going to impose additional social costs, 
such as increased crime.
    Senator Allard. I want to thank this panel for your 
testimony. You've been very helpful.
    What happens with the Committee is that we may submit 
questions to you after this hearing, and we would ask that you 
respond back within 10 days, if you would, please. We would 
appreciate that, and we'll make it a part of the record.
    And so I want to thank the panel. Mr. Governor, I want to 
thank you for being here. Paul, thank you, and Robert, thank 
you both for being here and coming to Colorado to share your 
expertise with us.
    The second panel we'll now call up, and the make-up of the 
second panel will be Mr. Ed Tauer, Mayor of Aurora, Colorado; 
Mr. Dan Rubinstein, Chief Deputy District Attorney, Mesa 
County; Ms. Helen Krieble, President and Founder of the Vernon 
K. Krieble Foundation; Ms. Paula Presley, Commander in the El 
Paso County Sheriff's Office; Tony Gagliardi, Colorado State 
Director of the National Federation of Independent Business; 
and Mr. Ken Buck, Weld County District Attorney.
    OK, we'll now have the Committee come to order.
    I'd like to start with Mayor Tauer and at the very start 
thank you, Mayor, and the city of Aurora for allowing us to use 
this very fine facility and for providing the security and the 
comforts of home for those who have come here to testify.
    Mr. Tauer, we are limiting members on this panel to 5 
minutes, and would ask that you summarize your testimony in 5 
minutes.
    There will be a light on the podium right here in front of 
me, and when that turns red, then that's an indication. It will 
turn yellow, indicating you're getting close, and then red 
indicates you're past 5 minutes.
    Now, we're not going to gavel you down, but we would ask 
you to be sensitive to that, and I might, in the context of 
things, politely remind you that your time is expiring.
    So, Mr. Tauer, you now are recognized.

      STATEMENT OF MAYOR ED TAUER, MAYOR, AURORA, COLORADO

    Mr. Tauer. Senator, I think we'll have to treat those 
lights much as we do a photo red light in the city. Somebody is 
going to complain, but overall it ends up with a good result.
    First, Senator, we want to thank you for having this 
hearing today.
    We think that it's really critical to the citizens of 
Colorado, and we hear literally every day from our citizens 
about concerns about illegal immigration, and we think it's 
just a terrific thing that you're coming here and that you can 
hear from local officials and State officials about the impact 
that this has on our communities.
    We recognize that there are a lot of impacts; some economic 
impacts, social impacts. And you've just heard from three 
people in the first panel who talked about what a lot of those 
impacts are.
    I'm going to limit our testimony to something much more 
specific, and that is trying to address some of the specific 
impacts on local government budgets.
    So we recognize that there are a lot of things that we 
won't be talking about, but we think it's important to include 
in the debate what is the impact of illegal immigration on our 
local communities.
    The first thing we want to talk about is something that 
you've already heard, which is that it's very difficult to 
pinpoint what are the exact impacts of illegal immigration.
    As the Governor mentioned a little while ago, in our school 
districts, we're specifically prohibited from asking the 
immigration status of students or their parents. The result of 
that is that you have to make assumptions when you try and 
assess costs.
    We have to do the same thing in our city. When we look at 
impacts of illegal immigration on our budget, we have to look 
at what does the Census Bureau tell us the general population 
of illegal immigrants is in Colorado, and then use that and 
extend that into Aurora to see what our impacts would be.
    So, the numbers that we're going to talk to you about are 
our best reasonable estimates available. But the truth is that 
nobody can say specifically ``here is the exact number'' on 
either the cost or revenue side, and in the impact to local 
governments. We have to make assumptions in order to give you 
some numbers.
    The first thing that I want to talk about is the impact on 
a typical Colorado community's budget, using Aurora as an 
example, but as I talk to other mayors and city council members 
from around the State, our experience is really typical of what 
you'd see in any community.
    I'm not going to talk to you about things like parks and 
recreation budgets, translators, code enforcement people, 
things like that. I want to limit our comments really to public 
safety.
    If we look just at what does it cost for our police and 
fire departments to respond to the needs of illegal immigrants 
in our community, we are looking at something over $5 million 
every year.
    That's a significant part of our budget, and we're looking 
at that we could have easily a couple hundred, if you look at 
all of the impacts, including schools, a couple hundred 
teachers and police officers additional for our citizens if it 
weren't for these impacts.
    But just for public safety alone, we're looking at over $5 
million.
    Last year, we detained over 2,000 illegal immigrants. Those 
costs do not include the cost of prosecution or the cost of 
detaining people in our State prison system.
    When we look at K-12 education, you've heard from a couple 
of people that it's difficult to get those exact numbers. And 
what we've used is, looking at English as a second language 
populations in our communities, and the Governor told you a few 
minutes ago that in some communities in Colorado, those numbers 
are as high as a third.
    Our numbers are a little lower than that, and we did not 
assume that all of those are either illegal or they are 
children of illegal immigrants.
    But still, just looking at a very conservative number of 25 
percent of the ESL kids in Aurora, we're still looking at over 
$20 million that the taxpayers of Aurora are paying to educate 
those children.
    And that's conservative, compared to the numbers that they 
Governor gave you, which I think was a total of, I think, $500 
million across the State.
    So those impacts on local communities are very real.
    When we look at health care, we talked to both of the 
hospitals in Aurora, and between those two hospitals, this 
doesn't include clinics or doctor visits, just to those 
hospitals, the emergency care was approaching $10 million a 
year.
    Those are very real impacts to our community.
    One of the things that we hear very often is, ``Well, don't 
illegal immigrants pay taxes, so doesn't that balance it all 
out?''
    In the first panel, they went into a lot more detail than 
I'm going to about that that's not necessarily true, but to 
kind of support some of the things that they were saying, I'd 
like to give you a few anecdotal stories.
    One of the things that we see consistently, not just in 
Aurora, but across the Front Range, is where often illegal 
immigrants come in and have multiple families living in what is 
designed to be a single-family residence.
    The result of that is you have many more people on a given 
property that's paying property taxes than you might typically 
have for U.S. citizens in the same income bracket.
    The result is you have less property taxes per student 
going into those schools. So, is it true that indirectly, even 
if they're renting they're paying property taxes? Yes. Is that 
often less than it might be for some other family in the same 
economic circumstances? That's true, as well.
    We also have to look at that city government in Colorado is 
largely driven by sales tax. If you have people who are sending 
large portions of their income out of the country, that's money 
that's not being spent in our local economy, and sales tax that 
isn't being generated for our local governments.
    What this means is that in Colorado we have local 
communities that have very real costs, and those costs are 
significant.
    Without concrete data, we can still look at reasonable 
assumptions that would say that the taxes generated by illegal 
immigrants are typically not supporting all of the costs 
associated with illegal immigrants. And that's consistent with 
what you heard in the first panel.
    There are a lot of contributions that immigrants, both 
legal and illegal, make in our community, and Senator, you've 
made that point before. We're not trying to judge that. We're 
only looking at what is the budgetary impact on our local 
communities, both to local governments and to schools.
    Typically, the budget impact is that the costs, we believe, 
based on what we've been able to determine, exceed the taxes 
that are paid in.
    Senator, the local communities in Colorado would like to be 
your partner. We believe from our citizens' comments that this 
is the No. 1 issue that citizens in Colorado are concerned 
about.
    The local communities in Colorado would like to be a part 
of developing the answer, and we would like to ask that those 
local impacts are included in the discussion that we have in 
Washington.
    Again, Senator, we thank you. I know there's a lot of 
people for you to hear from today, so I'm going to wrap up my 
remarks and I'll stay and answer any questions that you have.
    [The prepared statement of Mr. Tauer follows:]

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    [GRAPHIC] [TIFF OMITTED] 26823.338
    

    Mr. Tauer. Thank you.
    Senator Allard. And thank you for your hospitality.
    Mr. Rubinstein, you're Chief Deputy District Attorney of 
Mesa County. Your community has had a real problem with the 
methamphetamines, and you have a Meth Task Force because of the 
methamphetamine problem.
    And your testimony that I read over, had a considerable 
amount of information in it about dealing with the problem on 
the Western Slope.
    During your 5 minutes, I hope you can tie that a little 
more in closely with the budget events and how that affects 
budgets in your law enforcement and what you're trying to deal 
with, and why you think that affects budgets and why illegal 
immigrants is a part of that.
    You have 5 minutes.

STATEMENT OF DAN RUBINSTEIN, CHIEF DEPUTY DISTRICT ATTORNEY AND 
       MESA COUNTY METH TASK FORCE EXECUTIVE BOARD MEMBER

    Mr. Rubinstein. Absolutely. Thank you, Senator, for having 
me.
    I want to start by saying that we accept the numbers that 
the Drug Enforcement Administration is giving us that 60 
percent of the methamphetamine that's coming into our area is 
coming in from Mexican drug organizations operating outside of 
the United States; 20 percent is coming from Mexican drug 
organizations operating inside the United States; and the other 
20 percent is coming from elsewhere.
    I want to talk a little bit about the violence that we've 
seen in Mesa County, and that's going to tie in greatly with 
some of the costs. A lot of the issues I'm going to talk about 
are related to border issues and some immigration, as well.
    Over the last few years, we've seen a huge increase in 
methamphetamine-related violence. In 2005, Jamie Birch was shot 
by a 22 year old man over a $300 drug debt from a prior 
methamphetamine deal.
    In October of 2005, a young man was murdered execution-
style with a shot to the forehead at point blank range for $600 
owed from a prior meth deal.
    The victim in that case had earned an athletic scholarship, 
but never made it because he spiraled downward as a result of 
methamphetamine before going to college.
    We are currently prosecuting a first degree murder case as 
a result of that incident. And 2 weeks ago, the person we're 
prosecuting, his father was sentenced to 38- years in prison as 
a result of his own drug dealing and possession with intent to 
distribute cases.
    Shortly after that murder took place, the young man was 
taken out to the desert north of Grand Junction and shot six 
times. The two shooters in that case did so because they 
believed, falsely, that that individual had cooperated with law 
enforcement in the earlier murder case. By the grace of God, 
that gentleman survived.
    All of this terrible violence is representative of what 
we've seen and it's a pattern we're attempting to break.
    In 2005, our Drug Task Force seized seven guns. In the 
first months, the first 7 months of 2006, we've already seized 
52 guns.
    In 2005, our Drug Task Force arrested 111 people related to 
methamphetamine. We've already arrested 112 in the first 7 
months of this year.
    Thanks to some visionary leadership by our DA's office, the 
Sheriff, the police chief, the county commissioners and the 
city council, we have had an unprecedented response to this, 
but it has been very costly to us.
    We successfully ran a wire tap, which was extremely 
expensive, and it resulted in the arrest of now 44 people. That 
briefly hampered the supply of methamphetamine coming into Mesa 
County.
    In 2005, we had seized 58- pounds. Thus far in 2006, we 
have seized 25 1/2, so we've slowed it just to the pace of last 
year, whereas the other numbers have greatly increased.
    When we were searching for the murder suspect and the two 
shooters in the retaliation murder, we learned about some 
enforcement efforts. Both of those manhunts stretched over 
several days, and we learned that assigning patrol teams to 
work heavily the meth sub-culture not only caused us to locate 
those individuals, but caused a huge decrease in the property 
crimes that we learned were related.
    We had previously connected the 190 percent increase in 
property crimes in Mesa County between 2000 and 2004 to the 
rise in methamphetamine.
    This confirmed that to us, and as a result of that, we have 
created a special Street Crimes Unit specifically to target 
that. That unit costs us an additional half million dollars a 
year, which we would not otherwise have spent had we not been 
trying to get a handle on the meth problem locally.
    We estimate the cost of a mother with children, who goes 
into the Department of Human Services system, to cost between 
$200,000 and $300,000. That is the cost for DA's, judges, 
public defenders, jurors, police, sheriffs, and that's just on 
the criminal side.
    On the dependency and neglect side, as well, we have to 
employ county attorneys, Department of Human Services workers, 
put kids into foster care, do drug and alcohol counseling for 
the parents, mental health counseling for the kids, and there's 
a lot of collateral services that go into that.
    A recent example of this is in June of 2006, two illegal 
immigrants were arrested for drug trafficking of 
methamphetamine. They had three pounds of methamphetamine on 
them and $57,000 in cash.
    They sat in the Mesa County Jail at a cost to us of $52.40 
per day. As a result of immigration holds, they were not 
eligible to bond out. And we also put their four children, ages 
one, three, 13 and 14, into the Department of Human Services' 
custody in foster care, at a cost to us of $10,000--over 
$10,000 per year.
    We estimate the--well, there was 745 immigration holds in 
Mesa County in 2005 on a variety of charges, and because of the 
immigration hold, they don't post a bond.
    When we did our white paper to do the study to create our 
Meth Task Force, we found that 49 percent of our jail inmates 
were in possession of methamphetamine at the time they were 
arrested, and 79 percent of them were high at the time they 
were arrested.
    In summary, Senator, we know that the drugs are not being 
manufactured locally in Mesa County. We know this because out 
methamphetamine labs have greatly reduced, and we attribute 
that to effective legislation, both on the Federal and the 
State level. And the pseudoephedrine is not available, and that 
is the main ingredient in methamphetamine.
    What we also know is that methamphetamine has caused us 
more violence and more problems than anything else in Mesa 
County history, and we ask the Federal Government's assistance 
on that.
    Thank you for your time.
    [The prepared statement of Mr. Rubinstein follows:]

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STATEMENT OF PAULA PRESLEY, COMMANDER, EL PASO COUNTY SHERIFF'S 
                             OFFICE

    Ms. Presley. Thank you, Senator. My name is Paula Presley, 
and I'm a commander with the El Paso County Sheriff's Office, 
and I'd like to talk a little bit this afternoon about the 
impact that illegal immigration has on local law enforcement.
    The increase of immigration in the last few years carries a 
significant price tag for local law enforcement agencies, which 
is, of course, then passed on to the taxpayers in those 
communities.
    From the initial contact with law enforcement officers on 
the street, to the deputy working a ward in a detention 
facility, the burdens and the costs are increasing.
    Patrol deputies and police officers often contact these 
immigrants on the street, and spend a considerable amount of 
time trying to confirm their identity or ascertain citizenship.
    Often this is only confirmed if and when that individual is 
taken into custody and incarcerated in one of the detention 
facilities.
    This process can be extremely time consuming as some of 
these individuals use a variety of aliases, specifically those 
who have been incarcerated in the local jails numerous times.
    If they are not incarcerated, confirmation of their 
identity may never occur and they may continue to live and work 
in the communities across Colorado without any legal status, as 
well as commit crimes in those communities.
    If the person is taken into custody and incarcerated on 
State or Federal charges, identity is more often than not 
confirmed through fingerprint identification.
    Immigration and Customs Enforcement is notified if the 
person is foreign-born, so the process of citizenship can be 
confirmed or denied.
    ICE may then place a hold on an individual; however, will 
not start deportation procedures until current criminal charges 
receive a disposition, or, in El Paso County's case, the bond 
is set for those charges and the bond is posted.
    The posting of the bond and subsequent deportation raises a 
variety of concerns for local law enforcement and the victims 
in many of these crimes.
    If the bond is posted and the hold is placed by ICE, the 
person will be transferred to ICE for potential deportation.
    A bond deportation, often the bond is recovered by whoever 
posted that bond; whether it's a local bond agent or family 
member, and that is statutorily permitted and the agent or 
family member suffers no financial loss.
    Often, the charges, then, are dismissed upon confirmation 
of the deportation.
    To give you an example of this, last year, in 2005, June 
9th, a defendant in El Paso County was arrested for unlawful 
distribution and manufacturing of schedule two, and a bond was 
set for $10,000.
    On August 21st, the defendant's bond was posted by a local 
bond agency. On the 22nd, he was released to an ICE agent, and 
on September 6th, he was ordered to be deported, and 
subsequently deported on September 8th.
    On November 28, 2005, the defendant's case was dismissed 
due to deportation. Unbeknownst to the courts at that time, and 
of course local law enforcement, the defendant was back in the 
county and committed a kidnaping and assault with a deadly 
weapon on November 25th--three days prior to the dismissal of 
his original case.
    The warrant was not issued until December 19, 2005. Of 
course, that defendant didn't face any penalty for the first 
case, and a warrant was issued and was still at large the last 
time I checked for the second case.
    If the person elects voluntary deportation, they may suffer 
no penalty for returning to the United States, or for the 
previous criminal offenses if the charges have been dismissed.
    This could also occur as a result of some type of plea 
bargain in the court system.
    If there is an order of deportation, then, of course, entry 
into the country can be a felony.
    We also have a problem with defendants posting a bond post-
conviction, pre-sentence. So they've been convicted of a crime, 
they're yet to be sentenced, and a bond is still set.
    If the defendant posts a bond, then of course, they can 
evade a sentence.
    An example of this, which was provided to me by one of our 
local judges in the Fourth Judicial District, is as follows:
    On November 21, 2005 a defendant pled guilty to a class 
four felony possession of more than one gram of cocaine. The 
plea agreement called for a cap of 4 years in prison. After the 
plea, the defendant asked the court to reduce his bond; it was 
set in the amount of $25,000.
    The court refused to reduce the bond, and sentencing was 
set for January 23, 2006. On December 24, 2005, a cash bond was 
posted in the amount of $25,000 by a family member.
    A pre-sentence investigation report was done, recommending 
a prison sentence based on the facts of the case, which 
included large amounts of drugs, money, and a firearm.
    But at the time the PSR was prepared by the probation 
department, ICE had already removed this defendant to Aurora.
    He failed to appear on January 23, 2006 and a warrant was 
issued for his arrest. The People indicated the defendant had 
been deported to Mexico.
    The person who posted the cash bond appeared on January 
26th, and he indicated that the defendant was never released to 
him after he posted the bond, because he was picked up by ICE, 
and that he had no ability to get him back from Mexico.
    The court reviewed several cases; two of which I have here, 
People versus Gonzalez and People versus Escalera, and those 
cases allow basically the bond to be returned.
    The end result was the defendant has violated the Colorado 
law and successfully avoided a prison sentence. He's released 
to Mexico, and the posted cash bond was then returned to his 
family member.
    In El Paso County, how this affects us on a daily basis is 
that we incarcerate an average of 90 to 95 inmates on a daily 
basis with immigration holds. Criminal offenses range from 
violent crimes to traffic charges; over 50 percent of these 
inmates have felony charges; 24 percent are drug-related and 24 
percent of those are violent crimes.
    The costs for housing and room and board only is what I'm 
talking about here, and basic--very basic--medical care 
averages about $35 per day per inmate for an annual price tag 
for El Paso County in excess of $1.2 million.
    And depending upon the individual defendant, that could 
reach $1.9 million.
    Approximately $100,000 of this is reimbursed, leaving the 
county and the taxpayers to assume the rest of the liability.
    These costs are not inclusive and do not include on-going 
medical and dental treatment, transporting an inmate to and 
from court, court security, prosecution, court costs, or any 
other additional staff time and attention outside basic 
housing.
    We are one of the largest detention facilities in the State 
of Colorado. There are 25 wards in that facility with 1,599 
beds, and these particular inmates comprise--if you were to 
look at the numbers--an entire ward, which requires around-the-
clock security of a deputy, one deputy at least, and that 
amounts to about $600 per 24 hour period.
    That doesn't include, again, medical expenses, intake and 
release processing, or any other additional expenses outside of 
basic housing.
    With the increase in the population of the illegal 
immigration, specifically in El Paso County, additional law 
enforcement staff time is needed to address these problems 
before they are arrested and before there is incarceration, 
because this then, once they are incarcerated, creates a 
significant financial burden on the taxpayers.
    Thank you, Senator.
    [The prepared statement of Ms. Presley follows:]

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    Now, I want to call on Mr. Ken Buck, who is the Weld County 
District Attorney. Welcome, Ken.

  STATEMENT OF KENNETH R. BUCK, WELD COUNTY DISTRICT ATTORNEY

    Mr. Buck. Thank you. I appreciate the opportunity to speak 
today on this very important issue, Senator.
    I also want to thank you for your work and that of your 
colleagues in the Senate for including the amendment in the 
Homeland Security Appropriations bill which will fund the study 
on the need and cost of an ICE office in Greeley.
    I note that earlier this week during one of the 
gubernatorial debates, both candidates endorsed this idea, and 
in fact, Bill Ritter talked about the frustration that a 
district attorney has by putting illegal immigrants who have 
committed felonies back on the streets of our community.
    Illegal immigration affects our entire country on all 
levels, from the Federal to the State to the local. And as Weld 
County District Attorney, I not only see the problems illegal 
immigration brings to our State every day, but also the high 
costs that our citizens are forced to pay.
    The monetary burden that illegal immigration places on our 
law enforcement agencies, our court systems and our prison 
systems, rises each year.
    The Weld County Sheriff's Department spent $1.6 million 
last year to house inmates out-of-county, because our jails 
have a 20 percent over-population rate.
    According to the Sheriff's Department, 12 percent or more 
of the jail population was comprised of undocumented 
foreigners.
    Only a small portion of the illegal immigrants that are in 
our jails are deported by the Immigration and Customs 
Enforcement Agency.
    The cost of illegal immigration on our education system is 
one that we as a society will pay for years to come. It is no 
secret that our children, especially those in the Greeley-Evans 
School District Six, are facing numerous problems with the 
education system. The district was recently placed on the State 
watch list.
    One such problem is, indeed, a language barrier. An average 
of 20 percent of district six children in kindergarten through 
sixth grade are monolingual, Spanish speaking only.
    The danger this reality presents is simple: It puts more 
stress on the system, it is a true no-win situation.
    Like many other rural counties, including Mesa County, my 
colleague from Mesa County, Weld County is facing a crisis with 
meth. Neighborhoods and towns are seeing the devastating 
effects of this drug, and the violent activities that surround 
it.
    Ninety percent of the meth in Weld County comes through our 
southern border. This is a study that was done by the Weld 
County Drug Task Force.
    If we leave that border open, we can expect to see this 
trend not only continue, but also increase.
    In 2002, the Weld County Drug Task Force cleaned up 63 meth 
labs, and in 2005 only six meth labs, which is a strong 
indicator that the meth is coming from outside. And based on 
the type of meth, it is believed it's coming from Mexico.
    The most devastating and unnecessary cost of illegal 
immigration is the loss of life. In May 2005, a wife lost her 
husband and a little girl lost her father. The true tragedy of 
their loss is that it could have been prevented.
    Damien Campos, a Mexican immigrant, in this country 
illegally, had slipped through the justice system several 
times. When he was arrested in Weld County following a drunk 
driving accident which killed his passenger, Damien had 
numerous aliases and several false forms of identification.
    Prior to the fatal accident, he had six drunk driving 
convictions, but wasn't tagged by immigration officials for 
deportation until after he killed Marcos Martinez.
    Through the use of false documents and aliases, Damien 
slipped through the system, and consequently was free to drink 
and drive again and again.
    The reality is that until ICE receives the resources and 
funding needed to do their job effectively, illegal immigrants 
who commit serious crimes will fall through the cracks and 
people will continue to be at-risk.
    We must close the border, Senator, and enforce the laws 
already in existence in this country regarding immigration, and 
we must make sure the agencies that are created to help control 
illegal immigration are provided with the resources they need 
to do their job well. That should be the only cost we are 
willing to pay to confront this problem.
    Thank you.
    [The prepared statement of Mr. Buck follows:]

    [GRAPHIC] [TIFF OMITTED] 26823.274
    

    [GRAPHIC] [TIFF OMITTED] 26823.275
    

    Mr. Gagliardi?

STATEMENT OF TONY GAGLIARDI, COLORADO STATE DIRECTOR, NATIONAL 
               FEDERATION OF INDEPENDENT BUSINESS

    Mr. Gagliardi. Thank you, Senator. My name is Tony 
Gagliardi, and I'm the Colorado State Director for the National 
Federation of Independent Business.
    On behalf of NFIB, I'd like to thank you for inviting small 
and independent business to the table to discuss this important 
issue.
    NFIB is the State and Nation's leading small business 
advocacy group; a non-profit, non-partisan organization founded 
in 1943.
    NFIB represents the consensus views of its 600,000 members 
in Washington and all 50 State capitals.
    In Colorado, NFIB represents 12,000 members.
    Before I get into my testimony, I'd like to just talk a 
little bit about the impact of small business.
    Small business comprises 92 percent of the businesses in 
existence in the United States, and employs over half the work 
force. Small business truly is the engine that drives this 
Nation's economy.
    A survey of NFIB members from across the country by our 
research foundation regarding immigration issues, found that 
over 90 percent of small business owners see illegal 
immigration as a serious problem, but are divided on which 
solution best addresses the issue.
    However, there is no doubt NFIB firmly believes that 
employers who knowingly hire illegal workers should be 
prosecuted to the fullest extent of the law.
    Seventy percent of NFIB members surveyed ranked problems 
surrounding the immigration issues as very serious or serious, 
and 86 percent say it should have a very high or high priority 
for Congress and the Administration.
    According to the small business owners surveyed, 47 percent 
said the single most important reason illegal immigration 
constitutes a problem is the cost of illegal immigrants to 
taxpayers and local government.
    Other reasons receiving significant concern regarding 
immigration were national security and threat of terrorism, and 
job loss and depressed wages for Americans.
    Illegal immigration has a negative effect on NFIB members, 
especially those in the construction and labor trades. Roofing 
and painting operations seem to generate the most complaints. 
Members report that they are at a severe disadvantage when 
employers knowingly use illegal workers and use a low wage 
standard for the purpose of contracting work at less than the 
standard rates.
    This situation also has negative effects on Federal, State, 
and local governments in terms of underpayment of taxes or no 
payment of taxes. Services provided to illegal workers 
additionally add to the costs.
    As individual States continue in attempts to address 
illegal immigration at the local level, the legal and 
legislative costs are underwritten by the legitimate taxpayer, 
and a large portion of these taxpayers are small business 
owners.
    Increasing penalties for employers who knowingly hire 
illegal aliens was supported by 78 percent of the small 
business owners surveyed.
    Small business owners would consider verification of an ID 
used by an employee to prove eligibility to work a moderate 
burden; however, the burden could be reduced by a workable and 
reliable verification authorization system that would certify 
document authenticity.
    This avenue must be examined and the cost benefit must be 
seen.
    On behalf of the 12,000 NFIB Colorado members, I sincerely 
appreciate the opportunity to appear before you, and welcome 
the membership of NFIB as a resource.
    [The prepared statement of Mr. Gagliardi follows:]

    [GRAPHIC] [TIFF OMITTED] 26823.287
    

    [GRAPHIC] [TIFF OMITTED] 26823.288
    

    Ms. Helen Krieble, President and Founder of the Vernon K. 
Krieble Foundation, you're next, Ms. Krieble.

 STATEMENT OF HELEN KRIEBLE, PRESIDENT AND FOUNDER, THE VERNON 
                     K. KRIEBLE FOUNDATION

    Ms. Krieble. Thank you very much, Senator. I request that 
my formal comments be entered into the record; they have been 
submitted.
    Senator Allard. They are so ordered to do that.
    Ms. Krieble. I also want to thank you. I noticed that our 
other Senator said that comments and commentary from people in 
Colorado could not possibly be important to discussions in 
Congress. I am very honored that you think otherwise, and thank 
you so much.
    Senator Allard. You're welcome.
    Ms. Krieble. The American people have said over and over 
again in polls that they want three things: They want border 
security, they want a sensible, workable, legal guest worker 
program, and they do not want amnesty.
    I am a employer of guest workers. I understand the problems 
associated with that; it's very visceral for me.
    There is no way for a worker from Mexico to get an H2B 
visa. H2B visas are applied for by employers, and then, if they 
are granted, you usually have rounded up some workers to 
receive them. But an individual cannot apply for those H2Bs.
    The guesstimate is that in Colorado there is probably a 
need for 150,000 H2B entry-level worker visas. There are 
approximately 67,000 issued for the entire United States, and 
it costs at least $1,000 a worker, if you're a small employer, 
to go through the endless bureaucratic layers that it takes to 
actually acquire an H2B visa. Anywhere during that process you 
can be told that you have passed the quoto for a visa. There is 
no refund on all the money, and you cannot get a legal worker.
    People such as me have a choice, if you are outside of that 
quota; of hiring illegals or closing the doors of your business 
and firing all of your U.S. citizen workers, because without 
entry level workers, you often can't run your business.
    The estimate is that every entry level worker provides 
three and a half jobs for American citizens. If you were making 
a widget, and you can export your company to a country that 
does have entry level workers, you will. I'd love to see an 
analysis of the cost of that to the American economy which is 
not considered when they're talking about a guest worker 
program.
    We have learned from many statistics that when a legal 
guest worker program that is efficient and workable is put in 
place, the number of people trying to cross the U.S. border 
illegally sinks.
    In this case, the belief is that 85 to 90 percent of the 
people coming across our borders illegally are not a security 
threat. What they want is work.
    I would like to say up front that we do not, in our policy, 
believe that a guest worker should be on the path to 
citizenship. Citizenship is very serious, it is a separate 
program, anybody in the world can apply for a green card or 
citizenship, go to the end of that line and go through the 
process. If you're a guest worker, you can do that. The 
Government doesn't need to give you permission to apply to be a 
U.S. citizen.
    What the guest worker program is for, or the temporary 
worker program, is for is work, and I think that people who 
want to come here and work for jobs that are going begging, 
should be accommodated.
    What we would like to offer to the debate on the Federal 
level, is a private sector market-oriented implementation of a 
guest worker program that will cost the Federal Government very 
little and reduce the number of people pouring across our 
borders illegally many of whom do not wish to be citizens, to 
10 or 15 percent of the number we have now. This reduces the 
people who are coming across our borders illegally, to people 
who, one, don't want work, or two, are criminals. We need 100 
percent security against those people.
    They will no longer be camouflaged by good people who 
simply wish to work in the United States.
    So, from there what we are saying is that a temporary 
worker program should be determined, the numbers, by the market 
itself. The jobs that are going begging in the United States 
should be able to be posted, after they've been advertised to 
U.S. citizens at private American employment agencies, licensed 
by the Government and located outside of our borders. Workers, 
foreign workers, who wish to fill those jobs should be able to 
apply for them with no intermediary, at the employment agency.
    Employment agencies are masters of matching jobs with 
workers. They would run the applicant through a security check 
like a gun shop does, and they would be licensed to issue smart 
cards, such as your MasterCard, which cannot be copied or 
cheated on in any way which you can use in the smallest little 
village in Turkey with great security.
    We know how to issue smart cards. Those smart cards could 
have on it whatever the Government would like; foreign workers' 
picture, their fingerprints, the job they've taken, the agency 
that issued that job, how to reach the job, how to reach the 
agency when the card expires. A person goes then immediately to 
the job. It eliminates two terrible disincentives which are the 
layers of bureaucracy and the cost of going through all of 
those Federal and local bureaucracies, and the quota, which 
means you have a very big chance of not getting a guest worker 
visa anyway. Furthermore no private person can apply for them 
outside of our borders in the H2B category.
    So, again, our program is private sector, market driven, at 
almost zero cost to the American taxpayer, because the costs of 
the smart card and the data base will be picked up by the 
employment agencies as a cost of doing business. They will be 
able to charge a fee to both the applicant employee and the 
applicant employer.
    When this happens--remember this has nothing to do with 
citizenship--any guest worker who would like to be a citizen 
and have the benefits of a citizen and a green card worker, 
must go to the end of the immigration line.
    But now, look at your security at the border. You are 
easily able to secure the border because you will only have 10 
percent of the people now trying to cross and no person seeking 
just a legitimate job in the United States will be sneaking 
across the border unless they're criminals. So you don't need 
to beef up the border, you don't need billions of dollars for 
walls or thousands more Federal employees. The people and 
technology we already have at the border we'll then be able to 
deal with it, and in the interim of the transition, the 
National Guard is marvelous because they don't become permanent 
Federal employees and they can be returned home when they are 
no longer needed.
    And finally, I would just like to comment on punishment. We 
are focused on punishing people, both people who wish to get a 
good job in the U.S., filling jobs that are going begging, and 
employers, when there is no legal path for either employers or 
potential employees to make a match. Becoming a criminal when 
you're going to close your business and starve your own family 
without entry level workers, and be punished for it when you 
can't get a legal worker, is not right.
    So, I hope that with economics at the heart of this, you 
will see that our plan requires very little extra money, and I 
hope Congress will look very carefully before it leaps head 
long into what I consider to be an abyss of another massive 
buildup of Federal bureaucracy and a massive buildup of Federal 
expenditure that is required by both the House bill and the 
Senate bill. It isn't necessary and it won't solve the problem.
    And so in our program, the market determines the numbers of 
guest workers; no job, no guest worker. Understand that. Only 
if there's a job going begging does a guest worker get the 
visa. Private business implements it, and the border can be 
credibly secured at very little expense.
    I hope that you will have faith in the American people who 
deal with these problems day-by-day as business people and in 
the workers who would like to come and work in our country, and 
that you will give this plan a careful review, as it deserves. 
Thank you.
    [The prepared statement of Ms. Krieble follows:]

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    [GRAPHIC] [TIFF OMITTED] 26823.291
    

    Now we'll go into a period of questions, and for you, Mr. 
Mayor, both you and the Governor mentioned something to the 
effect, and I just want to verify this with you, that there are 
many programs that you deal with, say, that you only provide to 
citizens, but yet Federal law prevents you from asking the 
question directly to them whether they're a citizen or not. Is 
that correct?
    Mr. Tauer. To the best of my knowledge, yes, Senator. I 
think the best example that we've talked about is the schools. 
It makes sense, as the Governor pointed out, to have a program 
where we educate children, and that's an undeniable good thing.
    But in this case, the bottom line is that local communities 
are footing the bill for our leaking Federal border and our 
school districts are not allowed to let people in or keep them 
out, and they're not even allowed to ask ``are you or are you 
not here legally.'' And I think that's the best example.
    There are other programs that the counties administer, as 
well. We don't have that many programs in the city that are 
actually social-type programs, but our partners tell us about 
quite a few of those.
    So, yes, Senator, that's true.
    Senator Allard. What is the proper role of cities in 
addressing the problems associated with illegal immigration, in 
your view?
    Mr. Tauer. Well, Senator, I know that you get asked loaded 
questions from time to time, so it's probably only fitting that 
you get to ask one in return.
    You know, I think that that's something that we need to 
work out together. I don't think that it's a great idea for us 
to say, ``this is the role.''
    I think that we do need to be partners, and let me give you 
an example, and it goes along with what Ms. Presley was saying 
a while ago.
    We recently had a case where we apprehended a criminal. As 
you've been told many times, ICE has very limited resources.
    Because that criminal was a repeat felony offender, we were 
able to work with ICE and get them deported. That criminal was 
re-arrested in Colorado committing a crime less than 4 weeks 
later.
    So, I think that we do need to carry our share, which is to 
work with the immigration authorities when we encounter illegal 
immigrants, especially and particularly those that are a public 
safety threat.
    But we also need the Federal Government to have a working 
system that lets us address those, so I think that the key is 
we need to be a partner, but I don't know that our resources 
are well spent until we have an answer at the Federal level.
    I'd love to say that we can answer it, but the truth is 
neither the State of Colorado nor any of our local communities, 
I believe, can effectively be using our resources until we also 
have that Federal answer.
    Senator Allard. You quoted a number of figures, for 
example, I think you quoted $5 million every year out of your 
law enforcement budget. I don't know whether you have that 
figure available--what the total figure is, but it would be 
interesting if we could get a percentage of the total law 
enforcement budget or $5 million out of what size budget that 
happens to be.
    Mr. Tauer. That's about 5 percent of our budget, Senator, 
and that includes all public safety, which includes courts as 
well as fire.
    We believe that's a very, very conservative number, and so 
we erred on the side of being conservative. I think that you 
could make arguments that would estimate that that number would 
go up by 50 percent.
    Again, the difficulty is that if, for example, if we give 
somebody a traffic ticket, we can suspect that they're here 
illegally, but the ability to determine concretely if they're 
here illegally is just simply absent.
    And so we have to make estimates on some of those things 
and, in this case, we estimated about 5 percent, which is 
consistent with what the Census Bureau says is the percentage 
of Colorado's population that is here illegally.
    Senator Allard. Now, education here in the Aurora area is 
$25 million cost you think to illegal immigrants, is that 
correct?
    Mr. Tauer. Illegal immigrants and children of illegal 
immigrants, and we believe that's very conservative.
    Senator Allard. What percentage of the costs on that are we 
looking at?
    Mr. Tauer. You mean the total school district costs?
    Senator Allard. Yes.
    Mr. Tauer. I can have that to your office by tomorrow 
morning.
    Senator Allard. If you can share that, it would be helpful.
    Mr. Tauer. We used that on--we determined that on the basis 
of 25 percent of the English as a second language students in 
our two school districts.
    Senator Allard. I see.
    Mr. Tauer. And our best information from talking to others 
around the State is that that's consistent across the State of 
Colorado.
    Senator Allard. OK. And then on health care, you used the 
figure $10 million. And what percentage of the budget is that, 
or what's the total, if you know?
    Mr. Tauer. Senator, that came from our two hospitals, and 
I'd be happy to get that for you, as well.
    Senator Allard. That would be helpful if you could.
    Mr. Tauer. Yes, sir.
    Senator Allard. Thank you. Ms. Presley, I think you stated 
90 to 95 illegal aliens a day are housed in your holding 
facility, is that correct?
    Ms. Presley. That's correct, Senator.
    Senator Allard. And if you know that a person is here 
illegally, present in the United States, what's getting in the 
way of them being deported from your holding facility?
    Ms. Presley. Often the local charges or the State charges 
that they're here on. They are initially arrested, certainly, 
on some type of crime, and you know, if they're able to post a 
bond, then of course they can deport quicker. But if they are 
not, then of course, the process is a little bit more lengthy 
as far as prosecuting them for that particular crime.
    So that's really what's holding them there is they either 
post a bond and then deportation can begin, or their local 
crime or their State crime, there has to be a disposition on it 
prior to deportation.
    Senator Allard. Has the immigration service been responsive 
when you've notified them, when you run into illegal 
immigrants?
    Ms. Presley. Yes, Senator. In our jurisdiction they are 
very responsive. To give you an idea, we actually have an agent 
in our facility almost on a daily basis, because we're housing 
so many illegal immigrants there.
    So, in any given week, probably four out of the 5-days, we 
have an agent that has been to our facility at some point 
during the day dealing with that population.
    Senator Allard. Mr. Rubinstein, you've talked about the 
methamphetamine problem that you're having there in Mesa 
County, and do you agree with the testimony from Mr. Buck, who 
has stated that he believes that nearly all the methamphetamine 
is coming in from outside our borders and a good percentage of 
that is meth labs on the other side of the Mexican-American 
border?
    Mr. Rubinstein. I do, Senator. The number that was given by 
Mr. Buck was that it was 90 percent was coming from the 
southwest border. The most recent numbers I had gotten from the 
Drug Enforcement Administration was that it was 80 percent from 
Mexican drug organizations, but part of that number was drug 
organizations operating inside the United States in the 
southwest region of the country.
    So I'm not sure if Mr. Buck's testimony was that it was in 
the southwest border outside of our country. I certainly don't 
dispute his numbers. The numbers I've received from the Drug 
Enforcement Administration, I think, were conservative; both 
what I'm hearing from DEA and from Mr. Buck are consistent with 
the information we're getting.
    One thing I can tell you is that we do not seize enough 
labs. We have a pretty good community of businessmen who report 
to us about pseudoephedrine sales. There is no way the 
methamphetamine that we're seizing is being manufactured in 
Mesa County. It's being manufactured in super labs.
    The labs that we're finding are manufacturing no more than 
an ounce. Super labs in Mexico can manufacture up to 100 pounds 
a day, so the ability to bring in pseudoephedrine into Mexico 
and manufacture there is much easier than it is, thanks to 
Federal and State legislation.
    Senator Allard. I had a physics professor that said to 
analyze a problem sometimes you must carry it to extremes. 
Let's suppose that we could put in place a policy that stopped 
all illegal immigration. Just for hypothetical purposes, what 
do you think would happen with your methamphetamine supplies in 
Mesa County?
    Mr. Rubinstein. I can give you a similar example. When we 
took down the wire tap and arrested the 44 people, we saw a 
slight increase in attempts to manufacture locally. The price 
also went up.
    So what occurs as a result of--and when you say stopping 
illegal immigration, I think it's really from our perspective, 
from a law enforcement perspective, securing the border from 
the drugs coming across is really somewhat of a separate issue 
than the immigration side of it.
    There is certainly immigration issues that come into play 
with jail overcrowding, but securing the border and stopping 
the methamphetamine from coming across, I think that would do a 
large part in drying up the supply long enough for us to do the 
other things that our task force is charged with doing; that 
is, prevention and treatment and trying to get those who are 
currently addicted off the drug, and those who are high risk, 
keep them from using.
    Senator Allard. Mr. Gagliardi, what tools do businesses 
need to verify that the people they hire are legally in this 
country? I've been a small businessman myself, and we've heard 
previous testimony that, you know, you use a birth certificate 
and that's easily forgeable.
    Use a driver's license, and Colorado has a driver's license 
that's difficult to forge, but many States it's not that 
difficult. Or you use Social Security numbers. Two of those 
three is what you use as a businessman to verify that they are 
here legally.
    What other tools do small business people need to make sure 
that their new hires are legally in this country?
    Mr. Gagliardi. Senator, when it comes to verification of 
employment documents, and currently small business owners, as 
you well know, complete the I-9 comprised of three columns. You 
either use one out of column A or one out of column B and one 
out of column C, and usually--and you are absolutely right. It 
usually comes down to the driver's license and the birth 
certificate.
    My members I've spoken with, once again, would consider--I 
have had members tell me they have used the on-line 
verification, and have not been able to get through, that it 
has not worked for them.
    Senator Allard. This is on-line verification provided by 
Social Security?
    Mr. Gagliardi. Yes.
    Senator Allard. Is that correct?
    Mr. Gagliardi. Yes, sir.
    Senator Allard. Are they put on hold, or what?
    Mr. Gagliardi. They just can't access it.
    Senator Allard. I see.
    Mr. Gagliardi. They just can't access it, that's why our 
stand at NFIB is if we are going to use a verification system, 
and it's going to be available to business, it needs to be 
reliable and it needs to be working at the pleasure of the 
employer. We're the ones who have to take the responsibility 
for making sure we are hiring illegal workers--or hiring legal 
workers.
    Senator Allard. Very good. Ms. Krieble, I find your plan 
very fascinating, and that's the Pence Plan, I believe.
    Ms. Krieble. I would say about 80 percent of what I believe 
should happen is in the Pence-Hutchison Plan.
    Senator Allard. When people review what you've said, the 
question that comes up is how do you assure them that worker 
that you bring here into this country is going to go back to 
the country from whence they came? In other words, are you sure 
that they're truly going to be temporary workers in this 
country?
    Ms. Krieble. Sir, if it was regularly and easily possible 
to hire verifiable legal workers with a smart card that anybody 
can swipe so that there's no process except that (we know the 
technology is there) and we know it can be done efficiently and 
inexpensively, if there was a regular supply of people who 
would fill your jobs that are a guaranteed legal, and there was 
a penalty for hiring an illegal, why would you hire an illegal 
person?
    I've never yet met an employer who really wants to hire 
illegals, so not only would these people find that they cannot 
get a job if they do not have a legal guest worker permit, the 
new people who are coming in, but the illegals already here 
would find that the market for illegals in the job market would 
dry up and they would have to find a way outside the borders of 
the country, make an appointment so it's a 2-hour visit, get a 
smart card, run through national security. If you've never 
committed a crime, you can be back to a job with a letter from 
your employer that you're employed.
    So, there is no human incentive or advantage to be an 
illegal anymore.
    Senator Allard. I agree with you that the technology is 
there, that we can probably use a smart card. The printing 
office for the Government has put together a visa that has 
biometrics on it and a lot of the things that you talked about 
that you can't--that's specific to the individual that gets 
that visa.
    I guess it's going to require some technology to use that 
card, to get that information. Do you think a businessman would 
have that technology if they came in to work for him, a job 
where he could run that through a system or something and get 
that verified?
    Ms. Krieble. We have already proved that the technology is 
there.
    Senator Allard. Yes, that's my point.
    Ms. Krieble. And that you can--that a card can be created 
that can do these things.
    Senator Allard. Yes.
    Ms. Krieble. It is absolutely non-duplicatable, in which 
anybody can get a swiping machine, like we have--most 
businesses have for MasterCards----
    Senator Allard. Sure.
    Ms. Krieble.--and other things. It would be just that easy.
    Senator Allard. That cost to the business, though, I mean, 
I've been a businessman, you know, you look at those costs.
    Ms. Krieble. But that cost would be the same as running 
MasterCards, and the advantages would be enormous and you're on 
the right side of the law.
    Senator Allard. Well I hope you're right on the cost. But 
that is one issue that's brought up, I agree we have the 
technology and your point that you're making is that if we have 
fines that are steep enough on the employer, why would they 
hire anybody unless they can verify it, and if they have a 
smart card, and it's going to work because nobody is going to 
bother to hire that illegal person, and he has no choice but to 
return back to the country from which he came.
    Ms. Krieble. Enforcement is very, very important to make 
this system work. But once again, I go back to the fact that if 
you make it impossible for people to be legal, you really 
shouldn't punish them if they go to the illegal side.
    Make it easy and efficient through the private sector to be 
legal, and then you will solve your problem.
    Senator Allard. Now, your plan is different from the 
immigration bill that we passed in the Senate.
    Ms. Krieble. Yes, sir.
    Senator Allard. And the fact that what we have in the 
Senate, passed out of Senate, actually has amnesty, because it 
leads to citizenship, but your plan does not have amnesty, is 
that correct?
    Ms. Krieble. There should be no citizenship track from a 
guest worker program. We have a citizenship track. The 
Declaration of the United States says that all people--the 
Declaration of Independence, are created equal under the law.
    To take a large body of people who have broken our laws and 
giving them a jump up against all decent individuals in the 
immigration line, is not right. They are perfectly welcome to 
apply at any time, but they go through the same process in the 
same way in the immigration line.
    Senator Allard. We've run out of time. And I want to thank 
this panel for their testimony.
    I want to thank the audience for their courteousness and 
complying with our Senate rules while you listened to the 
testimony here this afternoon.
    I would ask the panel to respond to any questions that may 
come from the Committee, within 10 days, if you would, please. 
If there's some followup questions, we would very much 
appreciate that because it would get us the information in time 
for it to be considered during our deliberations here in 
September.
    Thank you for your testimony, and with that, there's one 
other thing that I need to do and that is I need to enter into 
the record the Bell Policy Center Study, which my staff picked 
up at a meeting last night.
    And this, the reason we're entering it in the record, has a 
lot of figures in it dealing with the budget, and I think it's 
important that it be a part of the record.
    And with that, we will declare the Budget Committee 
adjourned.
    [Whereupon, at 4:40 p.m., the Committee was adjourned.]

                     ANSWERS TO QUESTIONS SUBMITTED

RESPONSES TO QUESTIONS FOR THE RECORD FROM SENATOR ALLARD REGARDING      
                     TESTIMONY BY PAUL CULLINAN, CHIEF, HUMAN RESOURCES 
                    COST ESTIMATES UNIT, CONGRESSIONAL BUDGET OFFICE, 
                    BEFORE THE COMMITTEE ON THE BUDGET, AUGUST 30, 2006

    1a. Under S. 2611, all of the estimated 12 million illegal 
immigrants in the United States will become eligible for 
citizenship. What government benefits are illegal immigrants 
eligible to receive?

    Undocumented immigrants are not eligible for most major 
federal benefit programs. However, a few programs provide 
benefits to individuals regardless of their immigration status, 
provided that they meet certain income and other requirements. 
Those programs include emergency Medicaid; the National School 
Lunch Program; the School Breakfast Program; the special 
supplemental nutrition program for women, infants, and children 
(WIC); and other federal food assistance and short-term 
disaster relief programs. (In addition, all taxpayers, 
regardless of their immigration status, are eligible to receive 
refundable tax credits if they qualify for them.)

    1b. What additional benefits would the current illegal 
immigrant population become eligible to receive upon being 
granted citizenship? What is the cost per-beneficiary for each 
of these benefits for the most recent fiscal year?

    Citizenship is not a requirement for most federal benefit 
programs. Under the Personal Responsibility and Work 
Opportunity Reconcilation Act of 1996, immigrants who are 
``qualified aliens''-refugees, asylees, or legal permanent 
residents (LPRs)-are eligible to receive benefits. Most LPRs 
are also subject to a five-year waiting period before they can 
receive benefits. In addition, they must meet a program's 
income and other requirements.

    Undocumented immigrants who attained LPR status under S. 
2611 would become eligible for several major federal benefit 
programs, whose eligibility requirements and benefit levels are 
described below. Those individuals would also become eligible 
for a number of other benefit programs (for example, Temporary 
Assistance for Needy Families, Social Services Block Grants, 
and child care assistance), but those new participants would 
have little impact on spending for those programs over the 
2007-2016 period because the programs have fixed funding, place 
more restrictions on the eligibility of noncitizens, or are not 
expected to see a significant increase in spending until after 
2016.

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