[Senate Hearing 109-]
[From the U.S. Government Publishing Office]
DEPARTMENTS OF TRANSPORTATION, TREASURY, THE JUDICIARY, HOUSING AND
URBAN DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR
2007
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U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
MATERIAL SUBMITTED BY AGENCIES NOT APPEARING FOR FORMAL HEARINGS
[Clerk's Note.--The following agencies of the Subcommittee
on Departments of Transportation, Treasury, the Judiciary,
Housing and Urban Development, and Related Agencies did not
appear before the subcommittee this year. Chairman Bond
requested these agencies to submit testimony in support of
their fiscal year 2007 budget request. Those statements
submitted by the chairman follow:]
Prepared Statement of Honorable Julia S. Gibbons, Chair, Committee on
the Budget, the Judicial Conference of the United States
INTRODUCTION
Chairman Bond, Senator Murray and members of the subcommittee, I am
Judge Julia Gibbons of the Sixth Circuit Court of Appeals. Our court
sits in Cincinnati, Ohio, and my resident chambers are in Memphis,
Tennessee. As the Chair of the Judicial Conference Committee on the
Budget, I present the following testimony on the judiciary's fiscal
year 2007 appropriations requirements. In doing so, I will also apprise
you of some of the challenges facing the Federal courts.
At the outset I want to note that we have enjoyed a productive
relationship with the subcommittee and its staff from the time the
judiciary was placed within your jurisdiction last year. We are
extremely appreciative that you made us a funding priority in the
fiscal year 2006 appropriations process.
DIRECTOR MECHAM'S RETIREMENT
Also submitting testimony today is Leonidas Ralph Mecham, Director
of the Administrative Office of the United States Courts. This will be
Director Mecham's final testimony before this subcommittee. After 21
years at the helm of the Administrative Office, he is taking a well-
deserved retirement. He is the longest-serving director of the
Administrative Office and is only the sixth person to head that unique
organization, which was established in 1939.
Director Mecham led the Administrative Office during two decades of
unprecedented change in the Federal courts. In 1985, when Director
Mecham began his tenure, the Federal courts still relied on electric
typewriters. The operating budgets for the nearly 400 court units
across the 94 judicial districts were largely managed from Washington,
DC Federal court facilities were in poor shape due to decades of
neglect and deferred maintenance. And the Administrative Office itself
was scattered in multiple locations across Washington, DC.
Twenty years later, the picture is quite different. The use of
information technology has fundamentally changed the way the courts
operate. Today we have a judiciary-wide data communications network
that provides a secure infrastructure for numerous systems and
applications. The judiciary's case management/electronic case files
system has been implemented in nearly all district and bankruptcy
courts and is now moving into our appellate courts. Electronic
courtroom technologies such as electronic presentation of evidence,
digital court reporting, and videoconferencing are now routinely used.
Today, under the judiciary's budget decentralization policy, courts
have the flexibility to address their unique needs and priorities at
the local level. Yet they are also accountable for managing these funds
wisely.
Under Director Mecham's leadership, 90 court building projects have
been approved, providing space needed by the courts to house judges and
support staff required to manage the judiciary's growing workload
needs. The Administrative Office finally consolidated its scattered
offices when it received its own building in 1992--the Thurgood
Marshall Federal Judiciary Building--which, in addition to the
Administrative Office, houses the Federal Judicial Center, and the
United States Sentencing Commission.
Director Mecham's superb leadership and vision have contributed
significantly to the Federal judiciary's management progress. We in the
Third Branch will miss his dedicated service to the courts.
IMPROVED FISCAL YEAR 2006 OUTLOOK FOR THE COURTS
As you may recall, last year at this time the courts were reeling
from the steady downsizing of probation and clerks' office staff in the
18-month period between October 2003 and March 2005, during which on-
board court staffing levels declined by 1,800 positions, or 8 percent.
The need to fund must-pay expenses such as judges' salaries and GSA
rent, within the constrained appropriations provided to the judiciary
in fiscal years 2004 and 2005, resulted in essentially flat funding for
the courts in those years. In fiscal year 2004, the courts lost 1,350
staff and in fiscal year 2005 additional positions were left vacant due
to the delay and uncertainty surrounding the fiscal year 2006
congressional budget. These funding constraints forced courts to fire
and furlough staff, offer early retirements, and leave vacant positions
unfilled in order to pay basic operating costs like telephone and
electric bills. Unfortunately, these staffing reductions came at a time
when the courts, especially those along the southwest border, were
experiencing historically high workload levels.
Now, a year later, I am happy to report that the financial outlook
for the courts has improved. I raised our budget concerns with the
subcommittee last year, and you responded by making the judiciary a
high priority. We recognize that many agencies in your bill received
little or no growth in fiscal year 2006, and yet you provided the
courts' operating account with a 4.5 percent increase in appropriations
for fiscal year 2006, after applying the government-wide 1 percent
across-the-board rescission and excluding supplemental funding. This
increase is consistent with those received in fiscal years 2004 and
2005 of 4.7 percent and 4.3 percent, respectively, and approximates the
minimum amount we required to maintain on-board staffing levels in
fiscal year 2006.
Fortunately, in addition to the appropriations provided by
Congress, several other unanticipated factors made more funds available
for the courts in fiscal year 2006. Actions outside the judiciary's
control (e.g., fewer than anticipated judgeship confirmations), along
with cost containment initiatives, such as the effort in New York to
identify and recover GSA rental overcharges--which I will discuss in
more detail later in my testimony--resulted in higher than anticipated
carryover from fiscal year 2005 and reductions in fiscal year 2006
must-pay requirements. These unanticipated, and likely one-time,
factors resulted in the courts receiving an overall 6.9 percent
increase in their funding allotments in fiscal year 2006, the first
above-inflation increase for the courts since fiscal year 2002. This
puts the courts in a position to backfill nearly half of the 1,500
probation and clerks' office staff lost over the last 2 years.
The favorable outlook for fiscal year 2006 requires some
perspective and a word of caution, however. After several years of
operating under extremely tight funding levels, an increase in fiscal
year 2006 funding for the courts in real terms (above inflation) is
considered a significant achievement. While the courts are in better
shape financially than in recent years, court staffing is still well
below the level needed to address all workload requirements imposed on
the courts. In fact, even with the enhanced funding provided to the
courts in fiscal year 2006, we still anticipate end-of-year staffing
levels in probation and clerks' offices to be more than 800 positions
below the benchmark of 22,372 staff that were on-board in October 2003,
the level just prior to the courts having to downsize due to budget
constraints. The emphasis placed on increased immigration enforcement
efforts as well as other factors caused overall workload to increase 8
percent during this same period.
COURT STAFFING LEVELS LAG BEHIND WORKLOAD GROWTH
Although caseload in the Federal courts has begun to stabilize, it
nonetheless remains at historic highs in most categories. While
caseload has grown sharply in recent years, not only have court
staffing levels failed to keep pace with that workload growth, but the
courts have, in fact, been falling farther behind. As illustrated in
the following chart, from fiscal year 2001 to fiscal year 2005 the
courts' aggregate workload increased 21 percent while on-board court
staffing levels declined by a net 5 percent. The judiciary has made
extensive use of electronic case management and case filing systems to
make clerks' offices more efficient, but reduced staffing levels and
budget constraints have resulted in 30 percent of our district and
bankruptcy clerks' offices having to reduce the office hours they are
open to the public.
Reduced staffing levels have also changed the way probation
officers do their work. Probation officers have had to prioritize their
supervision caseload to focus on higher-risk supervision cases and
reduce the amount of supervision they provide to lower-risk offenders.
This may be impacting public safety, as evidenced by a recent review of
national data which revealed that the number of removals from
supervision due to new criminal conduct increased by 9.4 percent in
fiscal year 2005 over the number in fiscal year 2004. We are very
concerned that any continued decline in court staffing may harm the
public.
In evaluating our need for staff to accommodate workload growth, we
have requested only the number of staff that can realistically be hired
over the course of the year, not the number of staff that our workload
statistics say we need. This is because we recognize that it takes more
time to add staff than to reduce staff. Eliminating staff, while
traumatic for managers and employees alike, can be done in a relatively
short amount of time. Early retirement and buyout offers attract
sizeable numbers of volunteers willing to leave the court rolls.
Unfortunately, often these individuals are the most experienced and
seasoned court employees. In other more difficult instances, staff have
to be laid off due to funding constraints. For courts that are
downsizing, staff need to be off the payroll early in the fiscal year
in order to maximize budget savings. On the other hand, backfilling
these positions takes much longer. With continuing resolutions and the
hiring freezes that may accompany them, coupled with the lead-time it
takes to advertise, interview, and make a selection, it can take
months--and well into the fiscal year--to fill a vacancy. Candidates
for probation officer positions require extensive background security
checks and can take up to a year to bring on board.
The judiciary's budget request includes funding for 464 new
probation and clerks' office staff to address the immediate workload
needs of the courts. A request based on the full requirements
identified by our staffing formulas would have resulted in an increase
of more than 2,000 staff in fiscal year 2007.
It is vital that Congress understand that, while the courts require
additional staff in order to perform their statutory duties, many have
been reluctant to hire those staff for fear they will have to fire them
almost immediately in fiscal year 2007. What the court community needs
now is a clear message that, at the very least, funds will be available
in fiscal year 2007 to maintain fiscal year 2006 year-end staffing
levels and ultimately to address the recent workload growth that was
not matched with additional staffing resources.
WORKLOAD IN THE COURTS
As I just mentioned, after years of steady growth the workload in
the courts has begun to stabilize. I would like to highlight some areas
of the judiciary's workload for the subcommittee, but before I do so, I
would like to discuss how judiciary work plays an indispensable role in
our Nation's homeland security efforts.
The Judiciary's Role in Homeland Security
Actions taken by the Department of Homeland Security and the
Department of Justice have a direct and immediate impact on the Federal
courts. Whether it is costly high-profile terrorist cases or soaring
increases in immigration cases and related appeals, this workload all
ends up on court dockets, and sufficient resources are required in
order to respond to it. In recent years, Congress and the
administration have significantly increased spending for homeland
security. Non-defense homeland security spending has more than tripled
since 2001. In sharp contrast, appropriations for the courts' operating
budget have increased by 29 percent and on-board court staffing levels
have declined by 5 percent. Increased spending on homeland security is
expected to continue, as evidenced by the President's fiscal year 2007
budget, which includes an 8 percent increase in non-defense homeland
security spending. The judiciary cannot absorb the additional workload
generated by homeland security initiatives within current staffing and
resource levels.
Immigration Enforcement
Funding for border security and immigration enforcement has nearly
doubled since 2001, and we have seen a direct impact on our workload as
a result. Since the September 11, 2001 terrorist attacks, nearly 1,200
additional border patrol agents have been hired, and Congress recently
funded an additional 1,500 agents. Furthermore, the President proposes
to add 1,500 border patrol agents in fiscal year 2007 for a potential
increase of more than 4,000 new agents since September 2001. This large
influx of new border patrol agents has and will continue to generate
considerable additional workload for judges and probation and clerks'
offices, especially in the five judicial districts along the southwest
border with Mexico. Costs in our Federal defender services program will
increase as well. These southwest border courts currently account for
nearly one-third of all criminal cases nationwide, up from 27 percent
in 2001, and criminal immigration cases in these courts have increased
by 68 percent since 2001.
The immigration-related workload also affects other areas of the
judiciary. Criminal appeals involving immigration issues increased 64
percent from 2004 to 2005. Over this same period, nearly 12,000 appeals
from decisions by the Department of Justice's Board of Immigration
Appeals were filed in Federal courts of appeals, a 19 percent increase.
Furthermore, these immigration appeals are up nearly 600 percent since
2001. The President's fiscal year 2007 budget includes funding for the
Department of Justice to increase the number of immigration judges and
immigration appeal attorneys in order to adjudicate a larger percentage
of detained immigrant cases and appeals. If funded, this will further
increase the number of immigration appeals that will end up in the
Federal courts.
Bankruptcy Filings
Passage of the Bankruptcy Abuse Prevention and Consumer Protection
Act of 2005 resulted in a massive workload increase for bankruptcy
courts as individuals rushed to file before the mid-October 2005
effective date of the legislation. Fiscal year 2005 bankruptcy filings
totaled 1,782,643, an all-time record and a 10 percent increase over
fiscal year 2004. In October 2005 alone, more than 600,000 bankruptcy
cases were filed nationwide; by comparison, filings in October 2004
totaled 130,679. Managing this unprecedented level of filings required
a truly Herculean effort on behalf of bankruptcy clerks offices around
the country. There are countless examples of clerks' office staff
working nearly around the clock to ensure that those wishing to file
for bankruptcy before the new law took effect could do so.
Given the landmark nature of this legislation, it is difficult to
predict what filing patterns will emerge in 2006 and 2007. Bankruptcy
filings are expected to decrease in the short-term, but the decline in
filings will likely be due, in part, to the large number of people who
filed just prior to the effective date of the new bankruptcy law.
Filings are expected to return in significant numbers as attorneys and
debtors become more familiar with the requirements of the new law. In
addition, the new legislation creates additional duties for the
bankruptcy courts. New duties were added in many areas including credit
counseling, means testing, financial management, tax returns,
reaffirmations, lease payments, and automatic discharges. Many of these
areas have required the creation of new processes and operations in the
clerks' offices. In addition, clerks' offices are experiencing a surge
in motions and related activity and inquiries from the bar and public.
As a result of the new demands imposed by the law on clerks' offices,
it is unclear at this time whether reductions in bankruptcy filings
will translate into reductions in workload and staff. Given these
uncertainties, the fiscal year 2007 budget request does not include any
change in bankruptcy clerks' office staffing levels.
Booker/Fanfan--Sentencing Guidelines
The judiciary is also facing the effect of the U.S. Supreme Court's
decision in the consolidated cases, United States v. Booker and United
States v. Fanfan. In fact, the courts began receiving increased filings
almost 6 months before Booker was decided--immediately after the
earlier Supreme Court decision in Washington v. Blakely. Since that
decision in June 2004, the courts have received over 14,500 cases
affected by issues raised in the Booker case, about 7,500 of these in
the courts of appeals and the remaining 7,000 in the district courts,
and the effects are not yet over. Habeas corpus petitions raising
Booker issues filed between October 1, 2005 and January 12, 2006, when
the statute of limitation for filing these petitions expired, are not
yet reflected in the statistics. Nor do they include most Booker-
related petitions that the Federal courts may receive from prisoners
sentenced in the State courts, as those prisoners must first exhaust
all options in the State courts before they can bring their cases to
the Federal courts. The Federal courts will likely continue to receive
an increased level of State habeas corpus petitions for the next 3 or
more years.
FISCAL YEAR 2007 BUDGET REQUEST
The Federal judiciary is approaching a crossroads in fiscal year
2007 and Congress will determine which direction the courts take. It is
imperative that Congress provide the courts with appropriations
sufficient to build on the gains achieved in fiscal year 2006. It would
be unfortunate to re-create the funding problems that the judiciary and
Congress have worked so hard to remedy. We greatly appreciate that
Congress made the Federal courts a high priority in fiscal year 2006
and respectfully request that you continue to do so. An appropriations
increase of 4 to 5 percent in fiscal year 2007--although consistent
with recent increases--will not achieve that goal. In fact, such an
increase will not provide for a current services operating level in
fiscal year 2007 and would likely require the courts to return to their
downsizing ways of the last 2 years. The reason for this is reflected
in the following chart and discussion.
The high carryforward balances utilized in the fiscal year 2006
financial plan were, in part, the result of rent credits from GSA and
other one-time windfalls outside the judiciary's control that will
likely not be available to finance fiscal year 2007 requirements. A
lower amount of non-appropriated sources of funding, from $401 million
to a projected $286 million, means that the courts' Salaries and
Expenses account requires a higher appropriation increase in fiscal
year 2007 just to stay even--about 7.7 percent over fiscal year 2006 to
maintain current services--and an increase of 8.3 percent to fund our
full request.
While the courts' Salaries and Expenses account requires an 8.3
percent increase for fiscal year 2007, the judiciary is requesting a
9.4 percent overall increase above fiscal year 2006 available
appropriations. A summary table detailing fiscal year 2007 requirements
by account is included at Appendix A. We believe this level of funding
represents the minimum amount required to meet our constitutional and
statutory responsibilities. While this may appear high in relation to
the overall budget request put forth by the administration, the
judiciary does not have the flexibility to eliminate or cut programs as
the executive branch does to achieve budget savings. The judiciary's
funding requirements essentially reflect basic operating costs which
are predominantly for personnel and space requirements. Of the $540
million increase being requested for fiscal year 2007:
--$160 million of the requested increase is needed just to pay for
standard pay and benefit increases for judges and staff. This
does not pay for any new judges or staff but rather covers the
annual pay adjustment and benefit increases (e.g., health
benefits) for currently funded judiciary employees. The amount
budgeted for the cost-of-living adjustment is 2.2 percent for
2007.
--$6 million is associated with increases in the number of active and
senior Article III judges.
--$140 million is a technical adjustment to cover the projected loss
in non-appropriated sources of funding ($115 million of which
is for the courts' salaries and expenses account). In addition
to appropriations, the judiciary receives revenue from fees and
other items that can be used to offset appropriation needs in
the next fiscal year. Revenue not needed during the year
collected may be carried over. As I mentioned, the high
carryforward balance from fiscal year 2005 and the rent credits
from GSA will likely not be available as financing sources in
fiscal year 2007, so the judiciary requires appropriated funds
to replace them. The projected 20 percent decline in filing fee
revenue in fiscal year 2007 due to fewer projected bankruptcy
filings is also reflected in this requested increase. We will
keep the subcommittee apprised of any changes to these fee or
carryforward projections as we move through fiscal year 2006.
--$50 million is needed for space rental increases, including
inflationary adjustments and new space delivery, and for court
security costs associated with new space. An additional $7
million is needed to pay for Federal Protective Service
security equipment and building-specific surcharges for court
facilities.
--$43 million is required to support, maintain, and continue
development of the judiciary's information technology program,
which has allowed the courts to ``do more with less'' in
absorbing workload increases while having to downsize staff.
--$18 million is required to cover mandatory increases in
contributions to the judiciary trust funds that finance benefit
payments to retired bankruptcy, magistrate, and Court of
Federal Claims judges, and spouses and dependent children of
deceased judicial officers.
--$14 million is necessary to pay costs associated with Criminal
Justice Act representations. The Sixth Amendment to the
Constitution guarantees that all criminal defendants have the
right to counsel. The Criminal Justice Act provides that the
courts shall appoint counsel for those persons who are
financially unable to pay for their defense. The number of
representations is expected to increase by 5,500 in fiscal year
2007, as the number of defendants for whom appointed counsel is
required increases. An additional $12 million will fund
deferred panel attorney payments and shortfalls in fiscal year
2006 requirements.
--$12 million of the increase will provide for several smaller base
adjustments such as continued investments in the Supreme Court
building modernization program and general inflationary
increases for judiciary programs.
The increases described above total $462 million, or 86 percent of
the requested increase, and represent must-pay items for which little
to no flexibility exists. This leaves a much smaller increase of $78
million to address workload increases and for other program
enhancements. Of this amount:
--$24 million is requested for additional staff and associated
expenses. The bulk of this increase (464 positions) would fund
the most critical and immediate workload needs of the courts,
which as I previously noted, is primarily immigration-related
workload along the southwest border where those five district
courts currently account for nearly one-third of criminal cases
nationwide. The judiciary uses statistically-based formulas to
determine the number of positions needed to address adequately
the workload of the courts. In an effort to hold down the
required increase in staffing, the judiciary's cost-containment
measures included a reduction to the formula-driven staffing
levels. As a result of these efforts, the judiciary's
calculations for full staffing requirements were lowered by
nearly 900 positions, or 4 percent. Even after this adjustment,
based on the courts' projected workload, the staffing formulas
indicate more than 2,000 additional positions are needed in
probation and clerks' offices over the level funded in fiscal
year 2006. Recognizing that the courts would have great
difficulty hiring that many new staff in a single year, the
judiciary has reduced its staffing request to reflect a number
that can realistically be hired in fiscal year 2007 (464) in
order to address the most critical workload needs of the
courts.
--$24 million to increase the non-capital panel attorney rate to $113
per hour. I will discuss this requested increase in more detail
in a moment.
--$23 million would provide for critical security-related
requirements.
--Of the remaining $7 million, $1.2 million would provide for three
additional magistrate judges and associated staff, $2 million
would fund information technology enhancements, and the
remaining $3 million is for smaller requirements in other
judiciary accounts.
Appendix B includes an account-by-account description for accounts
under the Courts of Appeals, District Courts and Other Judicial
Services heading which includes Salaries and Expenses, Defender
Services, Fees of Jurors, and Court Security.
INCREASE IN NON-CAPITAL PANEL ATTORNEY RATES
We believe that one program enhancement in our budget request
deserves strong consideration in order to ensure effective
representation for indigent criminal defendants. We are requesting $24
million to increase the non-capital panel attorney rate to $113 per
hour effective January 2007. A panel attorney is a private attorney who
serves on a panel of attorneys maintained by the district or appellate
court and is assigned by the court to represent financially-eligible
defendants in Federal court. These attorneys are compensated at an
hourly rate of $92 for non-capital cases and up to $163 for capital
cases.
The judiciary requests annual cost-of-living adjustments--similar
to the annual adjustments provided to Federal employees--for two
reasons. First, cost-of-living adjustments allow the compensation paid
to panel attorneys to keep pace with inflation and maintain its
purchasing power and, in turn, enables the courts to attract and retain
qualified attorneys to serve on their CJA panels. Second, regular
annual adjustments eliminate the need to request large ``catch-up''
increases in order to account for several years with no rate
adjustments. The subcommittee has recognized the importance of annual
cost-of-living adjustments by providing one to panel attorneys in
fiscal year 2006, and we are very grateful for your help.
Our request to increase the non-capital hourly rate amounts to a
catch-up increase, which, as I just mentioned, we would prefer to
avoid. The non-capital rate was increased to $90 in May 2002 (from $75
per in-court hour and $55 per out-of-court hour in most districts) but
no adjustments were made to that rate until this past January, when it
was raised from $90 to $92. In comparison, since May 1, 2002, the
Department of Justice has been paying $200 per hour to retain private
attorneys with at least 5 years of experience to represent current or
former Federal employees in civil, congressional, or criminal
proceedings. There is a substantiated need for our requested increase
for panel attorneys. In a 2004 survey of Federal judges, over half of
them indicated that their courts were currently experiencing difficulty
identifying enough qualified and experienced panel attorneys. In the
first statistically valid, nationwide survey conducted of individual
CJA panel attorneys in March 2005, a significant percentage (38
percent) of the over 600 attorneys surveyed reported that since the
hourly compensation rate had increased to $90 per hour in May 2002,
they had nevertheless declined to accept a non-capital CJA appointment.
The surveys also confirmed that panel attorneys are reluctant to accept
appointments in complex, high-cost representations at the $90 rate.\1\
Strikingly, after covering overhead costs for the predominantly solo
and small-firm lawyers who take CJA cases, their net pre-tax income for
non-capital CJA representations amounted to only about $26 per
compensated hour. A large proportion (70 percent) of the CJA attorneys
surveyed in March 2005 reported that an increase to the $90 hourly rate
is needed for them to accept more non-capital cases.
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\1\ Although rates have been raised to $92 per hour since the
survey was taken, this $2 per hour increase would not have materially
affected the survey responses.
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The requested increase to $113 per hour reflects the amount the
Judicial Conference believes is needed to attract qualified panel
attorneys to provide the legal representation guaranteed by the Sixth
Amendment. Indeed, $113 is the level that the judiciary was seeking in
2002 when Congress increased the rate to $90. Recognizing fiscal
realities, the $113 rate being requested is well below the $131 rate
that a full catch-up increase would permit. I urge you to give this
rate increase strong consideration.
SECURITY OF FEDERAL JUDGES
Mr. Chairman, I would like to update you on an issue in which I
know the subcommittee shares a strong interest: the security of Federal
judges and their families. As you recall, in February 2005 a Federal
district judge's husband and mother were killed in their Chicago home
by a disappointed civil litigant. A month later, a judge, court
reporter, and deputy were killed in the Fulton County, Georgia
courthouse by a defendant in a criminal case. In response to this
violence, Congress acted quickly and provided $11.9 million in fiscal
year 2005 supplemental appropriations to the United States Marshals
Service (USMS) for the installation of an intrusion detection system in
the homes of all 2,200 Federal judges, and for additional positions in
the USMS's Office of Protective Intelligence to improve the process of
assessing potential threats against judges. Over 1,700 judges have
indicated that they wish to participate in the Home Intrusion Detection
System Program.
In September 2005, Congress approved the USMS's financial plan for
spending the $11.9 million, and in December 2005 the USMS awarded a
contract to ADT to begin system installations. Subsequently, Congress
approved an amended financial plan in which the USMS agreed to assume
responsibility for the post-installation maintenance and monitoring of
these systems. We are very appreciative of the efforts of John F.
Clark, Director of the USMS, in moving this critically important
project forward.
THE JUDICIARY'S RENT BURDEN
I now turn to an issue that has been a concern of the Judicial
Conference for over 15 years: the rent that the judiciary pays to GSA.
Before I do so, I would like to take a moment on behalf of our courts
along the Gulf Coast to thank GSA for its prompt action in helping
those courts to recover from last year's hurricanes. The courts and GSA
worked well together, and GSA's help was essential.
While we appreciate GSA's hard work on our behalf, we do have
serious concerns about its rental pricing policies for courthouses.
Courthouses serve a critical role in our Nation's system of
jurisprudence. They enable the Federal judiciary to ensure the swift,
fair, and effective administration of justice, as is required by the
Constitution. Our space needs are unique and unlike those of any other
Federal entity. One of our primary concerns is that courthouses are
currently treated as commercial office space by GSA for rent assessment
purposes when, in reality, there is no building that is commercially
equivalent to a Federal courthouse. The fact that the judiciary has
added significantly to its space inventory over the last 10 years does
not fully justify or explain our sharply escalating rent payments to
GSA, which are expected to consume 20 percent of the courts' budget in
fiscal year 2006 and will soon top $1 billion per year.
The need to reduce the judiciary's enormous rent burden, which
threatens judicial independence, is critical to the courts' financial
well-being. Chief Justice John G. Roberts, Jr., in his ``2005 Year-End
Report on the Federal Judiciary'', identified the GSA rent issue as one
of ``. . . two areas of concern that have come to the fore and now
warrant immediate attention and action.'' Despite numerous appeals, GSA
has repeatedly declined to provide the judiciary with any measure of
rent relief, although in 2005 it provided rent relief to 14 other
Federal entities. As the Chief Justice stated, ``The disparity between
the judiciary's rent and that of other government agencies, and between
the cost to GSA of providing space and the amount charged to the
judiciary, is unfair. The Federal judiciary cannot continue to serve as
a profit center for GSA.''
In the absence of any changes to GSA's current rent pricing
structure for court-occupied space, the judiciary over the last year
has been meeting with appropriations and authorizing committees in
Congress to raise awareness of the detrimental impact GSA's rent
pricing policies have had on the judiciary's core mission of
administering justice. In those meetings, we have stressed that the
judiciary's recent budget problems, particularly in 2004 where the
courts lost 1,350 probation and clerks' office staff, were due at least
in part to GSA's rent pricing policies that diverted to rent funds
needed by the courts to perform their essential functions.
In the absence of rent relief, the judiciary has assumed the burden
of minimizing its rent payments to GSA by scrutinizing rent bills and
identifying overcharges. In New York, court staff spent months
examining GSA billings and identified space rent overcharges, the
cumulative effect of which resulted in savings or cost avoidance over 3
fiscal years totaling $30 million. GSA has corrected these errors
through rebates and rent credits. This was a time-intensive effort by
the New York courts that involved 2,000 staff hours--the equivalent of
one person working full-time for a year. The real impact is that it
took clerk's office staff away from core duties of processing the
court's caseload in order to validate, and eventually correct, the
billings from another Federal entity.
Because these overcharges may be happening elsewhere, the judiciary
is expanding its effort to identify billing errors and has launched a
nationwide initiative to train clerks' office staff on how to research
and detect errors. Again, this effort will come with a cost. It is
estimated that this nationwide effort will require a minimum of 13,000
staff hours--equivalent to six people working full-time for a year--in
addition to $4.3 million for training, travel, and contractor support
costs, including professional real estate appraisal services. This is
not work that clerks' office staff should have to do, and surely
Congress did not intend that we would have to devote scarce resources
to finding rent overcharges. But we are left with no choice. Given the
judiciary's austere budget situation, we must pursue savings and
economies whenever possible, even if we have to divert valuable court
resources in order to do so. I would conclude my remarks on this topic
by again quoting Chief Justice Roberts who said in his year-end report
``. . . the judiciary must still find a long-term solution to the
problem of ever-increasing rent payments that drain resources needed
for the courts to fulfill their vital mission.'' The judiciary stands
ready to work with Congress and the administration on this very
important issue.
COST-CONTAINMENT STRATEGY FOR THE JUDICIARY
The judiciary fully recognizes the fiscal situation facing the
Congress and has made cost containment a major priority. As was
reported to Congress last year, the Judicial Conference of the United
States approved in September 2004 a cost-containment strategy of
identifying and implementing measures to economize and reduce costs
while not adversely affecting the delivery of justice. Director Mecham
will be discussing cost-containment efforts in more detail in his
testimony, but I would like to emphasize that these cost-containment
efforts are having a real and immediate impact on our resource
requirements. As an example, the fiscal year 2007 budget request was
lowered by $80 million principally due to cost-containment efforts and
productivity improvements in clerks' and probation and pretrial
services offices. The judiciary is preparing a report, for release this
spring, to update Congress on the status of various cost-containment
initiatives.
RESPONSE TO RECENT HURRICANES ALONG THE GULF COAST
Director Mecham will be discussing emergency preparedness
activities in his testimony today, but I would like to talk briefly
about the recent hurricanes along the Gulf Coast and their impact on
Federal court operations. First, and most importantly, I am happy to
report that the Third Branch suffered no loss of life due to the
hurricanes, although some judges and court staff did lose their homes
in Hurricane Katrina. I would also like to thank you for the $18
million in fiscal year 2006 supplemental appropriations that was
provided to help the courts deal with the aftermath of these natural
disasters. This funding has paid for travel and per diem expenses for
judges, court staff, and their dependents who were displaced by the
hurricanes as well as for security, furniture, and operating expenses
for the affected courts. If Congress had not provided this emergency
funding, the judiciary would have been forced to absorb these expenses
which in turn would have reduced the funding available to the courts in
fiscal year 2006 for court support staff.
The hurricanes, particularly Katrina, caused significant disruption
to court operations along the Gulf Coast. The damage caused by
Hurricane Katrina forced the Fifth Circuit and its personnel to move to
temporary duty locations in Houston, Texas, and Baton Rouge, Louisiana.
District court personnel in the Eastern District of Louisiana were
moved from New Orleans to temporary duty locations in Houma, Baton
Rouge, and Lafayette, Louisiana, and in the Southern District of
Mississippi, district court personnel were moved from Gulfport to
temporary duty locations in Hattiesburg and Jackson, Mississippi.
Hurricane Rita impacted court operations in the Eastern District of
Texas. In that district, court personnel were moved from Beaumont to
temporary space in Tyler and Lufkin, Texas. All of the courts affected
by the hurricanes have resumed normal operations with the exception of
the district court in Gulfport, which is expected to reopen in June
2006. Of course, for those who lost their homes in the hurricanes, a
return to normalcy may be delayed for some time.
Quick action helped to minimize the cost of both bringing up court
operations at the temporary locations and restoring operations at
permanent locations. For example, court personnel in the Eastern
District of Louisiana entered the courthouse in New Orleans soon after
Hurricane Katrina hit and, under U.S. Marshals Service guard escort,
retrieved computer and office equipment and transported it to temporary
duty locations, thus reducing the need to replace equipment. GSA
quickly moved into affected court facilities to repair damages and
restore power and air conditioning. This saved millions of dollars that
would have been needed to replace furnishings damaged by mold and
mildew. After Hurricane Rita hit, courts around the country sent used
computer equipment to the Eastern District of Texas district court for
judges and staff to use at temporary duty locations, again minimizing
the need to purchase new equipment.
The disruption caused by the hurricanes--especially Katrina--
presented unique challenges, particularly for probation officers who
had to locate displaced offenders under their supervision. I would like
to relate one story for you in particular that exemplifies the quick
thinking and dedication of Federal probation officers across the
country.
Following Hurricane Katrina, probation officers in the Eastern
District of Louisiana scrambled to locate all the offenders under their
supervision, but gave special attention to convicted sex offenders. I
am pleased to say that all were found and are again in treatment and
under supervision. In one such case, however, an offender fled to his
mother's house in Alabama, which happened to be next door to an
elementary school. He did not contact his probation officer or local
police as required of convicted sex offenders. He was found, however,
thanks to the good work of a Federal probation officer from the
Northern District of Alabama. That officer recalled having briefly
supervised a serious sex offender from the Eastern District of
Louisiana while that offender was in Alabama, and, on a hunch, took it
upon herself to drive by the offender's mother's house. There in the
driveway was a car registered to the offender. Along with another
officer, she confronted the offender who admitted he had not registered
as a sex offender and had not tried to call his Louisiana Eastern
probation officer. The probation officer called local police who took
the offender into custody for failing to register. The offender is now
back in Louisiana in a community corrections center.
This is only one of many stories I could give you that would
demonstrate the commitment and dedication of our probation officers--
not just during a crisis--but in the day-to-day conduct of their law
enforcement duties.
CONTRIBUTIONS OF THE ADMINISTRATIVE OFFICE
The Administrative Office (AO) of the United States Courts has
served and supported the courts in an exemplary manner in a very
difficult fiscal year. The more the courts have to do, and the fewer
resources with which they have to do it, the more challenging is the
job of the AO. With only a fraction (1.2 percent) of the resources that
the courts have, the AO does a superb job of advising us and supporting
our needs.
The AO continues to serve as the central support agency for the
Federal courts, with key responsibility for judicial administration,
policy implementation, program management, and oversight. It performs
important administrative functions, but also provides a broad range of
legal, financial, management, program, and information technology
services to the courts. None of these responsibilities has gone away
and new ones are continually added, yet the AO staffing level has been
essentially frozen for 10 years. Time spent on new initiatives and on
assisting the courts in operating under fiscal constraints means basic
support and infrastructure work has to be deferred.
Last year was a particularly challenging one. In 2005, the AO
played a central role in assisting the courts to implement the
bankruptcy reform legislation, as well as in helping those courts
affected by Hurricanes Katrina and Rita deal with the myriad of space,
travel, technology, and personnel issues that had to be addressed. The
commitment of significant resources to these and other initiatives over
the last year further stretched the AO's already strained resources.
In my role as Chair of the Judicial Conference Committee on the
Budget, I have the opportunity to work with many staff throughout the
AO. They are dedicated, hard working, and care deeply about their
fundamental role in supporting this country's system of justice.
The fiscal year 2007 budget request for the Administrative Office
is $75.3 million, representing an increase of $5.8 million. All of the
requested increase is necessary to support adjustments to base, mainly
standard pay and general inflationary increases, as well as funding to
replace the anticipated lower level of fee revenue and carryover with
appropriated funds in fiscal year 2007.
I urge the subcommittee to fund fully the Administrative Office's
budget request. The increase in funding will ensure that the
Administrative Office continues to provide program leadership and
administrative support to the courts, and lead the efforts for them to
operate more efficiently.
CONTRIBUTIONS OF THE FEDERAL JUDICIAL CENTER
I also urge the subcommittee to approve full funding for the
Federal Judicial Center's request, which is only 7.5 percent over its
2006 level.
The Center's director, Judge Barbara Rothstein, has laid out in
greater detail what the Center needs and why it needs it in her written
statement. I want to add that the Center plays a vital role in
providing research and education to the courts. The Judicial Conference
and its committees request and regularly rely on research projects by
the Center. These provide solid empirical information on which the
judges, the judiciary, and Congress and the public, depend in reaching
important decisions relating to litigation and court operations.
Likewise, the Center's educational program for judges and court staff
are vital in preparing new judges and employees to do their jobs, and
in keeping them current so that they can better deal with rapid changes
in the law, and in tools--like technology--that courts rely on to do
their work efficiently.
The Center has made good use of its limited budget. It has made
effective use of emerging technologies to deliver more information and
education to more people, more quickly. The relatively small investment
you make in the Center each year (less than one-half of 1 percent of
the judiciary's budget) pays big dividends in terms of the effective,
efficient fulfillment of the courts' mission.
CONCLUSION
Mr. Chairman, I hope that my testimony today provides you with a
better appreciation of the challenges facing the Federal courts. I
realize that fiscal year 2007 is going to be another tight budget year,
perhaps the tightest ever. With the gains you helped us achieve in
fiscal year 2006, we are on the brink of setting a new course that will
restore the financial health of the Federal court system. But it will
take the resources we seek in our fiscal year 2007 budget request to
accomplish that goal and to avoid a repeat of the staffing losses that
occurred in fiscal years 2004 and 2005. I know that you agree that a
strong, independent judiciary is critical to our citizens, our economy,
and our homeland security. I urge you to fund this request fully in
order to enable us to maintain the high standards of the United States
judiciary. Failure to do so could result in a significant loss of
existing staff, dramatic cutbacks in the levels of service provided,
and a diminishment in the administration of justice.
I would be happy to answer any questions the subcommittee may have.
APPENDIX A
JUDICIARY APPROPRIATION FUNDING
[Dollars in thousands]
----------------------------------------------------------------------------------------------------------------
Percent Change
Fiscal Year Change Fiscal Fiscal Year
Appropriation Account 2006 Available Fiscal Year Year 2007 vs. 2007 vs.
\1\ 2007 Request Fiscal Year Fiscal Year
2006 2006
----------------------------------------------------------------------------------------------------------------
U.S. Supreme Court:
Salaries & Expenses........................ $60,143 $63,405 $3,262 5.4
Care of Building and Grounds............... 5,568 12,959 7,391 132.7
----------------------------------------------------------------
Total.................................... 65,711 76,364 10,653 16.2
================================================================
U.S. Court of Appeals for the Federal Circuit.. 23,783 26,300 2,517 10.6
U.S. Court of International Trade.............. 15,342 16,182 840 5.5
Courts of Appeals, District Courts & Other
Judicial Services:
Salaries & Expenses:
Direct................................. 4,308,395 4,687,244 378,849 ..............
Supplemental........................... 18,000 .............. (18,000) ..............
Vaccine Injury Trust Fund.............. 3,795 3,952 157 ..............
----------------------------------------------------------------
Total................................ 4,330,190 4,691,196 361,006 8.3
----------------------------------------------------------------
Defender Services.......................... 709,830 803,879 94,049 13.3
Fees of Jurors & Commissioners............. 60,705 63,079 2,374 3.9
Court Security............................. 368,280 410,334 42,054 11.4
----------------------------------------------------------------
Subtotal................................. 5,469,005 5,968,488 499,483 9.1
================================================================
Administrative Office of the U.S. Courts....... 69,559 75,333 5,774 8.3
Federal Judicial Center........................ 22,127 23,787 1,660 7.5
Judiciary Retirement Funds..................... 40,600 58,300 17,700 43.6
U.S. Sentencing Commission..................... 14,256 15,740 1,484 10.4
----------------------------------------------------------------
Direct................................... 5,698,588 6,256,542 557,954 ..............
Supplemental................................... 18,000 .............. (18,000) ..............
Vaccine Injury Trust Fund...................... 3,795 3,952 157 ..............
----------------------------------------------------------------
Total.................................... 5,720,383 6,260,494 540,111 9.4
----------------------------------------------------------------------------------------------------------------
\1\ Fiscal year 2006 appropriated funds include the effect of the 1 percent across-the-board discretionary
rescission where applicable (Public Law 109-148).
APPENDIX B--SUMMARY
The fiscal year 2007 appropriation request for the Courts of
Appeals, District Courts, and Other Judicial Services totals
$5,968,488,000, an increase of $499,483,000, or 9.1 percent, over
fiscal year 2006 available appropriations. In addition to appropriated
funds, the judiciary utilizes other funding sources to supplement our
appropriations including fee collections, carry forward of fee balances
from a prior year, and the use of no-year funds. When all sources of
funds are considered, the increase in obligations for fiscal year 2007
is $362,506,000 or 6.2 percent.
Of the $499,483,000 increase in appropriations, 85 percent
($425,742,000) is adjustments to the fiscal year 2006 base associated
with standard pay and other inflationary increases as well as other
adjustments that will allow the courts to maintain current services in
fiscal year 2007. The remaining 15 percent ($73,741,000) is needed to
respond to increased requirements for magistrate judges, Federal
defender offices, an increase in panel attorney non-capital rate
increases, court security systems and equipment, digital video
equipment in all new courthouses, information technology upgrades and
to fund additional court staff required to handle the most critical
workload, particularly along the southwest border.
The requests for the principal programs are summarized below.
Salaries and Expenses
The salaries and expenses of circuit, district, and bankruptcy
courts and probation and pretrial services offices account for most of
our request. A total of $4,691,196,000 in appropriations is required
for this account, including funding for the Vaccine Injury program, an
increase of $361,006,000 above the fiscal year 2006 available
appropriation. Funding totaling $285,892,000 is expected to be
available from other sources, including fee collections and
carryforward balances to fund Salaries and Expenses requirements.
Combined with our appropriations request, this results in obligations
of $4,977,088,000.
Of the $361,006,000 increase in appropriations, 93 percent
($335,553,000) is needed to fund adjustments to the fiscal year 2006
base including: pay and benefit increases for judges and chambers staff
($13,168,000); increase in the number of senior, Article III, and
magistrate judges and associated staff ($5,771,000); pay and benefits
for court personnel and programs ($106,694,000); GSA space rental and
related services ($46,886,000); information technology related
adjustments ($42,595,000); financing adjustments to replace non-
appropriated sources of funds with appropriated funds ($115,082,000);
and other operations and maintenance costs that are uncontrollable in
nature ($5,357,000).
The remaining 7 percent ($25,453,000) will fund 3 additional
magistrate judges and their staff to help Article III judges handle
civil cases and the record number of criminal cases facing the courts
($1,282,000); 257 court support FTE to address fiscal year 2007
workload requirements ($22,109,000); and increases to support new
information technology projects and upgrades ($2,062,000).
Defender Services
An appropriation of $803,879,000 is required for the Defender
Services program to provide representation for eligible criminal
defendants in fiscal year 2007. This is an increase of $94,049,000
above the fiscal year 2006 available appropriation.
Of this increase, 74 percent ($69,133,000) is needed for
adjustments to the fiscal year 2006 base for inflationary and workload
increases. Included in these adjustments are standard pay and inflation
increases for Federal defender organizations ($19,310,000); a cost-of-
living adjustment to the capital and non-capital panel attorney rates
($1,717,000) and annualization costs of the 2006 panel attorney non-
capital and capital rate adjustments ($1,535,000); and other
inflationary increases ($2,849,000); increase in the projected number
of representations ($14,214,000); funding adjustments to replace
carryforward funding with appropriated funds ($17,644,000); funding for
deferred panel attorney payments from fiscal year 2006 and unfunded
fiscal year 2006 base requirements ($12,464,000); and a reduction in
non-recurring costs (-$600,000).
Twenty-five percent ($23,676,000) is requested to provide funding
for the costs associated with increasing the panel attorney non-capital
rate to $113 per hour, effective January 1, 2007.
The remaining increase of 1 percent ($1,240,000) will fund an
increase for six new positions at the Administrative Office ($640,000);
and start-up costs of two new Federal defender organizations expected
to be opened in fiscal year 2007 ($600,000).
Fees of Jurors and Commissioners
For the Fees of Jurors program, an appropriation of $63,079,000 is
required, an increase of $2,374,000 from the fiscal year 2006 available
appropriation. The Fees of Jurors request is a current services budget
for fiscal year 2007 with no program increases. The adjustments to the
fiscal year 2006 base include a net decrease in the projected number of
juror days (-$722,000); an inflationary adjustment ($832,000); and a
financing adjustment to replace carryforward funding with appropriated
funds ($2,264,000).
Court Security
For the Court Security program, an appropriation of $410,334,000 is
required, which is an increase of $42,054,000 above the fiscal year
2006 available appropriation. Of this increase, 44 percent
($18,682,000) is for adjustments to base including an increase for
standard pay and benefit increases ($292,000); a fiscal year 2007
Department of Labor wage rate adjustment for court security officers
(CSOs) ($10,250,000); annualization costs for 37 new fiscal year 2006
CSOs ($889,000); 34 additional CSOs for new and existing space
($2,626,000); inflationary adjustments ($1,200,000); an increase for
Federal Protective Service security charges ($7,371,000); and a
reduction for non-recurring security systems and equipment
(-$3,946,000).
The remaining increase of 56 percent ($23,372,000) will fund
security systems and equipment enhancements ($16,778,000); the
installation of digital video recorders ($6,569,000); and a United
States Marshals Service server replacement initiative ($25,000).
______
Prepared Statement of Leonidas Ralph Mecham, Director, Administrative
Office of the U.S. Courts
INTRODUCTION
Chairman Bond, Senator Murray, and members of the subcommittee, I
am pleased to present my final testimony before the Senate in support
of the fiscal year 2007 budget request for the Administrative Office of
the United States Courts (AO). I will soon be retiring as Director of
the Administrative Office. I have served three Chief Justices,
thousands of judges and court staff, and directed the AO during two
decades of unprecedented change. I have worked closely with members and
staff of the various committees of Congress with jurisdiction over the
judiciary and am extremely proud of what we have accomplished together.
I am grateful for the opportunity afforded me to head what I believe is
the finest agency in the Federal Government.
I especially want to thank you and your committee for the support
provided to the judiciary during our first year under the purview of
this subcommittee. Only weeks after the Appropriations Committee
reorganization last year, you supported emergency supplemental funding
to enhance the protection of judges in their homes, and language
ensuring sufficient fees would be available to support the judiciary's
implementation of the new Bankruptcy law. Then, during consideration of
the fiscal year 2006 Transportation-Treasury Appropriations Act, you
made funding for the judiciary a priority, recognizing the
uncontrollable nature of the workload in our Nation's courts. And, as
the year drew to a close, you supported emergency supplemental funding
to assist Gulf Coast courts in their recovery efforts in the aftermath
of Hurricanes Katrina, Rita, and Wilma. Your leadership in support of
the Judicial Branch during these times of tremendous budget pressures
is deeply appreciated.
CONTAINING COSTS THROUGH RENT RELIEF
As you may recall from my visit with you last year, I am deeply
concerned about the adverse impact the judiciary's rent bill has had on
court operations. As Chief Justice John Roberts stated in his 2005
Year-End Report, ``The Federal judiciary cannot continue to serve as a
profit center for GSA.'' While the judiciary has taken steps of its own
to control its rent bill by undertaking a comprehensive review of its
courthouse construction program, including a moratorium on new
construction projects, it is the so-called ``market-based'' or
commercially equivalent rent we are paying for existing facilities that
is exacerbating our budget difficulties.
During the 18-month period from October 2003 through March 2005,
budget shortfalls and delayed appropriations forced the judiciary to
reduce court staffing by 8 percent or 1,800 employees. Yet, during this
same time period, the rent bill paid to GSA increased and was paid in
full. Faced with the choice of paying an even higher rent bill or
firing additional court employees, all during a period of historically
high workload, the judiciary tried unsuccessfully to seek a rent
exemption from the GSA--similar to those the GSA provided at the same
time to 14 other executive branch entities. Each request by the
judiciary was turned down or GSA offered alternatives that, in the long
term, would not save money. Unable to sustain any further staffing
reductions, and without cooperation from GSA, the judiciary had no
choice but to engage in a detailed, and costly, technical review of
rent bills at the local level to try to identify rent discrepancies
that would result in a lower rent bill.
Judge Gibbons describes this effort in her testimony and shares the
success we have had in identifying inaccuracies and errors in the rent
bills for the Northern and Southern Districts of New York, which
resulted in a savings of $30 million to the judiciary through rebates
and rent credits. Certainly we are pleased with this result as the
unanticipated return of funds has helped to offset the impact of the 1
percent across-the-board rescission to our fiscal year 2006
appropriation. But, the rebates provide only short-term rent relief. As
Chief Justice Roberts stated in his 2005 Year-End Report, ``. . . the
judiciary must still find a long-term solution to the problem of ever-
increasing rent payments that drain resources needed for the courts to
fulfill their vital mission.'' Unless judiciary appropriations keep
pace with the increase in our rent bills, we will be unable to sustain
the staffing levels necessary to carry out the mission of the Judicial
Branch. Despite the aforementioned rebates, rent paid to GSA in fiscal
year 2006 is expected to consume over 20 percent--nearly $1 billion--of
the courts' operating budget. In contrast, the Executive Branch as a
whole spends less than two-tenths of 1 percent of its budget on GSA
rent--in part because many agencies have managed to become totally
independent of the GSA.
On February 8, 2006, Congressman Sensenbrenner introduced H.R.
4710, the Judiciary Rent Reform Act of 2006. A similar bill, S. 2292,
was introduced in the Senate by Senator Specter on February 16, 2006.
The purpose of this bipartisan legislation is to ensure that the rent
paid by the Federal judiciary is fair and equitable, and is related to
the actual costs of providing court facilities. Enactment of the
legislation would change existing practice by requiring the judiciary
to pay only for the GSA's direct expenses associated with the operation
and maintenance of federally-owned space occupied by the courts, as
well as applicable indirect GSA expenses, which principally entail
GSA's administrative overhead at the field office, regional and central
office levels. The judiciary would be required to pay only the
underlying contract rent for any court-occupied leased space and would
be exempt from paying for components of GSA's current pricing policy,
which are above and beyond its actual costs of operating and
maintaining federally-owned space.
With regard to future courthouse construction or major repair and
alteration projects undertaken by GSA on behalf of the judiciary, under
this proposed legislation, the judiciary would request appropriations
directly from Congress and transfer appropriations approved by Congress
to GSA for deposit into the Federal Buildings Fund. The amounts
transferred would be designated specifically for those projects. This
legislation will not change the current congressional process for
authorizing new courthouse construction and repair and alteration
projects, nor will it change appropriations subcommittee jurisdiction.
It simply will ensure that the judiciary pays a fair and equitable
amount to GSA to lease, operate, and maintain court facilities.
Furthermore, it will ensure that all funding deposited in the Federal
Buildings Fund by the judiciary is used to support and build judiciary
facilities, and is not used by the administration to fund Executive
Branch projects instead.
Modifying the funding mechanism for judiciary facilities will
improve the process for both the judiciary and Congress, and will
preclude the situation the judiciary finds itself with respect to
fiscal year 2007 and, in fact, 5 of the past 10 years. The Judicial
Conference has identified to GSA and the administration the need for
five courthouse projects, at a cost of $307 million for fiscal year
2007. The President's budget has included no funds whatsoever for
courthouse construction projects. OMB has included no funds for
projects funded out of the Federal Buildings Fund. Yet, the judiciary
will pay approximately $1 billion in rent to GSA in fiscal year 2007,
which is about $500 million more than is needed to pay for the cost to
lease and operate court facilities. While there is $148.6 million in
the fiscal year 2007 request for three courthouse Repair and Alteration
projects, the vast majority of the ``rent profit'' realized by GSA from
the judiciary goes to support Executive Branch projects.
Mr. Chairman and members of the subcommittee, I hope you will
support the judiciary's efforts to address the burden that excessive
rent costs are placing on the judiciary by co-sponsoring S. 2292.
Especially during these times of limited resources, I fear that our
ability to carry out the basic functions of the judicial branch are at
stake if rent relief is not obtained.
ROLE OF THE ADMINISTRATIVE OFFICE
The Administrative Office of the U.S. Courts was created by an Act
of Congress in 1939 and is devoted to helping the courts fulfill the
judiciary's mission--administering justice to the citizens of this
country. Neither the Executive Branch nor the Legislative Branch has a
comparable organization that provides the broad range of services and
functions that the Administrative Office does for the Judicial Branch.
My successor will be only the seventh Director of this unique
institution in almost 70 years.
The AO provides administrative, legal, financial, management,
program, security, and information technology services to the Federal
courts. It provides support and staff counsel to the Judicial
Conference of the United States and its 25 committees, and it helps
implement Judicial Conference policies as well as applicable Federal
statutes and regulations. The AO is also the focal point for judiciary
communication, information, program leadership, and administrative
reform. Our administrators, accountants, systems engineers, analysts,
architects, lawyers, statisticians, and other staff provide
professional services to meet the needs of judges and staff working in
the Federal courts nationwide. The AO staff also responds to
Congressional inquiries, providing information on pending legislation
and congressionally mandated reports.
As I prepare to retire from this extraordinary organization, I want
to take this last opportunity to appeal for sufficient resources to
sustain the AO's staffing level, which has not been increased in over
10 years despite many new work demands. In the past few years, we have
been forced to maintain high vacancy rates due to funding shortages. I
hope the following examples of recent challenges and achievements will
illustrate the critical role the employees of the Administrative Office
play in supporting the Federal judiciary.
Implementing the Bankruptcy Abuse Prevention and Consumer Protection
Act of 2005
The most sweeping changes to bankruptcy law in the past 20 years
were enacted on April 20, 2005, with the signing of the Bankruptcy
Abuse Prevention and Consumer Protection Act of 2005 (Public Law 109-
8). The Act's impact on judiciary resources, including AO and court
staff, has been monumental. The 500-page Act made many substantive
changes to the Bankruptcy Code that required significant amendments to
the judiciary's bankruptcy rules and forms. It also established a host
of new procedures and proceedings that are adding to the work of
bankruptcy judges, bankruptcy clerks, bankruptcy administrators, and
staff here at the AO. Most of the Act's provisions took effect October
17, 2005, just 180 days after enactment, requiring the AO, Judicial
Conference committees, and the bankruptcy courts to undertake an
enormous effort to meet the tight deadline. Moreover, implementing the
Act required the AO to quickly develop a new version of CM/ECF, the
case management and electronic filing system, used by the courts.
To coordinate the AO's national implementation of the Act, I formed
a Bankruptcy Act Implementation Working Group, which met three times a
month to identify all implementation tasks and issues and to coordinate
all phases of implementation of the provisions of the Act. Over 100
employees representing a minimum of 15 program offices at the AO were
involved in this tremendous effort--all of which had other principal
duties.
I also approved the creation of a Bankruptcy Legislation Working
Group, comprising judges, unit executives, and deputy clerks, who
worked many hours, in conjunction with my staff, to address many of the
new issues raised in the Reform Act. This Group created a ``grid'' of
information, addressing various areas of the law, including means
testing, credit counseling, and tax returns. This grid, which included
procedural and legal guidance, statutory cites, and CM/ECF information,
proved an invaluable resource for the courts as they prepared to
implement the new law.
In addition, the Advisory Committee on Bankruptcy Rules, the
Committee on the Administration of the Bankruptcy System, and court
working groups devoted substantial hours and effort to ensure
compliance with the Act. Beginning with an organizational meeting the
day after enactment of the law, the Advisory Committee conducted more
than 20 conference calls, held three subcommittee meetings, and two
full committee meetings. Members of the Committee, the Committee's
consultants--four law professors--and AO staff spent countless hours
conferring, drafting, and redrafting the new and revised rules and
forms. As a result of this work, on August 11, 2005, the Executive
Committee of the Judicial Conference approved eight new rules,
amendments to 35 existing rules, amendments to 33 existing forms, and
nine new official forms, and authorized the distribution to the courts
of interim rules with the recommendation that the courts adopt them by
local order. In the meantime, the Standing Rules Committee is
proceeding with permanent changes to the Federal Rules of Bankruptcy
Procedure, following the normal procedures of the Rules Enabling Act.
Administrative Office staff posted these Interim Rules and official
forms on the judiciary's internet website. From October 2005 to January
2006, the new forms had nearly 362,000 visitors and the interim rules
had almost 100,000 visitors. AO staff have responded to thousands of
inquiries about the rules and forms, the new procedures and the amended
Bankruptcy Code in general, and have participated in many meetings on
the interim rules and amended forms, including dozens of national and
local seminars and teleconferences, and a satellite broadcast with
bankruptcy judges, clerks, and other court staff.
AO staff also completed major revisions to the case management
software, the courts' electronic docket and case management system, to
incorporate the many procedural changes in bankruptcy cases and
proceedings that took effect on October 17. This updated version of the
software enabled the courts to comply with the means test, as well as
the new noticing requirements. Currently, AO staff are working on the
development of a new statistical database and analysis system to enable
the courts to meet the Act's data reporting requirements, which will
become effective 18 months after the enactment. The enhanced
statistical infrastructure needed to produce the new statistics will be
in place by October 1, 2006.
Later in my statement, I will discuss the overall impact our
electronic case management system has had on the courts, but I would
like to point out here that without this system, the bankruptcy courts
would have been paralyzed during the period preceding the October 17,
2005, effective date. During the 16 days preceding the Act's effective
date, over 625,000 bankruptcy cases were filed, more than would
normally be expected over a 5-month period. In paper form, if an
average no-asset Chapter 7 case file measures three-eighths of 1 inch
thick, then those 625,000 cases would have required a shelf almost 4
miles long, to support a weight of 208 tons. With a lot of hard work
and overtime, and with the incredible performance of CM/ECF, our
bankruptcy clerks were able to begin processing this avalanche of
cases--which are still in progress--with minimal adverse impact on the
courts.
Disaster Response--Hurricane Recovery Efforts
In 2001, after the terrorist attacks of 9/11, I created a Judiciary
Emergency Preparedness Office at the AO to ensure that the courts have
the capability to perform essential activities and function without
extended delays in the event of natural disasters, terrorist attacks,
or civil emergencies. It is led and staffed by individuals who have
other duties during non-emergency periods. The AO's leadership role for
the judiciary in disaster response was demonstrated and tested during
the hurricanes of 2005. The staff of the AO met the challenge with
commitment, dedication, expertise, and above all--success.
In the wake of Hurricane Katrina, the AO launched an immediate and
intensive effort to assure that judges, court staff, and their families
were safe, and to return court operations to normal as quickly as
possible. Seventy court units from Houston to Miami experienced some
break in telecommunications and more than 1,500 court employees were
affected. Here in Washington, AO staff from 18 program offices formed
the Judiciary Emergency Response Team (JERT) to coordinate information
and assistance to the affected courts in the areas of procurement,
space and facilities, technology, travel, finance, human resources,
legislative affairs, public affairs, and legal counsel. The JERT met
for nearly 7 weeks to assess the situation and provide advice and
assistance to the courts, to include site visits to the affected areas.
Staff contacted banks in Louisiana and Mississippi to ensure
paychecks were received and processed, negotiated with benefit
providers to expedite payments, and made available phone and electronic
communication services for courts unable to access their long-distance
carriers. At the direction of the Judicial Conference, legislation was
pursued by the AO and quickly enacted to allow courts to convene
outside their regional jurisdiction during times of emergency.
Memoranda were also issued to affected judges and court unit executives
addressing areas of key concern such as: relocating judges and court
employees; providing guidance on temporary duty travel and related
expense reimbursement; allocating funds to cover disaster expenses;
delegating certain procurement authority for the immediate replacement
of furniture, supplies, and equipment; and reestablishing information
technology systems.
Throughout September, teams of experts from the AO were deployed to
Jackson in the Southern District of Mississippi, Baton Rouge, Houma,
and Lafayette in the Eastern and Western Districts of Louisiana, and to
the Hurricane Rita-impacted Southern and Eastern Districts of Texas.
The AO staff provided on-site assistance in human resources management,
temporary duty travel, information technology, procurement, space and
leasing, security, and coordination with other assisting government
agencies.
Court operations are running fairly well in the districts affected
by the hurricanes of 2005. Mr. Chairman, we owe a debt to you and your
subcommittee, which was especially supportive of our emergency
supplemental request. Our funding needs were primarily to recover costs
associated with per diem, travel expenses, and replacing lost
equipment. Fortunately, through quick action and the personal
dedication of our court staff, we were able to avoid hundreds of
thousands of dollars in equipment replacement costs. I am proud of the
work of the AO's Judiciary Emergency Preparedness Office, and the
judiciary employees across the country who were instrumental in the
judiciary's swift recovery from these natural disasters.
Continuity of Operations Plans (COOPs)
Since its creation, a principal focus of the AO's Judiciary
Emergency Preparedness Office has been to assist each court in the
development of continuity of operations plans (COOPs). During the last
several years, courts have been testing and validating their COOPs.
Before Katrina hit, and throughout the disaster recovery period,
the affected courts used their Continuity of Operations Plans to
safeguard staff, court files, and property. At both the circuit and the
district court levels, the intensive efforts to develop and test COOPs
paid off in the aftermath of Katrina. Court employees knew their space
and equipment requirements, knew which employees were critical to the
resumption of operations, and the employees themselves knew their
roles. Ten days after Katrina hit, the courts affected felt that they
were much further ahead than they would have been if Hurricane Katrina
had struck 4 years ago.
Cost-containment Initiatives
Supporting the judiciary's overall cost-containment initiatives has
been a top priority of the AO during the past year. Led by Judicial
Conference Committees, and working closely with court advisors, AO
staff is currently engaged in more than 50 cost-containment initiatives
related to space and facilities cost control, workforce efficiency,
review of compensation costs, effective uses of technology, program
changes in defender services, court security, and law enforcement, and
adjustments to fees. To date, initiatives that have already yielded
savings include the moratoria on space projects, reductions to
probation and pretrial services work requirements, reductions and
elimination of Federal Protective Service contract guard services that
were deemed to be redundant and/or unnecessary, and productivity
adjustments to court staffing formulas.
The AO is also leading by example. During 2005, the AO continued
implementation of internal cost-control measures--staffing vacancies
were closely monitored and controlled. Because of funding limitations,
the AO maintained a vacancy rate of nearly 10 percent also, all
operations, projects, and functions were closely examined to identify
cost reduction opportunities. Only limited travel and training were
allowed, and orders for all other contracts, services, supplies, and
equipment were restricted to those essential to basic operations and to
supporting Judicial Conference committees, continuing court operations,
and implementing information technology projects previously approved.
While such restrictions may be acceptable for a short period, over the
longer term, they begin to adversely affect the AO's ability to support
the courts. For example, having a properly trained workforce is
absolutely critical to maintaining legal, financial, human resources,
and technology support for the courts. It is also necessary to maintain
up-to-date information technology and office equipment if we are to
communicate with the courts effectively. Lastly, it is essential that
AO staff travel to the courts in order to perform program reviews and
audits, and to assist in the implementation of more cost-effective
practices which will benefit the taxpayers in the long run. Later, I
will discuss how our fiscal year 2007 budget request will meet these
needs.
We also sought and secured, thanks to your subcommittee, changes to
judiciary procurement authorities which will allow us to enter into
multi-year contracts that are more competitive and cost-efficient. The
Executive Branch already had these authorities and we appreciate your
extending them to the judiciary as part of the fiscal year 2006
appropriations act.
INCREASING PRODUCTIVITY IN THE COURTS THROUGH INFORMATION TECHNOLOGY
SYSTEMS
Another key AO responsibility is to lead and manage the
development, implementation, and support of new information technology
systems that will enhance the management and processing of information
and the performance of court business functions. During 2005, the AO
focused on continuing to strengthen the judiciary's information
technology infrastructure.
Electronic Case Filing
By the end of 2005, the Federal courts' Case Management-Electronic
Case Files (CM/ECF) system was operating in virtually all district and
bankruptcy courts. The prototype system was launched in 1995 when a
team from the AO helped the U.S. District Court in the Northern
District of Ohio cope with more than 5,000 document-intensive maritime
asbestos cases. That court faced up to 10,000 new pleadings a week, and
a workload that quickly became unmanageable. Together, the team
developed a system that allowed attorneys to file and retrieve
documents and receive official notices electronically. A year later,
the Bankruptcy Court in the Southern District of New York began live
operations with a similar system that the AO had tailored for
bankruptcy court needs. That court faced some of the early mega-
bankruptcies, and was drowning in paper. Since those early efforts, the
system has processed more than 24 million Federal court cases and
served hundreds of thousands of attorneys and litigants nationwide.
The implementation of CM/ECF is the largest system development and
implementation effort ever undertaken in the judiciary. Virtually all
bankruptcy and district courts are now using this system, and the
appellate courts are testing a version for deployment later this year.
The reach of the project is almost staggering. More than 400,000
attorneys have registered and been trained in CM/ECF and in 1 month
alone--August 2005--4.6 million docket entries were made using CM/ECF.
In coordination with the Public Access to Court Electronic Records
System (PACER), it provides lawyers, the media, and any interested
party with access to important case documents from anywhere, at any
time, and replaces what had previously been a burdensome, labor- and
paper-intensive responsibility. Attorneys have praised the systems,
noting that they are easy to use, reduce their service and copying
expenses, and provide quick notice of actions.
Bankruptcy Noticing Center
The AO's Bankruptcy Noticing Center (BNC) electronically retrieves
data from bankruptcy courts' case management systems and prints,
addresses, batches, and mails the resulting notices. The Bankruptcy
Code and Federal Rules of Bankruptcy Procedure require bankruptcy
courts to send these notices to all interested parties in a bankruptcy
case. The BNC not only eliminates local preparation and mailing of
notices by deputy clerks, it also generates notices in a fraction of
the time and at a far lower cost than local noticing. The BNC, now in
its eighth year, is estimated to have saved nearly $36 million for the
judiciary since its inception.
As bankruptcy courts across the country handled long lines of
bankruptcy filers, the Bankruptcy Noticing Center also was generating a
flood of notices. In the weeks prior to and immediately after October
17, 2005--the law's effective date--the BNC produced up to 1.7 million
individual notices per day, over triple its normal workflow. By the end
of October, the BNC was still churning out over 1 million notices a
day.
Probation and Pretrial Services Automated Case Tracking System
The Probation and Pretrial Services Automated Case Tracking System
(PACTS) is a case tracking and case management tool that demonstrated
its value in the days and weeks that followed the destruction on the
Gulf Coast. PACTS collects case-related information, produces
statistical and workload reports, and provides efficient retrieval of
case information by probation and pretrial services officers. An
interface between PACTS and personal digital assistants (PDAs)--as well
as laptop computers--allows officers field access to information in all
districts. The system is now implemented in all 94 districts and in the
aftermath of the hurricanes, we are working to provide PDAs to as many
officers as possible.
Without access to their offices, and in many cases, computers of
any kind, probation officers were able to use their PDAs and PACTS to
locate and check-up on supervised offenders who were displaced from
their homes after the hurricanes hit. One particular lesson learned in
our disaster recovery is the need to expedite the provision of PDAs to
all probation officers nationwide. At your direction, funding in the
Courts' fiscal year 2006 financial plan will allow us to do that.
ADMINISTRATIVE OFFICE BUDGET REQUEST
The fiscal year 2007 appropriations request for the Administrative
Office of the U.S. Courts is $75,333,000, representing an increase of
$5,774,000, or 8.3 percent, over fiscal year 2006 available
appropriations. While the percentage increase in appropriations we are
seeking may appear significant, overall it represents a current
services budget request. The primary reason for this large increase in
appropriations is to replace non-appropriated funds (fee/carryover)
that were used to finance the fiscal year 2006 financial plan, but
which are expected to decline in fiscal year 2007.
Specifically, the increases needed to maintain current services
include $1.1 million for standard pay and other inflationary increases
and a $4.7 million financing adjustment associated with a projected
decline in fees and carryforward in fiscal year 2007 from what was
available in fiscal year 2006. Should our current declining fee and
carryover projections come to pass, and they are not replaced with
direct appropriated funds, we will be forced to reduce current on-board
staffing. This will adversely affect our ability to serve the courts.
We will, of course, keep you apprised of actual fee collections and
carryover estimates as the year progresses. Should collections surpass
our estimates, the amount we are requesting could be reduced.
AO RESOURCES ARE STRETCHED THIN
The AO's funding situation is extremely tight. Without enough funds
to maintain a full complement of staff, the agency and its managers and
staff are under enormous strain. As demonstrated by some of my earlier
examples, unanticipated events over the past several years have
required us to provide greater support to the courts in the areas of
security, emergency preparedness and disaster recovery, financial
management and planning, technology, and the development and
implementation of new business practices resulting from changes in
Federal law. Without adequate staff resources, the AO struggles to meet
these challenges head on--we have been forced to pull people away from
their daily duties to handle the crises as they arise but cannot
continue to do this on a long term basis.
As illustrated in the following graph, staffing levels at the AO
have actually declined since fiscal year 1995, while during the same
time period, the number of judges and court staff being supported by
the AO have grown by 22 percent. This widening disparity between
staffing and support of the courts has been a hardship for the AO and
could be crippling in fiscal year 2007 if the non-appropriated sources
of funding available to the AO in fiscal year 2006 are not replaced
with direct appropriations.
CONCLUSION
Chairman Bond, Senator Murray, members of the subcommittee, I hope
that I have conveyed the wide array of responsibilities vested in the
AO and the seriousness with which we undertake them. For every issue
that affects the judiciary, every new piece of legislation that expands
or alters Federal jurisdiction, every administration initiative that
impacts Federal law enforcement, every congressional request for
information, personnel at the AO must quickly master the subject area
and render expert advice and support to the courts.
During these times of fiscal constraint and limited discretionary
spending, the AO takes the lead in assisting the courts in developing
new, innovative, and cost-effective ways to carry out the business of
the judiciary. I am proud of the AO's record of service to the courts
in this regard and know that the staff will continue to work tirelessly
to ensure the administration of justice is able to be carried out
efficiently and effectively. While I recognize that fiscal year 2007
will be another difficult year for you and your colleagues as you
struggle to meet the funding needs of the agencies and programs under
your purview, I urge you to consider the significant role the AO plays
in supporting the courts and the mission of the judiciary. Once again,
our budget request is one that will require the staff at the AO to do
more with less--it does not seek new resources for additional staff or
programs. I hope you will support it.
Thank you again for the opportunity to be here today. It has been a
privilege for me to serve the Federal courts for the past 21 years. I
have particularly enjoyed working with the Appropriations Committee.
I would be pleased to answer your questions.
______
Prepared Statement of the United States Sentencing Commission
Chairman Bond, Ranking Member Murray, members of the committee, the
United States Sentencing Commission thanks you for the opportunity to
submit this statement in support of the Commission's appropriations
request for fiscal year 2007.
In the Commission's statements in support of its fiscal year 2005
and 2006 appropriations requests, the Commission detailed for the
committee the impact the Supreme Court's decisions in Blakely v.
Washington \1\ and United States v. Booker \2\ were having not only on
the Commission, but the entire criminal justice community. The
Commission continues to feel the impact of these decisions but remains
firmly committed to meeting all of its statutory obligations.
---------------------------------------------------------------------------
\1\ 542 U.S. 296 (2004).
\2\ 543 U.S. 220, 125 S. Ct. 738 (2005).
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The Commission continues to be the central agency for the
collection, analysis, and reporting of Federal sentencing statistics
and trends, and it is dedicated to continuing this critical role. The
Commission also continues to develop appropriate guideline penalties
for a vast array of new and existing crimes, respond to Congressional
directives and inquiries regarding sentencing policy generally, provide
education on sentencing issues to the judiciary and other participants
in the criminal justice community, and conduct research activities that
help to shape the future of sentencing policy.
The preceding fiscal years have been extraordinarily busy for the
Commission, and it anticipates that fiscal year 2007 will be equally
so. Full funding of its fiscal year 2007 request will ensure that the
Commission can continue to meet all of its statutory obligations and,
most importantly, continue to provide the criminal justice community
with the most comprehensive and timely sentencing information
available.
RESOURCES REQUESTED
The Commission is requesting $15,740,000 for fiscal year 2007,
representing a 9 percent increase over allotted funding for fiscal year
2006. The Commission recognizes that the fiscal year 2007 budget cycle
is extraordinarily tight, and it does not seek this increase lightly.
The Commission's request is backed by significant resource demands,
including increased demand for Commission work product.
JUSTIFICATION FOR COMMISSION'S APPROPRIATION REQUEST
The statutory duties of the Commission include, but are not limited
to: (1) promulgating sentencing guidelines to be considered,
determined, and calculated in all Federal cases; (2) collecting
sentencing data systematically to detect new criminal trends, determine
if Federal crime policies are achieving their goals, and serve as a
clearinghouse for Federal sentencing statistics; (3) conducting
research on sentencing issues and serving as an information center for
the collection, preparation, and dissemination of information on
Federal sentencing practices; and (4) providing training to judges,
prosecutors, probation officers, the defense bar, and other members of
the criminal justice community in the application of the guidelines.
The Booker decision had a dramatic impact on the Federal sentencing
system, but it did not change these core missions. In fact, the Supreme
Court reaffirmed these statutory obligations by explaining that the
Commission's post-Booker mission remained ``writing Guidelines,
collecting information about district court sentencing decisions,
undertaking research, and revising the Guidelines accordingly.''
Sentencing Policy Development and Guideline Promulgation
The Commission has maintained an active policy cycle in the wake of
Blakely and Booker, despite the resource drain responding and adapting
to these cases has caused. In fiscal year 2006, for example, the
Commission has promulgated proposed amendments and issues for comment
in 14 areas of criminal law, including: immigration, steroids,
terrorism, transportation, and firearms offenses. With regard to
immigration offenses which now make up almost one-quarter of the entire
Federal caseload--the Commission has held one round table discussion
(in Washington, DC) and two regional hearings (one in San Antonio,
Texas and one in San Diego, California) at which it received expert
testimony from judges, prosecutors, defense attorneys, probation
officers, and others about issues related to immigration offenses. The
Commission also met with key congressional staff to advise them of the
Commission's findings and actions, and provided them with a detailed
staff report on immigration reform and the Federal sentencing
guidelines.
The Commission took a similar approach with regard to its
consideration of steroids offenses. The Commission held a roundtable in
Washington, DC that brought in practitioners, scientists, and other
academics to discuss these offenses and their associated harms.
Commission staff also met with congressional staff and worked with
staff from the Government Accountability Office on this very important
topic. As part of its amendment process, the Commission also produced a
detailed report on steroids use and abuse.
The Commission anticipates another active amendment cycle in fiscal
year 2007. In addition to its own policy priorities (which it
identifies each spring and finalizes each fall), the Commission expects
to address issues related to terrorism, transportation, sex offenses,
and drug offenses, as well as implementation of other pending crime
legislation from the 109th Congress warranting a Commission response.
The Commission believes that the multi-faceted approach it took with
regard to its consideration of immigration and steroids offenses should
continue to be the model for its future amendment cycles. As such, the
Commission will have to devote more staff (and Commissioner) resources
to the planning and execution of this type of outreach, including
associated travel costs. This approach to the amendment process also
will require greater resources to synthesize the information received
into meaningful sentencing policy. Full funding of our fiscal year 2007
request will allow the Commission to meet this key statutory obligation
in the most complete manner possible.
Collecting, Analyzing, and Reporting Sentencing Data
As detailed previously, recent Supreme Court activity has had a
major impact on the Commission's workload, primarily in the area of
data collection, analysis, and reporting. Immediately after Blakely and
Booker, the Commission realized that the most critical role it could
play as the criminal justice community assessed the impact of these
decisions was the reporting of the most timely and accurate sentencing
data available.
The Commission extracts information from five documents--in every
Federal case--that the courts are required to send to the Commission
under the 2003 PROTECT Act. On average, the Commission receives 70,000
cases annually, so the number of documents and pages that must be
collected, analyzed, and then reported by the Commission is voluminous.
Beginning in fiscal year 2005, the Commission refined its entire data
collection and reporting process so that it could provide ``real time''
data about the effects of Booker on national sentencing to the criminal
justice community. The Commission now reports national sentencing data
on an almost monthly basis, a monumental task for any Federal agency,
let alone an agency as small as the Commission. This refinement of our
data collection and reporting efforts has resulted in very significant
demands on the Commission's resources, particularly personnel. The
Commission's fiscal year 2007 funding request is designed to increase
personnel in the key areas of data collection and analysis, and
research. Increased funding during fiscal year 2007 also will allow the
Commission to keep up with both the time and volume demands on its data
collection and analysis resources it now faces.
Information Technology Issues Associated With Data
Collection, Analysis, and Reporting
As important as meeting the Commission's personnel needs in the
area of data collection and analysis, full funding will allow the
Commission to continue moving forward with its plans to collect,
analyze, and report data in an all-electronic format. Proceeding with
these efforts will allow the Commission to work with members of the
criminal justice community to gather information efficiently and in a
manner that promotes cooperation and efficiency, avoids unnecessary
duplication of efforts, and ensures that the entire criminal justice
system is operating at optimum levels.
To enhance the Commission's ability to process cases in a quick and
cost-efficient manner, it has developed and implemented an electronic
document submission system that enables sentencing courts to submit
electronically the five required sentencing documents directly to the
Commission, as opposed to having to spend court resources on copying,
bundling, and mailing hard copies. Currently, 64 districts are using
the electronic document submission system. The Commission anticipates
that all 94 districts will be using the system by the end of fiscal
year 2007.
The Commission also is moving to a fully automated document
collection and data analysis system so that by the end of fiscal year
2007, all document receipt and data extraction and analysis will be
done electronically. The Commission has spent the last several months
building the foundation of this process and expects to have a completed
system running by the end of fiscal year 2007. Becoming fully automated
is critical to the success of the Commission's statutory missions and
offers significant benefits to the entire criminal justice community.
First, our electronic document submission system already has reduced
personnel and resource burdens on the courts and probation offices, and
updating this system so that all aspects are automated will allow for
even more efficiencies. Second, by becoming fully automated, the
Commission anticipates being able to provide even more detailed and
accurate data on national sentencing trends to the criminal justice
community at an even more expedited pace. Third, a fully automated
system will allow the Commission to work closely with members of the
criminal justice community in creating an unparalleled system of
document receipt and data reporting that avoids unwarranted duplication
of efforts and promotes best practices throughout the system. Finally,
by increasing internal efficiencies, the Commission will be able to
dedicate more resources to research-oriented tasks that, in the
preceding fiscal years, have been curtailed.
Full funding of the Commission's fiscal year 2007 request will
ensure that the Commission can meet its information technology needs
and continue to work with members of the criminal justice community in
a technologically efficient, non-duplicative manner.
Increased Demands for Commission Work Product from Congress
In addition to the new demands for national data placed on the
Commission by the Booker decision, the Commission also is experiencing
increased demands for work product from Congress. In addition to
providing its monthly reports on national sentencing practices, the
Commission is required to assist Congress in assessing the impact
proposed crime legislation will have on the Federal prison population.
These assessments often are complex, time-sensitive, and require highly
specialized Commission resources. In addition, in fiscal year 2005 and
2006, the Commission responded to a number of more general requests
from Congress on issues such as gangs, drugs, immigration, and sex
offenses. These requests are not expected to diminish during fiscal
year 2007, and the Commission must ensure that it has adequate
resources to address the needs of Congress.
Conducting Research
Research is a critical part of the Commission's overall mission. As
such, the Commission has undertaken in fiscal year 2006 to prepare a
number of internal and external reports that provide a detailed
examination of key policy areas such as immigration, drugs, and
firearms offenses. These reports are crucial to the Commission's
overall objective of promulgating reasoned and well-informed guideline
and policy statement amendments. Also during fiscal year 2006, the
Commission released a detailed report on the Booker decision and its
impact on national sentencing.
The Commission anticipates undertaking a number of new research
projects in fiscal year 2007. In addition to reports associated with
its policy work, the Commission expects to continue its comprehensive
review of recidivism. The Commission is in the midst of a multi-part
series on recidivism in the Federal system that is the most
comprehensive study of its kind to be undertaken. The Commission also
anticipates undertaking other coding projects and research initiatives
of interest to the criminal justice community. Full funding of its
fiscal year 2007 request will allow the Commission to devote the
resources necessary to accomplish its research mission.
Training and Outreach
The Commission continues its commitment to providing specialized
guideline training and technical assistance to Federal judges,
prosecutors, defense attorneys, probation officers, staff attorneys,
and law clerks. The Commission provides intensive training sessions
throughout the year, and has increased its efforts since the Booker
decision. In calendar year 2005, the Commission trained over 9,700
people. Commissioners and staff traveled to, and provided training in,
59 districts and all 12 circuits. Commissioners and staff also
participated in numerous academic programs and symposia across the
country as part of the ongoing debate about the future of Federal
sentencing. Commission representatives also attended a number of
circuit court conferences, meetings of the Criminal Law Committee of
the Judicial Conference of the United States, and the judiciary's
National Sentencing Institute. The Commission also held its own annual
national training seminar with over 500 representatives of the criminal
justice community in attendance.
The Commission expects its training and outreach efforts to
continue at this accelerated pace in fiscal year 2007. As a result, the
Commission will continue to incur increased personnel and travel
demands, including more demands on Commissioners to travel. Full
funding of the Commission's request will ensure that these increased
demands can be met.
SUMMARY
The Commission is uniquely positioned to assist all three branches
of government in ensuring the continued security of the public while
providing fair and just sentences. An independent agency housed in the
Judicial branch, the Commission is an expert bipartisan body of Federal
judges, individuals with varied experience in the Federal criminal
justice system, and ex-officio representatives of the Executive Branch.
In short, the Commission is at the crossroads of where the three
branches of government intersect to determine Federal sentencing
policy.
The Commission has worked hard and performed well with the
resources available, and it appreciates the funding efforts of this
committee. Meeting the Commission's fiscal year 2007 funding request
will ensure that the Commission continues to: develop aggressive and
timely policy agendas; collect, analyze, and report accurate and
comprehensive sentencing data; train members of the criminal justice
community; and engage in meaningful research projects. The Commission
urges Congress to support fully our fiscal year 2007 appropriation
request of $15,740,000 so that it can continue its role as a leader in
Federal sentencing policy.
______
Prepared Statement of Hon. Barbara J. Rothstein, Director, Federal
Judicial Center
I am Barbara Rothstein. I have been the Center's director since
2003, and a district judge since 1980. I am pleased to submit the
Center's 2007 budget request on behalf of the Center's Board, which the
Chief Justice chairs, and which approved this request.
Our 2007 request is for $23,787,000, a $1,660,000, or 7.5 percent
increase, over 2006. The increase includes $868,000 for standard
adjustments to base, and $792,000 for 9 full-time equivalent positions
(12 positions for 9 months).
Before providing more detail on this request, let me provide you
with a little background on the Center and its activities. I hope to
convey to you the important contribution that the Center makes to the
effective and efficient functioning of the Federal courts; the Center's
careful, cost-effective use of the money Congress has provided us; and
my concern about the effects of having received less than full
adjustments to base for 9 of the last 10 years.
THE CENTER'S CONTRIBUTION TO THE COURTS
Speaking not only as the Center's director but also as a judge, I
can attest to the importance of the Center to the courts. The Center's
mission is to provide objective, well-grounded empirical research and
balanced, effective educational programs for the courts.
The courts, and particularly the Judicial Conference of the United
States, as well as Congress and the public, are regular consumers of
the Center's research projects. They rely on the Center for thorough,
unbiased, well-documented research. Examples include: examining the
impact of the Class Action Fairness Act of 2005 on the resources of the
Federal courts; providing information to assist judges in handling
capital cases; surveying the use of visiting judges that resulted in a
guide on how to make effective use of this cost-efficient judicial
resource. Not only do projects such as these help judges decide cases
efficiently and fairly, they also help the judiciary and Congress make
better informed decisions about policies and procedures affecting the
courts.
Center education programs are vital to judges and court staff. For
new judges, orientation programs enable them to assume their new
responsibilities quickly. Continuing education programs bring judges
up-to-date on topics ranging from case-management techniques to new
statutes and case law. (For example, last year the Center produced for
judges and court staff 11 different programs on the Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005, using in-person
workshops, satellite and video-streaming television programs, and audio
conferences. We also posted dozens of summaries, reports, articles, and
analyses on the Act on our intranet site.)
Court staff, who play a critical role in supporting judges and
ensuring the efficient operation of the courts, rely on the Center for
educational programs and materials that help them do their jobs better,
for example, integrating new technologies and executing cost-
containment strategies. The Center's Professional Education Institute,
which provides basic and advanced programs on leadership and management
for managers and supervisors at all levels in the courts, is a key
component of court staff training.
The Center uses a wide range of tools to deliver education. One
reality of the information age is that people can (and expect to)
receive information in many different ways. Twenty years ago the Center
relied almost exclusively on in-person programs, audiotapes, and hard-
copy publications to reach judges and court staff. Around 10 years ago
we were expanding into satellite television broadcasting,
teleconferencing, and use of the Internet and the courts' intranet. In
just the last 3 years we have moved into web-conferencing and streaming
video. And all the while we kept--and enhanced--all the earlier modes
of delivery. All these delivery means are needed to meet the diverse
needs of a diverse population of judges, managers, and staff.
The importance of the Center's educational programs is reflected in
their use by the courts. All Center training is voluntary; large
numbers of judges and court staff choose to participate in Center
programs and use its services because they know the Center's products
will help them do their jobs better. In 2005, nearly 11,500 employees
of the courts (including over 2,000 judges) attended Center programs in
person--over 60 percent of these did so in their own districts. Another
4,000 participated in Center video, audio, and web conferences.
Thousands more watched Center television programs, downloaded materials
from the Center's intranet site, and used Center publications.
THE CENTER HAS MANAGED ITS APPROPRIATION RESPONSIBLY
Understanding the need for fiscal responsibility, the Center has
made careful use of its appropriation each year. As I noted earlier, we
use a wide variety of cost-effective delivery tools to provide
education and information to judges and staff efficiently. The various
delivery tools we use have enabled us to reach a larger and larger
audience for far less money than we could with only one or two of these
media--but they also require a highly professional staff with diverse
skills in order to take full advantage of these media and to identify
and implement newer technologies as they emerge.
In-person programs remain a vital part of our education efforts.
Here we economize in several ways. Most staff training (and some judge
education) is done by bringing faculty to the courts for local
training. Most programs to which participants must travel are conducted
in hotels in large cities where we can negotiate reasonable rates and
take advantage of competitive airfares. We also conduct smaller
seminars in collaboration with several outstanding law schools,
enabling us to avoid faculty and overhead costs.
We also stretch our appropriation by working closely with our
sister agencies, the Administrative Office of the U.S. Courts and the
U.S. Sentencing Commission. We regularly consult with them to avoid
duplicative efforts, and we often provide them an opportunity to convey
their information to the courts at Center-sponsored programs.
Internally, the Center held to a hard hiring freeze for over 3
years: 22 full-time employees retired or left the Center in 2003-2005
without a single replacement, reducing our staffing level from 147 to
125. We can no longer sustain this attrition, and in late 2005 we hired
two full-time employees to fill key vacancies. We will continue to fill
only selected vacancies.
Since 2002, the Center has closely controlled pay raises and
bonuses for staff. While we have followed the Executive Branch and the
rest of the courts in granting the annual ECI and locality pay
increases, we have limited additional pay raises each year to 1 percent
of total Center salaries, and bonuses to one-quarter of 1 percent of
total Center salaries, each year. While this has helped to control
costs, it causes us concern over our competitiveness with public and
private employers in hiring and retention.
BUDGET SHORTFALLS WILL ADVERSELY AFFECT OUR SERVICE FOR THE COURTS
The Center is grateful for the efforts of Congress to provide
$903,000 in adjustments to its 2006 base. After the application of the
1 percent rescission, however, the Center was again, as in prior years,
forced to absorb $223,500 (25 percent) of those important funding
dollars. As I mentioned earlier, the Center has suffered shortfalls in
its adjustments to base in all but 1 of the last 10 years. This has
effectively reduced our spending power by 17 percent. As described
above, in the past 3 years alone, we have had to compensate for
shortfalls by not filling 22 positions that became vacant during that
time, thus reducing our staffing level from 147 to 125. Even as the
Center's staff has declined by 15 percent during that time, the courts'
needs for its services have continued to grow.
The continued shortfall in our appropriation will erode our ability
to provide the quality education and research that the courts need. The
tools we have used the last several years--a hiring freeze, salary
limits, and other reductions in spending--cannot go on indefinitely
without degrading the quality and quantity of work we can perform.
THE CENTER'S FISCAL YEAR 2007 REQUEST
Our request for 2007 is modest--standard adjustments to our 2006
base and a small amount to enable us to fill 12 of the most necessary
of the 22 vacancies (6 devoted to our education and distance learning
efforts; 3 to our ever-increasing number of research projects; and 3 to
our automation and technology function). These few positions will
return the Center to its fiscal year 2005 staffing level of 134. That
is still far below the 158 staff employed by the Center in the early
1990's, but with these resources we can continue to help the courts
prepare for and meet the many substantive, procedural, and operational
challenges they face.
Thank you for your careful consideration of our request. I would be
pleased to respond to any questions you may have.
______
Prepared Statement of Paul R. Michel, Chief Judge, United States Court
of Appeals for the Federal Circuit
Mr. Chairman, thank you for allowing me to submit my statement
supporting the United States Court of Appeals for the Federal Circuit's
fiscal year 2007 budget request.
Our request totals $26,300,000, an increase of $2,517,000 over the
fiscal year 2006 approved appropriation of $23,783,000, after a 1
percent across-the-board rescission. Although this represents an
overall increase of 10.6 percent, 63 percent of that increase,
$1,591,000, is for necessary adjustments to the base appropriation. The
remaining $926,000 (37 percent of the requested increase) is for
funding for information technology security upgrades, development and
maintenance of a disaster recovery plan for electronic information, and
courtroom technology implementation.
Along with the mandatory adjustments, we have included in our base
request $496,000 for off-site leased space for senior judges and their
staffs. The court has one judge who took senior status in February 2006
and four other judges who currently are eligible for senior status. The
court has no additional space in the courthouse for chambers for these
judges when they take senior status as they are expected to do. Keeping
these judges working is essential in order to keep up with the caseload
handled by the judges of this court which nearly has doubled since its
creation in 1982. In the last month the Administrative Office of the
United States Courts has directed GSA to begin to negotiate a lease for
off-site space for the senior judges.
The $926,000 requested for program increases includes the following
three items previously requested:
--(1) Information technology upgrades account for $87,000 of that
amount to provide the computer security software and hardware
required for the detection and prevention of electronic
computer attacks and intrusions into the court's network
computers and data. This equipment is necessary to provide a
secure computer environment which we now lack. For example,
court data stolen from unsecured equipment could greatly affect
stock market prices of corporate securities if obtained before
the court's decisions are made public.
--(2) Disaster recovery of information accounts for $255,000 of the
requested increase to cover the cost of establishing a
telecommunications infrastructure and client computer equipment
to connect to appropriate services to overcome destruction of
the court's electronic communications systems. This would
include remote dial-in access; file backup and restoration; and
electronic database support, among other emergency access
services that would be needed in the event of a disaster at the
courthouse.
--(3) The remaining $584,000 requested covers the large, nonrecurring
start-up cost of providing for modern video conferencing
technology in two of our three courtrooms. As you know, the
judiciary has adopted information technology initiatives for
reducing the reliance on paper, achieving economy in its
business processes, and providing better service to citizens at
locations around the country. This is especially critical to
our court because of its Nation-wide jurisdiction. The court
requests this funding to implement this program. The amount
requested is based on recommendations from the Administrative
Office of the United States Courts to provide two-way video and
audio transmission between the court and remote sites. We have
begun this process in one of our courtrooms by reprogramming
money from last year's appropriation as the subcommittee
suggested. Further such reprogramming would, however,
compromise core court functions. This funding will enable us to
proceed with the upgrades in the remaining two courtrooms.
I would be pleased, Mr. Chairman, to answer any questions the
committee may have or to meet with the committee members or staff about
our budget request.
Thank you.
______
Prepared Statement of Jane A. Restani, Chief Judge, United States Court
of International Trade
Mr. Chairman, members of the committee, I would like to once again
thank you for providing me the opportunity to submit this statement on
behalf of the United States Court of International Trade, which is
established under Article III of the Constitution with exclusive
nationwide jurisdiction over civil actions pertaining to matters
arising out of the administration and enforcement of the customs and
international trade laws of the United States.
The Court's budget request for fiscal year 2007 is $16,182,000,
which is $840,000 or 5.5 percent over the fiscal year 2006 available
appropriation of $15,342,000. This request will enable the Court to
maintain current services and provide for standard pay and other
inflationary adjustments to base. The request also includes funds to
pay for increases in costs paid to GSA for rent and to the Federal
Protective Service for building basic and building-specific security
surcharges. These surcharges provide for the Court's pro-rata share of
installing, operating and maintaining the systems for the critical and
necessary security of the Federal Complex in lower Manhattan. The Court
continues, as it has done for the past 12 years, to budget
conservatively and request funds that will provide for mandatory
increases in pay, benefits and other inflationary factors, as well as
to fund the essential on-going operations and initiatives of the Court.
Within the funds requested, the Court continues to meet the
objectives set forth in its Long-Range Plan through the use of its
annual appropriation and the Judiciary Information Technology Fund
(JITF). These objectives promote access to the Court through the
effective and efficient delivery of services and information to
litigants, bar, public, judges and staff. As a national court, this
access is critical in realizing the Court's mission to resolve disputes
by: (1) providing cost-effective, courteous and timely service by those
affected by the judicial process; (2) providing independent,
consistent, fair and impartial interpretation and application of the
customs and international trade laws; and (3) fostering improvements in
customs and international trade law and practice and improvements in
the administration of justice.
Technology is a critical component of the Court's commitment to
service delivery to its varied constituencies. As such, in fiscal year
2005, the Court: (1) purchased new servers for and upgraded the
database used in connection with the Federal Judiciary's Case
Management/Electronic Case Files (CM/ECF) System; (2) cyclically
upgraded, replaced and supported desktop computers and vital existing
software applications; (3) purchased new software applications that
enhance computer security and ensure the efficient deployment of
software updates to all computer systems at the Court; and (4)
purchased a fire wall server and software to ensure the security of the
Court's network and help build a secure identity management system.
Additionally, in fiscal year 2005, the Court continued its cyclical
maintenance program by refurbishing its trial courtrooms, robing rooms
and jury rooms, and replacing aging furniture.
For fiscal year 2006, the Court plans to expend funds to: (1)
implement the new operating system for the CM/ECF System and migrate
the attendant database; (2) continue the support of its upgraded data
network and voice connections and Virtual Private Network (VPN) System;
(3) replace the servers for the Court's library on-line cataloguing and
acquisition system and for the Court's Internet web site; (4) replace
desktop computer systems, laptops and printers in accordance with the
Judiciary's extended cyclical replacement program; (5) upgrade and
support existing software applications; (6) purchase new software
applications to ensure the continued operational efficiency of the
Court; (7) support Court equipment by the purchase of yearly
maintenance agreements; and (8) upgrade the Court's digital recording
equipment. Additionally, the Court will expand its efforts to provide
the developmental and educational programs for staff in the areas of
job-related skills and technology. In the same vein, the Court will
further its work with bar associations and law schools to provide
continuing legal education programming to raise the quality of practice
in the area of customs and international trade law.
In carrying out its mission in fiscal year 2007, the Court remains
committed to enhancing the administration of justice to the litigants,
bar, Court family and public. In so doing, the Court will continue its
information technology initiatives. Among the technology projects to be
supported by the Court's fiscal year 2007 budget request and the carry-
forward balance from its JITF are: (1) continuing the deployment of its
CM/ECF System and training the bar in its use; (2) supporting and
maintaining all technical equipment and systems; (3) supporting new
software applications that enable judges and staff to view
instructional videos at individual workstations and integrates the
Federal Judiciary's Training Network with the Court's local area
network; and (4) upgrading the Court's wiring closets with switches and
fiber modules.
Additionally, the Court intends to continue its cyclical
replacement and maintenance program for equipment, furniture and
building maintenance. This program not only ensures the integrity of
equipment and furnishings, but maximizes the use and functionality of
the internal space of the Courthouse. Moreover, the fiscal year 2007
request includes funds for the support and maintenance of the upgraded
security systems implemented by the Court in fiscal years 1999 through
2005, and the Court's COOP. Lastly, the Court again will participate in
efforts to address the educational needs of the bar and the Court
staff.
As I stated last year, maintaining security systems and ensuring
the protection of those who work in and visit the Courthouse continue
to be top priorities. In July 2005, GSA received Senate approval for
fiscal year 2006 funding for the construction of a security pavilion
for entry into the Courthouse. The Court is working closely with GSA in
the design and construction of this entrance pavilion. To that end, the
Court, in fiscal year 2005, entered into a Reimburseable Work
Authorization with GSA for a non-prospectus project for replacing the
present entrance doors to the Courthouse with blast resistant glass and
for installing video-surveillance cameras in strategic locations in the
new pavilion that will further secure the Courthouse and its environs.
GSA expects construction of the new pavilion to begin in the fourth
quarter of fiscal year 2006. The Court will continue to work in full
partnership with GSA to ensure the success of the security pavilion
project.
I would like to emphasize that the Court remains committed, as it
has in the past, to an approach of conservatively managing its
financial resources through sound fiscal, procurement and personnel
practices. As a matter of internal operating principles, the Court
routinely has engaged in cost-containment strategies in keeping with
the overall administrative policies and practices of the Judicial
Conference, particularly regarding rent, security costs, equipment
costs, technology, contractual obligations and personnel. I can assure
you that this management approach with respect to the Court's financial
affairs will continue into fiscal year 2007 and beyond.
The Court's ``General Statement and Information'' and
``Justification of Changes,'' which provide more detailed descriptions
of each line item adjustment, were submitted previously. If the
committee requires any additional information, we will be pleased to
submit it.
______
Prepared Statement of Marilyn L. Glynn, Acting Director, U.S. Office of
Government Ethics
Thank you for the opportunity to present this statement in support
of the request of the U.S. Office of Government Ethics (OGE) for fiscal
year 2007 resources of $11,489,000 and 80 FTEs. This request, as
reflected in the President's fiscal year 2007 budget, represents a 3
percent increase over the amount appropriated for fiscal year 2006.
The Office of Government Ethics is responsible for overseeing the
ethics program of the executive branch, a program designed to help
prevent conflicts of interest and promote integrity in government. OGE
sets the requirements of the program, develops executive branch-wide
policies, serves as a resource/consultant to agency ethics officials
and monitors agency programs to help ensure that the agencies are
carrying out their responsibilities effectively. While each executive
branch agency is responsible for carrying out many of the day-to-day
functions of the program, OGE's specific role includes: reviewing and
certifying the financial disclosure forms filed by Presidential
nominees requiring Senate confirmation; reviewing and certifying annual
financial disclosure reports filed by senior executive branch
employees; serving as the primary authority on executive branch conduct
and financial disclosure issues; conducting evaluations of agency
ethics programs; training agency ethics officials and developing
employee training materials used by agencies in their ethics training;
offering direct support to agencies through a desk officer program,
under which OGE staff serve as ethics liaison to executive branch
departments and agencies; and providing interpretative guidance on the
criminal conflict of interest laws.
The ethics program that OGE directs is part of the basic
infrastructure that supports good governance within the executive
branch of the Federal Government. The resources expended by OGE to help
promote integrity and prevent conflicts of interest are small compared
to the resources expended by investigators and prosecutors who enforce
ethics and conflict of interest rules and laws. Moreover, our
preventive efforts help guard against the loss of government resources
through inadvertent or deliberate misuse. We believe the resources we
have requested are those necessary to support a strong ethics program.
FISCAL YEAR 2007
In order to enhance our ethics program and continue to foster
public confidence in government programs and operations, OGE
established three strategic goals as outlined in our new strategic plan
for fiscal years 2007-2011. OGE's three strategic goals are: (1)
strengthening the ethical culture, and promoting an ethical workplace
within the executive branch, (2) preventing conflicts of interest, and
(3) promoting good governance. What follows is a summary of the major
programs OGE is planning to implement to achieve these goals during
fiscal year 2007.
OGE expects that there will continue to be a significant number of
Presidential nominees to positions requiring Senate confirmation during
the third year of the current administration. OGE performs a key role
in clearing these nominees, a process which is designed to help them
understand the application of the conflict of interest requirements to
their government service and to secure their agreement to take the
necessary steps to resolve potential conflicts of interest. Our goal is
to review nominee financial disclosure statements in a timely manner to
avoid any unnecessary delay in the nomination and confirmation process.
Once an individual is appointed, OGE follows through to see that any
agreements made by an appointee to address potential conflicts of
interest are carried out. In addition, over this period, OGE will
continue to conduct a second level review of over 1,000 annual and
termination financial disclosure statements filed by Presidential
appointees each year.
Through the use of improved technology OGE will enhance the
financial disclosure reporting and review process by developing a
confidential financial disclosure form that can be filed
electronically. In addition, OGE will modify the confidential financial
disclosure form in order to make the reporting process more streamlined
and user friendly. OGE will also partner with the Department of the
Army to develop an electronic filing system for public financial
disclosure filers. During fiscal year 2007, this electronic filing
system will be available to those agencies within the Department of
Defense that meet the web-based security requirements set by the
Department of the Army. OGE will continue to partner with the
Department of the Army in an attempt to make the electronic filing of
public financial disclosure forms more widely available.
OGE prepared and submitted two reports to Congress in fiscal years
2005 and 2006 pursuant to the Intelligence Reform and Terrorism
Prevention Act of 2004 (Public Law 108-458). The first report, which
was delivered in March 2005, evaluated the executive branch financial
disclosure requirements. The second report, which OGE compiled in
consultation with the Department of Justice, and delivered in January
2006, examined the criminal conflict of interest laws as they pertain
to the executive branch. OGE will work with the Office of Management
and Budget and the Congress on any Congressional efforts to consider
and implement any changes identified by these two reports. OGE will
take the necessary steps to revise its financial disclosure forms and
regulations to implement any changes in existing law. In addition to
implementing any changes in legislative mandates, OGE also plans to
improve the effectiveness of ethics policy by publishing a proposed
regulation revising the Standards of Conduct for Executive Branch
Employees.
OGE expects to purchase some new computer hardware and software.
This includes security software to protect our network and keep it
FISMA compliant, software necessary to keep our network up to date, and
hardware to replace computers that fail. In addition, OGE will
implement a comprehensive update to its web site making the information
contained on the site more accessible to a variety of users including,
designated agency ethics officials, Congress, the media, and the
public.
OGE will continue to provide international technical assistance in
the areas of anti-corruption and good governance programs in support of
international agreements and regional initiatives of the United States
in general and the Departments of State and Justice in particular. For
example, during the fiscal year, OGE will, as a principal member of the
U.S. delegation, represent the United States before the Group of States
Against Corruption (GRECO) in the plenary discussion and adoption of a
report on GRECO's evaluation of the U.S. adherence to certain of the
adopted Guiding Principles in the Fight Against Corruption. OGE will
also assist the State Department in the mutual evaluation mechanism
that is a follow-up to the Inter-American Convention Against Corruption
and with regional good governance/anti-corruption initiatives such as
Good Governance for Development for the Middle East and North Africa
states (MENA) and the Asian Pacific Economic Cooperation (APEC).
Primarily at the request of the State Department, OGE continues to
provide briefings to about 40 foreign delegations visiting Washington
each year.
As part of our ongoing education and training efforts, OGE will
prepare and conduct ethics training for agency ethics officials. To
reach ethics officials outside the Washington area, OGE plans to offer
three regional symposia. In addition, OGE will hold the fifteenth
National Government Ethics Conference for approximately 700 ethics
practitioners. These events provide an introduction to the ethics rules
and laws for new agency officials and advanced updates and refresher
sessions for those who are more experienced. Attendees will include
ethics practitioners, trainers, counselors, financial disclosure
reviewers, and enforcement officials. In addition, we also plan to
develop a 2-day orientation program for new ethics officials and offer
the program at OGE headquarters as well as on a regional basis as
needed.
OGE desk officers will maintain their day-to-day communications
with agencies assigned to them. This continuing liaison between OGE and
agency ethics staffs enables OGE to respond to the needs of the
agencies in a timely and accurate manner, as well as provide OGE with
an early warning that an agency ethics program is deficient or has
problems that require specialized attention. OGE plans to conduct
employee surveys regarding individual agency ethics programs, and the
information gathered through these surveys provides OGE with a better
basis on which to judge the effectiveness of the individual agency
programs under review and of the overall ethics program. We also plan
to conduct ethics program evaluations in 35 Federal agencies, regional
offices and military commands. In addition, OGE will develop a program
of self-assessment for agencies to use in years that OGE is not
scheduled to perform a program review.
OGE also plans to increase the effectiveness of our support to
agencies' ethics programs by raising awareness of ethical issues
arising from the presence of contractors in the Federal work place. For
example, during fiscal year 2006, OGE participated in and contributed
to a National Academy of Public Administration working group on the
issues presented by the multi-sector workforce. We will continue to
expand our outreach activities to Federal agencies and contractors by
providing educational materials and presentations on ethics issues that
arise when contractors work side-by-side with Federal employees.
Finally, we will also expand our educational and outreach activities to
Federal agency procurement officials in order to increase their
awareness of various ethical issues that arise from interacting with
contractors.
The programs and activities we have described are just some of
those envisioned for fiscal year 2007. We are pleased with the past
success of the executive branch ethics program and look forward to the
challenge of maintaining and enhancing the quality of the program.
______
Prepared Statement of John E. Potter, Postmaster General/CEO, United
States Postal Service
Good morning, Mr. Chairman, and members of the subcommittee. I am
pleased to be with you today as we discuss the United States Postal
Service, its achievements, its challenges, its opportunities, and our
appropriations request for fiscal year 2007.
I know this subcommittee shares our mutual goal of protecting
affordable, universal service for every American household and business
for many, many years to come.
Since it was created by reform legislation in 1970, the Postal
Service has demonstrated a remarkable ability to transform itself from
a traditional government agency to a customer-focused, business-driven
organization--one that has realized outstanding results. For the
greater part of three decades, this success was supported by a business
model that made it possible to balance the costs of an ever-expanding
delivery network with revenue from continuing growth in mail volume,
particularly high-contribution First-Class Mail.
Over the last decade, it has become clear that this model would be
unsustainable for the long term. The explosive expansion of electronic
communications and, to a lesser extent, intense competition for package
and document delivery, has had profound effects on mail volume growth,
upsetting the delicate balance that is at the heart of our 36-year-old
business model.
Against this background, the Postal Service took decisive steps to
stabilize finances, increase efficiency, improve performance, and
pursue growth by making mail a better value than ever. Our 2002
Transformation Plan defined specific strategies to help us achieve
these goals.
The results speak for themselves. We ended 2001 with outstanding
debt of $11.3 billion. By 2006, that debt was completely retired,
reducing interest costs on borrowings from more than $300 million per
year to only $2 million in 2005.
We committed to removing $5 billion in costs from our system by the
end of 2006. We achieved that goal 1 year ahead of time. Cumulatively,
our Transformation Plan savings have reached $17 billion.
By the end of 2005, we achieved a record sixth consecutive year of
productivity gains, helping to offset a portion of inflationary cost
growth over the same period. Since 2000, our annual productivity gains
have, on average, been almost six times higher than those achieved
annually from 1972 through 1999. This progress was not a given. It is
the result of sound governance, focused management, engaged employees
and the effective use of technology, both in operations and
administrative activities.
Total revenue of $70 billion in 2005 was up from $66.7 billion in
2002. This is a positive reflection of our efforts to drive growth by
adding value to the mail by adding products, services and features that
meet the needs of our customers, and by expanding access, making it
easier than ever for all mailers to do business with the Postal
Service. Significantly, our customers experienced a full 3\1/2\ years
of rate stability during this period.
Our focus on the bottom line was matched by a focus on service. We
closed fiscal year 2005 with 11 straight quarters of 95 percent or
better on-time delivery of First-Class Mail with an overnight service
commitment. Similarly, customer satisfaction continued to maintain
record levels.
Through the dedication and performance of the 700,000 men and women
of the Postal Service, we have sustained our historic mission to bind
the Nation together and we remain a vital part of American commerce and
American life.
And yet, the challenges we face have never been greater.
While we had record volume of 212 billion pieces in 2005, this was
marked by a challenging trend in the mix of mail entering our system.
For the first time in our history, Standard Mail, primarily catalogs
and advertising mail, has exceeded First-Class Mail volume; it is now
our largest volume category.
At the same time, First-Class Mail growth was essentially flat,
with a 4 percent decline in single piece First-Class Mail offset by
growth of just below 4 percent in workshare First-Class Mail.
Single piece First-Class Mail is most vulnerable to electronic
diversion, and we expect its continued decline as businesses,
organizations, governments, and consumers increasingly shift
transactions from the mail to the Internet. Since 1998, the volume of
single piece First-Class letters has declined by 20 percent--11 billion
pieces--representing a revenue loss of $3 billion. From a revenue
perspective, it takes two to three pieces of Standard Mail to make the
same contribution to system overhead as just one piece of First-Class
Mail.
While 2005's total mail volume set a new record of 212 billion
pieces, the shifting mix of the mail has affected revenues
substantially. At 2005 postage rates, the lower volume and the specific
mail mix of 2000 would have generated $3.3 billion more in revenue.
We are also challenged by continued growth in our delivery network,
which must expand to serve about 2 million additional homes and
businesses every year. The costs of this expansion, coupled with the
financial effects of the changes in the mail mix, have resulted in a
continued decline in revenue per carrier delivery.
And we are faced with steady increases in costs over which we have
little or no control. Every 1 cent increase in the cost of gasoline
adds $8 million to our costs. Last year alone, our transportation costs
increased by $468 million, due primarily to higher fuel costs.
Despite significant reductions to our workforce, the cost of health
benefits for current employees has doubled since 2001, reaching $5.1
billion in 2005. Over the same period, retiree health benefits have
grown from $858 million to $1.5 billion. Overall, retirement and health
benefits for active and retired Postal Service employees, most of which
are statutorily mandated, accounted for $14 billion last year, fully 20
percent of all Postal Service costs, and an increase of almost $1
billion from 2004.
Looking ahead, we are concerned by a sluggish economy. For the
fourth quarter of 2005, the Gross Domestic Product increased by only 1
percent. This was reflected in the Postal Service's first quarter
results, with First-Class Mail volume down by 3.8 percent, compared to
the same period last year, producing a $415 million revenue decline.
This was only partially offset by growth of 0.5 percent in Standard
Mail volume, representing a revenue increase of just $30 million.
Clearly, this is a trend that is unsustainable in the long term.
It is our experience that mail use is an indicator of general
economic activity. Quarter 1 results suggest that customers are
changing their mailing behavior in response to the economy. We are
monitoring this situation carefully and we will continue to do
everything we can to increase efficiency to help offset any continued
volume decline.
Our focused transformation efforts since 2002, coupled with the
limited-term financial relief provided by the Postal Civil Service
Retirement System Funding Reform Act of 2003, Public Law 108-18, have
made it possible for us to absorb rising costs without the need to
raise rates to meet increased operational costs since June, 2002.
The recent 5.4 percent across-the-board postage increase was
implemented solely to meet the $3.1 billion escrow payment required
this year by Public Law 108-18. None of the revenue from the new rates
is available to offset other costs as they continue to rise over the
coming months and years. As a result, we are projecting a loss of up to
$2 billion this year.
Reluctantly, we have concluded that it will be necessary to ask the
Governors of the Postal Service to file a rate case in the near future.
While we have not determined when the filing will occur, we are working
closely with the Governors as we prepare for this action. This would
represent the first adjustment in the price of postage since mid-2002
to address operational cost increases.
As I mentioned, the Postal Service and its customers have benefited
from our strategy of pursuing increased productivity. In just the last
year, this has resulted in the equivalent of more than $700 million in
cost savings. Looking forward, we must do everything possible to
support continued productivity growth.
Building on the momentum of our original Transformation Plan, our
Strategic Transformation Plan 2006-2010, is keeping us focused on our
core business and the strategies we know produce results. We will
promote growth by continuing to create more value for every customer.
We will continue to reduce costs by improving efficiency in all of our
operational and business processes. We will bring service performance
to even higher levels. And we will achieve these results with an
energized, customer-focused workforce.
Our transformation goals, and the methods we will use to achieve
them, were developed to help us push the limits of business
effectiveness and operational efficiency. They represent a sound
approach to a dynamic business environment. They are effective. We
believe they have the potential to be even more effective when applied
to a business model that addresses the challenges of a new century.
I am also here today with more immediate needs--our appropriations
request for fiscal year 2007. This request covers funding for revenue
forgone and free and reduced rate mail. Our request differs from the
amounts recommended by the administration's fiscal year 2007 budget in
several ways.
Our first request is for $29 million for revenue forgone
reimbursements. The administration's budget does not include funding
for the Federal Government's own debt to the Postal Service for
services required by statute. In accordance with the Revenue Forgone
Reform Act of 1993, the Postal Service is to receive $29 million
annually through 2035. This payment covers the cost of services we were
required to provide in fiscal years 1991 through 1993, but for which
there were insufficient amounts appropriated. It also covers payment
for services provided from fiscal year 1994 through 1998.
For two decades after the creation of the Postal Service, Congress
continued to fund reduced postage rates for certain categories of mail
and mailers through the so-called ``revenue forgone'' appropriations.
Congress required that the Postal Service provide reduced postage rates
as well as free mail for purposes which Congress considers to be in the
public interest. These favored types of mail included reduced-rate bulk
standard mail advertising sent by qualified non-profit organizations,
and in-county mailings of local newspapers. These appropriations were
devoted entirely to the benefit of these historically-favored mailers,
and did not financially benefit the Postal Service.
Under the provisions of the Revenue Forgone Reform Act of 1993,
approximately half of the former taxpayer subsidy to non-profit mailers
was transferred to regular-rate postal customers, and that portion of
the ``revenue forgone'' subsidy was ended. In this same legislation,
Congress authorized a series of 42 annual appropriations of $29
million, without interest, as reimbursement for $1.2 billion in costs
incurred by the Postal Service ($515 million in past under-funding of
revenue forgone plus the cost of phasing reduced postage rates to
higher levels over 5 years, under the Revenue Forgone Reform Act). The
outstanding balance on this debt is approximately $840 million. This
year's appropriation would be the fourteenth in the series of 42 annual
payments to reimburse the Postal Service the $1.2 billion owed for
these purposes. Failure to fund this authorized appropriation places
the remaining debt of nearly $840 million at risk of nonpayment.
As the Postal Service continues to responsibly address its long-
term obligations, it is counter-productive to increase those costs
through non-payment of a debt already deferred by interest-free
installment payments spread over a period of 42 years.
The second part of our request is for $123.7 million in payment for
costs imposed on the Postal Service by statute. This $123.7 million is
for current year costs of $80.127 million and a $43.608 million
reconciliation adjustment for prior years. This appropriation
reimburses the Postal Service for the statutory obligations to provide
free mail for the blind and others who cannot use or read
conventionally printed materials, the mailing of absentee balloting
materials that can be mailed free by members of the armed forces and
other United States citizens residing outside of the United States, and
balloting materials that can be mailed in bulk between State and local
election officials.
This request differs from the administration's budget
recommendation of $79.915 million. The administration provides $60.725
million for current year costs plus a $19.190 million reconciliation
adjustment. The administration's proposal not only provides an amount
less than that requested, but also continues an ``advance funding''
process adopted in recent years of deferring actual payment of the
recommended funding until the following fiscal year.
Although this approach provides limited funding for these services,
these funds are only made available long after the service has been
delivered. These actions place the postage ratepayer at a greater risk
of absorbing a social service cost beyond the mission of the Postal
Service. The Postal Service does not have the authority to control or
limit these mailings to reduce the funding needed. And we have no way
to mitigate the shortfall in funding. Providing less than the requested
amount will continue to compound the financial burden caused by the
current ``advance'' funding.
I should note that the Postal Service takes great pride in its
success in funding postal operations solely through the sale of postal
products and services. While we are authorized by statute to request a
public service appropriation every year for costs incurred in providing
effective and regular postal services nationwide, even in communities
where Post Offices may not be deemed self-sustaining, we have operated
without this appropriation since fiscal year 1982, saving the American
taxpayers more than $11 billion. Again, for fiscal year 2007, we are
not requesting an appropriation for public service.
In closing, I would like to take this opportunity to acknowledge
the hard work and dedication of the men and women of the Postal
Service. They are at the heart of our success. They are valued and
trusted members of every community they serve.
Thank you, Mr. Chairman and members of the subcommittee for the
opportunity to discuss our fiscal year 2007 appropriations request. I
would be pleased to respond to any questions at this time.
______
Prepared Statement of the United States Tax Court
The United States Tax Court provides a national forum for the
resolution of disputes between taxpayers and the Internal Revenue
Service (IRS). As such, the U.S. Tax Court handles over 95 percent of
Federal tax cases.
The Tax Court is uniquely able to deal with disputes arising under
the Nation's tax laws. As the largest Federal trial court, we receive
and close approximately 23,000 cases each year. The Court maintains
numerous courtroom facilities and conducts hundreds of weeks of trial
sessions in 77 cities across the United States. The Court accomplishes
this mammoth task with less than 300 employees, including the judges
and their staffs.
TAX COURT CASES AND WORKLOAD
Significantly, the Tax Court has no control over the type or volume
of cases that are docketed. Congress, through legislation; the Internal
Revenue Service, through its audit and enforcement activity, and
taxpayers by their choice of forum determines our caseload.
Deficiency cases comprise 90 percent of the current caseload. The
remaining 10 percent of cases include: administrative costs, abatement,
employment classification, lien/levy, Tax Equity and Fiscal
Responsibility Act of 1982 (TEFRA) partnership, declaratory judgment,
and section 6015 (stand alone, innocent spouse) cases. The Court's
pending caseload increased by 4 percent in fiscal year 2005. The
largest increase was in deficiency cases.
The Tax Court's fiscal year 2007 budget request anticipates a
moderate increase in cases of all types. The estimated caseload in
fiscal year 2007 is in part, based on the increase in audit and
enforcement activity projected by the IRS.
FISCAL YEAR 2007 BUDGET REQUEST
Staffing Needs
The Tax Court studied caseload data and projections of IRS audit
and enforcement activity and determined that it could lower the number
of funded vacancies from 40 to 15. Maintaining these positions provides
the Court the flexibility to promptly address increases in caseload.
The requested positions allow the Court to make contingency plans for
changes in workload. With no control over the flow of cases into the
Court, it is prudent to maintain the flexibility to respond to
increases in workload.
The Court expects to have a stable staffing pattern in fiscal year
2007. However, the Court, as of June 1, 2006, will have only 17 of 19
of its presidentially appointed judges on board. Funding for two
additional presidentially appointed judges and staff is included in the
Court's request.
Training
As mentioned in the fiscal year 2007 budget request, the training
program for Court employees is ongoing. The program, begun in 2005,
focuses on improving employees' job-related skills and helping them
become eligible for greater responsibility as part of the Court's
succession plan.
The Tax Court has a large number of employees eligible to retire. A
total of 43.2 percent of the Court's staff can retire over the next 5
years. Of the total eligible to retire, 19.7 percent are eligible now.
The training program is a key part of the Court's succession plan. The
Court is identifying and training employees, so they are ready to fill
positions of increased responsibility or areas where the Court lacks
sufficiently trained staff.
Training is provided consistent with guidelines for employee
training contained in 5 C.F.R. Part 410. The Court maximizes its
training dollars by providing on-site group training where possible.
Modular Furniture
In 2005, the Court initiated a project to replace a large inventory
of outmoded wooden desks purchased in 1985, with modular furniture. The
modular or systems furniture more suitably accommodates today's office
technology by providing built-in electrical outlets and wiring raceways
for computer and printer equipment. It provides a further advantage
over the traditional desk configuration by offering better space
economy and the flexibility to reconfigure workspace to meet the
requirements of workload and corresponding staffing changes. To date,
using modular furniture has allowed the Court to more efficiently use
the space in its headquarters.
The fiscal year 2007 budget request builds on this replacement
project. Fiscal year 2007 is the final year for replacing old,
traditional office furniture with new, efficient modular furniture. The
Tax Court is establishing a cyclical replacement program to ensure
cost-effective use and replacement of furniture in the future.
Field Courtroom Restoration
In fiscal year 2006, the Court initiated a multi-year effort to
survey, renovate and refurnish, as needed, its field courtroom
inventory. The Court's national jurisdiction requires its judges to
travel to over 70 cities providing litigants with a geographically
convenient forum. The Court leases courtroom and chambers space in 35
of these cities. Many of these leased sites have not been refurnished
or refurbished in 20 years. Several of these facilities are in dire
need of new furniture to replace worn 25-year-old equipment. Several
facilities are in need of new carpet and paint, and a handful will
undergo minor remodeling to correct deficiencies.
We are also installing technology systems cabling in all of the
leased field courtroom and chambers to facilitate networking
capabilities with headquarters. Judges and Court personnel will have
secure electronic access to the Court's network and their case files.
All of the Court's case information is now electronically stored and
must be accessible by the judges and staff when they are hearing cases
across the country.
We expect to spend approximately $1 million in our field courtroom
renovation project in fiscal year 2006. This effort will address, at a
minimum, the problems in one-third of the Court's leased space
inventory. The fiscal year 2007 request contains funding to accomplish
needed upgrades in another one-third of field courtrooms. We anticipate
requesting funds for the final one-third of needed renovations for
fiscal year 2008.
Technology Upgrades
The Court's fiscal year 2007 budget request continues the cyclical
replacement of technology begun in the fiscal year 2006 budget. In
addition to replacing or upgrading technology at the Court, we have
been engaged in a comprehensive review of our operating procedures in
an effort to enhance our services to the tax bar and the taxpayers we
serve. This comprehensive evaluation is intended to result in the
application of technological tools, such as automated master
calendaring, comprehensive document imaging and RFID (radio frequency
identification) enabled records tracking, to improve the quality of
service and the speed at which it is delivered. We expect to continue
these improvements within the funding levels requested in the fiscal
year 2007 budget.
The Tax Court implemented a new telephone system in February 2006.
The Court is now using a voice-over-internet protocol for its phone
service. This technology allows Court judges and employees who travel
to retrieve voice mail wherever they are by phone or through a web
portal. This technology provides faster, less expensive, and more
efficient communication between Headquarters staff and traveling judges
and employees. The Court also purchased and installed a server that
runs SQL software, allowing us to implement improvements in our
accounting, purchasing, payroll and human resources systems. The Tax
Court appreciates the subcommittee's support for these projects that
will make the Tax Court more efficient in accomplishing its mission.
The Tax Court is launching an e-filing pilot project this year that
will be ready for beta testing in fiscal year 2007. In connection with
this, the Court is currently reprogramming its case management database
and ancillary systems from a legacy language to a sequel medium to
permit them to operate on a SQL server. As a result, the Court will be
able to receive and process electronically delivered case documents. In
advance of implementation, we will update our attorney admissions and
enrollment database and will be training, late this fiscal year or
early in fiscal year 2007, the enrollees in the selected e-filing pilot
group on the e-filing program. In addition to facilitating access to
case data, the Court expects electronic filing will save time for the
parties and reduce their document processing expenses.
Tax Court Independent Counsel Fund
The Tax Court independent counsel fund is established by IRC
section 7475. The Tax Court uses the fund to retain counsel to assist
the Court in its attorney disciplinary process, for example,
investigations of alleged misconduct.
The monies in the independent counsel fund are derived from fees
charged to individuals who wish to practice before the Court. The
current balance in the independent counsel fund is $404,239.18.
The Tax Court Modernization Act, S. 661, would expand the Court's
authority to use the fund to provide more services for pro se
taxpayers.
The Judges' Survivors Annuity Fund (JSAF)
The Judges' Survivors Annuity Fund was statutorily created to
provide survivor benefits for the spouses and eligible children of
presidentially-appointed Tax Court Judges. The Judges' Survivors
Annuity (trust) Fund is funded with approximately $8.5 million. The
majority of the funds are invested in Treasury securities with a
portion held aside to pay current annuitants. In addition to income
from interest payments, judges contribute 3.5 percent of their salary
or retired pay to the fund. The JSAF is voluntary. Of the 32 judicial
officers of the Tax Court, 21 participate in and contribute to the
JSAF. Additional funds, subject to a maximum of 11 percent of the
participating judges' salaries and based on an annual actuarial study,
are paid into the fund from the Tax Court's annual appropriation to
ensure that the JSAF is actuarially sound. The fiscal year 2006
liability for survivorship annuity payments is $511,911.
For fiscal year 2007, the Tax Court is requesting budget authority
of $1 million in order to make payments to the annuitants of the JSAF.
OTHER MATTERS OF CONCERN TO THE TAX COURT
The following matters are of concern to the Tax Court. The Court is
not asking the subcommittee for any funds in its fiscal year 2007
budget to address these concerns. These matters are being brought to
the subcommittee's attention because of their possible impact on future
budget requests by the Court.
Security
Unlike other Federal judicial officers, the U.S. Tax Court Judges
are not protected by the United States Marshals Service (USMS). While
Tax Court Judges do not hear criminal matters, they are involved with
tax protesters and other individuals who wish to express their
opposition to the United States Government. The Marshals Service is not
always available to provide courtroom security for Tax Court Judges.
They do not provide any security directly to the Tax Court in its
Washington, DC Courthouse and offices. The Tax Court has a contractual
agreement with the Marshals Service to provide special security
officers for the Tax Court building in Washington, DC. The USMS has
informed the Tax Court that the Court will have to bear more of the
cost of providing courthouse security in Washington, DC, as well as in
each of the cities in which we conduct trial sessions. The USMS also
has informed the Court that they are not legally required to provide
outside-of-the-courthouse security to our Court.
The Tax Court believes that the security needs of its judicial
officers require the same level of attention as provided for the safety
and security of judicial officers in other Federal courts. The Tax
Court will continue to work with the Marshals Service and Congress to
ensure the security of its judges.
Leased Space
The Tax Court holds trial sessions in over 70 cities. The Court
currently leases courtroom and chambers space in 35 cities. As noted in
our fiscal year 2006 budget, the Court reviewed its space usage and was
able to reduce some of its leased space. We continue to monitor our
space needs and work with the General Services Administration (GSA) to
obtain the space we need to serve the taxpayers.
In the cities in which the Court does not lease space, it must try
to borrow space in Federal courthouses and other Federal buildings. The
Court finds it increasingly difficult to borrow suitable space in which
to hold trial sessions. We are working with GSA to lease space in
Seattle, Washington; Nashville, Tennessee; and Columbia, South
Carolina, as we have been unable to borrow space from other courts in
these cities. The Court continues to work with other Federal courts to
obtain space when needed in order to conduct sessions throughout the
country. Because the Tax Court must provide a convenient Nation-wide
litigation forum, it cannot reduce its space budget at this time.
The Tax Court remits it annual rental payments to GSA. The rental
payments made to GSA are approximately 20 percent of the Court's
operating budget.
CONCLUSION
The Court is carefully monitoring its use of resources. The Court
also tries to use technology wherever possible to help reduce the cost
of service delivery. Substantially all of the Court's budget is non-
discretionary--spent for salaries, courtroom space rental, and travel
and transportation. The Tax Court also pays for its retired judges from
its appropriation, a practice that does not exist in most Federal
agencies.
We have one program--managing docketed cases and providing a trial
forum for those cases that are not settled prior to trial. In a large
agency, a rescission or budget cut might be absorbed by reducing or
eliminating one of several programs. With only one program or mission
and no discretion over the volume or type of cases the Tax Court
receives, we cannot easily absorb reductions to our budget.
However, the Court's ongoing efforts to control costs, improve the
Tax Court's infrastructure, and efficiently manage the Court's business
resulted in a $888,000 reduction to the overall budget request for
fiscal year 2007.
The Court is committed to being an effective steward of its
resources while meeting its responsibilities to carry out its mission.
The Tax Court's fiscal year 2007 request was designed to address the
Court's needs and those of the government and taxpayers who appear
before the Court. Thank you for your consideration of our fiscal year
2007 request.
______
Prepared Statement of the Honorable Hal Stratton, Chairman, U.S.
Consumer Product Safety Commission
I appreciate this opportunity to present to the subcommittee the
appropriation request for the U.S. Consumer Product Safety Commission
(CPSC) for fiscal year 2007. CPSC is an independent, bipartisan agency
charged with protecting children and families from unreasonable risks
of serious injury or death from more than 15,000 categories of consumer
products under the agency's jurisdiction. Since its inception, CPSC has
delivered critical safety benefits to America's families and has made
significant contributions to the 30 percent decline in the rates of
injuries and deaths related to hazardous consumer products.
While we are proud of these achievements, there still remains an
average of over 25,000 deaths and 33 million injuries every year from
consumer product incidents. These injuries and deaths and property
damage cost the Nation more than $700 billion annually. Because new
products, new trends and new technologies are continuously being
introduced into the marketplace, and subsequently into the American
home, improving consumer product safety is never a completed task but
always an ongoing process of research, standards development,
enforcement and public education.
The CPSC appropriation request for fiscal year 2007 is $62,370,000.
This is the same funding level as the agency's final 2006
appropriation. To manage this funding projection for 2007, staff levels
at the agency are again being reduced through natural attrition and
incentives, such as ``early outs'' and ``buy outs.'' Such actions will
allow the agency to meet the increased costs of salaries and increased
costs related to infrastructure that supports the agency's mission.
CPSC is a staff intensive organization with 80 percent of its
funding going to staff salaries. Primarily as a result of the proposed
2.2 percent Federal pay increase for 2007 and other compensation costs,
we estimate that the cost of staff will increase in the new fiscal year
by $2 million. To achieve the necessary savings to pay this increase,
CPSC's staffing level for fiscal year 2007 is targeted to be 420 FTEs,
a decrease of 20 FTEs from the current fiscal year and a decrease of 51
FTEs from fiscal year 2005. This represents a decrease in our FTE
ceiling during these 2 fiscal years of over 10 percent.
We estimate that non-salary costs such as service contracts, IT
equipment and software maintenance will also increase. For example,
over the past few years we have been required to implement several new
operating systems, purchase IT infrastructure improvements, and provide
increased building and information technology security enhancements.
These system startups and enhancements all have recurring annual
maintenance charges and cost increases.
Additionally, we foresee an increase in the cost of operation of
our most important data source, the National Electronic Injury
Surveillance System (NEISS), an internationally-recognized hospital
emergency room injury reporting system which provides national
estimates for injuries related to consumer products. CPSC staff
annually reviews about 360,000 product-related injuries reported by
NEISS.
Because quality data is central to the execution of CPSC's mission
and lays the groundwork for the agency's standards setting and related
hazard reduction activities, continuously maintaining and improving the
overall quality of NEISS and other CPSC data is critical. Data
collection is the foundation of the agency's early warning system that
identifies hazardous products, injury patterns, and causes of deaths
and injuries. Early identification of product hazards by our Office of
Hazard Identification and Reduction allows CPSC to take prompt action
to prevent and reduce injuries and deaths. This information is the
underpinning of the agency's decision-making process as it relates to
voluntary standards development, compliance, consumer education,
product labeling, and rulemaking initiatives.
One example of a CPSC rulemaking that relied on the quality of our
data is the new open-flame flammability standard for mattresses that
was promulgated earlier this year. This is one of the most important
safety standards ever adopted by the agency; it is estimated that when
fully effective, the new standard will save over 250 lives per year. As
with all Federal standards, its success and effectiveness rely on the
accuracy, precision and soundness of the data that was used to develop
it.
CPSC's mandatory safety standards are enforced by our Office of
Compliance. In fact, whenever potential product hazards are identified,
the Compliance staff conducts investigations to determine whether
corrective action is required. In addition to monitoring compliance
with safety standards by conducting field inspections of manufacturing
facilities and distribution centers and making purchases at retail
establishments or via the internet, CPSC Compliance staff also conducts
surveillance and sampling of imported products at the Nation's ports of
entry.
In 2005, CPSC staff conducted over 250 seizures and detentions
involving almost 4 million units of imported products at the ports
because of possible safety hazards. Examples of these products included
over 240,000 units of hazardous toys and other children's products and
over 1.3 million non-complying fireworks devices.
Our governing statutes also permit the Commission to assess civil
penalties. Due to aggressive enforcement of our safety laws, 2005 set a
new record with civil penalty assessments of $8.8 million including the
largest civil penalty ever issued by the agency against a company that
failed to report some 12 million products that posed a danger to young
children. (All of these amounts are paid to the U.S. Treasury and none
are retained by CPSC.) In addition, staff assisted in securing criminal
convictions for violations of the Federal Hazardous Substances Act.
In 2005, CPSC announced 398 cooperative recalls, also an all-time
record for the agency, involving a wide range of products that included
defective bicycles, cribs, all-terrain vehicles, gas grills and
pacifiers. Over 100 of these recalls were for toys and other children's
products involving nearly 16 million production units.
A key element of any recall is the targeted public notice that goes
out to alert owners of the product to the hazard and to the remedies
that are available to them. This effort is led by CPSC's Office of
Information and Public Affairs which uses numerous outlets to publicize
the recall.
In 2005 Public Affairs staff informed the public of hazardous
products through 383 press releases and recall alerts, 1.2 million
distributed publications (in English and in Spanish), numerous
appearances on network television, and through CPSC's consumer hotline
and website that had an increase in consumer ``hits'' from 200,000 in
1997 to 13.7 million in 2005. Staff also placed a number of video news
releases that reached an audience of over 85 million viewers and
conducted national public awareness campaigns throughout the year on
critical issues such as swimming pool safety.
As noted earlier, one of the major challenges facing the agency is
the surge in imported consumer products. In addition to our activities
at the ports-of-entry, the Office of International Programs and
Intergovernmental Affairs has been expanded to focus on this challenge.
Through this office CPSC has established working relationships with our
counterparts in other countries through the execution of formal
memoranda of understanding with 11 foreign governments including major
trading partners such as China, Mexico, Canada, and the European Union.
As I stated last year, China is the No. 1 toy-producing country and
the United States is the No. 1 toy-consuming country in the world. It
is critical that we work to make certain these imported products are
safe for American families before they are ever put on a ship bound for
an American port.
CPSC is a small agency with a big mission. By any measure, each
year CPSC saves the Nation many times the agency's annual budget.
Through our standards work, compliance efforts, industry and consumer
partnerships, and education programs, the agency contributes to
substantial reductions in deaths and injuries from a wide variety of
hazards. Notable CPSC ``success stories'' include significant death and
injury reduction over the years from residential fires, electrocutions,
carbon monoxide poisonings, and child poisonings. In fact, consumer
product-related deaths in these hazard areas decreased by almost 500
deaths per year by the end of the period covered by our first Strategic
Plan.
We have worked diligently to generate savings and implement
efficiencies to offset the cost increases that we confront. We have
achieved substantial cost savings in the past with such efforts as
replacing regional offices with field telecommuting.
In 2005, we began the process of reducing our FTE ceiling from 471
to 440. We achieved those staff reductions, primarily, by focusing on
administrative efficiencies. With expected 2006 attrition, by offering
``early outs'' and ``buy outs'', and by careful attention to filling
only critical vacancies, the agency plans to achieve the necessary 420
FTE staff level by the start of 2007. Our goal is to carefully adjust
our activities to this reduced resource level in such a manner that the
remaining programs continue to adequately protect American families.
I appreciate the committee's continued interest in our work, and I
want to assure the senators that we at the CPSC remain committed to our
mission to reduce product hazards and to assure the safety of the
consumer products that are used in our homes, backyards and playgrounds
across the Nation.
______
Prepared Statement of Patricia Black, Deputy Inspector General, Office
of Inspector General, Federal Deposit Insurance Corporation
Mr. Chairman and members of the subcommittee, I am pleased to
present the fiscal year 2007 budget request totaling $26.3 million, or
$4.4 million less than fiscal year 2006 (including a 1 percent
rescission) for the Office of Inspector General (OIG) at the Federal
Deposit Insurance Corporation (FDIC). This budget has been possible
because of the improved health of the banking industry since the early
1990's, the continued staff downsizing at the FDIC and within the OIG,
and our internal efforts to improve our performance and productivity
even with reduced budgets.
As you know, the FDIC was established by the Congress in 1933,
during the Great Depression, to maintain stability and public
confidence in the Nation's banking system. Our Nation has weathered
several economic downturns since that era without the severe panic and
loss of life savings unfortunately experienced in those times. The
Federal deposit insurance offered by the FDIC is designed to protect
depositors from losses due to failures of insured commercial banks and
thrifts. While the basic insurance coverage of individual deposits
remains at $100,000, as of April 1, 2006 the FDIC raised the deposit
insurance coverage on certain retirement accounts to $250,000 from
$100,000. As of December 31, 2005, the FDIC insured $3.893 trillion in
deposits for 8,845 institutions, of which the FDIC supervised 5,245.
The FDIC also promotes the safety and soundness of these institutions
by identifying, monitoring, and addressing risks to which they are
exposed.
The Corporation reports that financial institutions have recently
had record earnings. The rate of bank and thrift failures has remained
at a relatively low level over the past 10 years, and the Corporation
has substantially reduced its estimates of future losses from failures.
In fact, 2005 was the first year in the FDIC's history where no
institution has failed, nor has 2006 seen any failures to date. Assets
held in receiverships following bank failures are at comparatively low
levels, and significant progress has been made in closing older
receiverships. These are important indicators of a healthy banking
system, and the Corporation can take pride in its positive
contributions in these areas.
The FDIC OIG is an independent and objective unit established under
the Inspector General Act of 1978, as amended (IG Act). The OIG's
mission is to promote the economy, efficiency, and effectiveness of
FDIC programs and operations, and protect against fraud, waste, and
abuse to assist and augment the FDIC's contribution to stability and
public confidence in the Nation's financial system.
As the Deputy Inspector General, I have led the office since
January 2005 (when Gaston L. Gianni, Jr. retired). I will continue to
dedicate myself to carrying out the mission of the OIG until an
Inspector General is confirmed. In this capacity, I will support the
Congress, the FDIC Chairman, and other corporate management in meeting
current and future challenges facing the FDIC and the banking industry.
I am proud of the work the OIG accomplished this past fiscal year.
This statement discusses the fiscal year 2005 accomplishments, our
assistance to FDIC management, internal management and operational
initiatives to improve the OIG, and our new ``2006 Business Plan''. I
am also providing additional details about our fiscal year 2007 budget
and how it will be spent.
A REVIEW OF THE FDIC OIG'S FISCAL YEAR 2005 ACCOMPLISHMENTS
As in past years, during fiscal year 2005, our work resulted in a
number of major achievements, as follows:
--$42.4 million in actual and potential monetary benefits;
--76 non-monetary recommendations to FDIC management;
--42 referrals to the Department of Justice;
--36 indictments/informations;
--27 convictions; and
--3 employee/disciplinary actions.
More specifically, our accomplishments included 38 completed
investigations that led to the above indictments and convictions as
well as fines, court-ordered restitution, and recoveries that
constitute slightly over $29.5 million in actual and potential monetary
benefits from our work. Also, we issued a total of 40 audit and
evaluation reports, which included about $3.3 million in questioned
costs and $9.5 million in recommendations that funds be put to better
use. The audit reports contained 76 non-monetary recommendations to
improve FDIC policies, operations, and controls that ultimately are
designed to improve FDIC's ability to effectively and efficiently
accomplish its mission. A number of these recommendations addressed
important cross-cutting corporate issues, e.g., the corporate planning
process, the use of consultants, and human capital.
Further, the OIG accomplished many of its organizational goals
during the fiscal year as outlined in our annual performance plan. Our
2005 Performance Report shows that we met or substantially met 31 of
our 37 goals, or 84 percent. This compares to 76 percent met or
substantially met in 2004. In a measurable way, this achievement shows
the progress we continue to make in adding value to the Corporation
with our audits, investigations, and evaluations in terms of impact,
quality, productivity, and timeliness.
Examples of the OIG's audit, investigation, and evaluation work
that contributed to these accomplishments follow:
Bank Fraud in Connection with BestBank Failure
After a 3-week trial in the U.S. District Court, District of
Colorado, a jury found the owners of Century Financial Services, Inc.
and its successor Century Financial Group, Inc. (Century), guilty on
charges of conspiracy, bank fraud, wire fraud, and operating a
continuing financial crimes enterprise that contributed to the 1998
failure of BestBank in Boulder, Colorado.
By way of background, the owners owned and operated Century, a
company that marketed and sold travel club memberships to subprime
borrowers. Subprime credit card borrowers are high-risk borrowers with
poor credit histories. The subprime borrower would finance a membership
by charging it to a new BestBank unsecured VISA card. In 1998, the
largest asset of the bank was the portfolio of subprime credit card
accounts containing more than 500,000 credit card accounts with a
reported value of more than $200 million.
From 1996 through July 1998, the defendants, through Century,
applied $20 credits to the accounts of numerous cardholders who did not
pay their credit card bill and whose accounts otherwise would have
grown increasingly delinquent. These payments made the portfolio appear
to be performing better than it was. During this same period of time,
BestBank continued to fund the growing credit card portfolio with
insured deposits. In July 1998, the Colorado State Banking Commissioner
and the FDIC determined that the value of the subprime credit card
portfolio, the primary asset of BestBank, was overstated because
delinquent loans were fraudulently made to appear current. BestBank was
found to be severely undercapitalized, with losses exceeding $200
million, resulting in one of the largest adverse impacts to the Bank
Insurance Fund in the last 10 years.
While Century earned in excess of $460 million in gross receipts,
the owners each derived more than $11 million from the offenses. Each
of them faces a possible mandatory minimum sentence of 10 years to life
in Federal prison and fines of up to twice the amount gained from
committing the offenses. Sentencing has not yet been scheduled by the
Court.
Also charged in the same indictment for offenses relating to the
failure of BestBank are the dissolved bank's Chief Executive Officer
and Chairman of the Board, the Chief Financial Officer, and the
President. The jury trial against the remaining three defendants is
scheduled to begin in July 2006.
We investigated the case jointly with the FBI and the IRS Criminal
Investigative Division. The U.S. Attorney's Office for the District of
Colorado and the U.S. Department of Justice are prosecuting the case.
Investigation Into Misapplication of Bank Funds at Connecticut Bank of
Commerce
The former chairman of the board of directors of Connecticut Bank
of Commerce was sentenced in January 2005, to 51 months' incarceration
and 36 months' supervised release after pleading guilty to one count of
misapplication of bank funds. No criminal restitution was ordered by
the court because the parties agreed that the former chairman's payment
of $8.5 million to the FDIC, as part of his settlement of the agency's
administrative charges, satisfied all losses directly related to his
criminal conduct.
We conducted this investigation jointly with the FBI. The U.S.
Attorney's Office for the District of Connecticut prosecuted the case.
FDIC's Supervision of an Institution's Compliance With the Bank Secrecy
Act (BSA)
We conducted this audit in response to a congressional request for
our independent assessment of the circumstances related to an
institution's BSA violations. We reported that responsibilities to
ensure compliance with BSA were not adequately fulfilled by either
institution management or the FDIC. In addition, FDIC examinations
lacked sufficient follow-up on corrective measures to address BSA
violations. Further, the FDIC needed to more thoroughly consider the
impact of BSA compliance violations when qualifying potential acquirers
of a failed institution. As a result of our recommendations and its own
initiatives, the FDIC has made significant improvements in, and is
devoting substantially more resources to, its supervision of
institution BSA compliance programs.
FDIC's Investment Policies
We issued a report on the results of an audit conducted by
PricewaterhouseCoopers, LLP to determine whether the FDIC's investment
strategy and portfolio management procedures provided the highest
possible investment returns for the FDIC. This audit concluded that the
FDIC's Division of Finance performed well in managing the FDIC's
investment portfolio in the context of the applicable legal and
regulatory framework, stated investment strategy, interest rate
environment, and assessment of certain insured institutions undergoing
financial stress.
The audit identified opportunities for the FDIC to improve the
return on its investments through two broad courses of action. First,
in certain market environments, the FDIC should decrease holdings in
overnight certificates and increase holdings in longer-maturity
securities. Second, the FDIC should explore the possibility of changes
in its investment approach, such as expanding the universe of allowable
investments. We recommended that the Corporation perform an internal
review of its investment policies, adopt certain performance measures
and goals, and obtain periodic independent reviews of the investment
program. All recommendations in the report were resolved.
Our semiannual reports to the Congress provide many other examples
of OIG work that has contributed to fiscal year 2005 accomplishments.
These reports can be found on our Web page at http://fdicig.gov or
obtained by contacting our office.
ASSISTANCE TO FDIC MANAGEMENT
In addition to 2005 audits, investigations, and evaluations, the
OIG made contributions to the FDIC in several other ways. We strive to
work in partnership with Corporation management to share our expertise
and perspective in certain areas where management is seeking to make
improvements. Among these contributions were the following activities:
--Reviewed 35 proposed corporate policies and offered comments and
suggestions when appropriate.
--Provided advisory comments on the FDIC's 2005 Annual Performance
Plan and 2005 Annual Report.
--Participated in division-level conferences and meetings to
communicate our audit and investigation work and processes.
--Provided technical assistance and advice to several FDIC groups
working on information technology issues, including
participating at the FDIC's information technology security
meetings. We also participated in an advisory capacity on the
Information Technology Subcommittee of the Audit Committee.
OIG MANAGEMENT AND OPERATIONAL INITIATIVES
An important part of our stewardship over the funding we receive
includes our continuous efforts to improve OIG performance and plans.
We provide objective, fact-based information and analysis to the
Congress, the FDIC Chairman, other FDIC officials, and the Department
of Justice. Our key efforts typically involve our audits, evaluations,
or criminal investigations conducted pursuant to the IG Act and in
accordance with applicable professional standards. We also make
contributions to the FDIC in other ways, such as reviewing and
commenting on proposed corporate policies and draft legislation and
regulations; participating in joint projects with management; providing
technical assistance and advice on various issues such as information
technology, strategic planning, risk management, and human capital; and
participating in internal FDIC conferences and seminars.
The OIG has continued to downsize with the Corporation through
reorganization, closing two field audit offices, and offering buyouts
and retirement incentives to impacted employees under an FDIC-wide
program. The OIG will continue to carry out several key initiatives to
implement our human capital strategic plan and ensure that the OIG is a
results-oriented high-performance organization. Many of the planned
initiatives relate to staff development and include: the establishment
of a mentoring program; providing training and development related to
the OIG core competencies and business knowledge needs; and developing
a strategy to improve the supervisor-staff feedback process.
Other internal initiatives included our hosting an interagency
symposium on the Federal Information Security Management Act (FISMA) of
2002. Representatives from more than 18 Federal agencies attended the
symposium to share information, ideas, and best practices related to
the implementation of FISMA. The OIG also hosted an ``Emerging Issues''
conference with participants from other OIGs of financial regulatory
agencies, GAO, regulatory agency officials, and congressional staff.
The conference brought together distinguished speakers who shared their
perspectives on the banking and financial services community with
Inspector General staff in the interest of enhancing the value that
OIGs can add to their agencies by successfully addressing risk areas.
We also sponsored the annual conference of the Federal Audit Executive
Council, a working group comprised of the heads of Federal audit
organizations. This forum helps ensure that Federal audit organizations
keep current with auditing standards, practices, priorities, and issues
of concern.
BUSINESS PLAN
The OIG developed a new business plan that explains what we are
about, what we want to accomplish, and how we will get there. It also
provides a means to assess our performance. Our ``2006 Business Plan''
represents the results of concerted efforts over time, especially
during the past year, to improve our planning process and demonstrate
the value added by our office to sound FDIC governance and to executive
and legislative branch decision-makers.
The ``2006 Business Plan'' combines the OIG Strategic Plan and
Performance Plans. This plan contains six strategic goals to help
accomplish our mission. In carrying out the key efforts of our plan, we
will strive to demonstrate to the Congress, the public, the FDIC, and
the banking industry that the OIG is doing the right things and
generating results that are a worthy return on the investment made in
us.
The complete ``2006 Business Plan'' is available at www.fdicig.gov.
We have begun the process for developing performance goals and key
efforts for fiscal year 2007, which will continue building on this
strategic framework. Our six 2006 strategic goals and selected key
efforts follow:
Strategic Goal 1.--Assist the FDIC to Ensure the Nation's Banks Operate
Safely and Soundly
Bank supervision is a cornerstone of the FDIC's efforts to ensure
stability and public confidence in the Nation's financial system. The
OIG's role under this strategic goal is targeting audits and
evaluations that review the effectiveness of various FDIC programs
aimed at providing continued stability to the Nation's banks. The OIG
also conducts investigations of fraud at FDIC-supervised institutions,
fraud by bank officers, directors, or other insiders; obstruction of
bank examinations; fraud leading to the failure of an institution;
fraud impacting multiple institutions; and fraud involving monetary
losses that could significantly impact the institution. Below are
selected key efforts representing ongoing work or work envisioned in
support of this goal.
--Conduct material loss reviews of failed banks, as needed;
--Review bank examination procedures for addressing bank sensitivity
to interest rate risks;
--Investigate criminal obstruction of bank examinations;
--Review bank examination procedures for addressing electronic
banking risks;
--Review whether bank examinations adequately consider the
reliability of property appraisals;
--Investigate financial institution fraud;
--Review the FDIC's use of the Financial Crimes Enforcement Network
(FinCEN); and,
--Review the use of Bank Secrecy Act examinations for foreign
transactions.
Strategic Goal 2.--Help the FDIC Maintain the Viability of the Deposit
Insurance Funds
FDIC deposit insurance remains a central component of the Federal
Government's assurance to the public that it can be confident in the
stability of the Nation's banks and savings associations. Since its
establishment in 1933, the FDIC has insured deposits up to the legally
authorized threshold, which historically was at $100,000. For almost
two decades following bank crises in the late 1980's and early 1990's,
the FDIC has managed two deposit insurance funds--one for banks with
about $35 billion, and one for savings and loans with about $13
billion. These funds, which are primarily an accumulation of premiums
that insured depository institutions have paid the FDIC and interested
earned, have been used to pay FDIC operating expenses and insured
depositors, as necessary. On February 1, 2006, the Congress enacted
deposit reform legislation that will create a deposit insurance system
that is more focused on risk and better able to adapt to rapidly
changing industry. The new deposit insurance reform legislation:
--Merges the two deposit insurance funds into a single Deposit
Insurance Fund.
--Maintains deposit insurance coverage for individual accounts at
$100,000, but provides for indexing for inflation every 5 years
beginning in 2010.
--Increases deposit insurance coverage for retirement accounts to
$250,000 and provides for indexing for inflation every 5 years
beginning in 2010.
--Replaces the current Designated Reserve Ratio of 1.25 percent of
estimated insured deposits by permitting the reserve ratio to
move within a range of 1.15 percent to 1.50 percent of
estimated insured deposits.
--Requires the FDIC to provide cash rebates in amount equaling 50
percent of the amount in excess of the amount required to
maintain the reserve ratio at 1.35 percent. Requires the FDIC
to provide cash rebates in amount equaling the total amount in
excess of the amount required to maintain the reserve ratio at
1.50 percent.
--Provides financial institutions with a one-time transitional
premium assessment credit based on the assessment base of the
institution on 12/31/96 as compared to the combined aggregate
assessment base of all eligible depository institutions.
The Corporation has begun the process for implementing the
provisions of the new legislation. To date, the FDIC has merged the two
deposit insurance funds into a single Deposit Insurance Fund and raised
the deposit insurance coverage on certain retirement accounts to
$250,000 from $100,000. As insurer, the FDIC must evaluate and
effectively manage how changes in the economy, the financial markets,
and the banking system affect the adequacy and the viability of the
deposit insurance funds. The OIG has a responsibility to evaluate the
FDIC's programs and operations to ensure that the agency has adequate
information to gauge the risks inherent as financial institutions
consolidate, enter into new business areas, and become more global. In
support of this goal, we have planned the following key efforts.
--Review the FDIC's approach to risks posed by large or multiple bank
failures;
--Review the FDIC's risk-based premium program;
--Review the insurance application process for industrial loan
companies (ILCs); and,
--Review FDIC methods for maintaining adequate insurance fund
reserves.
Strategic Goal 3.--Assist the FDIC to Protect Consumer Rights and
Ensure Community Reinvestment
The FDIC oversees statutory and regulatory requirements aimed at
protecting consumers from unfair and unscrupulous banking practices.
The FDIC has recognized the importance of its role in this regard by
establishing its own strategic goal to ensure that consumers' rights
are protected and supervised institutions invest in their communities.
The FDIC's bank examiners conduct examinations in FDIC-supervised banks
on a scheduled basis to determine the institutions' compliance with
laws and regulations governing consumer protection, unfair lending, and
community investment. When problem institutions are identified,
primarily through the examination process, the FDIC attempts using
reason and moral suasion to bring about corrective actions; however,
the Corporation possesses broad enforcement powers to correct
situations that threaten an institution's compliance with applicable
laws. The OIG's role under this strategic goal is targeting audits and
evaluations that review the effectiveness of various FDIC programs
aimed at protecting consumers, fair lending, and community investment.
Additionally, the OIG's investigative authorities are used to identify,
target, disrupt, and dismantle criminal organizations and individual
operations engaged in fraud schemes that target our financial
institutions. Our planned 2006 work towards this goal includes the
following key efforts:
--Investigate misrepresentations of deposit insurance coverage;
--Work with Congress and FDIC management to strengthen enforcement
against misrepresentations of deposit insurance;
--Investigate ``phishing,'' ``pharming,'' and other identity theft
schemes;
--Review multiple FDIC efforts to ensure financial data privacy;
--Evaluate the FDIC's approach to examining fair lending and
community reinvestment;
--Review risks posed to institutions and the FDIC by predatory
lending;
--Assess how the FDIC makes use of data required by the Home Mortgage
Disclosure Act; and,
--Review how the FDIC addresses deficiencies reported in compliance
examinations.
Strategic Goal 4.--Help Ensure That the FDIC is Ready to Resolve Failed
Banks and Effectively Manages Receiverships
When a bank that offers Federal deposit insurance fails, the FDIC
fulfills its role as insurer by either facilitating the transfer of the
institution's insured deposits to an assuming institution or by paying
insured depositors directly. Although there have been far fewer
failures in recent years than occurred during the years of crisis in
the banking industry, the FDIC's responsibility for resolving troubled
institutions remains a challenge. The FDIC reports that failures in
today's economy would differ in nature, size, and cost from the record
failures of the 1980's and early 1990's. Nonetheless, the FDIC could
potentially have to handle a failing institution with a significantly
larger number of insured deposits than it has had to deal with in the
past or have to handle multiple failures caused by a single
catastrophic event.
The OIG's role under this strategic goal is targeting audits and
evaluations that assess the effectiveness of the FDIC's various
programs designed to ensure that the FDIC is ready to and does respond
promptly, efficiently, and effectively to financial institution
closings. Additionally, the OIG investigative authorities are used to
pursue instances where fraud is committed to avoid paying the FDIC
civil settlements, court-ordered restitution, and other payments as the
institution receiver. Our office is focusing on the following key
efforts.
--Assess the FDIC's planning for large or multiple bank failures;
--Review the recovery of unclaimed deposits in failed banks;
--Review the development framework for a new technology-driven asset
servicing project; and,
--Identify and investigate instances of assets fraudulently concealed
from the FDIC.
Strategic Goal 5.--Promote Sound Governance and Effective Stewardship
of Financial, Human, Information Technology, and Procurement
Resources
The FDIC must effectively manage and utilize a number of critical
strategic resources in order to carry out its mission successfully,
particularly its financial, human, information technology (IT), and
procurement resources. Financial resources are but one aspect of the
FDIC's critical assets. The Corporation's human capital is also vital
to its success. The FDIC appreciates the importance of its people, with
four of its six values, integrity, competence, team work, and fairness
specifically referencing the workforce.
Information technology drives and supports the manner in which the
public and private sector conduct their work. At the FDIC, the
Corporation seeks to leverage IT to support its business goals in
insurance, supervision, consumer protection, and receivership
management, and to improve the operational efficiency of its business
processes. Along with the positive benefits that IT offers comes a
certain degree of risk. In that regard, information security has been a
long-standing and widely acknowledged concern among Federal agencies. A
key effort for all agencies must be the establishment of effective
information security programs.
The OIG's role in this strategic goal is to perform audits,
evaluations, and investigations that identify opportunities for more
economical, efficient, and effective corporate expenditures of funds;
recommend actions for more effective governance and risk management
practices; foster corporate human capital strategies that benefit
employees, strengthen employees' knowledge, skills, and abilities;
ensure employee and contract integrity; inspire employees to perform to
their maximum capacity; help the Corporation to leverage the value of
technology in accomplishing the corporate mission; promote the security
of both IT and human resources; and ensure that procurement practices
are fair, efficient, effective, and economical. The key efforts below
are some of the ongoing work or work to be undertaken in support of
this goal.
--Evaluate selected FDIC efforts to operate efficiently, effectively,
and economically;
--Review the FDIC's personnel discrimination complaint tracking
system;
--Investigate FDIC employee or contractor misconduct, as needed;
--Review succession planning initiatives;
--Review safeguards over sensitive employee information;
--Review the FDIC's information security, privacy, and data
protection programs; and,
--Review selected procurement practices.
Strategic Goal 6.--Continuously Enhance the OIG's Business and
Management Processes
The OIG's final strategic goal has an internal focus on continuous
improvement. Our aim under this goal is to:
--Enhance our own business and management practices;
--Enhance strategic and annual planning and performance measurement;
--Strengthen human capital management;
--Ensure the continued quality and efficiency of audits and
investigations; and,
--Foster good relationships with clients, stakeholders, and OIG
staff.
THE OIG'S FISCAL YEAR 2007 BUDGET REQUEST
The proposed fiscal year 2007 OIG budget includes funding in the
amount of $26,256,000, or $4,434,000 less than fiscal year 2006 (after
a 1 percent rescission). This budget will support an authorized
staffing level of 130--a 19 percent reduction from the 160 staff
authorized in fiscal year 2006. The FDIC has continued a downsizing
effort over several years in response to changes in the banking
industry, information technology, and fewer bank failures.
Consequently, we have conducted a thorough review of our workload and
determined that we can reduce the number of audits to be performed and
some other aspects of our workload because of certain decreased
elements of risk, fewer assets under FDIC receivership management, and
fewer bank failures experienced and anticipated. However, the OIG's
investigative workload is increasing, with a substantial caseload of
financial institution fraud because Federal Bureau of Investigation
resources have been redirected to the war on terrorism.
The FDIC OIG has been operating under an appropriated budget since
fiscal year 1998 in accordance with Section 1105(a) of Title 31, United
States Code, which provides for ``a separate appropriation account for
appropriations for each Office of Inspector General of an establishment
defined under Section 11(2) of the Inspector General Act of 1978.'' The
FDIC OIG is the only appropriated entity in the FDIC, and this funding
approach is part of the statutory protection of the OIG's independence.
As in past years, the funds for the OIG budget would be derived from
deposit insurance funds and the FSLIC Resolution Fund. The insurance
funds are funded by assessments on deposits held by insured banks and
thrifts and from the interest on the required investment of fund
reserves held in government securities. These funds are the ones used
to pay for other FDIC operating expenses.
BUDGET BY STRATEGIC GOALS
For fiscal year 2007, the OIG developed the budget based on the six
strategic goals that I discussed earlier. The six strategic goals,
along with their associated portion of budget dollars follow:
--Strategic Goal 1.--Assist the FDIC to Ensure the Nation's Banks
Operate Safely and Soundly;
--Strategic Goal 2.--Help the FDIC Maintain the Viability of Deposit
Insurance Funds;
--Strategic Goal 3.--Assist the FDIC to Protect Consumer Rights and
Ensure Community Reinvestment;
--Strategic Goal 4.--Help Ensure the FDIC is Ready to Resolve Failed
Banks and Effectively Manages Receiverships;
--Strategic Goal 5.--Promote Sound Governance and Effective
Stewardship of Financial, Human, Information Technology, and
Procurement Resources; and,
--Strategic Goal 6.--Continuously Enhance the OIG's Business and
Management Processes.
fiscal year 2007 budget by major spending categories
The following chart shows the distribution of the OIG's budget by
major spending categories. Mostly, the OIG budget is comprised of
salaries and benefits for its employees and the necessary funding for
travel and training expenses. Our fiscal year 2007 budget also includes
funds to replace our staff's laptop computers, which will be over 3
years old and due for replacement, in accordance with the Corporation's
computer replacement schedule.
CONCLUDING REMARKS
Mr. Chairman and members of the subcommittee, I appreciate the
support and resources we have received through the collaboration of the
President, the Congress, and the FDIC. As a result, the OIG has
continued to make a real difference in FDIC operations in terms of
financial benefits and improvements, and by strengthening our own
operations and efficiency. I look forward to continue working with this
subcommittee and working with the new Inspector General when appointed.
I believe our fiscal year 2007 budget strikes an appropriate balance
between the mandate of the Inspector General Act, other legislative
requirements, our judgments of OIG workload needs, the changing
conditions in the banking industry, and the FDIC's downsizing. We
continue to seek your support so that we will be able to effectively
and efficiently conduct our work on behalf of the Congress, the FDIC,
and the American public.
______
Prepared Statement of Austin Smythe, Office of Management and Budget
Mr. Chairman, Senator Murray, members of the subcommittee, I am
pleased to present the President's fiscal year 2007 budget request for
the Office of Management and Budget (OMB).
PROGRESS ON SPENDING RESTRAINT
Before reviewing OMB's fiscal year 2007 budget, I would like to
take a moment to review the substantial accomplishments in spending
restraint we were able to achieve together over the past year. In line
with the President's budget request, the Congress sent the President
appropriations bills that held the growth of total discretionary
spending below the rate of inflation and cut non-security spending. In
addition, Congress adopted 89 of the President's proposed 154 cuts and
terminations, saving $6.5 billion in the process. And Congress achieved
nearly $40 billion in mandatory savings over 5 years, the first time in
8 years reconciliation has been used to slow the growth in spending.
President Bush's 2007 budget builds on last year's progress by
focusing on national priorities and tightening our belt elsewhere. It
gives our troops and those who defend our security what they need to
fight and win the Global War on Terror. And it supports the President's
pro-growth economic agenda.
In order to stay on track to meet the President's goal of cutting
the deficit in half by 2009, we must continue to do two things: keep
the economy growing and restrain spending.
First, the 2007 budget will support continued economic growth by
proposing to make permanent the tax relief signed into law by the
President in 2001 and 2003. Some have argued that we should let the tax
relief expire. A tax increase is the wrong prescription, not only for
the Nation's economic health, but for the government's fiscal health as
well.
We are not an under-taxed society. By rejecting tax increases on
families and small businesses, this budget will help keep the economy
on a continuing course of job creation and strengthen the foundations
for long-term growth.
The second critical component of deficit reduction is a vigorous
policy of spending restraint. Similar to last year, the budget holds
overall discretionary spending growth below the rate of inflation. It
again proposes a cut in non-security discretionary spending. It calls
for major reductions in or total eliminations of 141 Federal programs,
saving nearly $15 billion. And it continues our efforts to slow the
growth in spending on mandatory programs, by proposing $65 billion in
savings over 5 years.
The Appropriations Committees and the Congress have achieved
considerable progress in restraining discretionary spending. We need to
continue this progress on the mandatory side of the budget. The efforts
begin to restrain the growth in mandatory spending are vital--not just
for our near-term deficit reduction efforts--but especially for the
long-term. Toward the end of the next decade, deficits stemming largely
from entitlement programs such as Social Security and Medicare will
begin to rise indefinitely. At that point, no plausible amount of
discretionary spending cuts or tax increases will restore our long-term
fiscal health.
The President has shown a willingness to take on these future
unfunded obligations and to propose long-term reforms. This year's
budget proposes $36 billion in savings from Medicare, and includes
proposals that pave the way for additional reforms in the future. As
with Social Security and Medicaid, we do not need to cut Medicare, but
we do need to slow its growth--and the President's budget begins to do
just that.
DELIVERING RESULTS
To ensure the Federal Government spends taxpayer dollars more
effectively, the administration continues to implement the President's
Management Agenda (PMA). The PMA helps individual agencies and programs
focus on and produce results. It promotes this goal through several key
components: strategic management of human capital; competitive
sourcing; improved financial performance and reporting standards;
electronic government (e-gov) initiatives; and integration of budget
policy with performance measures.
OMB has successfully designed and implemented the Program
Assessment Rating Tool, or PART, to help agencies measure the success
of their programs, focus efforts to improve program performance, and
set budgetary policy accordingly. To support these efforts, OMB has
introduced a new website called ExpectMore.gov. ExpectMore.gov allows
taxpayers to review the OMB assessments of nearly 800 Federal programs.
You can search the programs by rating, topic, or by a simple keyword
search. I urge you and your staffs to use this new resource in
evaluating whether programs are achieving the results you, the
Congress, intend.
In addition to the PART, I want to highlight our competitive
sourcing and electronic government initiatives about which some members
of Congress have raised concerns.
The Competitive Sourcing initiative finds the lowest cost, highest
quality sources to perform the government's commercial activities. This
initiative is expected to generate savings to the taxpayers of more
than $800 million a year.
The Expanded Electronic Government initiative is identifying and
eliminating duplicative information technology systems in agencies. The
result is improved service delivery to citizens, businesses and Federal
employees at a lower cost. Overall, these E-Government initiatives are
delivering to Congress and the American people more than $380 million a
year in cost savings and millions more in cost avoidance.
Both of these initiatives have been the subject of statutory
restrictions that inhibit their progress. OMB's Deputy Director for
Management Clay Johnson is the lead for the administration on these
issues and we want to work with you to make these initiatives a
success. In this time of fiscal restraint, our mutual goal should be to
maximize rather than limit the savings resulting from these common
sense programs.
OMB'S BUDGET
Consistent with the President's overall fiscal year 2007 Budget,
the Office of Management and Budget has submitted a disciplined request
for our agency. OMB's budget requests $68.8 million--a 0.6 percent
reduction from the fiscal year 2006 enacted level when measured on an
apples-to-apples basis.
To achieve this spending restraint, OMB is pursuing cost savings
wherever possible. OMB has been operating under very tight budgets. Our
budget is nearly entirely comprised of salaries and expenses and our
only significant means to achieve savings is through reductions in
staffing. To accommodate lower funding levels, we have reduced OMB
staff from 527 positions in fiscal year 2001, to 510 positions in 2004,
to 490 positions in 2005.
In last year's appropriations bill, Congress provided a net
increase of $750,000 to our request, boosting our budgeted staff levels
to 500 positions. Following the guidance provided by the committee, we
have increased staff levels in the resource management offices (RMOs)
of OMB. To meet increased pay and other costs and achieve the 0.6
percent reduction proposed in OMB's budget for fiscal year 2007, OMB
would reduce staff levels by 11 positions compared to the enacted
fiscal year 2006 level.
We believe OMB can continue to deliver high-quality performance and
fulfill our many important core responsibilities with these lower staff
levels. The best known of OMB's responsibilities is the preparation of
the President's annual budget. In addition, our responsibilities
include oversight of the other agencies regarding budgetary matters,
management issues, the administration's legislative proposals,
regulatory reforms, procurement policies and other important subjects.
We work to ensure that all the administration's proposals in these
areas are consistent with relevant statutes and Presidential
objectives. In meeting these responsibilities, OMB is prepared to work
within the constraints of a tight budgetary environment.
I look forward to working with the Congress to develop a final
budget that is consistent with our goals of spending discipline while
focusing on national priorities.
______
Prepared Statement of W. Douglas Buttrey, Chairman, Surface
Transportation Board
Mr. Chairman, and members of the subcommittee, thank you for the
opportunity to submit for the record this testimony on the fiscal year
2007 budget request of the Surface Transportation Board (Board).
BACKGROUND ON THE BOARD
The Board is a three-member, bipartisan, decisionally independent
adjudicatory body organizationally housed within the Department of
Transportation (DOT) with jurisdiction over certain surface
transportation economic regulatory matters.
The Board provides an efficient and effective forum for the
resolution of disputes relating to surface transportation regulation.
The Board has jurisdiction over railroad rate and service issues and
rail restructuring transactions (mergers, line sales, line
construction, and line abandonments); certain trucking company, moving
van, and non-contiguous ocean shipping company matters; certain matters
relating to the structure, finances and operations of intercity
passenger bus companies; and certain pipeline matters not regulated by
the Federal Energy Regulatory Commission.
The Board's Section of Environmental Analysis performs
environmental reviews of construction, abandonment, and merger matters
that come before the Board for review and approval, as required by the
National Environmental Policy Act. These reviews have become more
complex and require significant resources.
THE BOARD'S FISCAL YEAR 2007 BUDGET REQUEST
The budget request submitted by the Board for fiscal year 2007
totals $25,618,000. This budget level mirrors the Board's fiscal year
2006 budgetary authority enacted by Congress, adjusted for a decrease
in funding associated with the one-time build-out cost in fiscal year
2006 for the Board's new office space and offset by the fiscal year
2007 pay raise as well as the amount required to physically move to the
new space. The Board also seeks resources and authority to operate at
150 FTEs, the current staffing level authorized by Congress.
The Board is requesting $375,000 for moving services to complete
the agency's relocation by the General Services Administration (GSA)
from its current physical site. The Board has been at its current site
for the duration of its 10-year lease, which expires early in 2007. The
Board cannot remain in its current building and must find new space
because the building owners intend to vacate the building to provide
for extensive renovation and modernization. GSA had the replacement
lease prospectus approved by Congress during 2004. GSA advertised the
lease solicitation during the summer of 2005 and will award the lease
by the summer of 2006. GSA will begin the design and interior
construction in 2006 with an anticipated move-in date of January 2007.
Funds included in the fiscal year 2006 appropriations bill will provide
GSA with the resources to schedule the network and telecommunication
connections and interfaces and perform the required structural changes
to the leased space to support the Board's mission. The Board is
requesting funds in fiscal year 2007 for the physical relocation of its
furniture, equipment and files to the new space, as well as an amount
to pay for the new level of rent.
The Board would use the remaining additional funds requested to
cover salary and employee benefit costs associated with the fiscal year
2006 and fiscal year 2007 pay increase and increases associated with
employee health benefit and retirement costs. Unlike many agencies,
there is little room in the Board's budget to absorb a pay increase
without additional resources, because fixed costs, including salary and
rent, comprise about 95 percent of the agency's expenses. Absorbing
even a small amount of the pay increase would impair the Board's
ability to perform its statutory mission.
The requested authorization for 150 FTEs will enable the Board to
hire staff to replace retirement eligible staff prior to their
anticipated retirement date. Currently, 47 employees, or 34 percent of
the Board staff, are retirement eligible. Several retirements can be
expected in the near future. Having the flexibility to hire qualified
people when they are available is particularly important for an agency
that must hire professionals with technical expertise when they are
available in the labor market.
Consistent with appropriation acts for past fiscal years, the Board
requests a provision allowing user fee collections to be credited to
the appropriation as offsetting collections and used for necessary and
authorized expenses to the extent that they are collected. The overall
budget request reflects the workload that is expected and the statutory
and regulatory deadlines associated with the resolution of the cases
filed.
OVERALL GOALS OF THE BOARD
The Board seeks to resolve matters brought before it fairly and
expeditiously. Through use of its regulatory exemption authority,
streamlining of its decisional process and the regulations, and
consistent application of legal and equitable principles, the Board
seeks to facilitate commerce by providing an effective forum for
efficient dispute resolution and facilitation of appropriate business
transactions. The Board continues to strive to develop, through
rulemakings and case disposition, new and better ways to analyze unique
and complex problems, to reach fully justified decisions more quickly,
and to reduce the costs associated with regulatory oversight. The Board
will continue to:
--strive for a more streamlined process for the expeditious handling
of rail rate reasonableness and other complaint cases in an
effort to provide additional regulatory predictability to
shippers and carriers;
--diligently process cases before the Board and ensure that
appropriate market-based transactions in the public interest
are facilitated;
--adhere to all statutory deadlines for the resolution of matters
pending before the Board;
--encourage new opportunities for the various sectors of the
transportation community to work cooperatively with the Board
and with one another to find creative solutions to persistent
industry and/or regulatory problems involving carriers,
shippers, employees, and local communities;
--work to ensure the provision of rail service that is responsive to
the needs of customers; and
--ensure that the Board's processes are open and transparent to the
public.
NATIONAL RAILROAD PASSENGER CORPORATION (AMTRAK) DIRECTED SERVICE
PROVISION
The fiscal year 2006 Transportation Appropriations Act directed the
Secretary of Transportation to reserve $60 million of Amtrak's fiscal
year 2006 appropriation to fund directed service, that is to direct
another carrier or carriers to carry out the functions currently
performed by Amtrak that are necessary to continue commuter and freight
rail operations, in the event Amtrak ceased to operate during the
fiscal year. The fiscal year 2007 President's budget request also
proposes to provide the Board with $60 million to support commuter and
freight rail service should Amtrak cease operations. These funds would
allow the Board to direct service of commuter and freight rail
operations that fail as a result of a cessation of service by Amtrak.
The Board has statutory authority under section 11123 of title 49
to direct service, or in other words, order another railroad to step
into the shoes of a rail carrier that has stopped operating (usually
because of bankruptcy) and serve its customers. This authority was
broadened by Congress in 2005 to include authority for the Board to
direct the continuation of commuter and freight rail services that fail
as a result of a cessation of service by Amtrak. The Board participates
in a joint working group to coordinate issues relating to Amtrak
directed service with the U.S. Department of Transportation's Federal
Railroad Administration (FRA). That group has met with all major
stakeholders--including Amtrak, the affected commuter and freight
railroads, and representatives of labor--to identify issues. It has
compiled all of the services Amtrak provides to commuter and freight
railroads, and has examined legal issues that might arise. However,
these planning efforts would need to be significantly supplemented were
the need to implement directed service imminent. While matters brought
before the Board are often lengthy, in directed service proceedings
section 11123 does alter some administrative procedures to allow the
Board to act cooperatively and quickly.
FISCAL YEAR 2006 AND 2007 ACTIVITIES OF THE BOARD
The Board's workload involving rail rates and services is expected
to remain stable through fiscal year 2007. The Board will continue to
look for ways to streamline and improve its regulatory process and to
promote private sector resolution of problems. In this regard, the
Board is open to proposals filed by parties and independently will look
for ways to shorten and streamline its procedures and processes.
The Board has instituted a rulemaking proceeding to address major
issues regarding the proper application of the stand-alone cost (SAC)
test in rail rate cases and the proper calculation of the floor for any
rail rate relief. The Board's general standard for judging
reasonableness of rail freight rates are set forth in the Coal Rate
Guidelines, which adopted a set of pricing principles known as
constrained market pricing (CMP). Most captive rail shippers seek
relief under CMP's SAC test. Under the SAC constraint, the rate at
issue cannot be higher than the railroad would need to charge to serve
the complaining shipper while fully covering all its costs, including a
reasonable return on investment. Because the issues being addressed in
the rulemaking have been raised or are implicated in the pending rail
cases, the Board is holding the pending rail rate cases in abeyance
while it examines these important issues.
The Board will continue to handle rail cases involving questions of
whether certain State or local regulation of certain rail-related
facilities is preempted by Federal law. These issues have generated
considerable interest in recent years, as the Board and the courts have
explored the extent of Federal preemption on a case-by-case basis.
Board staff expeditiously handles on an informal basis rail
consumer inquiries and complaints concerning matters related to rates
and other charges, car supply and other service issues, claims for
damages, and service-related problems, employee concerns, and community
issues. The Board's Rail Consumer Assistance Program is an informal
mechanism for resolving disputes between freight railroads, and between
those railroads and their customers. This program has a special toll-
free telephone number and a website connection to assist rail customers
and others with concerns involving railroads. It resolved 121 rail
consumer issues during 2005.
The Board has participated in forums between railroads and their
customers to facilitate better communications regarding service issues
and plans to resolve them. The Board continues to encourage parties in
cases before it to reach private sector solutions to their disputes
outside of the Board's formal processes.
The Board's responsibility with respect to rail carrier
consolidations includes a broad range of control transactions among
larger railroads and smaller railroads. In addition, the Board
continues to resolve issues related to past Class I rail mergers. We
are not aware that any major rail mergers are contemplated in the
immediate future, so the workload in this category is expected to
remain constant through fiscal year 2007. Of course, it is impossible
to predict with certainty that no major merger will be proposed during
fiscal year 2007. If a major merger is proposed, that would
significantly increase the workload beyond the expected level.
The Board projects that its line construction docket will remain
constant through fiscal year 2007. The Board has an unprecedented
number of railroad line construction proposals currently under review.
These 14 proposals vary in size and scope, ranging from less than 1
mile to 280 miles of new rail line. The associated environmental review
work is significant The Board granted final approval in its decision in
STB Finance Docket No. 33407, ``Dakota, Minnesota & Eastern Railroad
Corporation Construction into the Powder River Basin'', for a railroad
to construct a 280-mile rail line into the Powder River Basin subject
to extensive environmental mitigation conditions. This case represented
a major multi-year effort on the part of the Board to address the
complexities of a major rail construction case. Demands on the Board to
conduct environmental reviews for such transactions continue to grow,
and these activities require significant resources to complete.
Other line transaction activity is expected to remain constant
through fiscal year 2007 as more carriers continue to sell unprofitable
or marginally profitable lines as an alternative to service
abandonment. The Board continues to see a number of line acquisitions
by both small carriers and noncarriers as the larger rail carriers
continue to restructure their rail systems.
Regarding non-rail matters, the Board has pending before it one
pipeline rate dispute and one water carrier dispute, in addition to one
water carrier dispute that has been decided by the Board and is now
under court review. The Board's pipeline work is expected to remain
constant as the pending case moves forward. The Board's intercity bus
merger and pooling workload are projected to remain constant through
fiscal year 2007; as is the Board's noncontiguous domestic water trade
rate case activity. The Board expects to devote the same level of
staffing resources to work on cases involving motor carrier ratemaking
antitrust immunity through fiscal year 2007.
SUMMARY
The Board's budget request would ensure the resources needed for
the Board to continue to implement its responsibilities expeditiously
and effectively as Congress intends. I appreciate the opportunity to
submit this statement for the record and would be happy to respond to
any questions that the committee may have about the Board's fiscal year
2007 budget request.
______
Prepared Statement of the Federal Election Commission
Mr. Chairman, Ranking Member Murray, and members of the committee,
it is my privilege to present the Federal Election Commission's (FEC's)
fiscal year 2007 appropriation request. To begin, on behalf of the
agency, I thank you for last year's appropriation. Your bipartisan
support of the FEC budget has enabled us to continue to implement the
Bipartisan Campaign Reform Act of 2002 (BCRA), which amended the
Federal Election Campaign Act of 1971. We have used those funds to
continue a process of constantly seeking to improve the FEC's operation
in all three of its core missions: disclosure, enforcing compliance
with the law, and operation of the presidential matching funds system.
Despite some financial belt-tightening in fiscal year 2006, we can see
a measurable improvement in the FEC's ability to meet its core
functions.
Our fiscal year 2007 appropriation request is for $57,138,000, an
increase of $2,985,000 or 5.51 percent over our enacted fiscal year
2006 appropriation. This increase will permit the agency to continue
its current functions while meeting statutorily mandated salary and
benefit increases. This year, the FEC is seeking only a modest increase
over its fiscal year 2006 budget of $54,153,000 ($54,700,000, less the
fiscal year 2006 across-the-board rescission). The fiscal year 2007
request represents a continuation of fiscal year 2006 funding levels,
adjusted for inflation and salary and benefit increases. As such, it
represents essentially a Current Services request for fiscal year 2007,
with no additional funds or staff for new programs or initiatives. I am
pleased to report this request conforms to the President's fiscal year
2007 budget request for the FEC. We have provided detailed support for
this request in our fiscal year 2007 budget justification.
I would also like to note that our fiscal year 2007 request sets
the agency's authorized personnel level at 375 FTE, a decrease of 16
FTE from our previous authorized level of 391. Although the agency is
authorized for 391 FTE in fiscal year 2006, we found it necessary to
reduce staffing in order to handle the increased cost of operations and
to fund some non-recurring expenses in fiscal year 2006. As spelled out
in our fiscal year 2006 Management Plan, the FEC's projected FTE
utilization for fiscal year 2006 will be approximately 380 FTE. In
fiscal year 2007, we estimate that an FTE level of 375 will enable us
to maintain operations at the current service level and absorb the full
cost of the fiscal year 2007 COLA.
Generally, the Commission submits a package of legislative
recommendations to the President and the Congress in March. However,
this year the district court's decision in Shays v. FEC required the
Commission to rewrite some portion of nine of its previous rules in a
condensed timeframe. Therefore, the annual review of legislative
recommendations will be submitted at a later date. In the meantime,
there is one legislative change that the Commission unanimously decided
to include in its fiscal year 2007 budget request to Congress.
We are seeking statutory authority to charge and use registration
fees for FEC-hosted conferences. The Commission has always relied on
effective outreach and our informational programs to reduce violations
due to lack of understanding of the law. These programs, such as the
800 informational line, the campaign finance workshops and seminars,
and the campaign guides and brochures, have all received high marks
from the election community, the media, and the public. Unfortunately,
due to budget constraints we found it necessary to cancel our campaign
finance workshops and seminars for 2006. In order to preserve these
conferences in the future, we are seeking legislative authority to
charge and use registration fees to help offset the costs of these
conferences. If legislative authority is not granted, the Commission
will require additional appropriated funds in order to host future
conferences.
Over the past few years, the FEC has achieved several major
successes, while also seeing a steady improvement in its operations.
These significant achievements include meeting statutory and court
deadlines for implementing BCRA, successfully defending legal
challenges to the constitutionality of BCRA, and settling the largest
enforcement case in the history of the agency. In addition, the agency
has expanded and invigorated its compliance program and improved the
timeliness of reporting. These successes are the result of FEC efforts
and support from our Congressional oversight committees.
I now will provide a brief overview of the FEC's three core program
areas and relate those areas to the agency's fiscal year 2007 budget
request.
DISCLOSURE PROGRAM
The FEC's disclosure program reviews, compiles, and places
candidate and political committee campaign finance reports and
information on the public record, primarily through the FEC's extensive
electronic databases. The disclosure program is also responsible for
educating the public and practitioners about the Federal campaign
finance laws and their application. Over one-third of the agency's
staff (143.4 FTE), are involved in our Disclosure program. This
includes staff from the Public Records Office, Information Technology
Division, Reports Analysis Division, Press Office, Information Office,
and attorneys from the Office of General Counsel (OGC) who formulate
proposed regulations and draft responses to advisory opinion requests.
A key objective of the Disclosure program is to improve the web
accessibility of FEC information. Via the FEC's website at www.fec.gov,
the public can conduct detailed searches of candidate and political
committee reports, closed FEC enforcement matters, and the agency's
advisory opinions. The website also provides access to the most up-to-
date campaign guides and brochures, past and current regulations,
litigation materials, and agenda documents. Beginning this year, the
FEC has made audio file podcasts of meetings available for download
within 48 hours of meetings.
The Disclosure program provides education outreach to the public
and regulated community through campaign finance conferences and
seminars, through a toll-free help line, and through the FEC's public
records room. Our campaign finance conferences are crucial to the
overall success of our Disclosure program, and it is imperative that we
receive the statutory authority explained above in order to host these
conferences without taking funds away from other core programs.
Improvements in productivity, aided by information technology (IT)
enhancements, have enabled the FEC to keep pace with the large
increases in Federal campaign finance activity during recent election
cycles. Campaign financing has skyrocketed since 1976, when the FEC
regulated the $310 million in disbursements by Federal candidates and
committees in the first publicly-funded Presidential election. For the
2004 Presidential and Congressional elections, the FEC regulated the
disbursement of approximately $4.8 billion--an increase of more than
1,500 percent in just eight Presidential election cycles. With your
help, we are building an impressive system capable of handling our IT
needs well into the future. This system offers the capability of
instantly updating our campaign finance database and expanding the
types of information collected. As you are aware, however, this system
is expensive. Our fiscal year 2007 budget request for IT funding is
$6.5 million. This is the minimum amount required for IT projects. It
keeps the ``lights on'' and supports the basic IT mission only. It
forgoes some upgrades and desirable improvements. In future fiscal
years we will require additional resources to complete necessary IT
infrastructure upgrades and to make needed improvements in our
disclosure and review functions. We do, however, plan to apply any
savings realized through the course of the fiscal year to our IT
programs.
With the passage of legislation mandating electronic filing of
campaign finance reports, we are seeing benefits of improved
timeliness. Since the institution of electronic filing, the median time
to process detailed information from all documents received has
improved from 11 (2000 cycle) to 6 (2002 cycle) to 2 days (2004 cycle)
from receipt of the disclosure reports by the Commission. Due to both
the enhanced use of technology and management initiatives, the FEC is
processing and reviewing disclosure reports more rapidly than ever,
despite the huge increase in the amount of campaign finance funds and
information to be processed and disclosed. This provides voters with
more accurate and timely disclosure information prior to an election,
enabling them to make an informed decision when it comes to the sources
and uses of campaign funds by the candidate.
COMPLIANCE PROGRAM
Obtaining voluntary compliance with Federal campaign finance laws
is the foundation of the FEC's mission and central to its strategic and
performance plans. An effective and comprehensive enforcement program
is, however, an essential complement to any voluntary compliance
effort.
Nearly one-half of Commission resources in the proposed fiscal year
2007 budget are dedicated to ensuring compliance with the law. In
fiscal year 2007, we anticipate assigning over 175 FTE to compliance,
including enforcement, supervisory, and support staff from OGC,
Information Technology Division, Reports Analysis, and the Audit
Division. In recent years, the administrative fine program and
alternative dispute resolution program have been added to the
Commission's compliance program.
Together with the standard enforcement program, these three
compliance programs allow the FEC to handle significantly more cases
than it did several years ago. These programs have allowed the FEC to
activate more cases, close more cases with substantive action, resolve
cases that would otherwise have been dismissed, and generally enforce
the law in a more thorough and efficient manner, while preserving the
Commission's legal resources for more complex enforcement matters.
The standard enforcement program, which is the responsibility of
the Office of General Counsel, deals with the most complex cases and
the most significant violations of the law. The General Counsel has
undertaken a number of management and organizational initiatives in the
last 5 years to increase the efficiency of processing matters under
review (MURs), and those efforts have resulted in a more current
caseload and significantly higher civil penalties. Despite a caseload
that now involves the most factually and legally complex cases, MURs
have been closed on average 35 percent faster in fiscal year 2005 than
in fiscal year 2003, and a greater percentage of the assigned (or
active) caseload now involves allegations arising from the most recent
election cycle (i.e., 2003-2004). The administrative fine and
alternative dispute resolution programs have helped to speed the
resolution of less serious violations of the law.
Overall, the compliance program has become more effective, as well
as more efficient. In 1991, prior to the introduction of the
administrative fine and alternative dispute resolution programs, the
FEC assessed civil penalties totaling $534,000. By fiscal year 2004,
approximately 4 years after the implementation of the administrative
fine and alternative dispute resolution programs, that figure had grown
to $3.46 million. Thus far in fiscal year 2006, the FEC has assessed
civil penalties and fines totaling $5.302 million, including a single
$3.8 million civil penalty, the largest in the history of the agency.
Fiscal year 2006 marks the seventh consecutive year with more than $1
million in civil penalties.
The alternative dispute resolution (ADR) program affords both the
FEC and the respondents the opportunity to resolve cases more rapidly
with a focus on ensuring future compliance with the law. Since the
inception of the program on October 1, 2000, through September 30,
2005, the ADR Office concluded agreements with respondents and formally
closed 214 cases, 150 with substantive action (70 percent). These 214
cases were generally closed within 6 months of referral to the ADR
program. The ADR Office has negotiated approximately $310,000 in civil
penalties since fiscal year 2001. In fiscal year 2005 alone, civil
penalties negotiated through ADR totaled $154,500. The administrative
fine program has closed 1,223 cases since fiscal year 2000 and assessed
civil penalties totaling $2,309,454 in cases of late and non-filed
reports. In fiscal year 2005, cases were closed on average 201 days
from when the reports were due to be filed at the FEC.
Finally, in the audit track of the compliance program, we are
pleased to report that the agency has sufficient resources to enable it
to initiate 40 to 45 audits ``for cause'' for the 2006 election cycle.
Further details on the compliance program are contained in the fiscal
year 2007 Budget Justification.
PUBLIC FUNDING PROGRAM
The Commission also administers the Presidential public funding
program. During fiscal year 2007, approximately 55 FTE from the Audit
Division, Office of General Counsel, and Information Technology
Division will be directly involved in this program. Their
responsibilities will include completing the audits of the remaining
two candidates who received matching funds for the 2004 election, and
the two general election candidate committees, for a total of four
Presidential audits continuing from the 2004 cycle. In addition, they
will be preparing for the 2008 Presidential election cycle by replacing
the sampling software used to process matching funds requests and
updating the Commission's ``Guideline for Presentation in Good Order''.
The Guideline sets forth the uniform format required for the
presentation of matching funds requests and specifies the quality of
content standard that must be met.
On a related matter, we believe it is appropriate to bring to your
attention the potential shortfall in the Presidential Public Funding
Program. There was a brief shortfall in the February primary matching
payments for the 2004 Presidential election, which was restored the
following month with the February deposits to the Fund. This was the
only shortfall for the 2004 cycle. We did not experience a major
shortfall for the 2004 Presidential election because several major
candidates decided not to take Federal matching funds for the 2004
primaries. This may change, however, in future elections. The Treasury
Department maintains the matching fund account, which is comprised of
money derived from a taxpayer check-off system. Shortfalls in 1996,
2000, and 2004 occurred for several reasons. First, the Treasury
Department does not consider expected election-year check-off proceeds
to be available when calculating payout resources on January 1 of the
election year. Second, while payouts under the program have been
adjusted upward, due to inflation, the $3 check-off amount has not been
increased since 1993. Third, the number of taxpayers participating in
the check-off has been declining. Fourth, the ``front-loading'' of
primaries and caucuses, which puts a premium on early fundraising, has
resulted in a high demand for matching payments early in the election
year. Finally, the eligibility requirements for matching funds have not
been adjusted since 1974, and many candidates can qualify for public
funding as a result. Absent legislative action, the shortfall problem
will recur in future elections.
The foregoing summarizes the FEC's fiscal year 2007 budget request.
For a more detailed review of this request, I would urge members of the
committee to consult our budget justification, which includes charts
delineating how our budget request would be allocated and how it
compares to previous years. It also demonstrates how the FEC has
developed and used strategic and performance planning.
Again, I thank you, Mr. Chairman and the committee, for your
continued support and the opportunity to present our fiscal year 2007
budget request.
______
Prepared Statement of Terrence L. Bracy, Chair, Morris K. Udall
Foundation
Mr. Chairman, members of the subcommittee, thank you for the
opportunity to present testimony regarding the fiscal year 2007 budget
of the Morris K. Udall Foundation. We have previously submitted our
Congressional Justification and met with the subcommittee's staff to
answer their questions regarding our programs and budget.
The Foundation has two major program areas, supported by two
distinct appropriations funds: First, the U.S. Institute for
Environmental Conflict Resolution (the U.S. Institute), supported by a
combination of annual appropriations and fees charged for services; and
second, the Education Programs, supported by the annual interest from a
Trust Fund (invested solely in Treasury obligations).
The President's budget requests $700,000 for the Institute in
fiscal year 2007. The Institute anticipates generating an estimated
$3.1 million in gross revenues in fiscal year 2007, of which an
estimated $2.4 million will fund extramural mediation services and
$700,000 will be applied to intramural costs. The Institute will
continue to work toward maximizing its revenues from collection of fees
for its services. An additional $750,000 will be applied from the
remainder of the Institute's original appropriation for capitalization
expenses.
The President's budget requests no new appropriation for the Trust
Fund. The Foundation education programs are expected to have a total
budget of $1.6 million in fiscal year 2007, which includes $1.5 million
in interest and $100,000 in carryover from fiscal year 2006. This
funding is expected to allow the Foundation to maintain current
Education Programs in fiscal year 2007, including 80 scholarships of
$5,000 each and a grant of $296,000 to the Udall Center for Studies in
Public Policy, as required by the Foundation's enabling legislation.
The Foundation's budget details are thoroughly discussed in our
Congressional Justification. In this testimony, I would like to focus
on some of the programmatic highlights at the Udall Foundation over the
last year.
The U.S. Institute for Environmental Conflict Resolution continues
to be recognized as a significant resource for assistance in resolving
and preventing environmental conflicts involving Federal agencies. In
November 2005, the Office of Management and Budget and Council on
Environmental Quality jointly issued a memorandum directing all Federal
agencies to increase the effective use of environmental conflict
resolution and build institutional capacity for collaborative problem
solving. The policy memorandum encouraged agencies to draw on the
services of the U.S. Institute to assist in resolving disputes, as
appropriate, and to help review strategies for increasing the use of
environmental conflict resolution by those agencies. The U.S. Institute
is coordinating an interagency forum of senior agency staff that will
oversee implementation of the policy memo.
In addition, the U.S. Institute has continued to provide conflict
resolution and training services around the country. A substantial
amount of work has been with the Federal Highway Administration--for
example, the Institute has provided conflict resolution services in
connection with a FHWA project in Oregon (the West Eugene Parkway), and
it also has conducted workshops to strengthen FHWA efforts to work with
State, local and tribal governments. One workshop focused on Federal
and State consultation with American Indian Tribes, as required by the
National Historic Preservation Act, bringing together the Tennessee
Division of FHWA, the Tennessee Department of Transportation, and 11
federally recognized Tribes. Additional customized workshops are
expected to strengthen Federal and State agencies' efforts to
successfully meet agency coordination and cooperation mandates of the
Transportation Equity Act for the 21st Century (TEA-21), Section 1309:
``Environmental Streamlining'' and Executive Order 13274:
``Environmental Stewardship and Transportation Infrastructure Project
Reviews''.
The Institute recently completed one of the few successful
mediations on timber issues in the United States, helping the parties
to resolve a lawsuit challenging a timber sale in Oregon. The
settlement provided for the Bureau of Land Management to continue with
logging on 75 percent of the original 152 acres planned for sale and
canceled logging on the rest, preserving old growth habitat. One
innovation of the settlement was an agreement that community
representatives can ride along with contract administrators during
logging activities and visit post-harvested sites. The agreement is
also important as a possible prototype for other settlements--at
present, about 80 percent of proposed Forest Service timber sales are
involved in litigation nationwide.
Another area of increasing activity for the Institute has been in
customized training for Federal agency personnel in the use of
collaborative processes to resolve conflicts. For example, Institute
staff designed and led training in multi-party negotiation and conflict
management for the U.S. Air Force. This training was first delivered in
April at the Air War College in Alabama. The Air Force plans to use
alternative dispute resolution more systematically in environmental and
land-use disputes, with the goal of reducing dispute resolution cycle
times and avoiding unnecessary dispute resolution costs. The Air Force
already has reported saving time and much of the cost of litigating
contract disputes through use of ADR, while achieving results at least
equal to those expected from litigation.\1\
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\1\ Report to the Secretary of the Air Force on the Air Force
Alternative Disputes Resolution Program, January 2005. The Air Force
ADR Program said data through fiscal year 2004 showed ADR resolves
disputes in less than half the time, on average, compared with
litigation through trial, and avoided much of the cost of full
litigation, including the government's liability for interest on
contractor claims. Early resolution through ADR also meant less
disruption to Air Force programs and to the Air Force's working
relationships with contractors, the report said.
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The Education Programs of the Udall Foundation are also thriving.
The Foundation continues to draw the highest quality applicants for its
scholarships, fellowships, and internships. A total of 836 college
scholarships have been awarded through fiscal year 2006 to students
from all 50 States and 259 colleges. The Native American Congressional
Internship Program has placed 126 interns from 87 tribes in
Congressional offices, the Executive Office of the President, and high-
placed offices at the Departments of Interior, Education and Defense.
Beginning in August 2006, the Foundation is planning a year-long
``Celebration of Public Service'' to mark the 10th anniversary of its
Education Programs. As part of this effort, current and former
scholars, fellows and interns will initiate and implement public
service projects all around the country.
Native Nations Institute, a joint project of the Udall Foundation
and the University of Arizona, has conducted executive education
sessions for more than 1,700 councilors, presidents and senior managers
from more than 340 Indian nations over the last 5 years and has reached
many more through conference presentations. In partnership with the
Harvard Project on American Indian Economic Development, NNI has
developed the leading research on tribal economic development,
leadership and self-determination. NNI has maintained program levels in
fiscal year 2006 due to a transfer from the fiscal year 2006 Udall
Foundation Trust Fund appropriation (as authorized by Congress in
Public Law 109-115); in fiscal year 2007, NNI will receive no
additional funding from the Foundation but will utilize $176,000 in
carryover from fiscal year 2006 and an estimated $62,000 in fees to
continue the Native American internships and the executive education
program. NNI will continue to seek other funding, including grants from
public and private organizations.
I am pleased to report to the subcommittee that the Foundation
received an unqualified ``clean'' audit opinion again for fiscal year
2005, and no material inadequacies were identified by the independent
auditor, Clifton, Gunderson, LLP. As in prior years, I want to assure
the chairman and members of the subcommittee that the Foundation has
taken extraordinary steps to keep down administrative expenses and get
the most value out of its limited funds.
Thank you for the opportunity to provide testimony. We look forward
to working with you and your staff on fiscal year 2007 appropriations.
______
Prepared Statement of Kenneth D. Wade, Chief Executive Officer,
Neighborhood Reinvestment Corporation dba NeighborWorks America
Neighborhood Reinvestment Corporation, now doing business as
NeighborWorks America, is pleased to submit this testimony for the
record, on behalf of the NeighborWorks system. This system includes
NeighborWorks America and 240 nonprofit, community-based organizations
that comprise the NeighborWorks network. In fiscal year 2005, we served
over 4,000 communities and generated over $2.4 billion in direct
investment.
OVERVIEW OF THE NEIGHBORWORKS SYSTEM
To help more Americans seize opportunities to build wealth,
strengthen their communities and realize the dream of home ownership,
we work on three basic fronts:
--NeighborWorks America headquarters and training agency;
--Our national NeighborWorks network of nonprofit community
development organizations; and
--Financial backing through Neighborhood Housing Services of America.
For nearly 30 years, the NeighborWorks System has proven to be an
increasingly effective and efficient vehicle for generating significant
private-sector resources for community revitalization and affordable
housing. The NeighborWorks System relies on public-private
partnerships, the leveraging of Federal funding, and flexible revolving
loan funds to achieve results. Innovations that are generated in
response to community needs are a hallmark of the NeighborWorks System.
We were borne out of a real and present community need for more private
sector investment in decaying urban areas in the 1970's and continue to
nimbly address real and present community needs today.
NeighborWorks America
NeighborWorks America evolved from a 1972 effort by the Federal
Home Loan Bank Board to increase thrift-industry lending in declining
neighborhoods. Recognizing the model's effectiveness in community
development and turning around urban blight, Congress chartered
NeighborWorks America as a public nonprofit organization in the Housing
and Community Development Amendments of 1978 (Public Law 95-557).
Today NeighborWorks America:
--As the Nation's largest certifier of high-quality home ownership
education counselors, creates a national force of home
ownership and financial literacy education counselors that have
educated and empowered 500,000 Americans nationwide.
--Fuels local innovation with a powerful battery of community
development training, research, managerial advice, turnaround
specialists and an aggressive brokering of business and
government partnerships.
--Maintains high performance standards for its NeighborWorks member
organizations through rigorous and thorough audits to ensure
accountability and results.
--Empowers underserved populations and regions of the Nation. When
comparing total lending activity, the NeighborWorks network
serves four times as many minorities as conventional lenders
and twice as many as served by government agencies (as a
percentage of the total clients served).
--Ensures continued responsiveness to local needs through sound
dependable capital loan funds that have invested $2.5 billion
in communities in the last 5 years alone.
--Challenges predatory lending with the twin tools of education and
customized, responsible lending.
The NeighborWorks Network
In the early 1970's, NeighborWorks America founded the
NeighborWorks network, a group of community-based nonprofits that has
evolved from a few organizations to more than 240 members active in
more than 4,000 communities across the country. NeighborWorks
organizations operate in our Nation's largest cities, suburban
neighborhoods and rural areas across all 50 States, Puerto Rico and the
District of Columbia. No matter what their location, NeighborWorks
organizations are responsive and effective, because they function as
partnerships of local residents, lenders and other business leaders,
and representatives from local government. NeighborWorks network
results include:
--forging private-sector partnerships that revitalize blighted
communities to create an infusion of job retention and economic
development strategies to local economies;
--providing full-service affordable rental housing that provides
citizens with much more than a roof over their heads;
--creating home ownership incentives that help individuals realize
the American dream and build wealth for their families and
communities;
--educating communities about strategies that improve safety and
attract wealth-building opportunities.
Neighborhood Housing Services of America (NHSA)
Flexible financing enables NeighborWorks organizations to be
nimble, competitive and effective. Neighborhood Housing Services of
America works in partnership with NeighborWorks America to meet special
secondary market needs of NeighborWorks organizations and their
clients. The primary mission of NHSA is to operate a specialized
secondary market created to replenish the revolving loan funds and
capital pools of local NeighborWorks organizations. As such, it has
become an important tool for challenging predatory lenders.
PROJECTED OUTCOMES FOR FISCAL YEAR 2007
This is a time of unprecedented challenges and opportunities in
housing and community development. NeighborWorks America is in a prime
position to deliver results.
An appropriation of $120 million will allow the NeighborWorks
system to:
--Award 8,300 training certificates in community development and
housing; home ownership and community lending; home ownership
education and counseling; construction, production, real estate
and housing management; nonprofit management and leadership;
and economic development, revitalization and community building
to practitioners throughout the country.
--Generate $20 in other investment for every $1 appropriated to
NeighborWorks America, for a total reinvestment of over $2.4
billion in American communities.
--Provide affordable housing and counseling to more than 180,000
individuals or families living in 4,000 communities by 240
organizations the comprise the NeighborWorks network.
--Increase financial fitness education in underserved markets to
build better money management skills that position families to
build assets and achieve financial independence.
--Secure and expend $85 million in social investments in support of
affordable housing loans.
For fiscal year 2006, NeighborWorks America received an
appropriation of $118 (minus an across-the-board rescission). The
proposed increase for fiscal year 2007 of $2 million will further
NeighborWorks America's work to create and sustain minority home
ownership through grants to NeighborWorks organizations, as well as
continue to allow NeighborWorks America to attract and retain qualified
and competent staff in community development.
PRIORITIES FOR FISCAL YEAR 2007
In developing the Corporation's fiscal year 2007 budget,
NeighborWorks America is setting more aggressive expectations for the
NeighborWorks system. NeighborWorks America has always worked to be
good stewards of the funds that Congress has entrusted to us, and the
Corporation continues to diligently work to maximize our efficiency and
effectiveness. In order to meet these expectations, NeighborWorks
America and the NeighborWorks system will:
--Leverage strategic partners and resources to stay on the forward
edge of housing and community development needs;
--Monitor the efficiency and results of the NeighborWorks network
through financial and performance reviews;
--Fuel network innovation that can be applied across the Nation; and,
--Build skills and performance in the housing and community
development field.
Leverage Strategic Partners and Resources
Historically, the success of the NeighborWorks System has far
exceeded its visibility. In fiscal year 2007, NeighborWorks America
will continue its efforts to enhance the visibility of NeighborWorks by
launching a public awareness and branding campaign: ``NeighborWorks
America--Transforming Lives and Strengthening Communities.'' The
campaign will unite the corporation with the national network it
supports--240 NeighborWorks organizations across 50 States.
Neighborhood Reinvestment is adopting the name ``NeighborWorks
America'' as its public trade name. A resolution of the Board of
Directors directing the Corporation to launch this public awareness and
branding campaign passed unanimously on September 20, 2004.
More awareness of NeighborWorks America will help us serve more
communities, creating a force of empowered consumers and engaged
communities. NeighborWorks America will promote several tools to
empower neighbors to maximize their financial position, to become
informed homebuyers and savvy homeowners whose home values grow and
provide equity. As NeighborWorks America, united with our national
network under one name and a singleness of purpose, we will become a
more visible and powerful national force for change.
Increase the Efficiency and Results of the NeighborWorks Network
Our scale and history allows NeighborWorks America and its
affiliated NeighborWorks network to be responsive and innovative,
successfully navigating the rocky terrain of the current housing and
community development landscape. To keep pace with the breakneck and
challenging changes in the current environment, we will:
Demand Accountability and Results
NeighborWorks America is committed to promoting and maintaining a
network of productive, well-managed, nonprofit housing and community-
development corporations that deliver high quality services responsive
to local needs and have a measurable impact on the communities they
serve.
Conduct Rigorous and Thorough Audits and Reviews of
NeighborWorks System
As part of its responsibility to be a strong steward of Federal
funding and protect the investment of other partners and the reputation
of the NeighborWorks network as a whole, NeighborWorks America uses a
rigorous and thorough audit and review of all NeighborWorks programs
and organizations. Those who don't measure up are given a defined time
period to turnaround or leave the network. We demand high-performance
and results.
Through a system of continuous monitoring, we assess the risks
faced by each NeighborWorks organization with a thorough collection and
analysis of programmatic and financial data.
Measure the Success of the Community Development Field
As stewards of taxpayer money and advocates for our most needy
neighbors, we must make sure our investments are working in ways that
truly make a difference. It's not good enough to talk about simple
counts of housing units produced or dollars leveraged. We must be
willing to hold ourselves accountable for results. If banks and
actuaries can refine their investment and insurance packages with
increasing accuracy and sophistication, we also must find new ways to
measure the impact of our work. This year NeighborWorks America will
begin using the Success Measures Data System as one important tool to
help answer the question: ``Are we making a difference?'' This state-
of-the-art program can measure dividends such as changes in safety,
property values, levels of civic engagement and the quality and
performance of schools and healthcare, helping us to work smarter in
serving the real and present needs in our communities.
The development of this index has been encouraged by OMB through
its Program Assessment Rating Tool (PART) process. Federal Reserve
Chairman Alan Greenspan cited Success Measures as a model tool for
providing ``objective and quantifiable standards to assess community
development programs.''
Improve Efficiency and Coverage of Underserved Areas
The efficacy of the NeighborWorks system is measured in
productivity, more efficient use of resources and more responsive
service delivery. In many underserved areas, the most effective growth
strategy is to expand the reach and/or programmatic services of an
existing network member or to facilitate a merger of two organizations
to create one powerful organization with greater impact and efficiency.
We receive far more applicants to become NeighborWorks members than
we charter. Through a careful affiliation process, NeighborWorks
America ensures that before any organization is chartered as a
NeighborWorks entity, it is sound and productive; led by a board of
directors reflective of the community it serves; and committed to a
mission with goals, values, programs and accomplishments compatible
with the focus and priorities of the NeighborWorks network.
Invest in What Works
Responsible, responsive real-estate development and lending
requires dependable equity capital grants. NeighborWorks America
provides our network with this critical gap funding and equity,
allowing NeighborWorks organizations to make loans for home purchase,
property rehabilitation and small business loans.
NeighborWorks America also provides grants to NeighborWorks
organizations to address a range of community needs, such as financial
fitness education, home ownership counseling and education, development
of affordable rental property, loans for improving safety, and much
more.
Fuel an Engine of Innovation
The structure of the NeighborWorks network facilitates
collaborative learning to harness all the practical knowledge picked up
on the ground and in our research. Initiatives that allow NeighborWorks
organizations to learn directly from each other include: the
NeighborWorks Campaign for Home Ownership, the NeighborWorks
Multifamily Initiative, the NeighborWorks Rural Initiative, and the
NeighborWorks Insurance Initiative and its National Insurance Task
Force.
To help organizations stay on the forward edge of business
practices and community development, we deploy several strategies:
Topflight Expertise and Coaching
NeighborWorks America deploys a team of experts to provide
NeighborWorks organizations with the expertise and coaching needed to
continue to serve resident needs.
This on-call team provides help in six areas:
--Organizational development;
--Resource development and marketing;
--Community revitalization and business planning;
--Management systems (including technology and financial management);
--Single-family housing and lending; and
--Real-estate development and management.
Championing Home Ownership Opportunities
NeighborWorks America has worked for the past 20 years on expanding
home ownership opportunities. Over the past 5 years, while access to
credit has become easier, access to appropriately-priced mortgages
continues to adversely and inordinately affect minority, female-headed
households and immigrant families. The NeighborWorks network's
financial literacy and homebuyer education efforts work to increase
access to the best-priced mortgage for each consumer. The NeighborWorks
System provides home ownership opportunities in a number of important
and highly effective ways.
--67 percent of those assisted by the NeighborWorks Campaign for Home
Ownership are low- or very low-income households. Only 25
percent of the clients of conventional mortgage lenders have
low or very low incomes.
--51 percent of the households assisted by the NeighborWorks Campaign
for Home Ownership are ethnic minorities, compared to only 25
percent of the clients served by conventional mortgage lenders
are minorities.
--46 percent of the buyers assisted by the NeighborWorks Campaign for
Home Ownership are female, compared to only 21 percent of the
clients of conventional mortgage lenders.
The NeighborWorks Campaign for Home Ownership
The NeighborWorks Campaign for Home Ownership is a joint effort of
government, banks, the insurance industry, secondary markets, the real-
estate community and others, coordinated by NeighborWorks America in
conjunction with more than 158 community-based NeighborWorks
organizations. Since 1993, the combined efforts of the Campaign have
created more than 90,300 new homeowners (the majority of whom are low-
and moderate-income minority families) and provided counseling to more
than 538,300 individuals. As a result, $9.05 billion has been invested
in many of America's distressed communities. The campaign provides
resources and education for homeowners and empowers those for whom the
American dream is thought out of reach.
HomeOwnership Centers
To date, NeighborWorks America has supported the development of
nearly 100 NeighborWorks HomeOwnership Centers throughout the Nation.
These Center are one-stop shops for a broad range of home ownership
services available to low- and moderate-income families including
unbiased advice, counseling, training, referrals to partners such as
lenders, real-estate agents, inspectors, contractors, and special
financial assistance to income-qualified buyers. The Centers can also
help existing homeowners with housing rehabilitation advice and
assistance along with maintenance training. Financial counseling to
avoid credit problems, loan delinquencies and foreclosures is also
available.
NeighborWorks America expects to add at least 10 percent more
HomeOwnership Centers in fiscal year 2007. On average, after becoming
fully operational, each HomeOwnership Center will produce over 100 new
homeowners per year and counsel over 375 families per year.
Minority Home Ownership Strategies
Between 2003 and 2007 the Campaign for Home Ownership set a goal to
reach 30,000 minority homeowners. This goal also helps support the
White House's Minority Home Ownership Initiative. Through 2005, the
Corporation has developed and implemented a series of strategies to
meet this goal. Among the strategies are development of an online
searchable database called ``Winning Strategies'' that documents
innovative strategies successfully used to promote minority home
ownership in local communities; promoting expansion of financial
education with new partners such as churches, schools and employers;
working through NeighborWorks Center for Home Ownership Education and
Counseling (NCHEC) to initiate new partnerships to develop training and
certification classes on home ownership education that will be offered
regionally and nationally; hosting national symposia on minority home
ownership issues, education and counseling, and promoting stronger
partnerships between nonprofits and real-estate agents, credit unions
and employers.
NeighborWorks Home Ownership Activities for Fiscal Year 2007
In fiscal year 2007, the NeighborWorks System will continue to
focus attention on helping qualified lower-income families and
individuals purchase, maintain and stay in their homes for the long
term. Our plans include:
--Delivering new training classes on ``Reaching Underserved
Homebuyers'' that will continue to be offered regularly at the
NeighborWorks Training Institutes;
--Designing a new ``minority marketing toolbox'' in 2005 that will
include templates, tools and marketing materials to help local
NeighborWorks organizations implement enhanced marketing
efforts to attract more minority customers as potential
homebuyers;
--Promoting expansion of financial education and home ownership-
education programs with new partners such as churches, schools
and employers.
Financial Literacy and Education to Help Avoid Predatory
Lending
Predatory lending tactics are at an all-time high, particularly
those preying on minority families, immigrants, and financially less-
sophisticated borrowers. Too often bad actors encourage homeowners to
pursue inappropriate debt consolidation, refinancing schemes, home
improvement, or home equity loans that threaten the assets that the
NeighborWorks System has worked so hard to help them acquire.
NeighborWorks America just added a new course to its training
curriculum to help combat predatory lending. The class filled up
immediately and given this ballooning need, we are working to
accommodate more.
Other strategies we use to combat predatory lending include:
--A Financial Fitness Program that prepares families to build sound
finances and be aware of predatory tactics. The Corporation
developed standards, adapted and created training materials,
trained trainers to initiate this comprehensive program, and
supports its growth;
--The addition of 10 Financial Fitness sites in fiscal year 2007 to
expand the reach of financial education efforts across the
network;
--A new consumer training curriculum for ``Refinancing Your Home''
that can be offered to assist existing homeowners in making
smarter choices when considering the multitude of options in
refinancing their home;
--A new consumer training curriculum on ``Buying a Manufactured
Home'' to help consumers who are considering buying
manufactured homes; and
--A study on the cost/benefit of providing pre-purchase counseling to
consumers.
Support the Center for Foreclosure Solutions
We need to prevent foreclosures earlier--before a family even
thinks of buying a home. NeighborWorks America's approach is to provide
education and counseling at every stage--pre- and-post-ownership. We
want to empower individuals, their families, their communities and
their economies to be on a path of continued wealth creation. Informed
consumers can leverage better service, lower costs and a more
transparent, accountable lending and real estate industry.
Over the past 10 years, there have been dramatic increases in high-
risk lending, growing job instability and excess consumer debt
obligations that are all trademarks of susceptibility to foreclosures.
NeighborWorks America has established the Center for Foreclosure
Solutions (CFS) to research and test home ownership preservation
efforts.
Our NeighborWorks affiliate--Chicago Neighborhood Housing
Services--is blazing trails for other organizations across the Nation.
Chicago NHS teamed up with city officials and 20+ lenders to reduce
geographically concentrated foreclosures that leave neighborhood blocks
riddled with vacant homes. The Home Ownership Preservation Initiative
(HOPI) provides counseling to financially strapped owners and
assistance in working with lenders to discuss refinancing, lowering
interest rates and modifying payment plans. Over the past 2 years, the
HOPI campaign prevented 940 foreclosures through innovative outreach
and counseling efforts.
In fiscal year 2007, NeighborWorks America will expand the work of
HOPI to establish a national model to address concerns about growing
foreclosure problems. Other national and local partners are critical to
successfully addressing these problems.
The goals of the Center for Foreclosure Solutions include market
penetration in 15 markets with a phase roll-out approach focusing on
key foreclosure hotspots, telephone counseling 24 hours, 7 days a week
through a national, third-party intermediary, and implementation of a
national and local targeted media and public relations campaign to
reach delinquent and at-risk homeowners.
Rural America
The NeighborWorks network has become increasingly active in rural
communities around the country. Today, 77 out of 240 chartered
NeighborWorks organizations--about 30 percent of the network--serves
rural populations, across 39 States and Puerto Rico. As a result of a
series of growth and programmatic innovations, the number of rural
Americans assisted by the network is expected to increase to 50 percent
in the next few years. The needs of rural homeowners and renters differ
in many aspects from those in urban or suburban areas. In many States,
rural areas have the highest rate of substandard housing, the highest
poverty rate, and median incomes often 35 percent or less than the
median incomes of urban residents. Unfortunately, rural areas
traditionally have lacked the financial resources for home financing.
In fiscal year 2007, NeighborWorks America will seek new
affiliations with community-based organizations serving rural
communities and will boost the capacity of existing NeighborWorks
organizations to significantly increase their rural service areas to
include high-priority under-served populations.
Hurricane Katrina has demonstrated the importance of coordinating
relief efforts. In addition to new and expanded NeighborWorks charters,
the Corporation will partner with at least three regional capital
intermediaries based in perennially under-served rural regions. The
NeighborWorks System will provide access to customized training event,
including place-based Training Institutes in areas such as the Gulf and
Appalachia; equity capital to leverage targeted investment in housing
and community economic development, and at least partial liquidity for
those investments through the Corporation's national partnerships.
During fiscal year 2007, the Corporation will also launch at least
six pilot sites for community economic development projects in rural
markets. The pilot project will be designed to strengthen communities
through job creation, retention and enhancement strategies.
This aggressive growth strategy is designed to increase
NeighborWorks America's overall production in rural communities from
$500 million in direct investments and 16,000 individuals served in
fiscal year 2005 to $750 million in direct investments and 24,000 rural
Americans served by the end of fiscal year 2007.
Areas Affected by Natural Disasters
The NeighborWorks System (NeighborWorks America, related Capital
Corporations such as Neighborhood Housing Services of America and
affiliated local NeighborWorks organizations) along with the
Corporation's national partners are well-positioned to play a
significant role in rebuilding the areas of the Gulf Coast region
affected by Hurricane Katrina. This nationwide network has access to
skilled housing and community development experts who will apply their
expertise to the affected are in a number of ways:
--Contractors and construction managers who can do a triage of work
on existing properties to determine which properties can be
rehabilitated and which should be demolished;
--Real estate developers who know how to take an idea and turn it
into a reasonably-priced quality constructed house or
subdivision;
--Mortgage lenders who can originate and underwrite loans;
--Counselors on credit and housing issues, who can assist residents
through complex processes involved with property rehabilitation
and/or mortgage financing;
--Contractors who are knowledgeable of various Federal, State and
local programs and funding sources that may be available;
--Organizers who can help provide hope to the affected families and
communities, and mobilize volunteers in the rebuilding efforts;
and,
--Resource development professional who have a proven track record in
soliciting private-sector contributions in support of
rebuilding efforts.
Affordable Rental Opportunities
The desire to own a home is strong across all socioeconomic groups,
but not everyone is adequately prepared, and the strongest communities
offer multiple housing options. Therefore it remains important to have
viable rental housing--especially units that allow a safe, stable
environment--with rents affordable enough for occupants to accumulate
savings. Tomorrow's first-time buyers are renters today.
A major focus of NeighborWorks Multifamily Initiative, which
provides affordable rental housing, has been on strengthening aging
property portfolios that may be suffering a weakness in cash flow. Our
expert coaches and analysts suggest operational improvements, and
explore creative ways to restructure financing, with an eye to
improving cash flow across the entire portfolio.
NeighborWorks America also promotes more opportunities to increase
the supply of affordable rental homes. In 2004, the Corporation was
able to use the special set-aside of $5 million for multifamily housing
to promote mixed income rental homes that truly serve their communities
by providing more than just sound housing.
NeighborWorks organizations in our Learning Center Consortium
provide after-school care, job training, health care, parenting classes
and much more. NeighborWorks America has commissioned a study to
measure the impact on the difference made on the kids and their
families in the form of dropout rates, GPA, attendance rate, and job
retention.
Build Skills and Performance in the Housing and Community Development
Field
NeighborWorks Center for Home Ownership Education and
Counseling
NeighborWorks is the Nation's largest certifier of high-quality
home ownership educators and counselors, working to empower consumers
to make the biggest investment of their lives a successful one.
Although the value of home ownership education and counseling to
homebuyers is supported by research and is increasingly recognized as a
powerful tool to promote neighborhood revitalization, the quality is
uneven and the coverage insufficient. There are few national
certification standards, limited continuing-education requirements for
trainers and counselors, gaps in coverage across the Nation, and a lack
of quality control for home ownership education and counseling--ranging
from intensive, multi-day curriculum and standards to ``sham''
counseling programs that lure potential buyers into predatory loan
deals. There is also a dearth of well-trained educators and counselors
to meet the growing national need.
To address these concerns, NeighborWorks America, through the
nationally recognized NeighborWorks Training Institute, has launched
the NeighborWorks Center for Home Ownership Education and Counseling
(NCHEC) to create a national force of high-quality home ownership and
financial education counselors. To date these counselors have helped
more than 500,000 Americans gain critical financial literacy skills and
make the most of home ownership.
NCHEC aims to increase the number of home ownership educators and
counselors trained and certified through the NeighborWorks Training
Institute from 700 to more than 2,000 per year--indirectly ensuring the
education and counseling of several million individuals and families by
2007. NCHEC has already provided over 3,800 training certificates a
year in more than 20 courses in home ownership, education, counseling
and lending.
In the fall of 2004, the Department of Housing and Urban
Development awarded NeighborWorks America $7.75 million over 2 years to
train and certify HUD-approved housing counselors around the country
through NCHEC. In addition to expanded home ownership and community-
lending training offered at the NeighborWorks Training Institutes,
NCHEC has partnered with other intermediaries, State-wide counseling
collaboratives, and NeighborWorks organizations to offer trainings in
local settings around the country.
NeighborWorks Training Institutes
For more than 15 years, NeighborWorks America has been providing
outstanding community development training in the country through its
NeighborWorks Training Institutes, which are held four to five times a
year in different cities throughout the United States. In recent years,
NeighborWorks America has begun taking its NeighborWorks Training
Institute courses to local markets in the form of ``place-based
trainings'' conducted in collaboration with local and regional
partners. NeighborWorks America has also offers an Advanced
Practitioner Program (APP) for seasoned community development
practitioners and board members.
CONCLUSION
Let me close by thanking the subcommittee for the opportunity to
brief you on our work, and the results generated by NeighborWorks
America's congressional appropriation. The NeighborWorks System and
NeighborWorks America's congressional appropriation represents a
precious asset for 240 community development organizations and more
than 4,000 communities across America. With our leveraging of dollars,
NeighborWorks has been efficient and effective in ensuring the maximum
impact of our Federal appropriation. Congress has allowed NeighborWorks
America to be flexible and responsive to local needs; as a result,
families and communities are stronger and more self-reliant.
NeighborWorks America is committed to continuing to build healthy,
strong and safe communities all across America. Your continued support
is vital to us in accomplishing this goal.
______
Prepared Statement of the Honorable Steven R. Blust, Chairman, Federal
Maritime Commission
Mr. Chairman and members of the subcommittee, thank you for this
opportunity to present the President's fiscal year 2007 budget for the
Federal Maritime Commission.
The President's budget for the Commission provides for $21,474,000
for fiscal year 2007. This represents an increase of 5.8 percent, or
$1,180,000, over our fiscal year 2006 appropriation. This budget
provides for 132 work-years of employment.
Our fiscal year 2007 budget request contains $15,691,000 for
salaries and benefits to support the Commission's programs. This is an
increase of $1,178,000 over our fiscal year 2006 appropriation. This
includes all salaries, including those for employees hired in fiscal
year 2006, promotions, within-grade increases, and an anticipated cost
of living adjustment. The funding includes annualization of the fiscal
year 2006 cost of living adjustment increase, and an anticipated 2.2
percent fiscal year 2007 cost of living adjustment. Further, it
includes funds to hire two critical staff: a Commissioner's Counsel and
an attorney for our Office of Consumer Affairs and Dispute Resolution
Services.
Official travel has been straight-lined at our fiscal year 2006
level of $237,000. Travel remains an essential aspect of our effort to
provide better service to the ocean transportation industry and to
accomplish our oversight duties more effectively. We are committed to
working within our straight-lined travel funding to ensure that our
expanded outreach and compliance programs are fully supported, in
addition to providing appropriate travel funds to support all other
program efforts.
Administrative expenses have increased $2,000 net over fiscal year
2006, to $5,546,000. The Commission is planning for a small increase in
rent to accommodate rental rate increases in our field offices, as well
as an increase to fund Homeland Security charges. Other administrative
expenses will be incurred in fiscal year 2007 to support increases in
our customary business expenses, such as maintaining government and
commercial contracts, and for items such as telephones, postage, and
supplies. These increases are partially offset by a reduction of
$157,000 for furniture and equipment.
Just as in previous years, the Commission's budget contains
primarily non-discretionary spending. These items represent the basic
expenses any organization faces in order to conduct its day-to-day
operations, and are crucial to allow us to meet the responsibilities
Congress has entrusted to the agency. This budget request therefore
represents a modest increase over the current year appropriation,
primarily to address anticipated cost increases over current year
expenses.
As you know, Mr. Chairman, the Commission is responsible for the
regulation of oceanborne transportation in the foreign commerce of the
United States. Since 1916, the Commission and its predecessor agencies
have effectively administered Congress' directives for the ocean
transportation industry, and its long-standing expertise and experience
have been recognized by Congress, as well as by the industry the
Commission oversees, courts, and other nations. Working with the
industry, we have developed a regulatory system that allows for
necessary oversight with minimal disruption to the efficient flow of
U.S. imports and exports. I would like to highlight for you some of the
significant activities in which the Commission is involved.
Last year, I advised you of the Commission's rulemaking proceeding
to allow non-vessel-operating common carriers (``NVOCCs'') to enter
into confidential service arrangements with their shipper-customers. As
you will recall, NVOCCs otherwise in compliance with the licensing,
financial responsibility, and tariff publication requirements of the
Shipping Act are now permitted to enter into confidential NVOCC Service
Arrangements, or NSAs, with their shipper customers in lieu of
publishing their rates in a publicly-available tariff, provided that
the NSA is filed confidentially with the Commission and the essential
terms are published in the NVOCC's tariff. This new regulation is
consistent with those regulations governing service contracts between
ocean common carriers and their shipper customers, and we anticipate
that it will result in greater competition in the shipping industry.
Originally the exemption rule did not allow NVOCCs or shippers
associations with NVOCC members to participate in NSAs as shippers. We
were concerned about the potential antitrust implications of such
arrangements. Some of those concerns were ameliorated after issuance of
a judicial decision last fall, and the Commission determined that it
could remove these limitations. Two or more NVOCCs are still prohibited
from jointly offering a single NSA, as we believe this might run
counter to recent judicial interpretations which construe the antitrust
provisions of the Shipping Act in a manner we believe to be much
broader than what was envisioned by Congress, this Commission, and
indeed even the industry. I indicated last year that we would continue
to work with the industry to address this issue. In fulfillment of this
obligation, the Commission requested the comments of industry
participants on potential ways to authorize joint NSAs by multiple
NVOCCs. The Commission received numerous comments in late 2005, and is
presently evaluating them.
As of mid-April 2006, 300 original NSAs had been filed--by 57 NVOCC
filers--out of 355 NVOCCs who are registered to be able to offer NSAs.
That means that only slightly more than 10 percent of all NVOCCs have
registered to offer NSAs, and fewer than 2 percent have taken advantage
of the new contracting option. It will take some time for new business
processes, skills and recognition of benefit to converge into a new
market; however, I forecast a substantial growth in the use of NSAs in
the future as the industry becomes more familiar with these agreements.
As part of the Commission's enforcement and ocean transportation
intermediary oversight functions, as well as the ombudsman services
provided by the Office of Consumer Affairs and Dispute Resolution
Services, the Commission recently commenced a formal investigation
against nine household goods moving companies operating in violation of
the Shipping Act. The Commission's preliminary investigation indicated
that these companies were unlawfully doing business as unlicensed
NVOCCs without proof of financial responsibility or published tariffs,
and were engaging in conduct that created risks of significant
financial harm to the public. On January 17, 2006, the U.S. District
Court for the Southern District of Florida granted the Commission's
motion for a preliminary injunction against four of the companies and
three of the individuals named as respondents in the proceeding. The
injunction, which prohibits these respondents from operating in
violation of the Shipping Act, will remain in effect pending the
completion of the Commission's investigation.
The Court injunction and the Commission's formal investigation are
based on more than 250 consumer complaints. Some examples of those
complaints include failure to deliver cargo and refusal to return the
pre-paid ocean freight; loss of the shipper's cargo; charging the
shipper for marine insurance never obtained; withholding cargo until
the shipper pays a higher rate than the one originally quoted;
misleading the shipper as to the cargo's whereabouts; and finally,
making the release of cargo dependent upon the shipper paying a second
carrier or warehouse for transportation and warehousing already pre-
paid to respondents. As most of the injuries of which we are aware
involve shippers' personal household possessions, the Commission
considers it especially important that every effort be made to prevent
the respondents from injuring anyone else. At the moment, the
proceeding is before the Commission's administrative law judge and we
will seek additional injunctions as warranted.
Last year, I advised you about the agency's public outreach
initiative involving a series of informational seminars hosted by the
Commission's Area Representatives and other Commission personnel at
various locations around the country. These seminars continue to be
successful in creating a forum for enhanced dialogue between the
industry and the Commission. As you may recall, we also started a
program where we have invited representatives from various segments of
the industry to brief our staff on current issues and concerns
affecting the ocean transportation industry. Thus far, we have met with
representatives from the ocean transportation intermediary, passenger
vessel and vessel operator communities, as well as shippers, marine
terminal operators, and port authorities. We are in the process of
planning more informational briefings for 2007 with other segments of
the maritime industry, including Federal agencies. One Federal agency,
the Maritime Administration, briefed Commission staff last March, and
the U.S. Customs and Border Protection is scheduled to brief our agency
in June about the Automated Commercial Environment trade processing
system. I am confident that these briefings will provide the Commission
and its staff with a greater awareness and understanding of the most
current issues facing the maritime community.
The Commission continues to address restrictive or unfair foreign
shipping practices under section 19 of the Merchant Marine Act, 1920
(``Section 19''); the Foreign Shipping Practices Act of 1988
(``FSPA''); and the Controlled Carrier Act of 1978. Section 19 empowers
the Commission to make rules and regulations to address conditions
unfavorable to shipping in our foreign trades; FSPA allows the
Commission to address adverse conditions affecting U.S. carriers in our
foreign trades that do not exist for foreign carriers in the United
States. Under the Controlled Carrier Act, the Commission can review the
rates of government-controlled carriers to ensure that they are not
below a level that is just and reasonable.
In my statement last year, I advised you of several pending
proceedings related to shipping conditions in China. In particular, the
Commission was investigating whether Chinese laws and regulations might
discriminate against and disadvantage U.S. vessel operators and NVOCCs
with regard to a variety of maritime-related services. As you know, in
December of 2003, the United States, through the Secretary of
Transportation, and his Chinese counterpart, the Minister of
Communications, signed a bilateral maritime agreement which appeared to
address many of the concerns raised by the Commission, including issues
affecting vessel operators, NVOCCs, and other industry interests. That
agreement became effective with the exchange of diplomatic notes in
April of 2004.
Subsequently, the Commission requested comment from the industry on
whether the commitments made in the bilateral agreement, which would
have relieved the impediments to U.S. companies identified by the FMC,
were being honored.
The issues we raised were adequately addressed, and the Commission
terminated the formal proceeding investigating these Chinese practices
on April 21, 2005. Informally, we continue to receive positive feedback
from the U.S. industry in this regard. Another U.S.-flag carrier has
entered the U.S.-China trade and has opened offices in two cities in
China. Matson Navigation's first vessel in the Ningbo-Shanghai-Long
Beach express service called in Ningbo on February 21, 2006. As always,
we will continue to monitor practices around the world to determine
whether formal action is warranted.
Lastly, the Commission recognizes that its oversight of ocean
common carriers, ocean transportation intermediaries, including ocean
freight forwarders and NVOCCs, and marine terminal operators, is an
important element in the effort to protect our Nation's seaports. We
are continuing our efforts to combat unlawful participation in the U.S.
ocean transportation system by ensuring that all entities engaged in
the U.S. foreign commerce are in compliance with the requirements of
the statutes we administer. The Commission has met with the Office of
Naval Intelligence, the Department of Homeland Security and the
Department of Transportation to discuss information sharing and other
possible FMC contributions to maintaining a safe and efficient maritime
transportation system. The Commission's regulation of operators of U.S.
marine terminals ensures that they follow just and reasonable
practices, and that they do not unreasonably prefer or prejudice any
person or unreasonably discriminate against carriers using their
facilities. While our oversight is limited to the regulation of such
commercial practices, we make every effort to work closely with other
agencies to share information in this area. Moreover, the Commission is
a member of the Committee on the Marine Transportation System, the
inter-agency group created by this administration to carry out a joint
strategic plan that ensures that the U.S. marine transportation system
achieves the expansion goals necessary to support the level of traffic
anticipated in the 21st Century in a secure, environmentally sound and
coordinated manner for all stakeholders. We also continue to exchange
information with the U.S. Customs Service through a Memorandum of
Understanding. As the Commission continues to refine its role in the
safeguarding of our national security, we stand ready to provide our
technical expertise and assistance to all groups that are on the front
lines of securing our ports and vessels.
Mr. Chairman, I hope that my comments have served to give you a
clear indication of the important work to be accomplished by the
Federal Maritime Commission. I respectfully request favorable
consideration of the President's budget for the Commission so that we
may continue to perform our vital statutory functions in fiscal year
2007.
______
Prepared Statement of Mark V. Rosenker, Acting Chairman, National
Transportation Safety Board
Chairman Bond, Ranking Member Murray, and members of the
Subcommittee on Transportation, Treasury, the Judiciary, Housing and
Urban Development, and Related Agencies, the National Transportation
Safety Board appreciates the opportunity to present testimony on its
appropriations request for fiscal year 2007.
The National Transportation Safety Board is an agency with the
critical mission of ensuring the safety of the traveling public through
transportation accident investigation and special study of
transportation safety concerns. The Safety Board investigates aviation,
pipeline, rail, hazardous material, marine, and highway accidents. The
Board also conducts highly technical laboratory examinations and
analyses of voice and data recorders and physical evidence recovered in
accident investigations. The Board determines the probable cause of the
transportation accidents and makes safety recommendations to prevent
similar accidents from happening again. We address these
recommendations to the agencies, organizations, and companies that are
best able to make improvements. The Board's investigators serve as U.S.
accredited representatives as specified in international treaties for
aviation accidents outside U.S. borders involving U.S.-registered
aircraft or involving aircraft or major components of U.S. manufacture.
Beyond our national and international accident investigation work, the
Board works closely with State governments to transform our safety
recommendations into laws that save lives.
I assure you that we work hard to manage well the people and
resources of the Safety Board to perform our critical mission. During
last year's appropriations cycle, the committee expressed concerns
about the distribution and management of agency resources. Over the
last year we have made considerable progress to improve the mission
focus of the Safety Board.
Recent leadership changes at the Safety Board have been
significant. In March 2005, Joe Osterman began serving as the Board's
Managing Director, its highest-ranking career leader. Mr. Osterman is
effectively leading a highly talented management team. Over the past
year, the Board has changed personnel in 14 of the top 24 leadership
positions. Highly qualified and experienced professionals, from both
inside and outside the Board, fill these important positions. Some
noteworthy new members of the team are Dr. Jack Spencer, the Director
of our Office of Marine Safety, and Colonel Gary Halbert, our General
Counsel. Dr. Spencer, an MIT-educated naval architect, comes to us from
the private sector, and Mr. Halbert--an accomplished attorney and
aviator--recently retired from the U.S. Air Force. Both have hit the
ground running and are making important contributions to the Board.
Also, we are currently recruiting for a Chief Information Officer who
will join the agency's management team with the responsibility of
managing the agency's information infrastructure. We are improving our
performance management system throughout the agency; and, most
importantly, we are refocusing our efforts on leadership, internal
communication among staff and the Board members, external
communications with our committees and the public, and dedication to
the Board's mission.
The Safety Board has reinvigorated its focus on the timely
completion of investigations and the production of accident reports. We
have increased production of reports, with safety recommendations by 50
percent, without compromising the quality that is the hallmark of
Safety Board investigations and reports. Since this time last year, the
Board has considered and adopted 21 investigation or safety reports in
public meetings and conducted two public hearings. Moreover, our
leadership team is on track to improve this record even further. A
dozen of next year's Board products have been scheduled, and three
public hearings and one safety forum have been proposed for the Board's
consideration. We are focused on the mission. Furthermore, our
leadership team is improving the management of the agency. In each of
the last 3 fiscal years, timely and accurate NTSB financial statements
have received clean audit opinions from the Department of
Transportation Inspector General. The Board now has a strategic plan,
and we are working closely with the Government Accountability Office to
examine our management practices to determine where we can make
additional improvements.
The Safety Board also has heard clearly the concerns regarding the
NTSB Academy. The building is the site of our training center, but it
also houses the Board's Mid-Atlantic Aviation Safety Regional Office,
the reconstruction of the TWA flight 800 wreckage (an important
training tool) and a laboratory. Finally, it serves as the continuity-
of-operations site for the Board as well as for other government
agencies. In the fiscal year 2006 appropriations for the Board, this
committee acknowledged the Academy's benefit in sharing accident
investigation best practices with the broader transportation community;
however, the committee also believed that the functions of the Academy
should be secondary to the Board's core mission of accident
investigation. The committee directed the Board to reduce the
investigator workforce hours at the Academy so that critical
investigative responsibilities would not suffer because accident
investigators were diverted to Academy teaching assignments. The
committee encouraged the Board to more boldly and directly cover the
cost of the Academy using authority to impose and collect fees for the
Academy's services. (Consistent with the committee's direction, we have
redirected our approach.) The Board now looks at the Academy as an
integral adjunct to the core investigative mission, concentrating on
the Academy's unique ability to develop and sustain innovative and
state-of-the-art training courses that support, not supplant, accident
investigation and safety activities.
I would like to provide a brief overview of some of the major
accidents, reports, and activities of the Safety Board in each mode of
transportation, and also touch on the important work of other major
offices during this past year.
Marine Safety.--The Safety Board initiated five marine accident
investigations in fiscal year 2005 including the sinking of the
uninspected passenger vessel Sydney Mae II in Oregon in September 2005.
Board investigators led the investigation of a fire on board the
passenger vessel Lady Baltimore in Baltimore, Maryland, and also a fire
on the small passenger vessel Express Shuttle II in Port Richy,
Florida, in October 2004. The Board also investigated accidents
involving two foreign ships: the Norwegian Dawn, a Bahamian flag
passenger vessel en route to New York that suffered heavy weather
damage, and the Malaysian flag bulk carrier Selendang Ayu that went
aground in the Aleutians.
The Board completed four marine investigations in fiscal year 2005.
These included the collision of the U.S. Navy submarine USS Greenville
and the Japanese vessel Ehime Maru off the coast of Hawaii, the
passenger vessel Taki Tooo, the Staten Island Ferry Andrew J. Barberi,
and the Alaskan Marine Highway System ferry Leconte.
Aviation Safety.--The Safety Board initiated five major domestic
aviation accident investigations in fiscal year 2005, including the
crash of a Northwest Airlink regional jet that killed both crewmembers
during a repositioning flight in Jefferson City, Missouri. Just 5 days
later, the Board launched a second go-team to Missouri to investigate
an accident involving an American Connection commuter flight that
crashed on approach to Kirksville causing 13 fatalities. A go-team also
was launched to Houston, Texas, in November to investigate an accident
involving a Gulfstream jet that was en route to pick up former
President Bush for a foreign speaking engagement. Two other accidents
involving corporate jets occurred in February: one was taking off from
Teterboro, New Jersey; the other was carrying Circuit City executives
to Pueblo, Colorado.
The Board launched investigators to assist on 17 foreign accidents
in fiscal year 2005, including the crash of a military Boeing 737
charter in Kabul, Afghanistan. August was an extremely busy month for
foreign investigations--the Board launched investigators to a Sikorsky
S-76 helicopter accident in Tallin, Estonia, and launched investigators
to assist in airline accident investigations in Canada, Greece,
Venezuela, and Peru.
The Board completed four major investigations in fiscal year 2005:
American Airlines flight 587 in-flight separation of the vertical
stabilizer in Belle Harbor, New York; Air Sunshine in-flight engine
failure near Treasure Cay, Bahamas; Federal Express hard landing and
gear collapse in Memphis, Tennessee; and Executive Airlines crash
during landing near San Juan, Puerto Rico. During this time, the Board
also issued two important aviation safety studies: ``General Aviation
Activity Reporting Requirements'' and ``General Aviation Weather
Accidents''.
Regional investigators initiated 1,862 general aviation accident
investigations in fiscal year 2005, and initiated 132 investigations
involving commercial (not GA accidents) operations. Regional
investigators completed 2,132 investigations during this period. The
Board also published annual reviews of aircraft accident data for air
carrier and general aviation operations.
Railroad, Pipeline, and Hazardous Materials.--In fiscal year 2005,
the Safety Board launched teams to investigate 13 railroad accidents
and 2 pipeline and hazardous material accidents. These included a
launch to Graniteville, South Carolina, in which a freight train
diverted at full speed onto an industrial siding where it subsequently
crashed into a standing train, releasing chlorine gas that killed nine
people and resulted in the evacuation of more than 5,400 people. The
Board completed eight railroad and three pipeline and hazardous
materials accident investigation reports and one pipeline safety study
in fiscal year 2005. The accidents included a tank car explosion in
Freeport, Texas, that occurred during chemical off-loading operations
and the derailment of an Amtrak train in Flora, Mississippi.
Highway Safety.--The Safety Board launched investigators on 6 major
highway investigations and 31 other investigations during fiscal year
2005. Those included a 14-fatality motorcoach rollover accident in
Turrell, Arkansas; a motorcoach that struck an overpass in Alexandria,
Virginia, while the driver was talking on a cell phone; two accidents
causing 5 fatalities in which gasoline tankers overturned (one near the
Pentagon in Arlington, Virginia, and the other in Davie, Florida); a
school bus collision with a trash truck in Arlington, Virginia, in
which 2 children were killed; and the tragic motorcoach fire in Wilmer,
Texas, that killed 23 elderly passengers during the Hurricane Rita
evacuation.
Five major reports were completed in fiscal year 2005, including
reports on two accidents 7 months apart at a Border Patrol security
checkpoint in North Hudson, New York, killing 4 and injuring 54; an
accident involving a motorcoach that struck the rear of a parked
tractor-trailer near Tallulah, Louisiana, killing 8; and another
accident in which a motorcoach crossed a highway median in a rainstorm
striking an SUV and killing 7 in Hewitt, Texas. In addition, the office
of Highway Safety also completed a special investigation report for the
Board on ``Medical Oversight of Non-Commercial Drivers'' that
highlighted the dangers of seizures and other medical issues uncovered
during the investigations of four accidents that resulted in 8
fatalities and 27 injuries. The Board also completed a report on the
effectiveness of driver's education programs that involved a public
hearing on an accident in Belgrade, Montana, that killed a driver's
education instructor and three students.
Safety Recommendations.--The most important result of an accident
investigation are the safety recommendations that help prevent future
accidents. Our recommendation acceptance rate was over 82 percent in
2005. We currently have 850 open safety recommendations of which 62
percent are to operating administrations of the Department of
Transportation and the U.S. Coast Guard in the Department of Homeland
Security.
In fiscal year 2005, the Safety Board issued 84 safety
recommendations and closed 142, 111 of which were closed with an
acceptable response. In aviation, 29 were successfully closed, as were
37 in highway, 8 in pipeline and hazardous materials, 10 in marine, and
27 in rail. The Board also updated its Most Wanted List of critical
safety recommendations targeted to Federal regulators and States that,
if implemented, will make the most dramatic impact on safety. The Most
Wanted List contains 56 recommendations directed to Federal recipients,
and 9 directed to the States. Additionally, the Safety Board conducted
more than 20 meetings and legislative briefings in 10 States to promote
Safety Board recommendations.
Some examples of successfully implemented recommendations include
tougher surveillance of rapidly growing air carriers, revised
lubrication intervals and pilot checklist procedures for horizontal
stabilizer trim systems on DC-9 and MD-80/90 and B-717 aircraft, new
regulations upgrading safety requirements for 9- to 15-passenger vans,
a requirement that steel pipe used in construction pipelines must have
adequate toughness to prevent brittle fracture, and improved crew
resource management training for railroad employees.
NTSB Academy (Training Center).--Fiscal year 2005 marked the first
full year of operational experience on site for the Academy. During the
year, the Academy expanded course offerings and received accreditation
from the International Association for Continuing Education Training,
allowing continuing education credits to be given to students who meet
the required criteria. Also, as a result of the direction provided in
the Board's appropriations, the philosophical approach for the Academy
has changed significantly and investigative resources are used for
Academy programs have been sharply curtailed. The focus of the NTSB
Academy is to support the accident investigation mission of the Safety
Board and promote transportation safety in the following ways:
--Improving the quality of NTSB accident investigations through
technical training and instruction;
--Improving the effectiveness of NTSB staff through skill development
instruction;
--Improving the efficiency and effectiveness of NTSB accident
investigations by communicating lessons learned, sharing
accident investigation techniques, and fostering the exchange
of new ideas and experience among organizations that
participate in NTSB investigations as parties and the broader
transportation safety community;
--Providing a forum for instruction, outreach, and advocacy on issues
relevant to the transportation safety community;
--Providing a facility for advanced laboratory and research activity;
and
--Utilizing its high-quality training resources to facilitate
transportation disaster response programs, collaborative
instruction with partner agencies, and other compatible
activities.
Summary.--Included in the President's fiscal year 2007 budget for
the National Transportation Safety Board is a provision that would
rescind the $1.998 million balance in the Board's no-year emergency
fund and make that sum available in the Board's fiscal year 2007 1-year
appropriation account. In addition, the President's budget proposal
would make up to $5 million of the 1-year appropriation available until
expended, thus allowing the Board to set aside up to $5 million of the
appropriation for extraordinary expenses, such as those that normally
would be covered by the emergency fund.
Should the Congress approve this provision, the Safety Board would
anticipate initially reserving some portion of its appropriations to
ensure that a minimum amount would be available for carry over for
emergency expenses. Any additional amounts that are available at year-
end would also be carried over for this purpose. Because establishing
an adequate pool of money for emergency expenses would likely take
several years to accomplish, this provision would necessarily need to
be included in the Board's appropriation language for subsequent fiscal
years as well.
As the Acting Chairman of the National Transportation Safety Board,
I am very proud of the men and women with whom I work. Other countries
have adopted our model, and many countries ask for the Safety Board's
assistance. The employees at the Board are considered to be the best in
the business, and prove it every day. What surprises many people is the
size of the agency. Currently the Board has only 399 employees. Of this
number, 283 employees are investigators or are mission-critical to an
accident investigation. Seventy percent of our budget is used for
employee compensation and benefits, 15 percent for fixed expenses (such
as office space, telephones, etc.) and 15 percent for everything else
including travel to accident sites, accident investigation services,
and lab equipment replacement and upgrades. I appreciate very much that
the Appropriations Committee has had to make difficult choices in the
last several years. This year's appropriation, which was held to last
year's funding level, was further reduced by a 1 percent across-the-
board rescission. In addition, the cost of the annual pay increase had
to be absorbed in the reduced appropriation. As a result, we reduced
our FTE level by 15 and have not been able to replace some key staff.
The Safety Board faces significant challenges. Although the Board
has executed a human capital forecast this year to realign our existing
resources to continue to meet critical mission needs, the Board will
find increasing challenges in some critical areas. Advances in
transportation technologies, increases in our necessary involvement in
foreign aviation accident investigations, and the sheer complexity of
many recent accident investigations will stretch thin our employee
resources. The Board has been very careful with its appropriated funds,
but we will have difficulty sustaining the high standards we demand of
ourselves without sufficient funding. In fiscal year 2005, we have made
demonstrable improvements in the management, financial fitness, and
mission focus of the NTSB. I would like to request that the
subcommittee consider the Board's critical mission and our future needs
for additional professionals to continue the fine work of the Safety
Board. In 2004, there were more than 44,000 fatalities in
transportation accidents, and we know that Congress shares our belief
that more can be done to prevent these fatalities. I would like to
thank the subcommittee for your continued support of the Safety Board.
______
Prepared Statement of Honorable Patrick E. McFarland, Inspector
General, the Office of Personnel Management
Mr. Chairman and members of the subcommittee, thank you for
providing me with this opportunity to discuss the President's fiscal
year 2007 request for appropriations for the Office of the Inspector
General. The total request for the Office of the Inspector General is
$17,764,000 which is $452,000 below the amount enacted in fiscal year
2006. Of this amount, $1,598,000 is from the salaries and expenses/
general fund and $16,166,000 is from the trust funds. These resources
are requested to perform our core functions which include:
--Conduct audits of agency programs and operations, primarily
carriers participating in the Federal Employees Health Benefits
Program (FEHBP), associated information systems, and internal
agency operations and financial systems;
--Provide investigative oversight of the OPM-administered employee
benefit programs; and
--Issue administrative sanctions, including debarments, suspensions,
and civil monetary penalties, to health care providers who pose
a financial risk to the FEHBP itself or a health care risk to
persons who receive health insurance coverage through the
FEHBP.
The Office of the Inspector General recognizes that oversight of
the retirement and health and life insurance trust funds administered
by OPM is, and will remain, its most significant challenge. These trust
funds are among the largest held by the United States Government. Their
assets totaled $715.8 billion in fiscal year 2005, their receipts were
$85.1 billion, and their annual outlays were $94.4 billion. The amounts
of their balances are material to the integrity of the government's
financial position. I continue to allocate the vast majority of the
Office of the Inspector General's efforts and resources to trust fund
oversight, and we remain fully committed to trust fund activities.
OPM makes outlays from the retirement trust funds in the form of
payments to millions of annuity recipients. The health insurance trust
fund provides payments to approximately 270 health insurance plans
nationwide. In turn, the health insurance carriers pay millions of
claims for services filed by their enrollees and health care providers.
We have shown through our investigations and audits that such health
insurance payments may be at risk through improper, inaccurate or
fraudulent claims.
We are obligated to Federal employees and annuitants to protect the
integrity of their earned benefits. Our audit and criminal
investigative work reduces losses due to fraud and improper payments
and recovers misspent funds whenever possible. We have a special
obligation to the Federal agencies and the American taxpayers who
provide the majority of the funding.
The Office of the Inspector General has achieved an impressive
record of cost effectiveness. Audits and criminal investigations of the
OPM administered trust fund programs have resulted in significant
financial recoveries to the trust fund and commitments by program
management to recover additional amounts. Since fiscal year 1992, these
recoveries and commitments total approximately $1.2 billion which is
approximately $10 of positive financial impact for each direct program
dollar spent. During fiscal year 2005, the positive financial impact
exceeded $121.7 million, and current estimates for fiscal year 2006 and
fiscal year 2007 are $130 million and $115 million respectively. In
addition, we believe that audits and criminal investigations provide a
significant deterrent against future instances of fraud, waste, and
abuse.
With the additional resources received over the past few years, the
Office of the Inspector General has established 21 investigative field
offices. We have determined that the most effective deployment of
investigative staff is to locate them in areas of the country where
FEHBP and retirement benefits are more concentrated. Experience has
shown that criminal investigators located in these areas often work in
cooperation with other law enforcement entities similarly located
resulting in additional criminal leads and better protection of OPM
programs. In many instances, criminal investigators located outside of
Washington, DC work exclusively on cases referred to them by local
authorities. During fiscal year 2005, investigative work resulted in 38
arrests, 43 indictments, and 20 convictions and we are projecting
similar outcomes in fiscal years 2006 and 2007.
During fiscal year 2007, we will continue to conduct audits of
pharmacy benefit managers (PBMs). The premiums paid for prescription
drug coverage have risen exponentially over the last 10 years and
allegations against PBMs have also increased. It is estimated that
approximately $6 billion was paid during 2004 in prescription drug
premiums to experience-rated carriers by the Office of Personnel
Management and Federal employees. This represents approximately 26
percent of experience-rated carrier premiums paid for health benefits
coverage for Federal employees and annuitants.
Also during fiscal year 2007, we will further our development of a
data warehouse of health benefits claims. A data warehouse offers the
best opportunity for detecting erroneous health benefit payment
transactions by medical providers, insurance carriers and subscribers
by accumulating all benefit claims for all fee-for-service insurance
carriers in a single data repository. This effort will enhance our
current claims reviews by enabling the auditors to target certain types
of potential claim payment errors on a program-wide rather than on a
plan-by-plan basis. This will provide a significant improvement in our
audit efficiency and effectiveness by offering us the opportunity to
address significant issues one time only, instead of multiple times per
year and to recover overcharges to the program when appropriate.
The data warehouse also provides information enabling our criminal
investigative staff to react quickly to criminal investigative leads.
For example, the OIG investigators are able to determine the potential
program risks associated with an identified provider or subscriber
fraud allegation, and take appropriate action in a matter of hours
instead of the days or weeks currently required.
Our administrative sanctions program has continued to improve its
effectiveness in protecting FEHBP and its enrollees against
untrustworthy health care providers. This program enforces the FEHBP
sanctions statute, which authorizes suspension or debarment of
providers on the basis of 18 different categories of violations. The
most frequently-encountered violations represent criminal convictions
or loss of professional licensure. The highest priority sanctions cases
involve providers who are the subject of investigation by our Office of
Investigations. We have also developed a state-of-the-art capability to
obtain sanctions-related information online and integrate it into our
decision-making processes. With the nature and extent of electronically
accessible information constantly growing, we are now able to identify
violations involving providers nationwide who are directly associated
with FEHBP as members of preferred provider organization networks and
or who have actually submitted claims to FEHBP carriers. We select
cases for action on the basis of the seriousness of the provider's
violations and the risks that the provider poses to the FEHBP and its
subscribers. We currently have over 29,350 active debarments and
suspensions in effect.
Thank you for this opportunity to present my resource request for
fiscal year 2007.
______
Prepared Statement of the Honorable Linda M. Springer, Director, Office
of Personnel Management
Mr. Chairman and members of the subcommittee, I appreciate the
opportunity to submit for the record a statement addressing the
appropriations request for the Office of Personnel Management (OPM) for
fiscal year 2007.
As you know, OPM provides a variety of products and services to the
nearly 1.8 million employees in the Federal Government. Some of our
products and services include managing health insurance for
approximately 8 million current and former Federal employees and their
families, administering retirement services for over 2 million retirees
from all branches of government, completing 90 percent of background
investigations, and administering career development programs. As the
OPM Director, I am committed to successfully delivering on our
responsibilities on a timely basis. In short, I believe the American
citizens and the Federal civilian workforce expect us to get things
done, and our fiscal year 2007 budget request will allow us to do just
that.
OPM'S NEW STRATEGIC AND OPERATIONAL PLAN
Mr. Chairman, operational planning and budgeting go hand in hand,
and the OPM process is no exception. For an organization to fulfill its
mission, it is first necessary to have a clear understanding of that
mission, with supporting strategic objectives and operational goals.
These goals must be accompanied by strong oversight and accountability
in order to reach optimal performance.
With these principles in mind, we recently reassessed the agency's
goals and priorities, with an eye toward creating a more transparent
and accountable OPM. This planning process was guided by an advisory
group consisting of executives and senior General Schedule employees
with OPM knowledge and expertise. During these meetings, the advisory
group reviewed draft strategic objectives and goals, identified
important program needs and milestones, and played a critical role in
the development of the resultant plan.
During the planning process, I also reached out to other resources
for input, including members of Congress, the Chief Human Capital
Officers Council Executive Committee, union leadership, and the Office
of Management and Budget.
The result is OPM's new Strategic and Operational Plan, which
begins with a concise mission statement--to ensure the Federal
Government has an effective civilian workforce. While this plan
complies with the Government Performance and Results Act of 1993, it
differs markedly from previous OPM plans and other Federal agency plans
as well. This is intentional. Its goals are straightforward and readily
identifiable, with each being action-oriented and beginning with a
verb. Each goal also has a date by which it will be accomplished. The
plan's 170 goals are included in the OPM Senior Executives' performance
agreements. This means that, under the new SES performance-based pay
system, executive compensation is directly linked to successful
execution of the plan's goals. The bottom line is this--program
performance will remain subject to high level management attention to
ensure achievement.
The new plan was developed concurrently with our 2007 budget
request. The budget priorities you have seen in the Congressional
Budget Justification can be traced back to program priorities in our
new plan. This means that accomplishing the goals of the plan is
realistic as long as the funding request is sustained.
We are requesting $36.6 billion to carry out our mission in fiscal
year 2007. Of this total, $36.4 billion is requested for mandatory
programs and $255.7 million for discretionary activities. The
discretionary request reflects $238 million for Salaries and Expenses--
including transfers from the Trust Fund Accounts of $126.9 million--and
$17.7 million for the Office of the Inspector General. The total
discretionary request reflects a net increase of $17.2 million compared
to the fiscal year 2006 enacted level.
Highlights of the request are discussed below.
RETIREMENT CLAIMS PROCESSING AND BENEFITS PROGRAMS
OPM's request includes funding to improve the services it delivers
to Federal employees, annuitants, and their families through the
retirement and insurance programs. Most notably, we will reduce the
time needed to process claims for benefits submitted by retiring
Federal employees to an average of 30 days. This represents a
significant improvement over the timeliness reported for fiscal year
2005--80 days for employees retiring under the Civil Service Retirement
System (CSRS), and 93 days for those under the Federal Employees'
Retirement System (FERS).
The budget requests an additional $26.7 million in No-Year Trust
funds for the Retirement Systems Modernization (RSM) Project. These
funds will allow OPM to continue the conversion of millions of paper
retirement records to electronic data and contract for the information
technology needed for the system. RSM is the core strategy to meet
OPM's long-term customer service, business, and financial management
goals for the retirement program. As RSM is implemented, OPM will
authorize new retirement benefits within 5 or fewer days (for 17
percent of all claims in fiscal year 2008 and 49 percent in fiscal year
2009). RSM will also improve the accuracy of retirement claims from 90
percent (CSRS) and 93 percent (FERS) to between 95 percent and 97
percent, respectively.
RSM implementation is scheduled for 18 to 36 months from contract
award. During this period, OPM will need experienced Legal
Administrative Specialists (claims processors) to provide subject
matter expertise and advice as the effort progresses. The fiscal year
2007 budget provides the flexibility to support RSM implementation
while maintaining timeliness and accuracy in processing retirement
claims.
For the Federal Employees Health Benefits Program (FEHBP), OPM will
continue to negotiate and contract with private insurance companies
that offer a broad range of health insurance benefits, including high-
deductible health plans with Health Savings Accounts and consumer-
driven health plan options. Customers can make informed health
insurance decisions by several means: OPM-sponsored health plan
brochures and Web site postings, health plan customer satisfaction
survey results, Web-based comparison/decision tools, and the Health
Plan Employer and Data Information Set. OPM will continue to carry out
tough negotiations with health carriers to contain premium hikes and
maintain benefit levels, and continue to provide, improve, and expand
tools so customers can make informed health insurance decisions. In
addition, OPM will continue to maintain the competitiveness of the
insurance programs by implementing the new dental/vision benefits
required by Public Law 108-496.
HUMAN RESOURCES MANAGEMENT (HRM) REFORM
In fiscal year 2007, OPM will pursue policy initiatives that
continue to reform human resources management in Federal agencies. We
will work with the Departments of Homeland Security (DHS) and Defense
(DOD) to ensure the reforms underway link pay to performance. At the
same time, OPM will work with other agencies engaged in Alternative
Personnel Systems to assess the lessons learned from various
modernization efforts. OPM is uniquely positioned to apply lessons
learned from modernization efforts undertaken at DHS and DOD to the
rest of the Federal workforce.
Mr. Chairman, in the last half-century, the Federal workforce has
changed significantly, and the old personnel system has not kept pace.
According to the 2004 Federal Human Capital Survey (FHCS), for example,
only 27 percent of Federal employees believe steps are being taken to
deal with poor performers, and only 29 percent believe differences in
performance are recognized in a meaningful way. Little of an employee's
current compensation is based on performance or mission accomplishment.
The fiscal year 2007 request will allow OPM to deliver this needed
human resources modernization.
The fiscal year 2007 budget will also allow OPM to maintain the
competitiveness of Federal employee benefits by promoting affordable
options within the Federal Employees Health Benefits Program, such as
health savings plans, explore ways to refine market adjustments to
Federal pay, and provide Federal employees with opportunities,
benefits, and service delivery that compare favorably with other
employers. For instance, OPM will continue to develop new workforce
recruitment strategies and tools, and further improve the hiring
process.
OPM will assess the results of its strategic human resources policy
activities by analyzing data collected from the FHCS and Federal
Benefits Survey to be issued in 2006 and by continuing to track and
report the extent to which agencies use innovations such as hiring
flexibilities, teleworking, and student loan repayments. The results of
these surveys will provide broad Government-wide indicators on the
status of Federal human capital, which will benefit lawmakers,
managers, and employees--and enable OPM to assess its performance in
terms of delivering new human resources policies and issuing ongoing
policy guidance as needed.
IMPLEMENTING HUMAN CAPITAL STANDARDS FOR SUCCESS
OPM will use requested funds to engage Federal agencies in
implementing Human Capital Standards for Success, and other best
practices in human capital management, in keeping with the Merit System
Principles, veterans' preference, and other standards. OPM's success
will be measured by the number of agencies that meet the Human Capital
Standards for Success. At the beginning of fiscal year 2006, 11 of the
26 agencies reporting under the President's Management Agenda Scorecard
met these standards, up from 8 in 2005, and zero in 2003. An additional
14 agencies have made significant progress toward achieving these
standards. As a result, more than 99 percent of the Federal civilian
workforce is employed by agencies that have made significant progress
toward meeting these standards.
OPM expects continued improvement in 2006 and 2007 as it
strengthens these standards and engages more agencies to fully adopt
them. Also, OPM expects Federal agencies to make hiring decisions more
quickly and implement improved and documented succession plans. In
addition, OPM anticipates Federal employees to be better trained for
their jobs and to be held accountable for their performance as agencies
implement improved performance management systems.
Through the Compliance Program, OPM will continue audit, review,
and oversight activities to ensure agencies comply with Merit System
Principles and veterans' preference, and to ensure whistleblower
protection and other rights and privileges are honored and protected.
OPM will strengthen this program by implementing a human capital
accountability system that holds agencies accountable for adhering to
these principles, laws, and rules, as well as the human capital best
practices referenced above.
HUMAN RESOURCES LINE OF BUSINESS
In 2007, OPM will continue to be a leader in the President's
Management Initiative for Expanding Electronic Government and has
included $8,349,000 in its request for this purpose. The requested
resources will support the Human Resources Line of Business (HR LOB)
and Enterprise Human Resources Integration (EHRI). HR LOB will continue
to identify and document common functional, technical, and data
requirements consistent with Federal human resources policies. It will
work toward the establishment of Federal and private sector Shared
Service Centers to meet these requirements. During 2007, the EHRI
project will continue to modernize how the Federal Government
maintains, stores, protects, and transmits human resources transactions
and resulting information.
SECURITY-RELATED ACTIVITIES
The fiscal year 2007 request includes funding for a number of
important security-related activities. OPM will implement Homeland
Security Presidential Directive 12 (HSPD-12), Policy for a Common
Identification Standard for Federal Employees and Contractors, which
was signed by the President on August 27, 2004. This mandates the
circulation of a Federal standard for a secure and reliable form of
identification for Federal employees and contractors. HSPD-12
requirements will enhance OPM's strategic goal of improving security
and emergency actions throughout the agency. Our request also contains
funds for security upgrades at OPM field offices across the country.
These funds will be used to address critical vulnerabilities and
correct the most serious problems identified during field evaluations.
Failure to correct these deficiencies compromises the security of our
employees.
OFFICE OF THE INSPECTOR GENERAL
OPM's discretionary request includes a total of $17.8 million for
the Office of the Inspector General (OIG) to carry out its audit,
investigative, and oversight responsibilities. This amount reflects a
net decrease of $452,000 (2.2 percent) in general funds from the 2006
appropriated resources. The trust funds annual level is unchanged from
2006 and will enable the OIG to continue its investigative oversight of
the Federal Employees Health Benefits Program and the Civil Service
Retirement System/Federal Employees' Retirement System programs, to
audit FEHBP plans and carrier information systems, and to continue its
prescription drug audit plan, established in 2005.
REVOLVING FUND
OPM also provides a variety of ongoing services that are financed
by other agencies through our revolving fund. These services include
providing one-stop access to high-quality e-Training products and
services; offering professional development and continuous learning for
Federal managers and executives; providing employment information and
assessment services; automating other agencies' staffing systems;
providing examining services when requested by an agency; providing
technical assistance and consulting services on all facets of HRM;
testing potential military personnel for the Department of Defense
where it is cost-effective for OPM to do so; managing the selection,
coordination, and development of Presidential Management Fellows; and
conducting investigations for all employees to determine whether they
are suitable for employment, as well as more in-depth investigations
for employees whose positions require a security clearances. For those
ongoing revolving fund responsibilities, the fiscal year 2007 budget
includes an estimated $1 billion in obligations and 2,786 FTE to be
financed through payments for OPM's services by other agencies.
MANDATORY PAYMENT ACCOUNTS
Since OPM serves as the ``employing agency'' for Federal
annuitants, the OPM budget request also includes, as always, mandatory
appropriations to fund the government contributions to the health
benefits and life insurance programs for those individuals.
A ``such sums as may be necessary'' appropriation is requested for
each of these accounts because of the mandatory nature of those
payments. For the approximately 1.9 million annuitants participating in
the Federal Employees Health Benefits Program, we estimate that about
$8.8 billion will be needed to pay the government's share of the cost
of coverage. That represents an increase of $560 million over fiscal
year 2006. We estimate that, for the 500,000 annuitants under age 65
who elect post-employment life insurance coverage, an appropriation of
$39 million will be required.
Also, as mandated by the financing system established in 1969 by
Public Law 91-93, liabilities resulting from changes (principally pay
raises) since that year that affect retirement benefits must be
amortized over a 30-year period. For that purpose, we are requesting a
``such sums as may be necessary'' payment to the Civil Service
Retirement and Disability Fund in the amount of $27.5 billion dollars.
This represents an increase of $350 million to cover the service cost
of the Civil Service Retirement System, which is not funded by and for
active employees.
PAY RAISE
Finally, the President's budget proposes an overall average
civilian Federal pay increase of 2.2 percent--the same overall average
increase as proposed for the military. This amount is equal to the full
increase in the Employment Cost Index for the 12-month period ending in
September 2005. It is designed to preserve the relative position of the
Federal Government in the overall labor market.
The budget includes a legislative proposal that would provide the
President with the flexibility to allocate a portion of the 2.2 percent
pay increase to special rate increases for specific groups of employees
(by occupation, location, or grade level) for which recruitment or
retention efforts are or may become significantly handicapped.
This proposal is designed to send a signal that the Federal pay
adjustment process should be ``smarter''--i.e., more strategic and
market-sensitive. This new flexibility cannot be exercised without
congressional approval of the proposed legislation. It would be used
only if the government has sufficient data to support the need for such
pay increases in response to demonstrated recruitment/retention
problems and OPM determines its readiness to implement.
Thank you again for the opportunity to provide for the record a
discussion of OPM's budget request. I would be pleased to provide any
additional information the subcommittee may need.
______
Prepared Statement of the U.S. Merit Systems Protection Board
Chairman Bond, Ranking Member Murray and members of the
subcommittee, thank you for the opportunity to submit this statement
for the record on the fiscal year 2007 appropriations request for the
U.S. Merit Systems Protection Board (MSPB or ``the Board'').
An independent quasi-judicial agency, MSPB employs 227 employees in
its Washington, DC headquarters, 6 regional and 2 field offices. The
Board has two statutory missions. The first mission is to adjudicate
employee appeals of personnel actions such as removals, suspensions,
furloughs, and demotions; employee complaints filed under the
Whistleblower Protection Act, the Uniformed Services Employment and
Reemployment Rights Act, and the Veterans Employment Opportunities Act;
Special Counsel complaints of prohibited personnel practices and Hatch
Act violations; and appeals of administrative decisions affecting an
individual's rights or benefits under the Civil Service Retirement
System or the Federal Employees' Retirement System. The Board's second
statutory mission is to conduct studies of the Federal civil service
and other Federal merit systems in the Executive Branch.
OVERVIEW OF THE REQUEST
The Merit Systems Protection Board is a small agency that uses
approximately 79 percent of its appropriation for personnel costs and
approximately 20 percent of its appropriation for fixed expenses, such
as space rent and utilities. We are requesting $36,531,000 in
appropriated funds and a reimbursement limitation of $2,579,000 from
the Civil Service Retirement and Disability Trust Fund to support the
operations of the agency. This request represents a $1,287,000 increase
over the fiscal year 2006 funding level, taking into account the
government-wide rescission. This increase covers the built-in cost
increases for pay raises and space rent as well as the costs of
relocating the San Francisco Regional Office because the current space
is not compliant with current earthquake standards.
FISCAL YEAR 2005 ACCOMPLISHMENTS WITH FISCAL YEAR 2007 OUTLOOK (BY
BUDGET ACTIVITY)
Adjudication
In fiscal year 2005, the Board did an outstanding job, at both the
regional and headquarters levels, in adjudicating cases in a timely
manner. During fiscal year 2005, the administrative judges in the
regional and field offices issued approximately 6,800 initial
decisions, with an average case processing time of 92 days.
At the headquarters level, the Board members issued approximately
1,600 decisions, most of which were on petitions for review of
decisions issued by the administrative judges. The Board has reduced
its inventory of outstanding cases by 48 percent. The average case
processing time for adjudicating petitions for review of initial
decisions was 265 days in fiscal year 2005. All this was accomplished
with no loss of quality, despite the growing complexity of the law and
the changing makeup of the Board. The Court of Appeals for the Federal
Circuit left unchanged 94 percent of the Board decisions that were
appealed to the Court.
The Board expanded its Mediation Appeals Program (MAP) to include
all regional and field offices and completed mediation training for new
mediators. Of the 105 cases that were processed through MAP, 83
mediations were completed. Settlements were reached in 40 of the 83
cases mediated for a success rate of 48 percent.
Both the Department of Homeland Security (DHS) and the Department
of Defense (DOD) have issued final regulations to implement their new
personnel systems. While Congress granted both agencies the option of
establishing an alternative process to adjudicate their employee
appeals, both decided to continue to have the Merit Systems Protection
Board adjudicate these appeals. All aspects of the Board's operations
will be affected by these new procedures. The regulations of both
departments have been challenged in the courts. We expect to see a
resolution to the court actions soon.
It should be noted that, while the new DHS and DOD systems require
the Board to revise its procedural regulations, the Board will still be
adjudicating appeals from DHS and DOD employees under several laws
(e.g., the Whistleblower Protection Act, Uniformed Services Employment
and Reemployment Rights Act and Veterans Employment Opportunities Act)
under procedures that are applicable to all other agencies subject to
the Board's jurisdiction.
As the agency begins adjudicating appeals under the new DOD and DHS
regulations with the faster processing times, it is important that the
agency have the staffing and administrative resources to process
appeals involving all other agencies in a timely manner.
Approximately 198 FTE, or about 84 percent of the approximately 236
FTE, have been allocated to the Board's adjudication function for
fiscal year 2007.
Merit Systems Studies and Oversight
The Board issues 6 study reports and 4 newsletters annually. Our
studies and reports are based on objective, independent research using
established scientific methods. To ensure the value of our products and
the effective use of government resources, we work closely with
research groups from the Government Accountability Office, the Office
of Personnel Management, and the National Academy of Public
Administration to share research agendas and expand the peer reviews of
our work. Reports of the Board's studies are directed to the President
and the Congress and are distributed to a national audience of human
resource practitioners and professional organizations.
Recent study reports include: ``Contracting Officer
Representatives: Managing the Government's Technical Experts to Achieve
Positive Contract Outcomes (2006)''; ``Designing an Effective Pay for
Performance Compensation System (2006)''; ``Reference Checking in
Federal Hiring: Making the Call (2005)''; ``Building a High-Quality
Workforce: The Federal Career Intern Program (2005)''; and
``Probationary Period: A Critical Assessment Opportunity (2005)''.
In addition to these reports, the Board completed its latest Merit
Principles Survey (MPS) in 2005. MSPB has conducted the MPS every 3-5
years for the past two decades. Each administration of the MPS assesses
the degree to which Federal agencies adhere to the merit principles,
tracks the incidence of prohibited personnel practices in Federal
agencies, and gathers information to support other OPE research
studies. The MPS 2005 was the first MPS administered via the World Wide
Web. Nearly 37,000 full-time civilian Federal employees completed the
MPS during the summer and fall of 2005. The Board's Office of Policy
and Evaluation is currently analyzing the data from this survey and
preparing a report for release by the end of fiscal year 2006.
The new DHS and DOD personnel systems will affect about half of the
Federal civil service employees, resulting in the biggest change since
the Civil Service Reform Act was passed in 1978. To facilitate the
accomplishment of MSPB's statutory mission of studying the health of
the civil service system, the Board will be gathering baseline data
about how the personnel systems in these agencies are currently
working. This data will then be compared with similar data after the
new systems have been operational for approximately 2 years.
This function will use approximately 12 FTE, or about 4 percent of
the approximately 236 FTE, the Board is projected to use in fiscal year
2007.
Management Support
The management support function, which will use approximately 26
FTE, or 11 percent of the 236 estimate in fiscal year 2007, provides
the information resources management, human resources management,
budget, finance, procurement, equal employment opportunity, travel,
space, and property management services for the agency.
In the area of information technology, the Board upgraded its wide
area network (WAN) infrastructure to improve response time and to
support the increasing traffic of electronic documents between the
headquarters and regional offices. In fiscal year 2006, we started
piloting wireless broadband technologies that enable high-speed access
for MSPB staff from any major metropolitan area.
The Board's Office of Information Resource Management (IRM) began
an impact analysis study on the transition to IPv6, as directed by OMB
(See OMB Memorandum No. M-05-22). This OMB memorandum requires the
agency's network backbone to be capable of passing IPv6 traffic by June
30, 2008. This IPv6 project will require careful planning, staff
training, hardware upgrade, and possible system changes and budget
implications over the next several years in order for us to prepare for
a smooth transition to meet all of OMB's requirements.
IRM has also increased its computer security in accordance with the
Federal Information Security Management Act. In fiscal year 2002 and
fiscal year 2003, IRM developed security plans, analyzed risks,
prepared contingency plans, upgraded servers and system software,
installed additional monitoring and access controls, and tested
recovery plans. In fiscal year 2004 and 2005, IRM made further
enhancements to IT security, following the recommendations of the
independent auditors and improvements identified from risk assessments
and penetration tests. These enhancements included updating of
policies, clarification of the role of program offices in IT security,
implementation of a centralized anti-virus server and spam filtering
software, improvements in internal network security, annual security
awareness training, and additional testing of contingency plans. IRM
will continue to make further enhancements to IT security and comply
with FISMA guidelines.
The Board has implemented several technology initiatives such as e-
Appeal that will expedite case processing and adjudication. Through e-
Appeal, individuals may file appeals online. Another innovation
provides all Board members with electronic access to complete case
files. As a result, Board members can analyze case records and issue
decisions while on official travel.
As previously stated, the Board is requesting funds to cover the
costs of relocating the San Francisco Regional Office because the
current space is not compliant with current earthquake standards.
CONCLUSION
I am honored to serve as Chairman of the Merit Systems Protection
Board. My staff and I are mindful of the need for all Federal agencies
to exercise fiscal restraint in this tight budgetary environment. We
have been, and will continue to serve as, careful stewards of the
public resources that have been entrusted to us for the purpose of
carrying out our statutory missions. The Board and its staff continue
to work diligently to maintain the reputation for efficiency,
effectiveness, and fairness it has earned over its long history. We
appreciate the support we have received from our appropriations
committees and welcome the opportunity to continue our partnership in
service to the American public.
______
Prepared Statement of the U.S. Election Assistance Commission
INTRODUCTION
Thank you Mr. Chairman and members of the subcommittee for the
opportunity to submit testimony regarding the work of the U.S. Election
Assistance Commission (EAC) and its budgetary needs to continue
assisting the States in implementing the Help America Vote Act of 2002
(HAVA) and the National Voter Registration Act of 1993 (NVRA) in fiscal
year 2007 .
EAC is a bipartisan commission consisting of four members: Paul
DeGregorio, chairman; Ray Martinez III, vice chairman; Donetta
Davidson; and Gracia Hillman. In addition to the four commissioners,
EAC employs 19 full-time staff persons.
HAVA instructs the EAC to develop and update national voluntary
voting system guidelines and manage the Federal Government's first
voting system certification program. EAC is also charged with assisting
the 50 States, four territories and the District of Columbia in
implementing provisional voting, updated and upgraded voting equipment,
State-wide voter registration lists, administrative complaint
procedures, and voter identification requirements and procedures.
Under the NVRA, the EAC develops the National Voter Registration
form, collects information for Congress and advises States of their
responsibilities. Below is a discussion of each EAC program and the
financial and human resources needed in fiscal year 2007 for EAC to
continue its work in improving the administration of Federal elections.
The following four program areas reflect the agency's mandates
under HAVA: (1) distribution and management of HAVA funds; (2) aiding
in the improvement of voting systems; (3) national clearinghouse of
election information; and (4) guidance and information to the States.
EAC conducts its activities in these program areas in an efficient and
cost effective manner to ensure maximum value of the funds appropriated
to the agency by the U.S. Congress.
DISTRIBUTION AND MANAGEMENT OF HAVA FUNDS
Congress appropriated more than $3,000,000,000 to help States meet
the requirements of HAVA and improve the administration of Federal
elections. All HAVA sections 101, 102 and 251 funds appropriated have
been distributed. The tables located on EAC's website (Title II
Requirements Payments & Early Money) show the disbursement of funds by
category and fiscal year. The graphic below shows the funds distributed
to each State, including funds distributed by the Department of Health
and Human Services under Section 261 of HAVA.
Responsible Stewardship of HAVA Funds
Now that the election reform funding has been distributed, EAC is
working to ensure that States are good stewards of these Federal funds.
To monitor the use of these funds, EAC issues guidance and answers
questions on the appropriate use of HAVA funds, reviews reports
submitted by the States and territories on expenditure of the funds,
and conducts assessments and audits of the States.
Appropriate Uses of HAVA Funds
HAVA specifically limits the use of funds distributed under the
various funding programs. These uses include purchasing voting
equipment to replace punch card or lever voting systems, implementing
provisional voting, purchasing equipment and software to build State-
wide voter registration databases, as well as various activities aimed
at improving the administration of Federal elections. To help clarify
the appropriate uses of HAVA funds, EAC and GSA applied OMB Circulars
A-87, A-102, and A-133. In addition, EAC provided guidance and
information on the appropriate use of HAVA funds in response to
questions from the States. Even with these resources, EAC must answer
questions daily from the 50 States, four territories and the District
of Columbia about allowable expenses under HAVA.
EAC requires that States, territories and the District of Columbia
report their uses of HAVA funds. In the second quarter of each year,
States report on their use of both Title I and Title II funds. The
Title II report includes: (a) a list of expenditures for each category
of activities described in Title III; (b) the number and types of
voting equipment obtained with the funds; and (c) an analysis and
description of the activities funded to meet HAVA requirements and how
such activities conform to the State plan. Title I reports require
States to (1) disclose, in separate reports for section 101 and 102
funds, the financial activity for the previous calendar year on a
Standard Form 269; and (2) provide the same detail on the expenditures
that is required for the reports on Title II requirements payments. EAC
conducts a detailed review of each report to validate that the
expenditure of funds met the requirements of HAVA and was in accordance
with plans filed by the State or territory. The States' Title I and
Title II reports are available to the public upon request.
Auditing
Section 902 of HAVA gives EAC and other HAVA granting agencies the
authority to conduct regular audits of HAVA funds. EAC's audit activity
will be conducted through EAC's Office of the Inspector General (OIG),
which currently consist of two types of reviews to determine if the
States are exercising sufficient controls and using the funds
distributed under HAVA for appropriate purposes. One is an assessment
of procedures each State uses to administer and monitor HAVA funds, as
well as a review of certain critical elements such as whether the State
has maintained sufficient matching funds. On a concurrent track, OIG
will commission audits of several States each year to more fully review
the State's internal controls, processes, procedures, and transactions
to ensure compliance with Government Auditing Standards.
In addition to EAC's regular audits, HAVA also provides for two
other means of extraordinary audit authority--(a) funds are subject at
least once during the term of the program to an audit by the
Comptroller General; and (b) section 902(b)(6) of HAVA allows EAC to
conduct a ``special audit'' or ``special examination'' of the funds
that are subject to regular audit under Section 902(b)(1). This special
audit authority covers every HAVA program, including funds distributed
under Title I, Title II, and programs administered by the Department of
Health and Human Services. If EAC determines that a special audit is
warranted, by vote of the Commission, EAC will refer the matter to the
OIG for review.
The OIG currently employs 1 full-time staff person. Two additional
persons have been provided to EAC by the Department of Interior via a
Memorandum of Understanding (MOU). These persons are responsible for
conducting the majority of the State assessments discussed above,
monitoring outside contracts for audits, reviewing EAC's internal
operations, and coordinating investigations of complaints, as
necessary.
Financial and Human Resources Needs for Management of HAVA Funds in
Fiscal Year 2007
In fiscal year 2006, EAC has budgeted $2.5 million for these
activities. Of that, $1.65 million is allocated to the OIG for auditing
the use of HAVA funds and assessing State controls. At this level of
funding, EAC anticipates that it will be able to fund the MOU for the
two persons provided by the Department of Interior, conduct assessments
of four or five States, and begin four or five full audits of States.
The remaining $550,000 is budgeted for management activities such as
reviewing reports submitted by the States, answering questions related
to the proper use of HAVA funds, and reviewing States' indirect cost
proposals. Three full time equivalents (FTE) and two staff persons via
MOU with the Department of Interior currently serve these functions.
In fiscal year 2007, EAC anticipates allocating the same amount of
funding and personnel to this function, including pay and non-pay
adjustments ($2.6 million). At this rate, EAC will be able to continue
assessing and auditing States at the rate projected for fiscal year
2006. Availability of personnel will depend on the willingness of the
Department of Interior or other agencies to continue providing
assistance through an MOU. It is essential that EAC maintain the
current level of staff support (5 persons), either through FTE or MOU
in order to assure that the use of HAVA funds is monitored
appropriately.
AIDING IN THE IMPROVEMENT OF VOTING SYSTEMS
One of the most enduring effects of HAVA will be the change in
voting systems used throughout the country. All major HAVA funding
programs can be used by States to replace outdated voting equipment.
HAVA also provides for the development and maintenance of testable
standards against which voting systems can be evaluated. It also
provides for Federal certification according to these standards. EAC is
responsible for and committed to improving voting systems through these
vital programs.
Voluntary Voting System Guidelines
One of EAC's most important mandates is the testing, certification,
decertification and recertification of voting system hardware and
software. Fundamental to implementing this key function is the
development of updated voting system guidelines, which prescribe the
technical requirements for voting system performance and identify
testing protocols to determine how well systems meet these
requirements. EAC along with its Federal advisory committee, the
Technical Guidelines Development Committee (TGDC), and the National
Institute of Standards and Technology (NIST), work together to research
and develop voluntary testing standards.
On December 13, 2005, EAC adopted the first iteration of the
Voluntary Voting System Standards (VVSG). This document was an initial
update to the 2002 Voting System Standards focusing primarily on
improving the standards for accessibility, usability and security.
These testing guidelines also incorporated standards for reviewing
voting systems equipped with voter verifiable paper audit trails
(VVPAT) in recognition of the many States that now require this
technology. VVSG also establishes the testing methods for assessing
whether a voting system meets the guidelines.
Significant work remains to be done to fully develop a
comprehensive set of standards and testing methods for assessing voting
systems and to ensure that they keep pace with technological advances.
In fiscal year 2007, EAC along with TGDC and NIST, will revise sections
of the VVSG dealing with software, functional requirements, independent
verification, and security and will develop a comprehensive set of test
suites or methods that can be used by testing laboratories to review
any piece of voting equipment on the market.
Accreditation of Voting System Testing Laboratories
HAVA Section 231 requires EAC and NIST to develop a national
program for accrediting voting system testing laboratories. The
National Voluntary Laboratory Accreditation Program (NVLAP) of NIST
will provide for the initial screening and evaluation of testing
laboratories and will perform periodic re-evaluation to verify that the
labs continue to meet the accreditation criteria. When NIST has
determined that a lab is competent to test systems, the NIST director
will recommend to EAC that a lab be accredited. EAC will then make the
determination to accredit the lab. EAC will issue an accreditation
certificate to the approved labs, maintain a register of accredited
labs and post this information on its website.
In July 2005, NVLAP advertised for the first class of testing
laboratories to be reviewed under the NVLAP program and accredited by
EAC. Five laboratories have applied for the accreditation program. Pre-
assessments of these laboratories began in April 2006 and formal review
will proceed thereafter. NVLAP anticipates that those laboratories will
be reviewed and those that are eligible to be recommended for
accreditation will be delivered to EAC in fall 2006.
Because testing of voting systems cannot be delayed, there must be
some interim review and accreditation of laboratories. In late 2005,
EAC invited laboratories that were accredited through the National
Association of State Election Directors (NASED) program as Independent
Testing Authorities (ITAs) to apply for interim accreditation. All
three ITAs have applied for interim accreditation. Interim
accreditation reviews by EAC contractors will begin in the Spring 2006.
ITAs will be accredited on an interim basis until the first class of
laboratories is accredited through the NVLAP process. After that time,
all testing labs must be accredited through the NVLAP evaluation
process.
Voting System Certification
In 2006, EAC is assuming the duty of certifying voting systems
according to national testing standards. Previously, NASED qualified
voting systems to both the 1990 and 2002 Voting System Standards. EAC's
certification process will constitute the Federal Government's first
efforts to standardize the voting system industry. EAC's program will
encompass an expanded review of voting systems. It will utilize testing
laboratories and EAC technical reviewers. The program will also include
assessments of quality control, field monitoring, vendor registrations,
and enhanced public access to certification information.
Historically, voting system qualification has been a labor
intensive process. In 6 months, NASED received 38 separate voting
system test reports for review and qualification. All requests must be
received, processed and monitored while the testing laboratory is
assessing compliance. Once a test report is produced, technical
reviewers must analyze the reports prior to recommending systems for
certification. Based upon the NASED data, this process will take
anywhere from 4 to 120 hours per report. In addition, EAC's enhanced
testing and certification program will require reviewers to evaluate
voting system technical data packages prior to testing, which will take
an additional 4 to 20 hours per voting system.
Financial and Human Resources Needs for Fiscal Year 2007
In fiscal year 2006, EAC has budgeted $3.95 million for its work to
aid in improving voting systems used throughout the country. Of that
amount, $2.772 million is transferred to NIST for its research for and
support of the TGDC. The remaining $1.178 million is dedicated to the
development, implementation, and operation of a voting system
certification program and laboratory accreditation program. EAC
currently employs one FTE to support all of these functions. In
addition, EAC anticipates hiring several contractors to serve as
technical reviewers in the voting system certification program and one
contractor to assist with the development of the VVSG and
administration of the voting system certification and laboratory
accreditation programs.
In fiscal year 2007, EAC has requested $6.421 million, which
represents an increase of $2.471 in this program. Of that amount, $4.95
million, which includes an increase of $2.178 million, will go to NIST
to complete work on the VVSG prior to the 2008 presidential election.
The needed work includes updating and revising the testing standards
and the development of testing protocols to assess whether a voting
system meets the standards. The remaining $1.471 million will be
applied to administering the voting system certification, voluntary
voting system guidelines, and laboratory accreditation programs. This
includes an increase of $293,000 to hire two additional FTE to manage
the day-to-day operations of the voting system certification and
laboratory accreditation programs, including work to assess vendor
facilities and processes to assure that quality control provides
equipment that is consistent with the caliber of the samples that are
certified under the EAC program.
NATIONAL CLEARINGHOUSE OF ELECTION INFORMATION
HAVA establishes EAC as a national clearinghouse of election
information, which means EAC studies and makes research available on a
range of issues including best practices in election administration,
hours and places for voting, and election data. EAC has conducted
extensive research on a variety of topics related to election
administration, has begun an ongoing process of collecting election
related data, and has compiled election-related resources such as
statutes and regulations. This information is presented to the election
community and to the public through the EAC's website as well as
through formal reports on studies and data collections. Through this
clearinghouse, EAC positions itself as a primary source of information
about Federal elections.
Research and Study
HAVA requires EAC to conduct a number of studies and provides
considerable discretion to research other election administration
issues to assist States in their efforts to improve election reform.
EAC uses its Federal advisory committees to assist in prioritizing
research topics that are important to and that will assist election
officials. In 2006, EAC will produce guidance, best practices and
reports on recruiting, training and retaining poll workers; usability
of ballots and information provided to voters; procedures for counting
and recounting ballots; provisional voting; voter identification; voter
fraud and intimidation; as well as launching a legal resources database
that will provide election officials and the public with access to
election laws and regulations from each of the 50 States. In addition,
EAC will also issue election management guidelines as a companion to
the VVSG.
In fiscal year 2007, EAC will focus on completing the research
required by HAVA on the use of social security numbers in voter
registration, standards for internet voting, and the possibility of
postage-free absentee voting. EAC will also collect and analyze data
from the 2006 Federal elections including voter turnout, absentee
voting, voter registration and military and overseas citizen voting.
The 2006 Election Day Survey will provide comprehensive data indicating
the progress States have made in implementing HAVA.
EAC's Website as a Clearinghouse
Using EAC's website as its main means of transmitting information
to the public is a useful, accessible and cost-effective tool. As its
studies, guidance and best practices are completed, EAC will have an
increasing amount of information to store and display through its
website. EAC will also use the website to provide information about the
voting system standards and certification program. EAC currently has a
memorandum of understanding with the General Services Administration
for its information technology (IT) support including servers to
maintain EAC data. In addition, EAC contracts for the hosting and
maintenance of its website. To accommodate the expanding clearinghouse,
EAC will need to expand its IT capabilities by either enhancing its
contracts for web services and IT support or by considering bringing
those services in-house.
Financial and Human Resources Needs for Fiscal Year 2007
In fiscal year 2006, EAC budgeted $2.5 million for its research and
study. In fiscal year 2007, EAC anticipates spending $2.13 million on
required research projects, data collection and analysis, development
of best practices documents, and expansion and maintenance of its
technical resources to host a clearinghouse on its website.
GUIDANCE AND INFORMATION TO THE STATES
HAVA established EAC to provide guidance and assistance to the
States on implementation of the law and transferred to EAC the
responsibility of implementing the National Voter Registration Act
(NVRA). EAC has provided valuable guidance to the States on what HAVA
means, implementing the law, and appropriate use of HAVA funds. In
fiscal year 2007, EAC will continue that work by developing election
management guidance, expanding on its voter registration data base
guidance, and by updating and revising the NVRA regulations and
national voter registration form. The election management guidance is a
comprehensive companion document to the VVSG that will assist States in
managing an election from receipt of voting equipment to the reporting
of results to the canvass or recount that follows. EAC's continued work
on voter registration databases will focus on studying the appropriate
use of security measures, verification of voter information using
appropriate matching protocols, and sharing information with other
State agencies and, ultimately, with other States. EAC will address
issues involving voter registration using the Federal form by updating
the NVRA regulations and the Federal registration form.
Financial and Human Resources Needs for Fiscal Year 2007
EAC has budgeted $750,000 in fiscal year 2006 for these activities.
In fiscal year 2007, EAC anticipates spending $1.2 million on providing
guidance and assistance to the States.
ADMINISTRATION
The administration objective represents the efforts of EAC,
internally or through contracts and MOUs, to support the mission and
work of this agency and meet the HAVA-imposed mandates. These costs
include rent, equipment, supplies, human resources functions, finance
and budget, computers, telephones, publication, and printing. This
objective includes maintaining the leadership and support staff for the
agency. Charges for salaries and benefits for the Commissioners and
non-programmatic support staff are included in this category. In
addition, the administrative objective includes supporting the efforts
of EAC's two Federal advisory committees, the Board of Advisors and
Standards Board. Between these two boards there are 147 members who
meet at least once in each fiscal year to fulfill their
responsibilities under HAVA. The leadership of these Boards meets more
frequently, approximately once each quarter.
Financial and Human Resources Needs for Fiscal Year 2007
In fiscal year 2006, EAC has budgeted $4.4 million for these
activities. In fiscal year 2007, EAC anticipates spending a similar
amount, including pay and non-pay adjustments ($4.55 million).
CONCLUSION
In the first 2 years of EAC's existence, the main focus was
expeditiously completing the distribution of more than $3 billion in
HAVA funds to the States to purchase voting equipment and implement
other election administration improvements. During this time, EAC also
adopted the 2005 Voluntary Voting System Guidelines within the HAVA-
prescribed 9-month timeframe. The completion of these activities
generates a new set of related priorities: (1) monitoring and auditing
the use of HAVA funds; (2) making sure the VVSG keep pace with
technology by updating them periodically, especially in the areas of
security and usability; and (3) establishing the Federal Government's
first voting system certification program.
Consequently, EAC will direct more funding in fiscal year 2007 to
its audit program, the VVSG and the certification program.
EAC will also continue to conduct research about election
administration issues and make that information available to election
officials to assist them in making policy decisions at the local level.
EAC will assure that all HAVA funds are used properly to effectuate the
required election reforms.
The EAC appreciates the opportunity to provide this testimony
regarding our needs for fiscal year 2007. If you have any questions
regarding these activities and allocations of funding, we will be happy
to address them.
______
Prepared Statement of William A. Chatfield, Director, Selective Service
System
Chairman Bond and members of this subcommittee, it is an honor for
me as Selective Service Director to present once again the President's
fiscal year 2007 Appropriations request of $24,255,000 for the agency.
This Congress and successive administrations under both parties have
acknowledged the wisdom of maintaining Selective Service as a hedge
against unforeseen threats and a relatively low-cost insurance policy
against underestimating any threat our Armed Forces might face in a
still-dangerous world.
This agency is as determined as ever to carry out the mission
Congress has given us, no matter how austere the budget climate shaped
by the requirements of homeland security and other priorities listed in
the President's January 31, 2006, State of the Union Address. To
achieve this balancing act of advancing the mission while accepting
budgetary realities will require creativity and discipline. I welcome
the challenge, and appreciate the opportunity to share my vision for
Selective Service with you today.
Personnel reductions at Selective Service have come from planned
attrition and will not involve a reduction-in-force. Meanwhile, the
agency will continue to employ more state-of-the-art information
technologies and public outreach to accomplish its statutory mission of
raising nationwide registration compliance by eligible young men while
preserving maximum customer service. Satisfying our goals will assure a
Selective Service that is beyond reproach while meeting the needs of
its primary customer, the Department of Defense.
WHAT WE DO TODAY
Selective Service is in business to perform two unique functions.
Should the Congress and the President authorize a return to a military
draft, the agency can conduct a draft that is efficient, fair, and
accepted by the public. It is also ready to administer a program of
alternative community service for men who are classified as
conscientiously opposed to military service.
Additionally, each and every day Selective Service continues its
close partnership with the Department of Defense by providing direct
support to Armed Forces recruiting and accessions processing.
Specifically, Selective Service provides names of registrants to the
Secretary of Defense for recruiting purposes, in accordance with a
provision in the Military Selective Service Act. Approximately every 1
to 2 weeks, information about Armed Forces opportunities for Regulars,
National Guard, and Reserves and a business reply card are enclosed
with our registration acknowledgment that the Selective Service sends
to each new registrant. For calendar year 2005, these contacts totaled
over 2.2 million young men. Consequently, the Defense Department
benefits by ``piggy-backing'' on our routine mailings which generate
actual recruiting leads. And it reimburses us for the additional costs
in accordance with the Economy Act.
Beyond its compliance with the Military Selective Service Act and
providing these tangible services, the agency also promotes an
intangible national benefit. For present and future generations of
America's young men, Selective Service is a very critical link between
society-at-large and today's volunteer military. It is a reminder that,
as Americans, every young man is personally responsible to ``provide
for the common defence'' in the time-honored tradition of preceding
generations.
AREAS OF EMPHASIS
To foster a greater public reception of the agency's new approach
to its traditional missions, I have approved an augmenting approach to
harness the power, passion, and patriotism of air shows to our core
mission of raising registration compliance by young men.
My vision for Selective Service is to present the agency in huge,
open community venues across the Nation, highlighting authentic
American heroes, and promoting public service and patriotic themes
appealing to multiple generations. Air shows are the second most
attended spectator events in America, and attract a high concentration
of registration-age men. I am convinced that funding and implementing
this approach will result in a substantial increase in registration
compliance, the surest path to assuring Americans that any future draft
will be fair and equitable. We are conducting this pilot effort by
absorbing the less than $300,000 expense out of our fiscal year 2006
budget. No new money is involved.
The value of this effort presented itself after several months of
assessing the agency's capabilities, priorities, and missions. These
events will complement other agency activities directed at conforming
to the President's Management Agenda.
I would point to three endeavors that I believe satisfy
administration and Congressional charges to Federal agencies to evolve
into performance-based organizations.
Organizational Adjustments.--The agency continues the process of
internal review and analysis it undertook in fiscal year 2004. As part
of this comprehensive ``bottom-up review,'' Selective Service is
restructuring. This will empower the agency to satisfy its missions
more efficiently and to bring Selective Service to full mobilization
more effectively in the event of a return to conscription.
Additionally, full-time civilian staffing has been reduced, and all
full-time military officers eliminated. Also, the number of part-time
military officers has decreased. I am convinced benefits accrued from
strategic management of human capital, competitive sourcing, improved
financial performance, expanded e-Government, and better integration
between budget and performance will substantially increase agency
efficiency in its core and support processes. Be assured that each of
my changes and staffing decisions is being driven by practical, cost-
conscious considerations grounded in greater customer service.
Registration Compliance.--Here the air shows will play an important
role in 2006 and possibly beyond. Although Selective Service has
reversed the decline in registration compliance from a high of 98
percent in 1991 to a low of 87.7 percent in 2000, anything less than
100 percent compliance constitutes a challenge. Only when all eligible
young men are equally vulnerable will any future draft be considered
completely fair and equitable. The public would believe, rightly so,
that not everyone who should be in the manpower pool is accounted for;
and therefore those who are registered have an increased chance of
being called for involuntary service.
Our final accounting for calendar year 2005 indicates about 93
percent of eligible men (ages 18 to 25) are registered. Keeping this
rate high is very important because I believe a compliance rate of less
than a healthy 90-plus percent would contribute to a lack of public
confidence in our ability to administer a fair and equitable draft. The
compliance rate of for ``on-time'' registration of men turning 18
continues at 76 percent.
Naturally, our priority is to maintain an increasing registration
compliance rate. We appreciate the subcommittee's support in ensuring
that our work over the past decade continues, and our successes satisfy
our congressional mandate to raise and maintain favorable registration
compliance. Since public trust in Selective Service is at stake, I will
use every resource to continue proven positive trends in compliance. In
addition to our outreach air shows effort, Selective Service intends in
pursuit of that goal to:
--(a) Continue to develop and distribute public service broadcast
messages to low compliance markets, together with printed
materials. To support this effort, we have distributed new
radio public service announcements in English and Spanish.
These high-quality products have been praised by listeners
around the country. In calendar year 2005 and so far this year,
the agency has secured commercial airings representing 82,036
worth of free airings, a commercial airtime value of more than
$5.1 million. These airings are in markets with no or optional
driver's license supporting legislation and cost Selective
Service only the expense of development, replication and
distribution. Public service broadcast messaging by Selective
Service is a very efficient method of raising public awareness
of the legal registration obligation, especially among those
who most need access to governmental benefits linked to
registration such as minorities. Support of the President's
budget request guarantees that this effective and efficient
outreach effort continues and America's youth are reminded of
their civil responsibility.
--(b) Carry on routine updating of the interactive Selective Service
pages on the World Wide Web (www.sss.gov) where online
registration, database verification, the ability to file
changes of information, and to review a wealth of other agency
information are available to anyone with access to the
Internet. For fiscal year 2005, 81.2 percent of registrations
reached Selective Service through electronic means, an increase
of more than 2 percent over 2004. Electronic registrations are
more cost-effective than processing paper registrations and
provide better customer service. We are also placing links to
our site with other Federal, State and local agencies, schools,
and assorted organizations to enhance public education and
facilitate customer responsiveness.
--(c) Profit from an increasing number of States which link obtaining
a driver's license or State I.D. card to the Selective Service
registration requirement. These State and territorial laws
currently provide Selective Service with an average of nearly
71,000 registrations per month. As of this month, 34 States,
three territories, and the District of Columbia have laws
enacted. These jurisdictions represent 63 percent of the
national 18-year-old male registrant population. We continue to
work closely with additional States where such legislation is
pending to provide technical expertise. Data electronic
exchanges are the most cost-effective, timely, user-friendly,
and technology-simple registrations available. Selective
Service is committed to aid the remaining 16 States in
implementing this easy method to protect their young men's
eligibility for State and Federal benefits and programs. This
program has been a valuable tool to reach not only all eligible
registrants, but also has enabled a more customer-friendly
system.
Information Technology (IT).--The agency has applied new
initiatives to the traditional way it does business. Support of the
President's request will allow Selective Service to continue to
modernize its core and support processes. We are pleased with the
returns generated by these IT investments. The agency has turned to
information technology because it is a force multiplier to offset
reduced staffing and constrained dollars. It permits this small agency
to examine how it does business, how it might improve its IT
architecture, both hardware and software, and to have the support
structure necessary to advance its operations. I am committed to
investing in IT because I know that it enhances customer service,
increases productivity, compensates for limited human and fiscal
resources, and establishes the technological framework to administer
well a fair and equitable draft. The agency has no choice but to keep
pace with IT applications in the Federal Government and society-at-
large.
FOCUSED YET FLEXIBLE
While there has been much dialogue among the public, private
groups, the media, and academia concerning a future draft,
volunteerism, homeland security, and national service, the Selective
Service System remains focused on its missions. It manages its
volunteer board members, is prepared to administer programs of
alternative community-based service for men classified as conscientious
objectors, and updates its conscription plans and registration
procedures. All these efforts are aimed at being ready to conduct a
fair and equitable classification procedure to determine who should
serve when not all can serve during an emergency. To ensure fairness
and equity, each Selective Service board is a gathering of civic-minded
men and women reflecting the racial, cultural and ethnic diversity of
the young men in the communities it serves. Through these volunteers, a
unique bond has been formed at the grass roots with young American men,
society-at-large, and the U.S. Armed Forces. Through the Selective
Service structure, every American community plays a positive role in
providing for the common defense. In short, this agency has extensive
practical experience in identifying, contacting and classifying people
to participate in a national security or a community service program.
Selective Service can lend its expertise and ample experience to any
appropriate task directed.
CLOSING
Mr. Chairman, Selective Service stands prepared to perform its
time-tested responsibilities, when directed. The fiscal year 2007
appropriation request of $24,255,000 will be invested prudently in one
of the Nation's important security assets in an increasingly dangerous
and ambiguous world. The president's request is adequate to provide a
compact, cost-efficient civilian structure capable of expansion in a
crisis; to provide manpower to the U.S. Armed Forces as required; and
to do it fairly, equitably, and within the necessary timeframes.
Additionally, this funding will allow outreach to minority and out-of-
the-mainstream youth, better privacy protections in our contacts with
the public, and improvements in our registration compliance rates. All
these outcomes will advance the guidance of the Congress, satisfy our
statutory mandate, and maintain the high registration compliance rates
so painstakingly raised over the last decade. Selective Service is
staying the course, ever watchful for opportunities to improve. It
remains an active partner in the national preparedness community.
Thank you, Mr. Chairman. I would be pleased to answer your
questions.
______
NONDEPARTMENTAL WITNESSES
[Clerk's note.--The following testimonies were received by
the Subcommittee on Transportation, Treasury, the Judiciary,
Housing and Urban Development, and Related Agencies for
inclusion in the record. The submitted materials relate to the
fiscal year 2007 budget request.
The subcommittee requested that public witnesses provide
written testimony because, given the Senate schedule and the
number of subcommittee hearings with Department witnesses,
there was not enough time to schedule hearings for
nondepartmental witnesses.]
Prepared Statement of Independent Sector
Independent Sector appreciates the opportunity to comment on fiscal
year 2007 Federal appropriations for Internal Revenue Service
activities.
Independent Sector is a nonprofit, nonpartisan membership
organization committed to strengthening, empowering, and partnering
with nonprofit and philanthropic organizations in their work on behalf
of the public good. Our coalition of more than 500 nonprofit
organizations, foundations, and corporate philanthropy programs
collectively represents tens of thousands of charitable groups as well
as millions of donors and volunteers serving a wide range of causes in
regions across the country. We have worked since our inception to
assist our member organizations to meet the highest standards of
ethical practice, accountability, and effectiveness.
We write today in support of increased funding of the Internal
Revenue Service's enforcement budget and urge you to appropriate, at a
minimum, the level requested by the President.
Increased resources for IRS tax law enforcement would:
--Continue Congress' recent efforts to restore the IRS enforcement
program;
--Help protect the integrity and credibility of the charitable sector
by providing resources to audit organizations' annual returns
and deter and penalize wrongdoers; and
--Foster greater compliance by funding additional education of
charitable organizations about existing tax law.
continue restoration of the irs enforcement program
During the late 1990's resources for IRS tax law enforcement
activities declined dramatically. According to testimony by IRS
Commissioner Mark Everson before this committee in April 2004, between
1997 and 2001 the total number of revenue agents, revenue officers, and
criminal investigators each declined by over 25 percent.\1\ During the
same period the number of IRS examinations of tax-exempt annual returns
dropped by 22 percent, while the number of returns filed increased by
19 percent.\2\ Explaining the consequences of these circumstances in a
March 2005 letter to Senate Finance Committee Chairman Charles
Grassley, Commissioner Everson wrote that, ``This decline, combined
with the significant growth of the tax-exempt sector . . . created
opportunities for noncompliance.'' \3\
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\1\ Commissioner of Internal Revenue Mark W. Everson, Written
Statement, Senate Committee on Appropriations, Subcommittee on
Transportation, Treasury and General Government, Hearing on Internal
Revenue Fiscal Year 2005 Budget Request, at 2 (April 7, 2004).
\2\ Government Accountability Office, ``Tax-Exempt Organizations:
Improvements Possible in Public, IRS, and State Oversight of
Charities'' (GAO-02-526) at 21-22 (April 2002).
\3\ Commissioner of Internal Revenue Mark W. Everson letter to
Chairman Charles E. Grassley, Senate Committee on Finance, p. 3,
available at http://www.senate.gov/finance/hearings/other/
Letter%20from%20Everson.pdf (March 30, 2005).
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We applaud the recent increased investments Congress has made
toward restoring IRS enforcement activities. In addition to conducting
audits of individuals, corporations, and tax-exempt organizations and
collecting due revenue, this funding has permitted the IRS to undertake
critical investigations into areas of concern in the tax-exempt sector,
including abuses by credit counseling agencies and nonprofit
compensation practices, and provide valuable guidance educating tax-
exempt organizations about their obligations under current law.
We believe, however, that still more needs to be done. The
Government Accountability Office noted in a statement for the record
before this committee in April 2006 that ``. . . tax law enforcement
continues to be included on our list of high-risk Federal programs.
This is due, in part, to the persistence of a large tax gap.'' \4\
Commissioner Everson noted in his March 2005 letter to Chairman
Grassley that the IRS continues to ``struggl[e] with yearly increases
in the number of applications for tax exemption.'' \5\
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\4\ Government Accountability Office, ``Internal Revenue Service:
Assessment of the Interim Results of the 2006 Filing Season and Fiscal
Year 2007 Budget Request'' (GAO-06-499T), at 1 (April 27, 2006).
\5\ Commissioner of Internal Revenue Mark W. Everson letter to
Chairman Charles E. Grassley, supra at p. 3.
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The administration has emphasized the need for continued oversight
resources, requesting in the President's fiscal year 2007 Federal
budget an increase of $137 million over fiscal year 2006 to sustain
fiscal year 2006 enforcement initiatives. The IRS Oversight Board has
recommended an even greater funding increase--$368 million over fiscal
year 2006--as part of a broader effort to address the tax gap. The
recently approved Senate fiscal year 2007 Budget Resolution proposes an
increase of $500 million.
ADDITIONAL IRS ENFORCEMENT FUNDING WILL HELP PRESERVE THE PUBLIC'S
TRUST IN THE CHARITABLE SECTOR AND FOSTER GREATER COMPLIANCE BY
CHARITABLE ORGANIZATIONS
Our country's expansive network of charitable organizations
provides vital services in such fields as health, education, social
assistance, community development, and the arts. Charities depend upon
the generosity of Americans--their gifts of time and money--to achieve
these missions. These gifts are fueled by the confidence that they are
used for the purposes for which they were intended. Indeed, this public
trust is essential to maintaining a viable and vibrant nonprofit
sector, and preservation of that trust depends upon a combination of
vigorous self-regulation by the sector and effective enforcement of the
law.
In recent years, media stories have revealed increased instances of
abuse by taxpayers using charitable organizations for personal gain and
individuals claiming excessive contributions. Although few in number,
these occurrences threaten to cripple the charitable sector by eroding
the public's confidence. IRS Commissioner Mark Everson encapsulated
this threat in testimony before this committee in April 2005, ``[i]f we
do not act expeditiously, there is a risk that Americans will lose
faith in our Nation's charitable organizations. If that happens,
Americans will stop giving and those in need will suffer.'' \6\
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\6\ Commissioner of Internal Revenue Mark W. Everson, Written
Statement, Senate Committee on Appropriations, Subcommittee on
Transportation, Treasury, the Judiciary, Housing and Urban Development,
and Related Agencies, Hearing on Internal Revenue Fiscal Year 2006
Budget Request, at 8 (April 7, 2005).
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At the encouragement of the chairman and ranking member of the
Senate Finance Committee, owing in large measure to these reports,
leading members of the charitable community convened the Panel on the
Nonprofit Sector in October 2004 to consider and recommend actions to
improve the transparency and accountability of charitable
organizations. Over the next 9 months, over 5,000 individuals
participated in the Panel's efforts, making comments on the best
methods for providing legitimate oversight of the sector while
protecting the independence crucial to its ability to remain innovative
and effective.
The Panel submitted its ``Final Report to Congress and the
Nonprofit Sector'' \7\ in June 2005 recommending more than 120 actions
to be taken by charitable organizations, Congress, and the IRS. A key
recommendation is to increase resources allocated to the IRS for
oversight of charitable organizations as well as overall tax
enforcement.
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\7\ Panel on the Nonprofit Sector, ``Strengthening Transparency,
Governance, and Accountability of Charitable Organizations: A Final
Report to Congress and the Nonprofit Sector,'' available at http://
www.nonprofitpanel.org/final/Panel_Final_Report.pdf (June 2005).
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As noted by the Panel, effective oversight of the charitable sector
requires vigorous enforcement of the law. Education of charitable
organizations about changes in Federal and State laws and reporting
requirements is also critical to increasing compliance. During the past
20 years, however, funding for IRS oversight of exempt organizations
has remained essentially constant while the sector has nearly doubled
in size and become even more complex. While recognizing the fiscal
challenges facing Congress, the Panel emphasized ``that, without
adequate resources for oversight and enforcement, those who willfully
violate the law will continue to do so with impunity.'' \8\
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\8\ Id. at 25.
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In addition to continuing recent efforts to restore the overall IRS
enforcement program, increased resources for IRS oversight would help
protect the integrity and credibility of our Nation's charitable sector
by providing resources to audit organizations' annual returns and deter
and penalize wrongdoers. Moreover, it would foster greater compliance
over the long term by making possible increased education of charitable
organizations about existing tax law.
CONCLUSION
Following a significant decline in resources, the Internal Revenue
Service has made great strides toward restoring its tax law enforcement
program. This achievement is due in large measure to recent actions by
Congress to appropriate increased funding to IRS oversight. We applaud
and appreciate this effort.
However, we echo recommendations by Commissioner Everson, the GAO,
and others that additional resources are necessary to enable the IRS to
continue to ensure effective oversight of the charitable sector and
enforcement of our tax laws while also maintaining taxpayer service. We
urge you to support the enforcement capacity of the IRS by increasing
the agency's fiscal year 2007 enforcement budget.
We thank you for consideration of these comments.
______
Prepared Statement of Easter Seals
EASTER SEALS PROJECT ACTION (ACCESSIBLE COMMUNITY TRANSPORTATION IN OUR
NATION)
Chairman Bond, Ranking Member Murray and members of the
subcommittee, Easter Seals appreciates this opportunity to share the
successes and needs of Easter Seals Project ACTION.
PROJECT ACTION OVERVIEW
The Transportation appropriations process initiated Project ACTION
in 1988 by providing funding to the Federal Transit Administration to
undertake this effort with Easter Seals. We are indeed grateful for
that initiative and the ongoing strong support of this subcommittee in
subsequent years.
Following its initial round of appropriations, Congress authorized
assistance to Project ACTION in 1990 with the passage of ISTEA,
continued the authorization in 1997 in TEA-21 and reauthorized the
project in 2005 as part of SAFETEA-LU. The strong interest and support
of all members of Congress has been greatly appreciated by Easter Seals
as it has pursued project ACTION's goals and objectives.
Since the project's inception, Easter Seals has administered the
project through a cooperative agreement with the Federal Transit
Administration. Through steadfast appropriations support, Easter Seals
Project ACTION has become the Nation's leading resource on accessible
public transportation for people with disabilities. The current project
authorization level is $3 million, and Easter Seals is pleased to
request the appropriation of that sum for fiscal 2007.
The strength of Easter Seals Project ACTION is its continued
effectiveness in meeting the congressional mandate to work with both
the transit and disability communities to create solutions that improve
access to transportation for people with disabilities of all ages and
to assist transit providers in complying with transportation provisions
in the Americans with Disabilities Act (ADA).
The activities of the project are guided by input from a national
steering committee that includes representatives from transportation
and disability organizations. Easter Seals Project ACTION has worked
effectively with the Department of Transportation under four
Presidents, and numerous Department of Transportation (DOT) Secretaries
and Federal Transit Administration (FTA) Administrators. Today, Project
ACTION is working closely with Secretary Mineta and the FTA. Secretary
Mineta, who worked on the original authorization of Project ACTION, has
worked closely with us since taking over DOT.
Easter Seals Project ACTION was also heavily featured in the
President's New Freedom Initiative Progress Report released in 2004.
This demonstrates how closely the administration is working with
Project ACTION to reach our shared goal of a safe, accessible,
reliable, efficient and affordable transportation for and by citizens
with disabilities at the local, State, regional and national levels
throughout the United States.
SUPPORT FOR EASTER SEALS PROJECT ACTION
Easter Seals Project ACTION's successes are diverse and the value
of the Project to both the transit and disability communities can be
well documented. For instance, Barry Barker, Executive Director of the
Transit Authority of River City (Louisville, KY) states that, ``Easter
Seals Project ACTION's support has enhanced our ability to maximize the
quality of service we provide to all of our customers. The project
helps us provide our customers with the mobility necessary to fully
participate in the community.''
Maureen McCloskey, National Advocacy Director of the Paralyzed
Veterans of America states that, ``The forum that Easter Seals Project
ACTION has provided has created a dynamic dialogue between the
disability and transit communities that has resulted in increased
access to transportation for people with disabilities.''
EASTER SEALS PROJECT ACTION WORKING AT THE COMMUNITY LEVEL
Among the programs pursued by the project in the recent period have
been efforts aimed at increasing community capacity to meet the
transportation needs of people with disabilities. For instance, in
2001, Easter Seals Project ACTION initiated the first Mobility Planning
Services (MPS) Institute. The latest Institute will take place in April
of this year and approximately 25 communities will take place in the 2-
day event. The teams are representing localities across the country
including Thomas Jefferson District, VA; Harford County, MD; Montgomery
County, PA; Aiken County, SC; Santee Wateree Region, SC; Jacksonville,
FL; Louisville, KY; Ann Arbor, MI; Genesee County, MI; Lake County, OH;
Polk County, MN; Washburn County, WI; Capital Area Region, TX; Valencia
County, NM; Spearfish, SD; Orange County, CA; Fairbanks County, AK; and
Multnomah-Clackamas-Washington Counties, OR. This was the fourth group
of communities to go through the MPS training. The first three groups
of communities remain active and working with Project ACTION to
continue their work at the community level. To participate in the
Institute, each community had to identify a leadership team to attend
the training. The leadership team had to consist of representatives
from transit providers, disability service providers and disability
advocacy organizations. This team approach will assure that all
stakeholders are involved in implementing MPS. The greatest success so
far of the MPS concept has been that it provides the disability
community and the transportation industry an opportunity to develop
tools for working together where in the past there had often been a
lack of communication and in some cases even animosity. By implementing
MPS, communities do a better job of meeting the transportation needs of
people with disabilities and therefore better meet the transportation
needs of all residents. Communities that participate in MPS receive
ongoing in-depth technical assistance from Project ACTION staff ranging
from access to Project ACTION materials to on-site training and
facilitation by Project ACTION staff.
EASTER SEALS PROJECT ACTION WORKING AT THE STATE LEVEL
Project ACTION has partnered with the FTA on several initiatives
designed to increase the capacity of States to support accessible
transportation for people with disabilities.
A good example of this collaboration is the work that Project
ACTION is doing with the FTA to support the success of the multi-
Federal Department ``United We Ride'' initiative. Project ACTION helped
facilitate a national meeting in March of 2003 of Governor-appointed
representatives from State Departments of Labor, Transportation,
Education and Health and Human Services. Forty-six States and
territories participated in this forum that was one of five elements of
an FTA effort to bring together Federal and State agencies to help
identify, plan and alleviate barriers to human service transportation
coordination. Project ACTION is assisting in the dissemination of the
FTA developed Framework for Action planning process guide to help
States and communities build and operate coordinated transportation
systems and is providing technical assistance on its use throughout the
country.
EASTER SEALS PROJECT ACTION WORKING AT THE NATIONAL LEVEL
Some of the materials that Easter Seals Project ACTION has
developed over the years include:
--A toolkit for assessing bus stop accessibility;
--A guide for employment professionals working with people with
disabilities on how to solve transportation issues that serve
as a barrier to employment;
--A public transportation curriculum for children with disabilities
in grade 8-12; and,
--A guide to transportation resources in rural communities for people
with disabilities.
All resource materials available from Easter Seals Project ACTION
activities are available free of charge through the Project ACTION
clearinghouse on the Project ACTION website: www.projectaction.org.
As mentioned, Project ACTION staff also are involved in
continuously providing technical assistance to transit providers,
nonprofit human service organizations, people with disabilities, and
the general public. The forms of technical assistance provided are
provided based on the determination of what would be the most helpful
in the situation being addressed. Assistance from Project ACTION ranges
from the delivery of basic information in the form of brochures from
our national clearinghouse to telephone, e-mail, participation in the
training program and on single or ongoing on-site work.
CONTINUING NEED FOR EASTER SEALS PROJECT ACTION
Access to transportation is a vital issue for people with
disabilities. For many people with disabilities, a lack of accessible,
affordable pubic transportation is the primary barrier to employment,
education and participation in community life. In his New Freedom
Initiative, President Bush recognized the importance of accessible
transportation for people with disabilities, and has proposed an
increase in Federal support for promoting innovative and alternative
transportation solutions for people with disabilities. As these
proposals are implemented, it will become increasingly important that
the resources and skills, relationships and knowledge that Easter Seals
Project ACTION has fostered remain strong. Should the appropriations
process support this New Freedom Initiative, Project ACTION is
committed to working with DOT on implementation.
There is a growing need for outreach by Project ACTION to specific
populations. While Project ACTION has historically worked with rural
communities to help address their transportation issues, the lack of
access for rural residents with disabilities is still unacceptable.
Easter Seals national headquarters and Project ACTION are working
together to coordinate efforts to better serve rural residents with
disabilities in a variety of service areas including transportation.
Further, as the population ages, there is also a need to develop and
provide additional specific resources and assistance to transit
providers and older passengers. Since most people will experience some
level of disability as they age and require accessible transportation,
Project ACTION's resources will again be invaluable as transit
providers struggle to meet the needs of this new wave of riders.
FISCAL YEAR 2007 REQUEST
In order to continue the outstanding work of Easter Seals Project
ACTION, Easter Seals national headquarters respectfully requests that
$3 million be allocated in fiscal 2007 to the Department of
Transportation for project activities.
Mr. Chairman, thank you for the opportunity to present this
testimony to the subcommittee. Your efforts have improved the
accessibility of transportation for persons with disabilities and the
ability of the transportation community to provide good service to all
Americans. Easter Seals Project ACTION looks forward to continuing to
work with you toward the pursuit of these objectives.
______
Prepared Statement of the Skokomish Tribe
My name is Gordon James. I am Chairman of the Skokomish Tribe of
Washington State. The Skokomish Indian Reservation is a rural community
located at the base of the Olympic Peninsula with a population of over
1,000 people. The Skokomish Tribe appreciates the work of the
subcommittee and asks that you provide $2.1 million from the Department
of Transportation, Federal Lands Highway Fund for the Skokomish Tribe
Highway 101 Improvements and Parkway Access Infrastructure Project. The
Tribe requests this funding for construction and improvements on
Highway 101 and the access road leading to the site of the Tribe's
planned community housing development.
BACKGROUND AND NEED
The need for housing in the Skokomish community is great. We
currently have 91 families with no available housing. Of the existing
housing stock, nearly half is within the 100-year floodplain. Flooding
has already caused damage to 40 percent of the Reservation's septic
systems, resulting in serious community health concerns and
environmental damage, such as dissolved oxygen in the Hood Canal.
Because it is in the floodplain, Federal funds are not available to
rehabilitate this housing.
To meet this need, the Tribe has been working for the past 9 years
to plan and develop a safe, practical and culturally relevant housing
development for tribal members. The Tribe recently purchased 160 acres
and will soon begin construction on the Skokomish Community Housing
Development. The development will eventually contain 138 homes and will
be constructed in three phases. Phase 1, which will entail construction
of 30 homes and the necessary infrastructure to support them, will be
constructed over the next 2 years. (Please see Attachment 3: Estimate
for Skokomish Master Plan for a detailed budget for the housing
development.)
The funding requested for fiscal year 2007 will support the road
improvements necessary to complete Phase 1. Highway 101 passes near the
development site, but the access road leading to the site is a small
logging road used for access to an adjacent State park. In order to use
it as a residential area, the access road must be drastically improved.
In addition, because the access road leaves the highway at a corner,
substantial infrastructure improvement will be needed to improve the
line of sight and make the road safe for frequent use. This includes,
for example, constructing a retaining wall, widening the highway and
adding a left turn lane. In addition to its use as an access road for
the Tribe's housing development, this road will also offer improved
access to the State park.
STATUS OF PROJECT
Over the past year and a half, the Tribe has acquired land and
developed a master plan for construction of a tribal housing
development. On April 1, 2006, construction will begin on the
infrastructure for Phase 1 of the development (the first 30 homes),
including the water and wastewater facilities. The Washington
Department of Transportation has issued a permit so that construction
can begin even without an asphalt road. However, improvement to U.S.
Highway 101 and the access road will be critical to both the
construction process and the eventual use of the development. We
anticipate that Phase 1 will be completed within 2 years. Once Phase 1
is completed, tribal members can begin moving into the first 30 homes.
Phases 2 and 3 will involve subsequent expansion of the development.
Funding from the fiscal year 2007 HUD budget will enable the Tribe to
complete the road improvements necessary for Phase 1. Funds for the
housing have been secured from other sources.
The total project cost is $2.1 million for road improvements
(highway improvement and parkway access). These improvements will be
undertaken during Phase 1 of the project, which we estimate will be
completed in approximately 2 years. Of this, at least $1.1 million will
be expended during fiscal year 2007. This amount includes the items
listed in Part A of Attachment 2: Parkway, Highway 101 to West Side of
Phase 1 & 2 (parkway access). It also includes the cost of Construction
Surveying and Engineering & Administration listed in Part B: Highway
101 Improvements (costs necessary to begin surveying for Highway 101
improvements). For additional information please see Attachment 2:
Estimate for Highway 101 Improvements and Parkway Access.
STATE, LOCAL AND FEDERAL SUPPORT
The Tribe has broad Federal and State support for its housing
development project. For Phase 1, the Tribe has secured a Community
Development Block Grant from HUD for water and wastewater and is
pursuing a grant/loan from the USDA for additional infrastructure
costs. Infrastructure funding will also come from HUD's Indian
Community Development Block Grant program and from the Indian Health
Service. Washington's Community Trade and Economic Development Council
will contribute money from its revolving fund for housing.
In addition to these financial commitments, the project is
supported by the Washington Department of Transportation, the Public
Utility Department and various financing institutions, and all these
Federal and State entities participate in regular planning meetings
with the Tribe.
For the reasons described above, the Skokomish Tribe supports full
funding of the Federal Lands Highway Fund and requests a special
appropriation of $2.1 million to support this project. We appreciate
the opportunity to present testimony on these important infrastructure
needs. If we can provide any additional information, please contact the
Tribe or our Counsel.
Attachments.--(1) Letter from Chairman James; (2) Estimate for
Highway 101 Improvements and Parkway Access; (3) Estimate for Skokomish
Master Plan; and (4) Phase 1 Design diagram. This diagram shows a
proposed dual access road that would serve both the housing development
and the adjacent State park. We are working closely with the State to
ensure that both sites are served by the improved access road.
______
Prepared Statement of the California Industry and Government Central
California Ozone Study (CCOS) Coalition
Mr. Chairman and members of the subcommittee, on behalf of the
California Industry and Government Central California Ozone Study
(CCOS) Coalition, we are pleased to submit this statement for the
record in support of our fiscal year 2007 funding request of $500,000
from the Department of Transportation for CCOS. These funds are
necessary for the State of California to address the very significant
challenges it faces to comply with new national ambient air quality
standards for ozone and fine particulate matter. The study design
incorporates recent technical recommendations from the National Academy
of Sciences (NAS) on how to most effectively comply with Federal Clean
Air Act requirements.
First, we want to thank you for your past assistance in obtaining
Federal funding for the Central California Ozone Study (CCOS) and
California Regional PM10 /PM2.5 Air Quality Study
(CRPAQS). Your support of these studies has been instrumental in
improving the scientific understanding of the nature and cause of ozone
and particulate matter air pollution in Central California and the
Nation. Information gained from these two studies is forming the basis
for the 8-hour ozone, PM2.5, and regional haze State
Implementation Plans (SIPs) that are due in 2007 (ozone) and 2008
(particulate matter/haze). As with California's previous SIPs, the
2007-2008 SIPs will need to be updated and refined due to the
scientific complexity of our air pollution problem. Our request this
year would fund the completion of CCOS to address important questions
that won't be answered with results from previously funded research
projects.
To date, our understanding of air pollution and the technical basis
for SIPs has largely been founded on pollutant-specific studies, like
CCOS. These studies are conducted over a single season or single year
and have relied on modeling and analysis of selected days with high
concentrations. Future SIPs will be more complex than they were in the
past. The National Academy of Sciences (NAS) is now recommending a
weight-of-evidence approach that will involve utilizing more broad-
based, integrated methods, such as data analysis in combination with
seasonal and annual photochemical modeling, to assess compliance with
Federal Clean Air Act requirements. This will involve the analysis of a
larger number of days and possibly an entire season. In addition,
because ozone and particulate matter are formed from some of the same
emissions precursors, there is a need to address both pollutants in
combination, which CCOS will do.
Consistent with the new NAS recommendations, the CCOS study
includes corroborative analyses with the extensive data provided by
past studies, advances the state-of-science in air quality modeling,
and addresses the integration of ozone and particulate pollution
studies. In addition, the study will incorporate further refinements to
emission inventories, address the development of observation-based
analyses with sound theoretical bases, and includes the following four
general components: Performing SIP modeling analyses, 2005-2011;
Conducting weight-of-evidence data analyses, 2006-2008; Making emission
inventory improvements, 2006-2010; Performing seasonal and annual
modeling, 2008-2011.
CCOS is directed by Policy and Technical Committees consisting of
representatives from Federal, State, and local governments, as well as
private industry. These committees, which managed the San Joaquin
Valley Ozone Study and are currently managing the California Regional
Particulate Air Quality Study, are landmark examples of collaborative
environmental management. The proven methods and established teamwork
provide a solid foundation for CCOS.
For fiscal year 2007, our Coalition is seeking funding of $500,000
from the DOT through Highway Research funds. DOT is a key stakeholder
in air quality issues because Federal law requires that transportation
plans be in conformity with SIPs. Billions of dollars in Federal
transportation funds are at risk if conformity is not demonstrated for
new transportation plans. As a result, transportation and air agencies
must be collaborative partners on SIPs and transportation plans, which
are linked because motor vehicle emissions are a dominant element of
SIPs in California and nationwide. Determining the emission and air
quality impacts of motor vehicles is a major part of the CCOS effort.
Heavy-duty trucks are known to have very different driving patterns
than light duty cars and, despite smaller numbers, are responsible for
a disproportionate amount of emissions (e.g. approximately 50 percent
of California's mobile source NOx emissions). The continued growth of
heavy-duty truck travel, including increases in inter-State and
international goods movement, makes this element of the SIP
transportation emission estimate critical. Thus, to support the
region's new SIPs and to address the new NAS recommendations,
improvement of the temporal and spatial distribution of heavy-duty
truck emissions is needed. We propose funding of this activity at a
level of $500,000. The funding will go to collect data that can be used
to more accurately characterize heavy-duty truck emissions, including
those resulting from NAFTA.
Thank you very much for your consideration of our request.
COOPERATIVE PARTNERSHIP
Private Sector
Western States Petroleum Association; Pacific Gas and Electric
Company; Electric Power Research Institute; Nisei Farmers League and
Agriculture; Independent Oil Producers' Agency; California Cotton
Ginners and Growers Associations.
Local Government
San Joaquin Valley Unified Air Pollution Control District (On
Behalf of Local Cities and Counties); Bay Area Air Quality Management
District; Sacramento Metro Air Quality Management District; San Luis
Obispo County Air Pollution Control District; Mendocino County Air
Pollution Control District.
State Government
California Air Resources Board; California Energy Commission.
Federal Government
Environmental Protection Agency; Department of Agriculture;
Department of Commerce; National Oceanic and Atmospheric
Administration; Department of Transportation; Department of Interior;
Department of Energy (Invited Partner).
______
Prepared Statement of the Coalition of Northeastern Governors
As the subcommittee begins the fiscal year 2007 transportation
appropriations process, the Coalition of Northeastern Governors (CONEG)
is pleased to share with the subcommittee testimony on transportation
and community development programs in the fiscal year 2007
Transportation, Treasury, the Judiciary, Housing and Urban Development,
and Related Agencies Appropriations bill. The CONEG Governors commend
the subcommittee for its past support of funding for the Nation's
highway, transit, and rail systems. We understand that the complex,
interlocking issues that the subcommittee faces in crafting this
appropriations measure are compounded by the overall budget
challenges--challenges that are intensified by the deficit and defense
and security needs. We urge the subcommittee to continue the important
Federal partnership role that is vital to strengthening the Nation's
multi-modal transportation system. This system is a critical
underpinning to the productivity of the Nation's economy and the
security and well-being of its communities.
TRANSPORTATION
The subcommittee's challenge in the transportation arena is
compounded by the uncertainty surrounding the future of contributions
to the Highway Trust Fund and its ability to sustain the structure
created by the Safe, Accountable, Flexible, Efficient Transportation
Equity Act: A Legacy for Users (SAFETEA-LU) (Public Law 109-59). The
CONEG Governors strongly support the National Surface Transportation
Policy and Revenue Study Commission created by SAFETEA-LU (Section
1909) and are concerned that it produce a credible report. We encourage
the subcommittee to review the funding levels provided to the
Commission and urge your active involvement.
The Governors urge the subcommittee to fund the combined highway,
public transit and safety programs at levels consistent with the
authorized levels in SAFETEA-LU. This Federal funding is essential to
continue the progress in recent years to improve the condition and
safety of the Nation's highways, bridges and transit systems. Continued
and substantial Federal investment in these infrastructure
improvements--in both urban and rural areas--is necessary if the
Nation's surface transportation system is to safely and efficiently
move people and support the substantial growth in freight movement that
is projected in the coming decade.
--We are pleased that the President requested a Federal aid highway
obligation limit of $39.1 billion for fiscal year 2007, a level
equal to the authorized contract authority plus $842 million
from the Revenue Aligned Budget Authority (RABA).
--The Governors strongly urge the subcommittee to fund public transit
at the fiscal year 2007 authorized funding level of $8.97
billion. The proposed $100 million shortfall in the newly-
created Small Starts program is of concern. This program is
attractive since it provides the flexibility to fund small but
vital transit projects, such as bus rapid transit, that might
not be efficient or cost-effective if subject to the lengthy
approval process needed for larger endeavors. Although the
administration questions the funding level needed as the Small
Starts program gets underway in fiscal year 2007, this does not
justify a reduction in the overall funding level for the
Capital Investment Grants program--a program which is highly
competitive and oversubscribed. Furthermore, a failure to fully
fund transit would undermine the important and historic 80/20
funding split between highways and transit.
--The Governors also urge the subcommittee to provide sufficient
funding for the Coordinated Border Infrastructure Program. A
strong program--one that invests in transportation projects
addressing both security and transportation needs--can
contribute to safer, more efficient and secure flows of people
and goods across international borders and through gateways.
The CONEG Governors also request that the fiscal year 2007
appropriations include $1.598 billion in Federal funding for intercity
passenger rail, with specific funding levels provided for operations,
capital and debt service. This funding level requested by the Amtrak
Board can ensure the stability of the current national system as
capital investment and operations reform are undertaken through
concerted and hopefully coordinated activities of Amtrak, the U.S.
Congress, the U.S. Department of Transportation (USDOT), and the
States. The administration's request of $900 million for Amtrak,
particularly its exclusion of funds required for debt service, could
undermine the reforms and critical capital investments currently
underway.
--Capital investment in infrastructure and equipment is the key to
improved reliability, increased ridership, and greater
operational efficiency. It is essential that the Federal
Government continue to be a consistent partner in funding the
capital needs of the Nation's intercity passenger rail system.
Across the Nation, States already partner with Amtrak by
investing in tracks, stations and equipment. Between 2002-2006,
the Northeast States have spent or committed approximately $1.7
billion for infrastructure improvements that benefit intercity
passenger rail. Amtrak is embarked upon a long-deferred capital
program to bring the federally-owned Northeast Corridor (NEC)
to a state of good repair. In fiscal year 2006, Northeast
Corridor States and commuter agencies and other third parties
will provide almost half of Amtrak's NEC infrastructure budget.
We are particularly concerned that the subcommittee ensures
that Amtrak can continue to fund the critically needed bridge
repair projects and life-safety work in the New York and
Baltimore tunnels.
--Intercity passenger rail is a complex and interconnected system.
Therefore, operations reform, such as that being developed for
Amtrak's long distance service, is an incremental process that
must be carefully designed and implemented to minimize
unintended consequences for ridership and revenues. Since
actual savings may not be realized for a number of years, we
urge the subcommittee to continue providing Federal operating
funds to Amtrak as part of its regular quarterly grant, not as
the discretionary Efficiency Incentive grant. The quarterly
operations and capital grant process is already subject to
USDOT oversight and approval.
--Amtrak has incurred substantial debt in past years to maintain
operations of the national system, acquire and improve
equipment for the entire system, and invest in infrastructure.
As in fiscal year 2006, we believe that the fiscal year 2007
appropriations should specifically include adequate Federal
funds for debt service so that this expense, incurred on behalf
of the entire national system, should not be paid at the
expense of essential capital investment.
The CONEG Governors recognize that the Appropriations Committee has
assumed a primary role in instituting reforms of Amtrak's internal
management, and more recently, reform of system management. We
previously shared with the subcommittee and the administration our
concerns with a number of specific and immediate reform provisions
imposed by the fiscal year 2006 transportation appropriations bill
(Public Law 109-115). We appreciate the subcommittee's recognition of
the importance of consulting with States in a number of these proposed
system reforms. However, we continue to believe that reform of
intercity passenger rail must occur in an orderly, timely process that
reflects collaboration with the States--not through an annual
appropriations process.
--We are deeply concerned with the NEC commuter access fee provision
that, for the first time, injects the USDOT into the public-
private contractual arrangements that govern passenger rail
cost-sharing on the Northeast Corridor. Rail service on the NEC
is governed by hundreds of carefully negotiated legal,
financial and operating agreements that involve substantial
State financial investments and numerous in-kind exchanges. The
Northeast Governors met with Secretary Mineta and Deputy
Secretary Cino, and chief executive officials from the State
transportation agencies and commuter authorities are engaged in
on-going discussions about this access fee. As previously
noted, Northeast Corridor commuter agencies already fully pay
for the additional operations expenses incurred by Amtrak due
to commuter rail service, and they participate in numerous
joint-benefit capital projects on this vital national
transportation corridor. Therefore, we urge the subcommittee to
allow the issue of cost-sharing to continue as part of
negotiated agreements between the commuter agencies and
Amtrak--and to allow any future changes to be undertaken as
part of these negotiations or parallel authorization
legislation.
--As the subcommittee also reviews the fiscal year 2006 appropriation
bill's reform provision dealing with restrictions on ticket
pricing and food and beverage service, we urge careful
consideration to ensure that any legislative requirements do
not negatively impact the ability of State-supported intercity
services to offer innovative food and beverage service and
market-based fares to grow intercity ridership, improve overall
financial performance, and meet State transportation goals.
A number of other national rail programs are important components
of the evolving Federal-State-private sector partnerships to enhance
passenger and freight rail across the country. SAFETEA-LU creates a new
Rail Relocation Program and enhances the Swift High Speed Rail
Development Program. We encourage the subcommittee to provide funding
for both these programs. We are concerned with the President's budget
proposal to eliminate the Railroad Rehabilitation and Improvement
Financing (RRIF) loan program, the principal Federal program for
addressing shortfalls in rail infrastructure investment. This proposal
is at odds with the tenfold increase in the RRIF program authorized by
SAFETEA-LU. The RRIF program provides an important financial tool,
particularly for the many regional and short line railroads that serve
communities across the Northeast and the Nation, as they seek to
upgrade infrastructure and equipment to meet the demands of changing
and competitive markets.
The CONEG Governors also support a modest increase in funding for
the Surface Transportation Board (STB) to $25.6 million. This funding
level will allow the STB, which provides essential oversight services
for the Nation and the Northeast, to maintain current service levels
while also addressing its increased building and security costs.
COMMUNITY DEVELOPMENT
The CONEG Governors urge the subcommittee to maintain the fiscal
year 2006 funding level for the Community Development Block Grant
(CDBG) program in fiscal year 2007. Federal funding for CDBG is an
efficient Federal investment since it leverages significant private and
public funds. Each $1 of Federal CDBG funding is matched by $3 in
private funds. The CDBG enables States to provide funding for
infrastructure improvement, housing programs, and projects that attract
businesses to urban and rural areas. It helps create new jobs and spurs
economic development, growth and recovery in the Nation's low income
and rural communities.
The CONEG Governors thank the entire subcommittee for the
opportunity to share these priorities and appreciate your consideration
of these requests.
______
Prepared Statement of the National Treasury Employees Union
FISCAL YEAR 2007 IRS BUDGET
NTEU represents 150,000 Federal employees in 30 Federal agencies
and departments, including the men and women who work at the Internal
Revenue Service. I appreciate the opportunity to provide the
subcommittee with comments on the IRS budget for fiscal year 2007.
There are several items in the administration's IRS budget that
NTEU believes would be detrimental to the IRS's mission. The two most
egregious items include the administration's plans to contract out tax
collection to private collection agencies starting this summer, and an
inadequate budget request that will prevent the IRS from continuing to
improve its customer service record while bolstering enforcement.
BUDGET
The IRS budget forms the foundation for what the IRS can provide to
taxpayers in terms of customer service and how the agency can address
the ever-increasing tax gap through enforcement. Without an adequate
budget the IRS cannot expect continued IRS customer service performance
ratings and to shrink the tax gap. I commend the administration for
acknowledging in its fiscal year 2006 Budget in Brief (page 12) that
the ``IRS yields more than four dollars in direct revenue from its
enforcement efforts for every dollar invested in its total budget.''
However, I must criticize the administration for failing to request a
budget for fiscal year 2007 that is commensurate with the needs of the
agency to meet its customer service, as well as enforcement challenges.
NTEU supports the IRS Oversight Board's overall IRS budget
recommendation which calls for an increase of $732 million over the
enacted fiscal year 2006 IRS budget. The Board's budget represents a
6.9 percent increase over the fiscal year 2006 budget and includes
increases in enforcement and taxpayer service programs, in contrast to
the President's budget request which calls for a cut of 2,500 full-time
equivalent (FTEs) employees and relies on unrealistic assumptions such
as an increase of $135 million in user fees. NTEU specifically supports
the increased enforcement budget proposed in S. Con. Res. 83, the
fiscal year 2007 Budget Resolution, as passed by the Senate. The Senate
Budget Resolution quadruples the President's enforcement request from a
$137 million increase over fiscal year 2006 to an additional $500
million increase for IRS enforcement in fiscal year 2007.
NTEU believes that if the IRS is going to continue to ask for
improved performance from its employees then it must request a
realistic budget that is commensurate with the agency's goals. The
President's budget request falls short and I would urge the
subcommittee for an appropriation that is commensurate with the IRS's
goals of bolstering enforcement and improving customer service.
SPAN OF CONTROL
I realize that Congress does not operate in a vacuum and it must
consider all Federal Government budget needs. In its fiscal year 2006
IRS Budget/Special Report, the IRS Oversight Board stated that it
``agrees that investing in enforcement does pay for itself many times
over, not only in increased revenues but by reinforcing the belief that
all taxpayers are paying their fair share.'' Although it's widely
recognized that additional funding for enforcement may provide a great
return on the investment, the administration seems reluctant to request
an adequate budget for the IRS enforcement budget. Thus, the agency
must look toward other cost-cutting measures within its budget
framework.
NTEU recommends the IRS look at the management-to-bargaining-unit
employee ratio to find much needed resources for additional collection
work. Although the number of frontline employees who do the work at the
IRS has decreased by 5.1 percent since 2000, the number of managers who
supervise these employees has increased by 1 percent over this same
period. If the IRS decreased the number of managers and management
officials at the same rate as it has decreased its rank and file
employees, the agency could put the savings toward bolstering
collections work, and avoid cuts to customer service.
CUSTOMER SERVICE
Congress must continue to reject IRS's plan to implement draconian
cuts to customer service. I was pleased that the subcommittee decided
to halt IRS's plans to move forward with cuts to customer service at
the end of last year with language in H.R. 3058 (Section 205), the
Transportation, Treasury, Housing and Urban Development, the Judiciary,
the District of Columbia, and Independent Agencies Appropriations Act,
2006. H.R. 3058, Section 205, uses broad language that prohibits any of
the appropriated funds to ``be used to reduce taxpayer services as
proposed in fiscal year 2006 until the Treasury Inspector General for
Tax Administration completes a study detailing the impact of such
proposed reductions on taxpayer compliance and taxpayer services . .
.''. The IRS decided to move forward with cuts to the toll-free service
by reducing hours of service and closing call sites, despite the
language this subcommittee imposed in H.R. 3058. In response, the
subcommittee followed up with additional language to clarify its intent
in H.R. 2863, Section 5021 (the fiscal year 2006 Defense Appropriations
bill) further explaining that ``reduced taxpayer services'' in the
Transportation-Treasury Appropriations bill included--but was not
limited to--any reductions in telephone service.
Despite these two explicit directives from Congress not to make any
taxpayer customer service cuts, the IRS closed the Chicago and Houston
telephone call sites. Furthermore, the IRS continues to consider
cutting Taxpayer Assistance Centers (TACs) as a cost-saving measure, as
confirmed in a recent TIGTA report (Reference Number: 2006-40-061). The
report also indicates that management does not have reliable data on
the TACs to make decisions about TAC operations. TIGTA also points out
that 47 of the 400 TACs nationwide--nearly 12 percent--are
``critically'' understaffed--meaning that they would be in danger of
closing were it not for the dedicated IRS employees who are filling in
from nearby TACs and through the use of seasonal employees. In its
first report responding to the congressional mandate in Section 205 of
H.R. 3058, TIGTA sharply criticizes the business model the IRS used to
justify the TAC closings last year (see TIGTA Reference Number: 2006-
40-067). Clearly, the IRS lacks the management information necessary to
provide adequate oversight of its TAC operations--much less make a
decision to close any of them.
I urge the subcommittee to continue to oppose the IRS's plan to
drastically cut customer service until the IRS has the data to justify
its customer service cuts and can explain the effects of such cuts on
taxpayers.
PRIVATE TAX COLLECTION
NTEU strongly opposes the administration's plan to privatize IRS
debt collection, as authorized by Congress in 2004 in H.R. 4520, the
American Jobs Creation Act of 2004. Under the statute, the IRS is
permitted to hire private sector debt collectors and pay them a bounty
of up to 25 percent of the money they collect. NTEU opposes this short-
sighted proposal, anticipates its complete failure as witnessed in a
similar 1996 pilot program and will continue to work towards its
repeal.
The IRS has said that it has learned from the 1996 project and is
better equipped to address the problems raised. However, a revealing
report by the Treasury Inspector General for Tax Administration (TIGTA
Audit No. 2003-20-010) provides evidence to the contrary. It shows how
IRS contractors, revamping IRS computers, put taxpayers' data at risk.
The objective of the TIGTA audit was ``to determine whether the
Internal Revenue Service (IRS) has adequately protected Federal
Government equipment and data from misuse by contractors.'' The review
found: ``The involvement of non-IRS employees in critical IRS functions
increases the risk of misuse or unauthorized disclosure of taxpayer
data, and could lead to loss of equipment or sensitive taxpayer data
through theft or sabotage.'' The TIGTA audit found that the ``lack of
oversight of contractors resulted in serious security
vulnerabilities.'' The report, found that, ``contractors blatantly
circumvented IRS policies and procedures even when security personnel
identified inappropriate practices.''
A more recent report by the General Accounting Office (GAO-06-328)
highlights the continuing failure of the IRS to ensure the internal
security of sensitive taxpayer data. GAO reported the IRS has corrected
only 41 of the 81 information security weaknesses it previously
discovered at two of the agency's critical data processing sites;
moreover, GAO said it has identified ``new information security
weaknesses that threaten the confidentiality, integrity and
availability of IRS financial information systems and the information
they process.'' These include, for example, the agency's failure to
implement effective ``electronic access controls related to network
management, user accounts and passwords; user rights and file
permissions; and logging and monitoring of other information security
controls to physically secure computer resources, and to prevent the
exploitation of vulnerabilities.'' Its report added: ``Collectively,
these weaknesses increase the risk that sensitive financial and
taxpayer data will be inadequately protected against disclosure,
modification, or loss, possibly without detection, and place IRS
operations at risk of disruption.''
The GAO report presents yet another warning signal about the
dangers of the IRS effort to move ahead with plans to hire private
sector debt collectors to pursue tax debts. Rather than seek to move
personal and sensitive taxpayer information into private hands the IRS
needs to devote time, attention and resources to ensuring it can
protect these vital data when the information is in its own hands. I
don't think anyone can realistically be satisfied right now that the
agency has accomplished that.
Clearly, the IRS does not have sufficient oversight of the current
contractors or technology it employs. Combine this fact with a 25
percent bounty incentive paid to the contractors and you have a recipe
for disaster, resulting in overly aggressive and abusive tactics on the
part of the private debt collectors.
While the IRS is currently liable for damages caused by an IRS
employee's misuse of sensitive taxpayer information, taxpayers would
not have proper redress with the Federal Government for misuse of their
confidential information by contractors. Instead, taxpayers would be
left to seek damages against the private collection agency while the
reputation of the IRS and the Federal Government is tarnished.
Furthermore, the debt collectors won't be given the same training
that is given to IRS collections employees. Even the National Taxpayer
Advocate in her 2005 Annual Report to Congress recognizes the problems
with implementation of the private debt collection initiative:
``However, the current plan shortchanges taxpayers by exempting
private collectors from the type of training required of IRS employees
in similar functions . . . Yet, the private collectors will not receive
even a small fractions of the training that is given to the IRS
employees in similarly situated positions. Moreover, the private
collectors themselves will administer the PDC training.'' (Volume 1,
page 78).
Not only will the private debt collectors not be given the same
training as IRS employees, but the contractors will be administering
the training. IRS collection professionals have a wealth of tax
knowledge that they have at their disposal in every case where they
deal directly with the taxpayer. The private debt collectors on the
other hand, will only be given a fraction of the training and not have
that same level of expertise as the IRS employee.
One of the most often-heard arguments in favor of the use of
private collection agencies is that if they are paid out of the
proceeds of what they collect, IRS's enforcement capabilities increase
without having to increase appropriations. Numerous congressional
supporters said they would prefer to have tax collection done by
Federal employees, but would go along with the use of private
collection agencies solely because it avoids the difficult issue of
getting Congress to approve additional appropriations for the IRS.
The statute that gives the IRS the authority to use PCAs allows 25
percent of collected revenue to be returned to the collection companies
as payment and 25 percent to be retained by the IRS for enforcement
efforts, thereby circumventing the appropriations process altogether.
There is nothing magical about revenues collected by private collection
companies. If those revenues could be dedicated directly to contract
payments and IRS enforcement efforts, there is no reason some small
portion of other revenues collected by IRS employees couldn't be
dedicated to IRS enforcement efforts. This would allow for increased
enforcement by IRS employees, which most people indicate is the
preferable route and eliminate large payments (up to 25 percent of
collections) to private collection companies, significantly increasing
net revenue to the General Treasury. While legislation would be
required to allow for this kind of dedication of revenue, I believe the
precedent has now been set with the private collection agency funding
provisions. Congress should consider supporting this approach as a
common sense way to make real progress in closing the tax gap, lowering
our deficits and making more funding available for our Nation's
critical needs.
It is a plain and simple fact: This plan to privatize tax
collection at the IRS will hurt U.S. taxpayers, will hurt IRS workers
and will erode the great gains the IRS has made with improved customer
satisfaction ratings. I urge the subcommittee to scrutinize the IRS's
accountability of its contractors and hold the private collection
agencies to the same standards as IRS employees.
PAY PARITY
The administration has asked Congress to provide only a 2.2 percent
pay raise for Federal workers in fiscal year 2007. This would be the
lowest raise since 1998, at a time when the cost of living rate is
steeply increasing and health insurance premiums are going up
dramatically. While in past proposals the Bush Administration did not
honor the historic practice of parity between the civilian and military
workforce, this year's proposal provides an equally insufficient pay
raise to both parts of government service.
Not only are Federal employees taking an effective pay cut once
inflation and health care costs are considered but the pay gap between
them and the private sector is widening. The Federal Employees Pay
Comparability Act (FEPCA), enacted in 1990 to close the gap between
Federal and private sector pay, has never been fully implemented.
Today, Federal pay lags 13 percent behind the private sector. Bringing
Federal worker pay into line with the private sector would be the most
effective cure to the Federal Government's hiring crisis.
Further reducing the potential fiscal year 2007 pay raise, the
administration proposes to reduce pay in fiscal year 2007 by funding
special rate pay out of this meager increase. While agencies should
have the resources they need to provide special rate pay, it should not
come by raiding the locality adjustments and annual pay increase for
Federal workers.
NTEU urges the subcommittee to oppose the administration's
legislative proposal to fund special rate pay by diverting part of the
locality and annual pay raise. I also seek your continued support for a
fair and equitable pay raise for the Nation's Federal civilian and
military workforce for fiscal year 2007.
CONTRACTING OUT
Last year, the House and Senate Transportation-Treasury HUD
subcommittees worked in a bipartisan, bicameral fashion to enact
legislation in H.R. 3058, Section 852 that begins to level the playing
field for Federal employees. NTEU supports the provisions and thanks
the subcommittee for its work last year. The legislation allows Federal
employees to offer their own realistic best bid with a most efficient
organization (MEO) in job functions being performed by more than 10
Federal employees; requires a 10 percent or $10 million cost savings of
the contractor in order for the work to be contracted out; and allows
executive agency heads to conduct public-private competitions to bring
contracted work back in-house. NTEU would strongly recommend that the
same provisions be included in the fiscal year 2007 Transportation-
Treasury Appropriations bill and additional flaws in the process be
examined.
For example, the process should prohibit the contractor from
receiving a cost advantage in the competition by offering an inferior
employer-sponsored health benefit than the Federal employees receive.
Contractors have an incentive to cut benefits to their workers in order
to reduce labor costs when offering their best bid. However,
contracting out should not be a race to the bottom. If contractors want
to offer inferior benefits to their workers, they should not be
rewarded for this by being given an advantage in the competition for
the work. Congress must also make sure that Federal employees are
treated fairly throughout the competition process by allowing us the
same legal standing before GAO for appeals purposes as has long been
enjoyed by contractors.
This list is by no means exhaustive but it's a good starting point.
If the administration is going to insist on using its flawed revised A-
76 Circular, then Congress must insist on correcting those flaws in the
competitive sourcing rules.
RIFS
I commend the subcommittee for acknowledging the IRS's haphazard
approach to reorganizing the agency and directing ``the IRS to consult
with the Committee prior to elimination, consolidation, or
reorganization of its workforce, and prohibits the IRS from proceeding
with matters relating to such job movement prior to the Committee's
action on the IRS budget.'' (Senate Rept. 109-109--Transportation,
Treasury, the Judiciary, Housing and Urban Development and Related
Agencies Appropriations Bill, 2006).
Despite the committee Report language, the IRS moved forward with
its planned reductions in force (RIFs) in several different areas.
Generally speaking, NTEU believes that the IRS would benefit both in
terms of cost savings and human resource satisfaction by placing a
greater emphasis on retraining current employees for other positions
within the IRS. Unfortunately, this has not been the approach taken by
the IRS with regards to RIFs at the agency. A more sensible downsizing
model is needed if the IRS wishes to keep the talented workforce it
currently has but also in order to attract new talent. A more
comprehensive, thoughtful approach to RIFs will also ensure that the
improved customer service gains made since 1998 are not lost.
CONCLUSION
It is indisputable that the IRS workforce is getting mixed signals
regarding its value to the mission of the Service and the level of
workforce investment the Service is willing to make. Without a doubt,
the frontline employees are committed to working with management to
increase efficiency and customer satisfaction. NTEU is committed to
striking a balance between taxpayer satisfaction, business results and
employee satisfaction. I invite Congress to join us in this endeavor.
______
Prepared Statement of the City of San Marcos, Texas
AIRPORT IMPROVEMENTS REQUEST--SAN MARCOS MUNICIPAL AIRPORT, SAN MARCOS,
TEXAS
Mr. Chairman and members of the subcommittee, on behalf of the City
of San Marcos, Texas, I am pleased to submit this statement in support
of our requests for project funding for fiscal year 2007.
The City of San Marcos requests Federal funding for the San Marcos
Municipal Airport to accomplish improvements that are in the public
interest. The improvements are described in the three specific projects
listed below:
------------------------------------------------------------------------
Amount
------------------------------------------------------------------------
Northside T-Hangar Construction......................... $3,500,000
New Terminal Building................................... 4,500,000
Fixed Base Operator (FBO) Facility...................... 1,500,000
---------------
Total Request..................................... 9,500,000
------------------------------------------------------------------------
The San Marcos Municipal Airport is a public general aviation
airport owned and operated by the City of San Marcos, Texas. It is
located just east of Interstate Highway 35 on Texas Highway 21
approximately 30 miles south of Austin and 45 miles north of San
Antonio in one the fastest growing corridors in Texas.
The airport is part of a closed military base; the remainder of the
former Air Force Base is occupied by the United States Department of
Labor's Gary Job Corps Center. When the base was closed and divided in
1966, the Job Corps retained the portion of the property with the
buildings and other amenities while the City of San Marcos was given
the aeronautical facilities consisting of runways, taxiways, and the
parking apron.
This arrangement has resulted in a ``bare bones'' airfield that
lacks the support structure to sustain an economically viable modern
airport. We have adequate aeronautical facilities and real estate but
little other facilities. In addition, current legislation provides for
airport capital improvement funding assistance through the Federal
Aviation Administration for aviation infrastructure, but not for the
type of improvements that this airport needs.
The City of San Marcos requests help to transform the airport into
a modern, self-sustaining enterprise. After analysis and master
planning, we have determined that the three projects herein described
will get us the ``biggest bang for the buck.'' These projects will meet
our highest priorities and most immediate needs, and they will be a
highly visible indicator that the San Marcos Municipal Airport is on
the move. We are firmly convinced that these improvements will kick-
start further development and attract private investment that will far
surpass the amount that we are seeking in Federal support.
The following program descriptions outline our three requests:
NORTHSIDE T-HANGAR CONSTRUCTION--$3,500,000
The layout of the former Gary Air Force Base is such that all the
buildings and developed area of the base were to the south of the
airfield. When the base was divided between the Gary Job Corps Center
and the San Marcos Municipal Airport, the airport was given only a thin
sliver of land on the south side to provide access and support the
airfield. There is not enough room for all the support facilities such
as hangars, maintenance shops, and terminal buildings that an active
airport requires.
However, on the north side of the airfield is real estate that has
never been developed. One prime piece of the northside area consists of
approximately 40 acres of very desirable airport land that fronts on
Texas Highway 21 and borders a newly refurbished main airport taxiway.
Except for the absence of infrastructure, it is the ``McDonald's''
location on the airport. The area requires an access road, drainage
improvements, pavements, and utilities. It also needs a seed project to
stimulate private investors to move into the area.
Our plan proposes to construct the infrastructure and to then build
approximately 50 nested T-hangars in two or three city-owned buildings.
Our planning estimate for the cost to implement this project is
$3,500,000. We are also convinced that once this northside development
ball starts to roll, the future of the new San Marcos Municipal Airport
will shift from the limited and constrained south side to the several
hundred acres of undeveloped land available on the north side.
NEW TERMINAL BUILDING--$4,500,000
The commercial, economic, and public service hub of a modern
airport is the public terminal building. The terminal building provides
public amenities such as a waiting room or lounge, airport
administration offices and public meeting rooms, restrooms, flight
planning facilities and communications links to obtain flight planning
information, commercial lease space for such businesses as an airport
restaurant, airport shops, and other aviation-related commercial
activities.
These facilities are sorely lacking in our present airport
configuration. It is opportune that the Federal Aviation Administration
is programming a new air traffic control tower for our airport in
fiscal year 2007. A new terminal building located adjacent to the
control tower could be architecturally coordinated with the control
tower for aesthetic advantage. The two facilities could achieve a
significant efficiency in the coordinated construction of road access,
utility services, parking facilities, drainage improvements, and
landscaping. This same concept is being touted at several other
airports similar to ours. (Dallas Executive Airport is a prime
example.) The planned terminal building planning concept is for a
building of approximately 10,000-square-feet first floor and total cost
estimated at $4,500,000.
FIXED BASE OPERATOR (FBO) FACILITY--$1,500,000
For general aviation operations, airport activity centers on the
FBO. This is where the transient and based pilots and aircraft
operators go to buy fuel and obtain direct support for their flights.
It is also a place where transient and based pilots can arrange to have
their aircraft serviced, repaired, and hangared overnight or longer
when required.
It is again opportune that the San Marcos Municipal Airport has an
established FBO that is capable of accomplishing these vital services
if a facility were available for them to lease. We propose that a
modern, state-of-the-art FBO be constructed to meet the airport's
present and future commercial requirements. The approximately 30,000
square foot structure would be mainly hangar space with an attached
business, shop, and office area. Cost is estimated at $1,500,000. Lease
payments and other airport fees would offset this investment; and the
investment is calculated to be a profitable enterprise for the airport
in the long term.
The 1,356 acre San Marcos Municipal Airport is a potential economic
dynamo for this region of Central Texas. The three airport improvement
projects that we are proposing will result in an increase in activity
and private investment. This is a good investment of public revenue
that will result in more high-paying aviation jobs, an increased tax
base, and more direct revenues in the form of airport fees and rents.
Our airport will also better serve the aviation needs of the region and
spur further growth, development, and prosperity for our citizens.
These projects are grounded in sound public policy principles. They
will result in excellent value for the American taxpayer and for the
traveling public that will utilize the facilities.
The City of San Marcos sincerely appreciates your consideration of
these requests for funding in the fiscal year 2007 cycle, and
respectfully requests your support.
______
Prepared Statement of the Access Board
The Access Board is requesting a total budget authority of
$5,956,000 for fiscal year 2007. The proposed budget is a 1.28 percent
increase over the amount requested for fiscal year 2006. The Board is
not planning new costly initiatives in fiscal year 2007. The Board will
continue its primary programs and has followed the directives issued by
the Office of Management and Budget for the preparation of the fiscal
year 2007 budget.
INTRODUCTION
The Board was established by section 502 of the Rehabilitation Act
and is the only Federal agency whose mission is accessibility for
people with disabilities. The Board has three primary programs:
guidelines and standards development; technical assistance, training,
and research; and enforcement.
The Board is responsible for developing accessibility guidelines
under the Americans with Disabilities Act, the Architectural Barriers
Act, and the Telecommunications Act. The Board is also responsible for
developing standards under section 508 of the Rehabilitation Act for
accessible electronic and information technology used by Federal
agencies. Additionally, the Board has responsibilities under the Help
America Vote Act to serve on the Election Assistance Commission's Board
of Advisors and Technical Guidelines Development Committee.
The Board provides technical assistance and training on each of its
guidelines and standards, and on a variety of other accessibility
issues. The Board also maintains a small research program that develops
technical assistance materials and provides information needed for
guidelines and standards development.
Finally, the Board enforces the Architectural Barriers Act, which
requires federally financed facilities to be accessible.
The Board has adopted this mission statement to guide its programs:
The Board is the catalyst for achieving an accessible America. The
statement recognizes that achieving an accessible America requires
bringing together the public and private sectors.
The Board has established long-range goals and annual objectives
for its programs in accordance with the Government Performance and
Results Act. The objectives are described in terms that permit future
assessment regarding whether the objectives were achieved. To satisfy
the requirements for an annual performance plan, this discussion and
budget justification presents information under each of the Board's
programs and reports on the results from fiscal year 2005 activities,
reviews the planned fiscal year 2006 activities, and presents the
fiscal year 2007 objectives.
The Board's long range goals are to promote accessibility by being
a:
--Leader in developing and updating guidelines, standards, and codes
for accessibility;
--Leader in information, education, and outreach on accessibility;
and
--Leading partner with Federal agencies to make the Federal
Government a model of compliance with accessibility standards.
The Board's strategies for achieving its long-range goals and
annual objectives involve working with its stakeholders. The Board
involves its stakeholders through advisory committees and review of
draft guidelines and standards to establish consensus-based guidelines
and standards that provide accessibility. The Board involves its
stakeholders in developing and disseminating information, education,
and outreach that will help covered entities understand and comply with
the guidelines and standards. Where the Board has enforcement
responsibilities over Federal agencies, the Board assists those
agencies to achieve compliance with accessibility standards.
The Board's programs will result in accessible buildings and
facilities, transportation vehicles, telecommunications equipment, and
electronic and information technology across our country and,
ultimately, the full economic and social integration of people with
disabilities into our society. Achieving these results will depend not
only on the Board's activities, but also on the level of commitment and
action taken by other Federal agencies, State and local governments,
and businesses that are required to comply with or enforce the various
laws that guarantee the civil rights of people with disabilities.
GUIDELINES AND STANDARDS DEVELOPMENT
The Board's long-range goal is to be a leader in developing and
updating guidelines, standards, and codes for accessibility. The Board
will continue to develop and update accessibility guidelines and
standards and to work cooperatively with organizations that develop
codes and standards affecting accessibility through fiscal year 2007
and beyond.
In January 2006, the Board committed itself to three new rulemaking
priorities. The three priorities include: (1) updating and revising the
Section 508 standards for accessible electronic and information
technology and the Telecommunications Act Accessibility Guidelines; (2)
updating and revising the Americans with Disabilities Act (ADA)
Accessibility Guidelines for Transportation Vehicles; and (3)
rulemaking on a variety of communications access issues.
Updating and revising the Section 508 standards and the
Telecommunications Act Accessibility Guidelines is the Board's top new
rulemaking priority. The Board plays a central role in the
implementation of Section 508 and keeping our standards current is a
vital part of this role. The telecommunications provisions in the
section 508 standards are based on and are consistent with the Board's
Telecommunications Act Accessibility Guidelines. Therefore, updating
and revising the Section 508 standards and the Telecommunications Act
Accessibility Guidelines should be done in one rulemaking. The Board
plans to charter a Federal advisory committee in fiscal year 2006 to
begin this rulemaking. The committee will include representation from
other Federal agencies, disability organizations, industry trade
associations, and others. It will also include representation from
other countries and international standards-setting organizations so
the new standards are harmonized with efforts being taken around the
globe.
Updating and revising the ADA Accessibility Guidelines for
Transportation Vehicles is needed to address emerging technologies such
as bus rapid transit and low floor vehicles. This rulemaking will be
accomplished by holding a series of information meetings in fiscal year
2006 and 2007 to collect information before issuing a proposed rule.
Rulemaking on communications access issues will address features
not already addressed, or not addressed fully, by the Board's
guidelines such as interactive transaction machines, point of sale
machines, drive-through machines, alerting devices for deaf and hard-
of-hearing individuals including carbon monoxide detectors and sleeping
room applications, and public address systems. This rulemaking will be
accomplished by holding a series of information meetings in fiscal year
2006 and 2007 to collect information before issuing a proposed rule.
The status of current guidelines and standards efforts is presented
below.
Outdoor Developed Areas
The Board's Outdoor Developed Areas Regulatory Negotiation
Committee presented its report to the Board in September 1999. This
committee developed new sections for parks, trails, camping and picnic
areas, and beach access routes. In October 2001, the Board sponsored an
information meeting on the final report of the Outdoor Developed Areas
Regulatory Negotiation Committee. The meeting was held in Denver, CO
during the annual meeting of the National Recreation and Park
Association. The meeting was informal and provided an opportunity for a
dialogue with Board members about the report.
In September 2003, the Board decided to develop a proposed rule on
outdoor developed areas using only its rulemaking authority under the
Architectural Barriers Act. Taking this approach will help move this
rulemaking forward and allow the Federal Government to take the
initiative of addressing accessibility in this area before applying
requirements to State and local governments or private entities. Future
rulemaking under the ADA will be enhanced by the experience of
implementing accessibility guidelines at Federal facilities and the
Federal Government will gain experience in implementing the guidelines.
This experience should prove important before applying them to other
entities. The Board expects to publish a proposed rule for public
comment in fiscal year 2006.
Passenger Vessels
In September 1998, the Board convened a 21-member Passenger Vessel
Access Advisory Committee to develop accessibility guidelines for
cruise ships, ferries, excursion boats, and other vessels covered by
the Americans with Disabilities Act. The Committee presented its report
with recommendations to the Board in November 2000. The Board created
an ad hoc committee of Board members to review the recommendations and
begin developing a proposed rule on access to passenger vessels.
On November 26, 2004, the Board published for public comment an
advance notice of proposed rulemaking (ANPRM) which addressed access to
and in smaller passenger vessels and a notice of availability (NOA)
releasing draft guidelines that addressed access to and in larger
passenger vessels. The Board is coordinating this rulemaking with the
Department of Transportation. The Department of Transportation issued
an ANPRM on operational issues affecting passenger vessels on the same
date as the Board. The Board held three public hearings in fiscal year
2005 to gather information and input on the ANPRM and the NOA. Over 150
vessel designers and operators, pier operators, persons with
disabilities, and others attended the hearings. The Board plans to
issue a second draft of the accessibility guidelines before issuing a
notice of proposed rulemaking. The second draft is expected to be
published in fiscal year 2006.
Public Rights-of-Way
In October 1999, the Board created a 32-member Public Rights-of-Way
Access Advisory Committee to assist it in developing new guidelines for
access to sidewalks, street crossings, and related pedestrian
facilities. The Committee presented its report with recommendations to
the Board in January 2001. The Committee will develop recommendations
for a technical assistance manual for agencies and practitioners to
support implementation of the future guidelines. In June 2002, the
Board released draft guidelines on accessible public rights-of-way for
public comment prior to issuing a notice of proposed rulemaking. Over
1,400 comments were received on the draft. The Board also held one
public hearing during the comment period. The Board has revised the
draft guidelines based on public comments and issued a notice of
availability in November 2005 placing the revised draft guidelines in
our rulemaking docket. The purpose of placing the draft guidelines in
the docket is to facilitate gathering of additional information for the
regulatory assessment and the preparation of technical assistance
materials to accompany a future rule. The Board is not seeking comments
on the draft guidelines. The Board will issue a notice of proposed
rulemaking in fiscal year 2007 and will solicit comments at that time.
Codes and Standards
The Board works with model codes organizations and voluntary
consensus standards groups that develop and periodically revise codes
and standards affecting accessibility. We have voting membership in
several codes and standards organizations, and monitor or are actively
involved in the development or revision of dozens of other codes and
standards affecting accessibility.
By working cooperatively with codes and standards-setting bodies,
Federal and private codes and standards will be more similar, or
harmonized, and the Board will be more alert to non-Federal influences
affecting its constituencies. Harmonization between Federal and private
requirements will make it more likely that buildings and facilities
will be accessible, thus reducing the necessity for complaints and
litigation.
Fiscal Year 2005 Results--Rulemaking
In fiscal year 2005, the Board:
--Published a notice of availability of revised draft guidelines on
access to public rights-of-way.
Fiscal Year 2005 Results--Codes and Standards
In fiscal year 2005, the Board:
--Actively participated in the development of the NSPI-9 Standard for
Aquatic Recreation Facilities. This new standard addresses
water parks and water attractions. The American National
Standards Institute's (ANSI) Board of Standards Review approved
NSPI-9 2004 ``Aquatic Recreation Facilities'' as an American
National Standard.
--Provided comment on revisions to the Manual on Uniform Traffic
Control Devices (MUTCD) which includes coverage of pedestrian
signals, intersection design issues, pavement markings,
signage, signalization, and other traffic control issues and
actively participated on the Signals Committee Task Force to
develop a draft standard for accessible pedestrian signals.
Fiscal Year 2006 Planned Activities--Rulemaking
In fiscal year 2006, The Board will issue two proposed guidelines:
--NPRM on outdoor developed areas.
--Second draft of guidelines for passenger vessels.
The Board will also charter a Federal advisory committee to begin
the process of updating and revising the Section 508 standards and the
Telecommunications Act Accessibility Guidelines.
Fiscal Year 2006 Planned Activities--Codes and Standards
The Board worked with the Election Assistance Commission (EAC) in
the development of voluntary voting system guidelines under the Help
America Vote Act. The guidelines were made available in January 2006.
The voting system guidelines were developed with the assistance and
input of a Technical Guidelines Development Committee and Board of
Advisors. Two Access Board members serve on these groups. In fiscal
year 2006, the Board will continue working with the EAC on the next
version of the guidelines.
Fiscal Year 2007 Objectives--Rulemaking
In fiscal year 2007, the Board will issue one final rule and two
proposed rules:
--Final rule on access to outdoor developed areas.
--NPRM on public rights-of-way accessibility.
--NPRM on access to passenger vessels.
Fiscal Year 2007 Objectives--Codes and Standards
In fiscal year 2007, the Board will continue efforts to harmonize
its guidelines with model codes and standards, including the ICC/ANSI
A117.1 Standard for Accessible and Usable Buildings and Facilities.
technical assistance, training, and research
The Board's long-range goal is to be a leader in information,
education, and outreach on accessibility. The Board provides technical
assistance to a wide variety of people regarding the accessibility
guidelines and standards it issues. The Board's customers include
architects, builders, designers, manufacturers, people with
disabilities, State and local governments, and Federal agencies. The
Board's technical assistance program has four components:
--Responding to customer inquiries. The Board responds to about
12,000 customer inquiries each year. We have four toll-free
telephone lines for customers to call with questions. Customers
also e-mail and fax us questions. Many literally are sitting at
a drawing table with a design problem. They want accurate,
reliable, and timely advice. Our customers value being able to
discuss their questions directly with our accessibility
specialists who developed the guidelines and standards.
--Developing and disseminating bulletins, manuals, and other
publications. The Board maintains about 30 publications on
accessibility issues. These range from short bulletins
responding to frequently asked questions about specific issues
such as accessible parking, to manuals on the Board's
guidelines and standards. We send out about 15,000 publications
each year in print and alternate formats.
--Providing training. The Board conducts about 90 training sessions
each year. Training usually is provided at conferences and
seminars sponsored by other organizations. Training sponsors
generally reimburse us for travel expenses.
--Maintaining the Board's website. The Board's website (www.access-
board.gov) has become a very effective way to distribute
information to the public. Customers can download many of our
publications and view our accessibility guidelines and
standards from our website. We received over 2.2 million user
sessions on our website in fiscal year 2005.
The Board also has informal partnerships with other organizations
such as the American Institute of Architects, the National Association
of ADA Coordinators, and the Disability and Business Technical
Assistance Centers (DBTAC) to disseminate information about the Board's
programs. Many of the Board's guidelines and publications are available
through these organizations' on-line networks. The Board also provides
training for these organizations.
As the Board develops guidelines for new areas such as outdoor
developed areas, passenger vessels, and public rights-of-ways, there
will be increased demands for technical assistance from existing and
new customer groups. There also will be opportunities to use existing
partnerships and establish new partnerships with customer groups to
disseminate information about the Board's guidelines and standards.
Fiscal Year 2005 Results--Technical Assistance, Training, and Research
Recently, the Board adopted a ``focus issue'' approach to public
outreach and technical assistance that will allow the Board to reach a
wider variety of audiences than it does now. The focused approach will
supplement the Board's existing outreach programs. Focusing on an issue
will allow the Board to make a large impact in a narrow segment of
society in a way that its current approach does not allow. The Board
selected access to courthouses as its first focus issue and in October
2004 created a 31-member Courthouse Access Advisory Committee to guide
this work. The committee has met five times since its creation. It is
scheduled to complete its work in November 2006. The committee will
develop technical assistance materials related to the accessibility of
courthouses, particularly courtrooms, including best practices, design
solutions, and the promotion of accessible features.
The Board unveiled its newly redesigned website in June 2005 using
the Board's new agency graphic identity. This new graphic identity
provided the Board with a coordinated range of new templates for the
layout of reports, bulletins, internet presence, and other print and
electronic materials. The Board developed this new and more appropriate
graphic expression, including both logo and text, for its family of
print materials. The Board did this to reflect its professionalism and
to communicate that the Board is the only Federal agency devoted to
accessibility in the built environment and in communications and
electronic technologies.
In fiscal year 2005, the Board responded to 12,271 customer
inquiries; distributed 1,250 information packets; and conducted 108
training sessions, which were attended by 9,100 people. An information
packet usually contains several publications. Since the Board does not
collect data on publications disseminated through partner
organizations, the actual number of publications disseminated to its
customers is greater than the current data indicate.
The Board has used its website to provide copies of the Board's
guidelines and answers to frequently asked questions about the
guidelines so that more customers can get the information they need.
The number of user sessions on the Board's website continues to grow.
There were approximately 2.2 million user sessions in fiscal year 2005,
nearly 600,000 more than the previous year. Due to the increasing use
of the its website, the Board is focusing on web-based dissemination of
information since this allows a variety of options for speedy
distribution at a low cost to the Board. The Board also published and
distributed six issues of Access Currents, a free newsletter issued
every other month by mail and e-mail.
Technical assistance, research, and training projects funded in
fiscal year 2005 include:
--Retail Checkout Counters and Point-of-Sales Machines.--This project
will develop a technical assistance bulletin demonstrating in
well-illustrated and detailed case studies and best practices
the application of accessibility requirements to the design,
engineering, fabrication, and construction of check-out
counters and transaction machines.
--Wheeled Mobility Research.--This multi-year project will research
and report on the space requirements, horizontal and vertical
maneuvering parameters, reach ranges, and other key factors of
occupied power wheelchairs and scooters in use in buildings,
facilities, and transportation vehicles. The data collected is
to be presented in a report that will facilitate comparison
with provisions in current accessibility guidelines, with key
published studies of mobility aid space and maneuvering
requirements, and will enable consideration of several
increments of accommodation for both power wheelchairs and
scooter types.
--Effects of Static Electricity in Play Areas.--Static electricity in
play areas is potentially harmful to children who have cochlear
implants. This project will collect measures of the levels of
static electricity being created in play areas where plastic
play components are installed. The contractor will analyze the
findings from several test areas and compare them to the
charges that result from other sources and charges known to
have effects on hearing technologies. A second phase of work
will support additional site testing.
--Measures and Materials.--This project will bring together
representatives of design and construction industry
organizations to work with the Board to incorporate information
on tolerances relative to accessibility in industry
specifications. A technical assistance publication will also be
developed.
--Wayfinding at Intersections.--This project funded a workshop that
brought together highway engineers, orientation and mobility
specialists, and people with disabilities in a 2-day workshop
to consider possible changes to roadway design to facilitate
wayfinding. Fiscal year 2005 funding supported continued
discussion and development of standard intersection plans based
upon workshop recommendations, with the objective of arriving
at consensus schemes that can be implemented by industry.
--Passenger Vessels Regulatory Assessment.--This project will develop
an initial case study for use in the Passenger Vessels
Regulatory Assessment.
Fiscal Year 2006 Planned Activities--Technical Assistance, Training,
and Research
In November 2005, the Board set its research priorities for fiscal
year 2006. The projects include the following:
--Communications in Transportation Facilities.--This project will
study and determine the need for changes in communications
accessibility provisions in the Board's guidelines for
transportation facilities and vehicles.
--Pedestrian Signals at Roundabouts.--The draft public rights-of-way
guidelines require pedestrian signals at multi-lane crossings
of roundabouts. This study will identify candidate technologies
in use elsewhere around the world.
--Wayfinding Research.--The Department of Blind Rehabilitation at
Western Michigan University is using seed funding from the
National Eye Institute to assess the relative effectiveness of
several physical wayfinding cues in the outdoor environment,
including returned edges, tactile surfaces, guidestrips, and
curb ramp orientation. Our funding will enable them to do more
dispositive research with a larger group of subjects and test a
wider range of cues.
--Standards for Assisted Transfer.--This project will follow-up on an
earlier one that collected and presented information on current
practices in medical care and assisted living facilities by
convening an expert group of stakeholders to recommend changes
to the Board's guidelines.
--Slope and Surface Effects on Manual Wheelchair Users.--This project
will commission a comparative analysis relative to manual
wheelchair use of the several standard protocols used to
measure work, effort, energy expenditure, efficiency,
difficulty, and rollability to develop a more accurate
protocol.
--APS Troubleshooting.--This project will commission a technical
assistance bulletin regarding how to specify accessible
pedestrian signals that are appropriate to specific
intersection types and conditions.
--Sign Language Versions of Selected Board Material.--People who are
deaf would like to access materials in their native language,
American Sign Language. This project will develop short video
clips using American Sign Language to convey information about
the Board and ways to file Architectural Barriers Act
complaints and place the clips on the Board's web site.
--Indoor Environmental Quality Follow-up.--This project will
commission the National Institute of Building Sciences to
pursue key recommendations of a previous Board sponsored study
on improving the indoor environment for individuals with
multiple chemical sensitivities and electromagnetic
sensitivities.
--Study Lighting for Low Vision Users.--This project will commission
a research synthesis on existing lighting research and
standards affecting people with low vision. This synthesis will
be useful in providing technical assistance to improve access
for people with low vision and could lead to eventual
rulemaking.
--Regulatory Assessment for Passenger Vessel Rulemaking.--This work
is required by our rulemaking agenda.
--Regulatory Assessment for Public Rights-of-Way Rulemaking.--This
work is required by our rulemaking agenda. This year the Board
will fund the incidental expenses necessary to convene industry
leadership to plan for data gathering and analysis.
Because of the Board's expertise in accessibility issues, many
government agencies and private organizations ask for its assistance in
ensuring access at their facilities. The Board provided technical
assistance to the Department of Commerce on the proposed new Census
Bureau building in Suitland, MD. Members of the Maryland Congressional
delegation requested the Board's assistance to help make this building
a model of accessibility. The Board also reviewed accessibility issues
for the planned new Department of Transportation headquarters building.
Fiscal Year 2007 Objectives--Technical Assistance, Training, and
Research
In fiscal year 2007 and beyond, the Board will develop training and
technical assistance materials on its planned final rules on outdoor
developed areas, passenger vessels, and public rights-of-ways. As the
Board publishes final rules, it makes every effort to ensure that
training and technical assistance materials will be available to
organizations and individuals that must apply the new requirements.
ARCHITECTURAL BARRIERS ACT ENFORCEMENT
The Board enforces the Architectural Barriers Act (ABA), which
requires that most buildings designed, constructed, altered, or leased
by the Federal Government and certain other federally financed
facilities be accessible to people with disabilities. Complaints
received by the Board concern post offices, national parks, military
facilities, veterans hospitals, courthouses, and a variety of other
facilities. When the Board has jurisdiction and finds that the
applicable accessibility standards were not followed, it requests a
corrective action plan and monitors the case until the barrier is
removed. Even when the Board does not have jurisdiction or no violation
is found, it attempts to negotiate voluntary barrier removal.
The Board's long-range goal is to be a leading partner with Federal
agencies to make the Federal Government a model of compliance with
accessibility standards. The Board's experience with enforcement of the
ABA is that most violations are not intentional. When violations are
found, it is usually because the people responsible for designing
buildings, reviewing plans, and on-site construction did not have a
good understanding of the accessibility standards and how to apply
them. People responsible for building planning and design at
headquarters, regional and field offices, and local sites must have a
working knowledge of the accessibility standards if compliance is to be
achieved. As Federal agencies are reorganized and personnel assignments
and responsibilities change, it is important that agencies have
effective systems for training new people responsible for applying the
accessibility standards and for monitoring compliance with the ABA. The
Board has also worked with the Federal agencies responsible for issuing
accessibility standards for facilities covered by the ABA to update
their standards to be consistent with the Board's new ADA and ABA
Accessibility Guidelines that were issued in July 2004. In November
2005, the General Services Administration updated its accessibility
standards for the ABA. The new standards will apply to most Federal
facilities that are constructed, altered, or leased after May 8, 2006.
The United States Postal Services also updated its ABA standards for
postal facilities in May 2005. The Board continues to work with the
Department of Defense and the Department of Housing and Urban
Development to update their ABA standards.
Fiscal Year 2005 Results--ABA Enforcement
In fiscal year 2005, the Board received 168 written complaints.
These included complaints investigated under the Architectural Barriers
Act, and also those concerning facilities not covered by that law but
potentially covered by other laws, such as the Americans with
Disabilities Act and the Rehabilitation Act. Of the 168 complaints, the
Board opened 90 as new Architectural Barriers Act cases. Although the
Board did not have authority under the Architectural Barriers Act in
the other 78 complaints, the Board responded to the complainants,
usually by referring them to the appropriate enforcement agency. In
addition, the Board referred another 46 complainants to other agencies
for action when our investigations revealed there was no violation of
the Architectural Barriers Act or the Board did not have jurisdiction.
The Board responds quickly to all new complaints and contacts
complainants frequently to update them on the status of their
complaints. In fiscal year 2005, the Board sent initial letters to
complainants acknowledging receipt of their complaint or began an
investigation of the issues they raised within an average of 5 days.
The Board's customers regularly say they are pleased to hear from a
Federal agency so promptly. It is Board practice to keep complainants
informed on a regular basis throughout the course of our
investigations. In fiscal year 2005, the Board contacted 159
complainants to provide updates on the status of their complaints.
Fiscal Year 2006 Plans--ABA Enforcement
In fiscal year 2006, the Board will continue to investigate
complaints under the Architectural Barriers Act. The Board anticipates
responding to complaints in an average of 5 or fewer business days and
will continue to provide periodic updates to complainants on the status
of their complaints. At the beginning of fiscal year 2006, the Board
had 107 active cases. The Board expects to receive 180 new complaints
in fiscal year 2006. Of this total, the Board estimates that 100 will
be opened as new Architectural Barriers Act cases and 80 will be
referred to other agencies for enforcement under other laws, such as
the Americans with Disabilities Act and the Rehabilitation Act. This
represents an increase over fiscal year 2005, which are anticipated in
response to an outreach effort the Board just completed to provide
informational packets on the Architectural Barriers Act to independent
living centers and technical assistance centers throughout the country.
Fiscal Year 2007 Objectives--ABA Enforcement
In fiscal year 2007, the Board will continue to investigate
complaints under the Architectural Barriers Act. The Board estimates
that it will have 105 active cases at the beginning of fiscal year 2007
and will receive 180 new complaints. The Board expects to open 100 new
Architectural Barriers Act cases and refer 80 complaints to other
agencies for enforcement under other laws. The Board will continue to
provide good customer service.
______
Prepared Statement of the Capital Metropolitan Transportation Authority
Mr. Chairman and members of the subcommittee, on behalf of the
Capital Metropolitan Transportation Authority in Austin, Texas, I am
pleased to submit this statement for the record in support of our
fiscal year 2007 funding requests from the Federal Transit Authority
for Capital Metro--the transportation provider for Central Texas. I
hope you will agree that the appropriating of funds for these Central
Texas projects warrants serious consideration as Austin and the
surrounding Texas communities plan for our region's growing
transportation needs.
First, let me thank you for your past financial support for
transportation projects in Central Texas. Your support has proven
valuable to Capital Metro and to our Central Texas community as we face
new challenges.
As you know, Interstate 35 runs from Canada to Mexico, and along
the way it also runs through the City of Austin and Capital Metro's
600-square-mile service area. While traffic in this important corridor
has always been a challenge, the North American Free Trade Agreement
has resulted in increased traffic and congestion for our region. In
fact, a 2002 study by the Texas Transportation Institute determined
Austin, Texas to be the 16th most-congested city nationwide.
Also, Central Texas' air quality has reached near non-attainment
levels. Together, our community has developed a Clean AirForce, of
which Capital Metro is a partner, to implement cooperative strategies
and programs for improving our air quality. Capital Metro has also
unilaterally implemented several initiatives such as offering free
rides on ozone action days for the last 14 years, converting its fleet
to clean-burning Ultra Low Sulfur Diesel (ULSD), becoming the first
transportation authority in Texas to introduce environmentally-friendly
hybrid-electric buses, and creating a GREENRide program to carpool
Central Texas workers in low emission hybrid gas/electric automobiles.
To address these transportation and air quality challenges as well
as our region's growing population, in 2004 Capital Metro conducted an
extensive community outreach program to develop the All Systems Go
Long-Range Transit Plan. This 25-year transportation plan for Central
Texas was created by Capital Metro, transportation planners, and local
citizens. More than 8,000 citizens participated in the design of the
program that will bring commuter rail and rapid bus technologies to
Central Texas. The plan will also double Capital Metro's bus services
over the next 25 years.
By a vote of over 62 percent, this long-range transportation plan
was adopted by the Central Texas community in a public referendum on
November 2, 2004. The plan received bipartisan support, along with
endorsements from the business community, environmental organizations,
neighborhood associations, and our community leaders.
An important component of the All Systems Go Long Range Transit
Plan is the creation of an urban commuter rail line along a 32-mile-
long freight rail line currently owned and operated by Capital Metro.
The proposed starter route would provide urban commuter rail service
extending from downtown Austin (near the Convention Center) through
East and Northwest Austin and on to Leander.
To implement the community's All Systems Go Transit Plan, Capital
Metro is seeking $10 million for fiscal year 2007 for five projects of
importance to our Central Texas community:
RAPID BUS PROJECT--$2 MILLION
The All Systems Go Long-Range Transit Plan relies heavily on new
rapid bus technologies. The plan creates several new rapid bus routes
throughout the Central Texas region. The Rapid Bus Project is designed
to provide faster, frequent and dependable service in main bus
corridors with high ridership while avoiding large fixed costs and long
lead times. Capital Metro is seeking $2 million for the Rapid Bus
Project.
ENHANCEMENT AND IMPROVEMENT OF BUSES AND BUS FACILITIES--$5 MILLION
Capital Metro has embarked on a long-term plan to improve and
expand bus service. In addition to improving bus routes, the agency is
investing in critical park and ride facilities, transit centers and
enhanced bus stop locations and amenities. As Capital Metro's service
area and the population we serve continue to grow, we will continue to
enhance our system and facilities while addressing traffic congestion
and air quality concerns. In the next 3 years, Capital Metro has
planned to invest $82.5 million in capital projects to better serve our
growing population. Capital Metro seeks $5 million from the
appropriations process for these improvements and expansions of our bus
service and facilities.
Also, Capital Metro is seeking funds for three new strategically
located park and ride facilities in our service area.
LEANDER PARK AND RIDE FACILITY--$1 MILLION
The Leander Park and Ride will anchor Capital Metro's Urban
Commuter Rail and express bus services serving Leander and rapidly
growing areas of Western Williamson and Travis Counties. Connecting
circulator service in Leander is also planned to expand and improve
Capital Metro's service in Northwestern suburbs and throughout Central
Texas. Capital Metro is seeking $1 million for this project.
OAK HILL PARK AND RIDE FACILITY--$1 MILLION
The Oak Hill Park and Ride facility will anchor Capital Metro's
future rapid bus services to rapidly growing areas of Southwest Austin
and Travis County. This facility and its routes will connect local
service to several nearby neighborhoods to serve the growing number of
suburban commuters in this portion of Capital Metro's service area.
Capital Metro is seeking $1 million for this project.
SOUTH IH-35 PARK AND RIDE FACILITY--$1 MILLION
The South IH-35 facility will anchor Park and Ride and Rapid Bus
services to Downtown Austin. It will also serve as a connecting point
for local bus services in Far South Austin. These local services will
expand as the area grows to improve Capital Metro's service in Southern
suburbs and throughout Central Texas. Capital Metro is seeking $1
million for this project.
I look forward to working with the committee in order to
demonstrate the necessity of these projects. Your consideration and
attention are greatly appreciated.
______
Prepared Statement of the Greater Orlando Aviation Authority
Chairman Bond and distinguished members of the Senate
Appropriations Subcommittee on Transportation, Treasury, the Judiciary,
Housing and Urban Development, and Related Agencies, the Greater
Orlando Aviation Authority (``the Authority'') greatly appreciates the
opportunity to present written testimony in support of our funding
request for important safety and capacity enhancements at Orlando
International Airport.
The Authority respectfully requests your subcommittee's
consideration and support of the following Federal initiative: Runway
36L Instrument Landing System Category II (ILS Cat II), with an
Approach Lighting System with Sequenced Flashing Lights, associated
Environmental Assessment and West Airfield modifications at Orlando
International Airport (MCO).
The Authority respectfully requests the subcommittee to include the
following line item in the fiscal year 2007 FAA F&E Budget:
``Acquisition and Installation of Runway 36L Instrument Landing
System Category II (ILS CAT II) with an Approach Lighting System with
Sequenced Flashing Lights (ALSF-2); and associated Environmental
Assessment and West Airfield modifications at Orlando International
Airport--$4,140,000''.
Serving nearly 34 million passengers in 2005, Orlando International
Airport is Florida's busiest commercial service airport and is ranked
as the 14th busiest airport nationwide. With its four parallel runway
system, the airport averages nearly 1,000 daily aircraft operations
(over 350,000 take-offs and landings annually). Runway 36L serves as
the predominant arrival runway when aircraft are landing in a ``north
flow'' approach at MCO. This runway end currently does not have
precision instrument approach capability.
Installation of ILS/ALS equipment will increase capacity, reduce
flight delays and provide enhanced safety and aircraft separation, by
allowing FAA Orlando Air Traffic Control staff to optimize its
preferred operational procedures of landing on outer runways and taking
off on the interior runways.
In addition, Orlando International Airport is currently served by
56 different air carriers. The ILS CAT II system is the only
established navigational system that is fully compatible with existing
air carrier instrument flight capabilities.
JUSTIFICATION AND CLOSING
Orlando International Airport remains steadfast in its commitment
to help our Nation in its mission to provide safe, efficient, and
affordable air travel as an integral part of our Nation's aviation
system.
Orlando International Airport (OIA) is one of the Central Florida's
primary assets and has been previously designated as a U.S. Security
Category X airport. In 2005, OIA served over 34 million passengers,
surpassing Miami International Airport as the busiest commercial
passenger airport in Florida. Additionally, OIA is the 14th busiest
commercial service airport in the Nation and the 24th busiest in the
world. In terms of origin and destination (O&D) passenger traffic at
domestic airports, OIA ranked 4th behind Los Angeles International, Las
Vegas' McCarran International and traditional airline hub airports such
as Chicago's O'Hare International. O&D passengers represent
approximately 95 percent of all passengers at OIA. This high level of
O&D activity is expected to continue.
OIA has scheduled service to 84 non-stop domestic destinations and
19 non-stop international destinations, promoting increased airline
service and competitive fares. The largest rental car market in the
world is located at OIA. The airport shares a unique relationship with
the regional economy. An Economic Impact Study completed in 2004
estimated that OIA generates a $20.7 billion annual economic impact to
the Central Florida Region and is responsible for 62,100 direct and
indirect jobs.
The Authority expresses its gratitude for the opportunity to
present this testimony to your subcommittee. We look forward to working
with you and your staff in advancing these safety and capacity
initiatives that will benefit the National Aviation System. If the
subcommittee requires any additional information regarding the
identified funding needs, please do not hesitate to contact the Greater
Orlando Aviation Authority.
RUNWAY 36L INSTRUMENT LANDING SYSTEM CATEGORY II (ILS CAT II), APPROACH
LIGHTING SYSTEM WITH SEQUENCED FLASHING LIGHTS AND ASSOCIATED
ENVIRONMENTAL ASSESSMENT AND WEST AIRFIELD MODIFICATIONS AT ORLANDO
INTERNATIONAL AIRPORT
``All of us who work for and with aviation safety professionals
take pride in the results of our collective efforts, especially given
the economic turbulence being experienced by U.S. carriers. But even as
we recognize how safe it is to travel in commercial air transportation,
we must look beyond to face the challenge of how to make the system
safer. How can we continue to improve aviation safety as demand and
complexity increase? We are facing record setting passenger numbers,
new light jets, UAVs, . . . even space travel is not as far away as it
once was. We cannot afford to rest on our laurels.''--Statement of
Marion C. Blakely, FAA Administrator, before the Senate Commerce
Committee, Subcommittee on Aviation on Safety Issues on Aviation
Safety, November 17, 2005.
The Authority respectfully requests the subcommittee to include the
following line item in the fiscal year 2007 FAA F&E Budget:
``Acquisition and Installation of Runway 36L Instrument Landing
System Category II (ILS CAT II), with an Approach Lighting System with
Sequenced Flashing Lights (ALSF-2); and associated Environmental
Assessment and West Airfield modifications at Orlando International
Airport--$4,140,000''.
This high priority airfield capacity enhancement project will
include the following elements:
--Development of an Environmental Assessment (EA) to evaluate the
planned ILS and ALS.
--Procurement of ILS and ALS related equipment: glide slope,
localizer, marker beacons (inner, middle, outer/DME), Runway
Visual Range (RVR) and ALSF-2.
--Design, construction, installation, and certification of ILS and
ALS equipment.
To support this airport capacity and safety related initiative, the
following upgrades to existing facilities will be necessary:
--Runway/taxiway pavement markings and signage.
--Electrical system and lighting.
Installation of an ILS CAT II on Runway 36L will provide the
following benefits:
--Increased capacity.
--Reduced flight delays.
--Enhanced safety and aircraft separation.
--Allow FAA Orlando Air Traffic Control staff optimization of its
preferred operational procedures by landing on outer runways
and taking off on the interior runways.
--Full compatibility with existing instrumentation utilized by all 56
air carriers currently serving Orlando International Airport.
PROJECT COST ESTIMATE--RUNWAY 36L ILS & ALS AND WEST AIRFIELD
IMPROVEMENTS, ORLANDO INTERNATIONAL AIRPORT (MCO)
------------------------------------------------------------------------
Item Description Cost Comments
------------------------------------------------------------------------
ILS CAT II \1\ \2\.............. $1,500,000 ILS eqpt. to be
upgraded to CAT
III as a future
project.
ALSF-2 \1\ \2\.................. 1,500,000 To serve R/W 36R
ILS CAT II &
future ILS CAT
III.
ILS/ALS EA...................... 35,000 EA--Environmental
Assessment.
-------------------
Subtotal.................. 3,035,000 ...................
West Airfield Modifications..... 100,000 Allowance for
electrical system,
lighting, marking,
signage
improvements.
-------------------
Construction Total........ 3,135,000 ...................
Professional Fees/Markups....... 1,008,216 ...................
-------------------
TOTAL..................... 4,143,216 ...................
TOTAL (ROUNDED)........... 4,140,000 ...................
------------------------------------------------------------------------
\1\ Costs were provided by Dave Gigowski (FAA Southern Region) and are
stated in 2006 dollars.
\2\ Includes costs for NAVAID design, equipment procurement,
installation/construction and flight certification.
______
Prepared Statement of the Navajo Nation
NAVAJO DIVISION OF COMMUNITY DEVELOPMENT--INDIAN COMMUNITY DEVELOPMENT
BLOCK GRANT
INTRODUCTION
The Navajo Nation reservation lies within the three States of
Arizona, New Mexico and Utah and covers about 27,000 square miles--
about the size of the State of West Virginia. According to the 2000
Census count the Navajo Nation has a population of 269,202 enrolled
members and is considered the largest federally recognized Indian Tribe
in North America. Most of its members still live in substandard
housing, consisting of one room dwelling units with no running water or
electricity and continue to suffer from high unemployment with about 43
percent of Navajos living below the poverty level with per capita
income averaging about $7,269 as compared to the national poverty level
of 9.2 percent and $21,587 for the national per capita income level.
The Navajo people suffer chronic unemployment and must cope with a
chronic massive need for housing and infrastructure. While unemployment
in American averages 5 percent, the Navajo unemployment rate averages
38 percent to 56 percent, depending on the season.
The Navajo Nation's need for adequate housing is amply supported by
other distressing statistics. For example, over 32 percent of Navajo
homes do not have plumbing or water, 60 percent do not have telephone
services and 28 percent lack of adequate kitchen facilities. We have
estimated the need for at least 30,000 new housing units and over
50,000 needing basic utility services.
NAVAJO NATION COMMUNITY DEVELOPMENT
The Navajo Nation Division of Community Development is responsible
for providing housing and related assistance to low-income families who
qualify under the following programs: (1) Weatherization Assistance
Program; (2) Housing Services Program, and (3) Community Development
Block Grant Program.
The Navajo Division of Community Development is established as part
of the Executive Branch within the Navajo Nation government. It is the
only Division responsible for providing community development
throughout the Navajo Nation in terms of governmental buildings and
home construction and related infrastructure. The Division of Community
Development administers the Weatherization Assistance Program, the
Housing Services Program, and the Community Development Block Grant
Program, the Capital Improvement Office, Design and Engineering
Services and Local Government Support Centers that provide assistance
and services to communities throughout the Navajo Nation. The services
provided by these programs are funded through the treasury of the
Navajo Nation government and through external funds received from State
and Federal grants and through appropriations administered through the
Bureau of Indian Affairs.
The Navajo Nation relies on revenues generated from mineral leases
that flow into its tribal treasury and is used to operate the Navajo
government. In fiscal year 2007 the Navajo Nation will lose about $21
million from its main employers who operate mineral leases that will
expire or will cease to continue operations if negotiations fail with
companies that do not upgrade their operation under the Clean Air Act
and Court Decree filed by environmental groups. For this reason, the
Navajo Nation looks to its trustee, the Federal Government to provide
Federal appropriations to serve its vast population, many of whom live
in rural and remote locations of the reservation and continue to have
inadequate housing and no running water and electricity. This is all
due to the vast Navajo land base that requires tens upon thousands of
dollars to run power lines, sewer lines and other basic necessities
through the rural communities and without Federal dollars to address
basic services from the Federal Government and as part of it trust
obligation to the Navajo Nation, the many Navajo members will continue
to live below the poverty level well into the next decade and beyond.
COMMUNITY DEVELOPMENT BLOCK GRANT
The Navajo Nation hereby provides a position on the following
proposed policy as it pertains to the Community Development Block
Grant.
The Navajo Nation Recommends More Tribal Consultation of Any Proposed
Allocation That Impacts Tribal Governments
At the present time there is basically no consultation between the
Federal Government and the Navajo Nation.
The Navajo Nation strongly opposes President Bush's proposal to
reform the CDBG formula by consolidating Native American Programs with
other similar programs. Native Americans live in a very unique society
and should not be grouped or compared with other distressed
communities.
The President's fiscal year 2007 budget proposes to reform the
ICDBG by consolidating and eliminating several economic development
programs. The President's proposal will establish regional councils to
focus more on programs that have regional impacts. The regional
councils will not be familiar with Native American communities and have
a different interpretation of rural communities. Indian country simply
cannot sustain or support such a severe reduction in funding or changes
in the ICDBG.
If other programs are consolidated into CDBG, the primary
intentions of the ICDBG program will be lost. The focus will shift from
infrastructure development such as water, electric, public facilities
and economic development other types of development.
The Navajo Nation Opposes the Transfer of ICDBG to the Department of
Commerce
The Navajo Nation strongly opposes the Bush Administration's
proposal to transfer the Indian Community Development Block Grant
program to the Department of Commerce. The Navajo Nation urges the
Congress to keep the ICDBG program within the U.S. Department of
Housing and Urban Development. Most of the work the Department of
Commerce has done has been with municipalities and urban areas. If the
ICDBG is transferred to Commerce, the rural areas and particularly the
Indian tribes will be neglected, because of the unfamiliarity of the
Department of Commerce with rural development and Indian tribes.
If the ICDBG is transferred and consolidated with other programs
with a common set of performance goals, it will probably be oriented
towards established communities and not rural areas.
The Navajo Nation Opposes Any Budget Cuts in the ICDBG and NAHASDA
Programs
The Navajo Nation opposes any proposed budget cuts in the ICDBG and
NAHASDA. The Navajo Nation has been providing infrastructure of basic
utilities to hundreds of Navajo families since 1976. The need for
infrastructure and housing continues to escalate while the funding
remains at the same level. The cost in materials, labor, inflation, and
the increase in the Navajo population has all resulted in increase
costs. A large number of the Navajo people need infrastructure
development (electricity and water/wastewater facilities). The Navajo
Nation continues to advocate for an increase in ICDBG funding to start
addressing a large number of families.
Despite the proposed changes, reform, or decrease in funding, the
ICDBG has made tremendous positive impacts to communities who have
received ICDBG funding in the past. Within the past 5 years, the ICDBG
has accomplished the following:
------------------------------------------------------------------------
No. of
Year Amount Funded Families
Benefited
------------------------------------------------------------------------
1999.................................... $5,000,000 407
2000.................................... $5,000,000 314
2001.................................... $5,000,000 240
2002.................................... $5,000,000 345
2003.................................... $4,345,941 295
2004.................................... $5,491,000 314
------------------------------------------------------------------------
conclusion
Therefore, the Navajo Nation urges the Congress to either increase
the level of funding of ICDBG or maintain the current level of funding
to provide the basic infrastructure for the increasing Navajo
population. Lastly, Navajo urges Congress not to make any changes in
organizational structure or formula structure of the CDBG until tribal
consultation is made.
______
Prepared Statement of the American Public Transportation Association
APTA is a nonprofit international association of more than 1,600
public and private member organizations including transit systems and
commuter rail operators; planning, design, construction and finance
firms; product and service providers; academic institutions; transit
associations and State departments of transportation. APTA members
serve the public interest by providing safe, efficient and economical
transit services and products. More than 90 percent of persons using
public transportation in the United States and Canada are served by
APTA members.
INTRODUCTION
Mr. Chairman and members of the committee, on behalf of the
American Public Transportation Association (APTA), we thank you for
this opportunity to submit written testimony on the need for and
benefits of investment in Federal Transit Administration (FTA) programs
for fiscal year 2007.
OVERVIEW
Mr. Chairman, the fiscal year 2007 Transportation, Treasury, the
Judiciary, Housing and Urban Development, and Related Agencies
Appropriations bill is an opportunity to advance national goals and
objectives through increased investment in our surface transportation
infrastructure, particularly public transportation. For that reason, we
strongly urge Congress to fund the Federal transit program at no less
than the $8.975 billion level authorized in the Safe, Accountable,
Flexible, Efficient Transportation Equity Act--A Legacy for Users
(SAFETEA-LU), which Congress approved by overwhelming margins just last
summer.
Transit plays a number of important roles, including advancing
energy independence. It reduces congestion and it provides mobility
options. In fact, expanding public transportation options is more
important than ever, since transit is the single quickest way for
individuals and families to beat the high cost of gasoline.
Americans took more than 9.7 billion transit trips in 2005, and
transit ridership grew faster than highway travel (1.3 percent vs. 0.1
percent). Since 1995, the use of public transportation has increased by
25.1 percent--more than the growth of highway travel (22.5 percent)
over that period. The growth of transit ridership during the past 10
years demonstrates that Americans want transportation choices and will
leave their cars behind when convenient, quality public transit service
is available. As gas prices continue to rise, the demand for public
transportation will only continue to grow.
Additionally, it is important to recognize that public
transportation benefits those who drive, as well as those who use
transit. According to the 2005 Texas Transportation Institute's Annual
Urban Mobility Report, transit is successfully reducing traffic delays
and related congestion costs in America's 85 largest urban areas.
Without transit, nationwide delays would have increased 27 percent,
costing residents and businesses in those major urban areas an
additional $18.2 billion in lost time and fuel.
FISCAL YEAR 2007 GOALS
APTA recognizes the need to wisely invest limited Federal
resources, and we believe that investment in public transportation is a
wise use of limited resources. Our Nation has a tremendous need for new
investment in transit and the rest of our surface transportation
infrastructure. According to a recent study by the U.S. Chamber of
Commerce's National Chamber Foundation, if the Federal share of
transportation investment remains constant, in 2015 the Federal share
of the average annual capital investment needed to maintain the
Nation's existing highway and transit systems will be $64 billion, and
the Federal share to improve highway and transit systems will be $89
billion.
APTA's funding request for FTA programs in fiscal year 2007 is
based upon SAFETEA-LU, which was enacted last year. SAFETEA-LU
authorizes and guarantees $8.975 billion for Federal Transit
Administration programs in fiscal year 2007. APTA urges Congress to
fund the transit program at the authorized level so that communities
across the Nation, utilizing State and local resources in tandem with
Federal funds, can begin to address the overwhelming need both to
preserve the existing transit infrastructure and to expand and improve
that infrastructure in growing communities and those without good
transit service.
SAFETEA-LU builds on the success of the two most recent surface
transportation authorization laws--the 1991 Intermodal Surface
Transportation Efficiency Act and the 1998 Transportation Equity Act
for the 21st Century. Under SAFETEA-LU, the Federal transit program
structure remains largely the same, retaining formula programs that
target Federal investment to transit systems based on need and capital
investment programs that address special needs and projects. The new
law also provides for increased transit investment in rural
communities, many of which have little or no transit service. It also
establishes a number of new programs, including programs for new small
fixed guideway projects, transit in our national parks, and another
meant to help address the needs of people with disabilities beyond
service required under the Americans with Disabilities Act.
PRESIDENT'S BUDGET PROPOSAL
The administration's fiscal year 2007 budget proposal recognizes
the importance of public transportation investment. While we are
pleased that the administration's proposal adheres to the authorized
transit program in most respects, we want to identify two concerns APTA
has with the President's fiscal year 2007 budget proposal.
First, the administration proposes to fund only $100 million of the
$200 million authorized in fiscal year 2007 for the small starts
program that is meant to assist the development and construction of
smaller fixed guideway projects such as streetcars, trolleys, commuter
rail, and bus rapid transit systems. This program is part of the
program that provides funding to new fixed guideway projects--heavy and
light rail, bus rapid transit, commuter rail, and trolleys--and the
President's proposal would actually reduce total funding for this
program below the fiscal year 2006 level.
Second, the President's budget proposal for the Federal Railroad
Administration (FRA) proposes, consistent with last year's
appropriations bill, that commuter railroad riders will assume a higher
portion of maintenance and capital expenses on the Amtrak-owned
portions of the Northeast Corridor. We are concerned that the
imposition of these fees by the Federal Government will increase
operating costs for these commuter railroads and result in higher costs
for commuter rail users and the State and local taxpayers who fund
these systems, and therefore urge Congress not to include this fee in
this year's appropriations bill.
NEW STARTS/SMALL STARTS
Mr. Chairman, APTA is disappointed that the administration has
proposed to fund transit below the level so recently authorized and
guaranteed by Congress. The administration requested $100 million less
than the amount authorized from the general fund for the new starts
program, proposing only half of the funding authorized for the new
small starts program, a program to fund less costly fixed guideway
projects such as light rail, commuter rail, and bus rapid transit
systems.
As this committee knows, there is overwhelming demand for new
starts projects, and SAFETEA-LU authorized 387 projects. New fixed
guideway projects are an important part of meeting transit needs, but
these major capital projects take years to develop and require a
predictable funding commitment. Once appropriated for a fiscal year,
new starts program funding remains available for the 2 subsequent
fiscal years. The effect of underfunding the small starts/new starts
program will be felt disproportionately in future years by causing
transit providers to fall further behind in the development of new,
less expensive projects due to the cuts that would be implemented under
the administration's proposal, robbing communities of the congestion
relief and environmental benefits associated with the projects.
We want to make another point, Mr. Chairman. SAFETEA-LU
restructured the general fund and Mass Transit Account (MTA) funding
sources so that MTA outlays are now scored when they are actually spent
rather than when they are appropriated. The good news is that MTA
balances now are significantly higher than they would have been under
the old scoring system. But this also means that the new starts program
is now funded exclusively from the general fund. Mr. Chairman, it is
important to emphasize that this was done to improve the overall
financing of the Federal transit program, and was not meant to create
funding uncertainty or program cuts, as the administration proposes.
Finally, and importantly, we note that 2005 ridership on light rail
systems in the United States has grown at a faster rate than any other
form of transit. Ridership on light rail grew by 6 percent in 2005.
Some light rail systems showed double digit increases in ridership:
Minneapolis (168.9 percent); Houston (38.0 percent); New Jersey (17.8
percent); Salt Lake City (13.3 percent); Sacramento (12.8 percent); and
Los Angeles (10.5 percent). There is clearly overwhelming demand for
these and other new starts projects. We look forward to working with
this committee and ask for your support for fully funding new starts
and all other elements of the fiscal year 2007 Federal transit program
at the authorized level.
NORTHEAST CORRIDOR COMMUTER RAIL ISSUES
We are also concerned about another issue in the proposed fiscal
year 2007 budget. The administration proposes that commuter railroads
will assume a higher portion of capital and maintenance expenses on the
Amtrak-owned portion of the Northeast Corridor. An amount of $59
million in fees on commuter railroads is assumed in each of fiscal year
2006 and 2007 to support Amtrak spending.
The provision in the fiscal year 2006 Transportation Appropriations
law that requires the Federal Railroad Administration to assess these
fees has proven very difficult to implement. The administration began
the process with a ``top down'' approach that did not take heed of the
accompanying conference report which directed the Secretary to seek to
achieve consensus among all stakeholders in the corridor. In fact, the
FTA went so far as to place a notice in the Federal Register indicating
its intent to make payment of these fees a condition for receipt of
Federal transit grants to commuter railroads. More recently, the
process has improved, but it still requires a series of very difficult
calculations and has absorbed a considerable amount of time among top
leaders of the FRA, State DOTs and commuter railroads.
The only silver lining for the 2006 process is that significant
time has been invested by governors, State DOTs and commuter railroads
in working with FRA on corridor issues. This time and effort should be
devoted to developing a long-term plan for improving the corridor not
to figuring out how to add to the substantial payments commuter
railroads already make for corridor maintenance and capital
improvements.
For fiscal year 2007, APTA urges Congress not to include language
on commuter railroads similar to last year's appropriations law.
Commuter railroads already pay a fair share of Northeast Corridor costs
as established through carefully negotiated legal, financial and
operating agreements involving substantial State investments.
PUBLIC TRANSPORTATION AND ENERGY INDEPENDENCE
APTA is pleased that President Bush highlighted the need to focus
on energy independence in his State of the Union address earlier this
year. The President said that ``keeping America competitive requires
affordable energy . . . America is addicted to oil, which is often
imported from unstable parts of the world.'' He further stated that
``the best way to break this addiction is through technology.''
We agree, Mr. President! We cannot think of a more important
technology in that regard than fixed guideway transit, including heavy
and light rail, commuter rail, and bus rapid transit. This technology
is readily available and many communities already have systems which
can be expanded with more investment.
We must remember also that at its current level of use, public
transportation is already reducing Americans' energy bills:
--For every passenger mile traveled, public transportation is twice
as fuel efficient as private automobiles.
--Public transportation saves more than 855 million gallons of
gasoline a year, or 45 million barrels of oil. These savings
equal about 1 month's oil imports from Saudi Arabia. In 2005,
9.7 billion trips were taken on public transportation.
Moreover, transit agencies are increasingly investing in
alternative fuel buses to reduce dependence on oil. Almost 17 percent
of fixed route buses now use alternative fuels and 20 percent of buses
on order will use alternative fuels. Public transportation is clearly
doing its part to promote energy independence through innovative
technologies, and that is why we urge Congress to honor SAFETEA-LU and
fully fund the transit program in fiscal year 2007.
CONCLUSION
Public transportation plays a key role in meeting the goals of the
administration and Congress in providing energy independence,
congestion relief and transportation mobility options for Americans.
APTA strongly believes that the Federal Government should invest no
less than the level authorized and guaranteed by Congress for fiscal
year 2007 in SAFETEA-LU if we are to advance these goals.
Mr. Chairman, on behalf of APTA's member organizations, I thank you
for this opportunity to express our views.
______
Prepared Statement of the National Alternative Fuels Training
Consortium, West Virginia University
Chairman Bond, Ranking Member Murray and members of the
Transportation, Treasury, the Judiciary, Housing and Urban Development,
and Related Agencies Subcommittee on Appropriations, the National
Alternative Fuels Training Consortium (NAFTC) respectfully supports the
request of the National Association of State Fire Marshals (NASFM)
fiscal year 2007 funding of $950,000 to develop, offer and implement a
comprehensive nationwide training program for all first responders to
learn about the specifics of Alternative Fuel and Advanced Technology
Vehicles. This program will provide first responders with the necessary
training to safely respond to accidents involving these vehicles to
minimize the potential for injury to themselves as well as the accident
victims.
I am Al Ebron, Executive Director of the NAFTC, a consortium
consisting currently of 27 educational institutions (listed in the
attached table) dedicated to supporting the use of alternate fuel
vehicles (AFVs)/advanced technology vehicles. First responders
(including fire, police, EMT and other emergency personnel) need
standardized training on the proper procedures to follow in accidents/
incidents involving alternative fuel and advanced technology vehicles.
These first responders require training to recognize the dangers
inherent in advanced technology vehicles in order to ensure their
safety, that of the persons involved in the accident, and bystanders.
For example, the new hybrid technology vehicles contain battery packs
which can discharge shocks in excess of 500 volts to the unwary. Fuel
cell vehicles contain hot surfaces which can cause burns. Hydrogen-
powered cars may be inherently dangerous from storage cylinders or fuel
lines. All are safe with proper training.
I would like permission to enter into the record as part of my
testimony a letter dated May 24, 2006, from Frank A. Burns, President
of the NASFM, to the leadership of the Senate and House Appropriations
Committees making them aware of this training needed for our first
responders. This letter adds validity and urgency to our ability to
jointly respond to this training need in order to save lives.
Many of these alternative fuel vehicles (AFVs) and advanced
technology vehicles are in service today. These vehicles have all of
the appearances of a conventional-technology vehicle, but contain
components which can be dangerous to personnel unfamiliar with advanced
technology vehicles.
General Motors, Ford, Toyota, Honda and other automobile companies
have sold hundred of thousands and have announced their intentions to
build hundreds of thousands more of these advanced technology vehicles
over the next 5 to 10 years. This large a fleet dramatically increases
the potential for hazards faced by first responders at the scene of
accidents involving these new vehicles. The U.S. Department of Energy's
(DoE) Energy Information Administration estimates that in the near
future, AFVs /advanced technology vehicles will comprise more than 20
percent of the light duty vehicles in the United States. This means
that one in every five accidents could involve an AFV/advanced
technology vehicle.
First responders (including other emergency personnel) should have
standardized training on the proper procedures to follow in accidents/
incidents involving alternative fuel and advanced technology vehicles.
Such training can be accomplished through the development and
dissemination of specialized courses that meet industry standards and
the offering of such courses through a network of properly trained
instructors. Currently available curricula are not structured to
provide comprehensive training for working safely with damaged vehicles
of these types. Resources to provide training for First Responders are
limited. This program proposes to evaluate and review all known
resources, combine the relevant resources into one training curriculum
and associated training programs, and disseminate the materials across
the United States. This type of integrated program is currently not
available on a comprehensive basis. We propose to conduct 2 to 3
regional or nationwide events/meetings to disseminate the information
and to conduct numerous local training classes.
West Virginia University and its National Alternative Fuels
Training Consortium has the ability to conduct this project with the
management of the National Association of State Fire Marshals and
industry assistance. The NAFTC is a nationwide organization of post-
secondary education institutions that develops advanced training
curricula, conducts training classes taught by certified instructors,
and promotes the use of alternative fuel and advanced technology
vehicles. The NAFTC is prepared and ready to develop, offer and promote
comprehensive training programs for first responders that cover the
following alternative fuel or advanced technology vehicles:
--Hybrid Electric;
--Electric;
--Fuel Cell;
--Hydrogen ICE;
--Biodiesel;
--Ethanol/Methanol Flex-Fuel;
--Natural Gas (Compressed and Liquefied); and
--Propane.
NAFTC training is modular in concept to allow instructors to:
--Address all of the alternative fuels and advanced technologies in a
course;
--Customize the course for a specific need;
--Training modules will include: Instructor Manuals, Participant
Manuals/Textbooks, PowerPoint Presentations for Effective
Lectures, and Scenario Training With Videos;
--Classes taught by certified NAFTC instructors and industry
instructors to train students and future instructors; and
--Education and outreach materials.
Individuals completing these courses would learn how to: (1)
determine the type of vehicle being approached; (2) avoid or circumvent
on-board systems that could cause injury during victim extraction; (3)
safely extract victims from vehicles; and (4) minimize damage to the
environment, others, and themselves.
The National Alternative Fuels Training Consortium (NAFTC) is the
only nationwide training organization dedicated to improving air
quality and decreasing U.S. dependence on foreign oil by promoting,
supporting, and expanding the use of alternative fuel and advanced
technology vehicles. It is the premier organization to develop first
responder training and provide train-the-trainer courses for first
responder organizations.
The NAFTC currently:
--Offers over 20 courses and workshops nationwide on alternative
fuels and advanced technology vehicles;
--Develops and delivers new courses and workshops yearly to meet
demand and updated technology needs;
--Provides extensive technical assistance through timely and accurate
technical data available on NAFTC web site;
--Produces two NAFTC Newsletters reporting on alternative fuel and
advanced technology vehicles--the NAFTC eNews, a monthly web
based newsletter and the NAFTC Clean Alternatives Report
(CAReport), a printed bi-annual publication.
Since its inception in 1992, the NAFTC has created tremendous
impact through:
--Delivery of over 700 courses and training to over 7,000
technicians, fleet managers, students, decision makers, and
others on alternative fuel and advanced technology vehicles;
--Conducting over 775 workshops and education/awareness events with
over 160,000 attendees;
--Enhanced liaisons with automobile manufacturers;
--Enhanced alliances with aftermarket retailers;
--Heightened awareness for millions about alternative fuels and
advanced technology vehicles by conducting National AFV Day
Odyssey. In 2004, this event consisted of 54 sites throughout
the United States and two sites in Canada with nearly 25,000
direct attendees and over 24,000,000 people reached through
media coverage.
The NAFTC has conducted training classes and workshops for
government and private organizations such as the U.S. Department of
Energy, U.S. DoE Clean Cities Coalitions, NASA, General Services
Administration, U.S. Postal Service, U.S. Air Force, U.S. Navy, U.S.
Federal Law Enforcement Training Center and Disney World.
Organizations in support of establishing a training program for
first responders include the National Association of State Fire
Marshals and the 27 members of the National Alternative Fuels Training
Consortium (NAFTC), headquartered at West Virginia University. The
NAFTC members are post-secondary academic institutions (with 10 to 25
new members to be added over the next year). Other supporters include
numerous industry organizations in the AFV/Advanced Technology Vehicle
and the Automotive Industry (including automobile manufacturers),
Professional Associations, and Industry Trade Associations (including
electric, biodiesel, natural gas, hydrogen and flex-fuel). The NAFTC
will work cooperatively to promote and distribute the training through
regional agencies (e.g., WVU Fire Extension Service and State Fire
Academies), national agencies such as the National Association of State
Fire Marshals, the National Fire Protection Association (NFPA), the
National Fire Academy in Emmitsburg, Maryland, the Transportation
Emergency Rescue Committee, International Association of Fire Chiefs
and other first responder organizations.
I am pleased that the NAFTC has centers in the States of Chairman
Bond and Ranking Member Murray as well as many other members of the
committee. The NASFM has nationwide representation and leaders of their
organization are in your States.
Thank you very much for your committee consideration of the joint
NASFM-NAFTC proposal to bring our first responders up to speed on
dealing with alternative fuel and advanced technology vehicles that are
growing in popularity.
Today's worsening energy crisis and consumers flocking to
alternative fueled vehicles are cause for concern among firefighters
and other first responders. Firefighters and emergency personnel
arriving on the scene of accidents and vehicle fires are sometimes
searching for the answers to complex questions about alternative fueled
vehicles. The answer to this dilemma is fiscal year 2007 funding of
$950,000 to launch a much-needed national program to provide
alternative fuels safety training for emergency responders.
The need for this program was not so apparent just a few months
ago. With energy prices at record levels, we have seen consumers,
corporations, and government agencies move increasingly to alternative
energy sources. Hundreds of companies have launched alternative energy
products into the market place and are involved in extensive R&D in
almost all States. These new technologies are vital to the future
security and energy independence of our country, but a barrier
threatens to halt progress. Firefighters simply are not prepared to
protect the public or themselves in incidents involving these new
technologies.
The United States has learned the hard way with pipelines, LNG and
other energy infrastructure that local officials and the public take
notice when emergency responders are apprehensive about new risks.
Responders already have expressed concern about electrical hazards with
hybrid autos, the proper firefighting foams to use on ethanol fires,
and explosion risks with compressed gases. Fire departments have
refused permits for some hydrogen demonstration projects.
Proper training and education of responders is the only practical
solution. The National Association of State Fire Marshals (NASFM)
consists of senior State-level public safety officials who either
manage or play a key role in emergency responder training at State,
regional and local academies in their States. NASFM has the ability to
reach responders quickly and efficiently.
With modest funding from U.S. Department of Transportation, NASFM
has organized a national consortium of emergency responders, Federal
and State agencies, universities, auto producers, energy companies and
others who have been working on an alternative fuels safety training
program for emergency responders.
Our plan is to complete work on a curriculum and materials, rapidly
deploy the program to five existing academies which shall serve as
regional centers, provide instructors and the program materials, and
initiate train-the-trainer programs by the end of fiscal year 2007. The
regional centers will require support to improve facilities and add
training props, but these costs can be discussed at a later date.
Without adequate resources, this program is unlikely to be ready much
sooner than 2008 and would be slow to implement and inadequate in its
content.
Elements of a strong and credible curriculum already exist. The
National Alternative Fuels Training Consortium (NAFTC) at West Virginia
University has much of what is needed, and other elements are available
from industry, existing hazardous materials safety curricula and other
sources. That process is underway with NAFTC working in collaboration
with the University of Montana's College of Technology and the Missouri
Transportation Institute, with input from the U.S. Departments of
Energy and Transportation.
While the curriculum is developed, the NAFTC will adapt its
material for the purpose of training first responders and add scenario
and video training. NASFM and NAFTC are in the process of designating
five State agencies to coordinate the regional training centers we will
need to deliver the program. The leading candidates are the Missouri
Division of Fire Safety; the Office of the State Fire Marshal, State of
New Hampshire; the New Mexico State Fire Marshal; the Florida State
Fire College; and the Office of the State Fire Marshal, State of
Washington.
To move this program forward now, the NASFM, with support from the
NAFTC is requesting a total of $950,000 in fiscal year 2007 for the
following tasks, consisting of these costs:
--$600,000 to assemble and validate these components, produce and
test a videotape and manual, and establish a website for on-
line training.
--$100,000 to enable us to make needs assessments of the existing
fire academies to serve as regional alternative fuel safety
training centers;
--$100,000 to support two senior trainers to work with regional
academy staff; and
--$150,000 to produce and distribute sufficient copies of the videos
and program materials to launch the program.
Safety is a shared responsibility. The public must be assured that
their safety is in the forefront of a shift to alternative fuels. We
have the people, the ideas and the responsibility to work with Congress
and the administration to make the transition to alternative fuels.
The States and localities already invest much in our Nation's
emergency responder training. In subsequent years, NASFM and NAFTC will
seek support from industry partners. Many have been generous in helping
State and local academies upgrade facilities for the pipeline safety
programs that NASFM operate in cooperation with the U.S. Department of
Transportation. But, it is doubtful that first responders can be
adequately prepared for the influx of alternative fueled vehicles
without fiscal year 2007 Federal dollars.
CURRENT NATIONAL TRAINING CENTERS
------------------------------------------------------------------------
Educational
State Institution City
------------------------------------------------------------------------
Arizona......................... Gateway Community Phoenix
College.
California...................... Rio Hondo College. Whittier
Connecticut..................... Gateway Community North Haven
College.
Florida......................... Traviss Career Lakeland
Center.
Illinois........................ Morton College.... Cicero
Indiana......................... Ivy Tech Community Gary
College of
Indiana.
Iowa............................ Des Moines Area Ankeny
Community College.
Louisiana....................... Louisiana Baton Rouge
Technical College.
Maryland........................ Com. Col. of Baltimore
Baltimore County
(Catonsville).
Massachusetts................... Wentworth Arlington
Institute of
Technology.
Michigan........................ Lansing Community Lansing
College. Kalamazoo
Kalamazoo Valley
Community College.
Missouri........................ Ranken Technical St. Louis
College.
Nebraska........................ Central Community Columbus
College.
Nevada.......................... Community College North Las Vegas
of Southern
Nevada.
New York........................ Onondaga Community Syracuse
College.
North Carolina.................. Wake Technical Raleigh
College.
Ohio............................ University of Lima
Northwestern Ohio. Cleveland
Ohio Technical
College.
Oregon.......................... Portland Community Portland
College.
South Carolina.................. York Technical Rock Hill
College.
Tennessee....................... Nashville Auto- Nashville
Diesel College.
Texas........................... Tarrant County Ft. Worth
College.
Washington...................... Shoreline Shoreline
Community College.
West Virginia................... West Virginia Morgantown
University.
------------------------------------------------------------------------
TARGETED NATIONAL TRAINING CENTERS
------------------------------------------------------------------------
Educational
State Institution\1\ City
------------------------------------------------------------------------
Alaska.......................... University of Anchorage
Alaska.
Utah............................ Salt Lake Salt Lake City
Community College.
Vermont......................... Vermont Technical Randolph Center
College.
Virginia........................ Northern Virginia Alexandria
Community College.
------------------------------------------------------------------------
\1\ Additional training centers will be recruited next in Alabama,
California, Colorado, Idaho, New Mexico, New York, Oklahoma, and
Pennsylvania.
______
Prepared Statement of the National Association of Railroad Passengers
The National Association of Railroad Passengers strongly supports
Amtrak's fiscal year 2007 grant request of $1.598 billion and the
additional $275 million in ``strategic investment initiatives'' Amtrak
outlined. That $275 million includes:
--$100 million to be administered by the Secretary of Transportation,
for a matching-funds program to support State efforts to
improve and expand intercity passenger rail services. This
would help address rail's longstanding competitive disadvantage
with other modes of transportation, which enjoy Federal funding
matches of 50 to 90 percent. We also support Amtrak's call for
a Federal-State partnership including ``reliable'' Federal
funding (80 percent Federal match).
--$50 million (which also could be administered by the Secretary) for
``joint investment [with States and railroads] targeted to
network chokepoints and linked to threshold performance
improvements in intercity passenger rail on-time performance.''
--$100 million to restructure some of Amtrak's debt, saving money
both for Amtrak and the Federal Government. Amtrak says the
restructuring ``is intended to achieve savings of $45 million,
above the initial $100 million cost, and a rate of return of
14.8 percent per year.''
--$25 million for Americans with Disabilities Act compliance
(supplementing $22 million for this purpose in the $1.598
billion ``base request'').
This is the second straight year that Amtrak's board, composed
entirely of Republicans appointed by President Bush, has supported a
significant increase in Federal investment in Amtrak and passenger
rail.
We of course agree with this from a May 28 New York Times
editorial: ``Amtrak does not need to make a profit, but it does need to
work. The government directs billions of dollars to roads and bridges.
Airports get plenty of help, but somehow very little trickles down to
the rails. Amtrak, which at one point was to have received zero federal
funds after 2002, has been offered $900 million by the administration
for next year. That amount is so low it should be an insult . . . If
President Bush really wants transportation alternatives, it is time for
a strategic look at how the railroads can serve as an even more
important escape valve for the nation's overloaded transportation
system.''
Viewed in the context of national need and world energy concerns,
as well as the last sentence in the above quotation, Amtrak's request,
which totals $1.873 billion, is conservative.
WHY TRAINS ARE A GOOD INVESTMENT
Citizens Want Them!--Harris Interactive, Inc. provides the latest
major poll indicating that Americans want more rail service and believe
that this should be mainly a responsibility of the Federal Government.
Significantly, the poll--released February 8--was taken December 8-14,
2005, before the latest run-up in gasoline prices.
Harris Interactive, Inc, asked, ``In the future, as more people
travel, which two of the following would you like to see have an
increasing share of all passenger transportation?'' Americans
overwhelmingly chose commuter and long-range trains (44 percent and 35
percent, respectively) compared to long distance travel by car (10
percent) and bus (6 percent).
When Harris asked ``. . . which of the following would you like to
see have an increasing share of all goods and commodities movements in
the United States?'' the response was even more striking: fully 63
percent of respondents favored freight railroads, more than air freight
(35 percent) and trucks (24 percent) combined. The survey then asked:
``Who do you think should be mainly responsible for maintaining and
improving the transportation system in the Nation as a whole?'' More
than two-thirds (68 percent) of adults said the Federal Government.
(Full poll: http://harrisinteractive.com/harris_poll/index.asp?PID=638)
The Traveling Public Votes ``Yes''.--Amtrak ridership has risen in
8 of the last 9 years, with fiscal year 2005 ridership 29 percent above
that for fiscal 1996.
I will not repeat the list of ``justifications'' for passenger rail
I recited a year ago. However, when energy price increases are ``above-
the-fold'' news, normal public support for passenger rail becomes even
stronger, as does the public policy case for providing that service.
In his State of the Union Address, President Bush said, ``America
is addicted to oil, which is often imported from unstable parts of the
world.'' He was correct. Strengthening and expanding passenger rail
will help reduce the vulnerability of our citizens and our economy to
high energy prices. Strengthening public transportation in general as a
response to high energy prices and concerns about long-term oil
supplies is at once popular and sound policy.
The longer the Federal Government starves intercity passenger rail,
the angrier the American people will be when they discover they do not
have choices that help them adapt to higher energy costs while still
preserving their freedom to travel and maintaining their quality of
life.
We urge that all Amtrak routes be continued--and the New Orleans-
Orlando segment restored--while Amtrak improves its cost-effectiveness
in various ways, many of which are discussed below.
AMTRAK EFFICIENCY CONCERNS
We share the concern of the subcommittee--and every responsible,
interested party--that Amtrak use its revenues (both commercial and
taxpayers) efficiently.
Mechanical.--Some of the biggest opportunities to improve Amtrak's
bottom line while maintaining and even expanding service involve
updating Amtrak's maintenance practices. The much-quoted GAO report on
Amtrak management cites an important report by the Amtrak Inspector
General. A key passage from the Amtrak IG's report reads: ``Both of our
consultants independently commented that Amtrak's maintenance
operations are being performed similar to the way the other major
railroads in North America did maintenance over 20 years ago. The other
Class I railroads have since moved on to more sophisticated approaches
to maintenance to improve reliability and reduce costs.''
Thus, Amtrak is updating and improving its practices, with an
expectation that its Mechanical Department can boost output and quality
while reducing costs.
Dining Cars.--Amtrak is well underway with projects that will
significantly reduce the net cost of on-board food and beverage
services. On long-distance trains, Amtrak is revising dining car
processes and reducing on-board staff; reductions began before
Christmas and are scheduled to be complete before the end of May.
Reducing food losses is a reasonable goal; eliminating them is not.
Carriers worldwide consider on-board food and beverage service not as a
profit center but as a necessary expense to attract and retain
business. In a November 2005 speech, Jonathan Metcalf, Chief Operating
Officer of Britain's Great Northeastern Railway, said that food service
on his trains ``probably loses 2-3 million a
year, if we didn't do food, we'd lose passengers . . . it's a key
reason why they travel with us . . . we probably would have lost
20-30 million in ticket revenue (without food
service).''
Mail.--Our Association repeatedly testified in support of David
Gunn's work to improve Amtrak. We believe Amtrak is much better off for
his having served there. Nonetheless, we have urged Amtrak to look
seriously at undoing one ill-advised step that he took. He completely
eliminated mail carriage even though every study of which we are aware
indicated mail was profitable for Amtrak. Amtrak invested in the mail
business and still owns relevant infrastructure and a sizable number of
cars with good life expectancy. I have written to Amtrak urging a
careful review of opportunities to restart mail carriage where this
would be incrementally profitable.
Fares and Technology.--Amtrak is not buying market-share with low
prices. Amtrak ridership has grown in spite of fare increases. Amtrak's
yield (average fare per passenger-mile) has increased every year since
at least fiscal year 1994 with the sole exception of fiscal year 2003.
(A passenger-mile is one passenger traveling 1 mile.) Fiscal year 2005
yield was 65 percent above that in fiscal year 1994.
Through the first 7 months of fiscal year 2006 (October-April), the
yield was 9.8 percent above the same period in fiscal year 2005. If
anything, Amtrak arguably has been too aggressive in raising fares.
Amtrak does offer good deals on-line where this makes business
sense--i.e., handling ``distressed inventory'' (that is, seats that
otherwise would go empty and where eliminating their operation is
impractical or would not achieve savings). This is also important for
cultivating tomorrow's revenues, since some of the people who have time
to search the internet for elusive good deals are young people who may
become tomorrow's ``full fare,'' loyal customers. If Amtrak was not
doing this sort of thing, others would criticize its fare-setting
practices as out-of-date.
Creative use of the internet is not new at Amtrak. It offered full
booking capability on-line starting in February, 1997, at about the
same time as Continental Airlines and well before the other major
airlines. Another indication of Amtrak's on-line sophistication is the
interactive route map Amtrak recently introduced.
The DOT Inspector General, incidentally, criticized GAO's report
for its glass-half-empty approach, that is, for not giving ``equal time
and space [to] what works' at Amtrak, and what has been improved at
Amtrak.''
Fares and Public Policy.--Sound public policy should encourage low
fares. Lower fares mean higher ridership, and help America and its
people deal more effectively with scarce oil. California's financial
support for its three Amtrak corridors helps support lower fares than
are found in many other parts of the Amtrak system. This should be
encouraged!
STATUTORY DIRECTIVES (INCLUDING REPORT LANGUAGE)
We urge Congress to hold Amtrak accountable for the bottom line,
but to be as restrained as possible with regard to specific directives
as to how to get there.
The history of Amtrak is replete with examples of ``good
legislative intentions'' which sometimes have resulted in higher costs
rather than reform--including directives in the 1980's regarding food
service.
The more the law contains specific directives about how to manage
the company, the greater the danger that management focus would be
distracted from doing what is best for the bottom line, and that
responsibility for results would shift from management to the sources
of the specific directives.
FUNDING LEVELS
The Bush Administration's request of $900 million--30 percent below
the current level of $1.3 billion--would not keep the trains running.
The administration characterizes its budget request as a ``reward'' for
progress that Amtrak has made on reforms, but the numbers are clear.
--Debt service is estimated at $295 million. Amtrak has taken on no
new debt since June, 2002. From September, 2002, to December,
2005, total outstanding debt fell by $300 million--from $3.9
billion to $3.6 billion.
--The operating grant requirement is estimated at $498 million, which
Amtrak's Board says ``represents a significant stretch goal . .
. $42 million below the approved fiscal year 2006 budget [of
$540 million] and $88 million below the DOT Inspector General's
baseline operating budget.''
--Amtrak seeks $730 million for capital (not counting $177 million in
non-Federal funding), and $75 million for working capital.
If a $900 million Federal grant did not cause an immediate
shutdown, it certainly would begin a visible, downward spiral in
service quality and reliability, due to elimination of rolling stock
heavy overhauls and of work on infrastructure. Chances would grow that
the failure of a moveable bridge would end Boston-New York service.
After debt service and operations (the first two bullets above),
only $107 million would remain for capital. This would be almost
totally consumed by the $90 million Amtrak seeks for ``investment
required to address legal and regulatory requirements, including NY
tunnel life safety program, environmental remediation and pollution
control, police and security, FRA-mandated rolling stock investment,
and initial ADA station compliance work.''
LONG-DISTANCE TRAINS
Amtrak's long-distance and shorter corridor services both are
important, complementing each other and other U.S. transportation.
--Long-distance trains continue to show strength. In fiscal 2005,
they carried an average 356 passengers per run, and the number
on board at any one time (passenger-miles-per-train-mile) was
171. Sleeping car ridership was up 30,000 (or 6 percent) from
fiscal 2004. Sleeping car passengers accounted for 15 percent
of ridership but 39 percent of revenues on these trains.
--A substantial number of coach passengers on long-distance trains
travel very long distances--55 percent traveled at least 400
miles, 25 percent at least 800 miles. These fiscal year 2005
figures understate trip length since they are ``unlinked
trips,'' that is, for example, a Washington-Milwaukee passenger
must change trains in Chicago and thus is recognized as a
Washington-Chicago passenger and a Chicago-Milwaukee passenger.
--Therefore, elimination of dining cars would hurt coach ridership.
Any analysis that assigns 100 percent of dining-car costs to
sleeping car passengers is wrong. Amtrak reports that usage of
dining cars by coach passengers has been increasing with the
new ``simplified dining service'' Amtrak has introduced on most
trains in the past several months.
--Sleeping cars and food service are needed to attract discretionary
travelers. If trains were operated only for those without any
other option, ``bottom fishing'' would produce lower-volume,
higher-unit costs and lower economic efficiency.
--On a passenger-mile basis, corridor and long-distance trains
require similar levels of operating support. [A passenger-mile
is one passenger traveling 1 mile.] In fiscal year 2004, the
``fare box loss'' per passenger-mile actually was higher
(``worse'') for short-distance trains (25 cents) than for long-
distance trains (15 cents).
--Long distance trains are the only intercity passenger trains in 25
States.
--One cannot simply ``buy everyone a plane ticket cheaper than
running an Amtrak train'' because hundreds of cities that
Amtrak serves have no access to discount airline service. In
addition, many Americans cannot or chose not to fly.
Thank you for considering our views. We stand ready to help the
subcommittee as we are able, including by providing such further
information as you may request.