[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
                 DEPARTMENTS OF LABOR, HEALTH AND HUMAN
               SERVICES, EDUCATION, AND RELATED AGENCIES
                        APPROPRIATIONS FOR 2009

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS
                             SECOND SESSION
                                ________
  SUBCOMMITTEE ON THE DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, 
                    EDUCATION, AND RELATED AGENCIES
                   DAVID R. OBEY, Wisconsin, Chairman
 NITA M. LOWEY, New York            JAMES T. WALSH, New York
 ROSA L. DeLAURO, Connecticut       RALPH REGULA, Ohio
 JESSE L. JACKSON, Jr., Illinois    JOHN E. PETERSON, Pennsylvania
 PATRICK J. KENNEDY, Rhode Island   DAVE WELDON, Florida
 LUCILLE ROYBAL-ALLARD, California  MICHAEL K. SIMPSON, Idaho
 BARBARA LEE, California            DENNIS R. REHBERG, Montana    
 TOM UDALL, New Mexico              
 MICHAEL HONDA, California          
 BETTY McCOLLUM, Minnesota          
 TIM RYAN, Ohio                     

 NOTE: Under Committee Rules, Mr. Obey, as Chairman of the Full 
Committee, and Mr. Lewis, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
                Cheryl Smith, Sue Quantius, Nicole Kunko,
           Teri Bergman, Charmaine Mercer, and Andria Oliver,
                           Subcommittee Staff
                                ________

                                 PART 6
                                                                   Page
 Secretary of the Department of Labor.............................    1
 Secretary of the Department of Health and Human Services.........  191
 Health Issues and Opportunities at the National Institutes of 
Health, Centers for Disease Control and Prevention, Substance 
Abuse and Mental Health Services Administration, and Agency for 
Healthcare Research and Quality/Fiscal Year 2009 Budget Overview..  465
 Secretary of the Department of Education.........................  599
 Reducing the Disability Backlog at the Social Security 
Administration/Fiscal Year 2009 Budget Overview...................  695

                                ________
         Printed for the use of the Committee on Appropriations
                                 Part 6

      DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION,

              AND RELATED AGENCIES APPROPRIATIONS FOR 2009
                                                                      ?
?
                                                                      ?

                 DEPARTMENTS OF LABOR, HEALTH AND HUMAN

               SERVICES, EDUCATION, AND RELATED AGENCIES

                        APPROPRIATIONS FOR 2009

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS
                             SECOND SESSION
                                ________
  SUBCOMMITTEE ON THE DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, 
                    EDUCATION, AND RELATED AGENCIES
                   DAVID R. OBEY, Wisconsin, Chairman
 NITA M. LOWEY, New York            JAMES T. WALSH, New York
 ROSA L. DeLAURO, Connecticut       RALPH REGULA, Ohio
 JESSE L. JACKSON, Jr., Illinois    JOHN E. PETERSON, Pennsylvania
 PATRICK J. KENNEDY, Rhode Island   DAVE WELDON, Florida
 LUCILLE ROYBAL-ALLARD, California  MICHAEL K. SIMPSON, Idaho
 BARBARA LEE, California            DENNIS R. REHBERG, Montana    
 TOM UDALL, New Mexico              
 MICHAEL HONDA, California          
 BETTY McCOLLUM, Minnesota          
 TIM RYAN, Ohio                     

 NOTE: Under Committee Rules, Mr. Obey, as Chairman of the Full 
Committee, and Mr. Lewis, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
                Cheryl Smith, Sue Quantius, Nicole Kunko,
           Teri Bergman, Charmaine Mercer, and Andria Oliver,
                           Subcommittee Staff
                                ________

                                 PART 6
                                                                   Page
 Secretary of the Department of Labor.............................    1
 Secretary of the Department of Health and Human Services.........  191
 Health Issues and Opportunities at the National Institutes of 
Health, Centers for Disease Control and Prevention, Substance 
Abuse and Mental Health Services Administration, and Agency for 
Healthcare Research and Quality/Fiscal Year 2009 Budget Overview..  465
 Secretary of the Department of Education.........................  599
 Reducing the Disability Backlog at the Social Security 
Administration/Fiscal Year 2009 Budget Overview...................  695

                                ________
         Printed for the use of the Committee on Appropriations
                                ________
                     U.S. GOVERNMENT PRINTING OFFICE
 43-195                     WASHINGTON : 2008

                                  COMMITTEE ON APPROPRIATIONS

                   DAVID R. OBEY, Wisconsin, Chairman
 
 JOHN P. MURTHA, Pennsylvania       JERRY LEWIS, California
 NORMAN D. DICKS, Washington        C. W. BILL YOUNG, Florida
 ALAN B. MOLLOHAN, West Virginia    RALPH REGULA, Ohio
 MARCY KAPTUR, Ohio                 HAROLD ROGERS, Kentucky
 PETER J. VISCLOSKY, Indiana        FRANK R. WOLF, Virginia
 NITA M. LOWEY, New York            JAMES T. WALSH, New York
 JOSE E. SERRANO, New York          DAVID L. HOBSON, Ohio
 ROSA L. DeLAURO, Connecticut       JOE KNOLLENBERG, Michigan
 JAMES P. MORAN, Virginia           JACK KINGSTON, Georgia
 JOHN W. OLVER, Massachusetts       RODNEY P. FRELINGHUYSEN, New Jersey
 ED PASTOR, Arizona                 TODD TIAHRT, Kansas
 DAVID E. PRICE, North Carolina     ZACH WAMP, Tennessee
 CHET EDWARDS, Texas                TOM LATHAM, Iowa
 ROBERT E. ``BUD'' CRAMER, Jr.,     ROBERT B. ADERHOLT, Alabama
Alabama                             JO ANN EMERSON, Missouri
 PATRICK J. KENNEDY, Rhode Island   KAY GRANGER, Texas
 MAURICE D. HINCHEY, New York       JOHN E. PETERSON, Pennsylvania
 LUCILLE ROYBAL-ALLARD, California  VIRGIL H. GOODE, Jr., Virginia
 SAM FARR, California               RAY LaHOOD, Illinois
 JESSE L. JACKSON, Jr., Illinois    DAVE WELDON, Florida
 CAROLYN C. KILPATRICK, Michigan    MICHAEL K. SIMPSON, Idaho
 ALLEN BOYD, Florida                JOHN ABNEY CULBERSON, Texas
 CHAKA FATTAH, Pennsylvania         MARK STEVEN KIRK, Illinois
 STEVEN R. ROTHMAN, New Jersey      ANDER CRENSHAW, Florida
 SANFORD D. BISHOP, Jr., Georgia    DENNIS R. REHBERG, Montana
 MARION BERRY, Arkansas             JOHN R. CARTER, Texas
 BARBARA LEE, California            RODNEY ALEXANDER, Louisiana
 TOM UDALL, New Mexico              KEN CALVERT, California
 ADAM SCHIFF, California            JO BONNER, Alabama                 
 MICHAEL HONDA, California          
 BETTY McCOLLUM, Minnesota          
 STEVE ISRAEL, New York             
 TIM RYAN, Ohio                     
 C.A. ``DUTCH'' RUPPERSBERGER,      
Maryland                            
 BEN CHANDLER, Kentucky             
 DEBBIE WASSERMAN SCHULTZ, Florida  
 CIRO RODRIGUEZ, Texas              
                                    
                  Rob Nabors, Clerk and Staff Director

                                  (ii)


DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION, AND RELATED 
                    AGENCIES APPROPRIATIONS FOR 2009

                              ----------                              

                                           Thursday, March 6, 2008.

          BUDGET REQUEST FOR THE DEPARTMENT OF LABOR FOR 2009

                                WITNESS

HON. ELAINE L. CHAO, SECRETARY, U.S. DEPARTMENT OF LABOR

                      Chairman's Welcoming Remarks

    Mr. Obey. Well, good morning, Madam Secretary. Today, the 
Committee will review the budget request for the Department of 
Labor for the coming fiscal year.
    Madam Secretary, let me say something before we begin. I 
think you are a very nice person and I respect the job you try 
to do, but I have very basic disagreements with some of the 
policies that you are pursuing. And I apologize ahead of time, 
but I am going to take a little more time than I normally do on 
opening a hearing to explain what my concerns are.
    First, I am troubled by a recent press article concerning 
some remarks attributed to you. According to those articles, in 
a February 7th address to the Conservative Political Action 
Conference you cited several milestones for your tenure as 
Secretary of Labor. One of those milestones was reportedly that 
``the Department's fiscal year 2009 budget is nearly 15 percent 
less than 10 years ago.'' I, frankly, do not see that as an 
accomplishment, considering what has occurred over the past few 
years in this economy.
    There are 7.6 million unemployed Americans today, 26 
percent more than was the case seven years ago. The number of 
people who have been unemployed for more than 27 weeks, long-
term unemployed is now double the January 2000 level. That 
includes several members of my family, and I think many members 
of Congress can say the same thing.
    Under the last seven years we have lost 3.2 million 
manufacturing jobs. The service sector, which amounts to two-
thirds of the U.S. economy, has contracted in January, for the 
first time in five years. New unemployment numbers are going to 
be released tomorrow. Nobody expects the news to be any better.
    Despite those economic conditions, which appear to be 
worsening--and those conditions, I would suggest, should tell 
us that we ought to be making greater investments to assist the 
unemployed and those at risk of losing their jobs--your budget 
cuts funding for programs run by the Department by $1.2 
billion, or 10 percent, below fiscal year 2008.
    In real terms, after accounting for inflation and 
population growth, which is the only way to measure the per 
capita impact on people, your budget is $5.3 billion, or 33 
percent, below its 2001 level.
    Over the past several weeks, this Subcommittee has been 
holding a number of hearings to try to achieve a clear 
understanding of the context in which these policy decisions 
are being made. One of the witnesses was Harold Meyerson, and I 
would like to read what he said. He said, ``The benefits, 
pensions, and rising annual income that were the common, though 
by no means universal, experience of American workers a 
generation ago are now a thing of the past to all but the 
talented or, more precisely, the fortunate tenth. We are no 
longer a Nation of good jobs.''
    Jared Bernstein, another economist, told us that working 
families are working harder and smarter, but real incomes are 
down and poverty is up.
    Another economist, Harry Holzer, said the following: ``The 
very low earnings and employment of millions of Americans 
generate high poverty rates and impose huge costs on the U.S. 
economy.
    Those presentations, I think, helped us to understand that 
the cost to society of not making these investments can be 
very, very high, and I would like to examine some of the 
consequences of your budget.


                   STATE EMPLOYMENT SERVICES FUNDING


    Under this Administration, funding for the State Employment 
Service has been cut by $93 million, or 9 percent, at the same 
time that the working age population has grown by 9 percent and 
unemployment has climbed by nearly 17 percent. Your fiscal year 
2009 budget proposes to eliminate Federal support.
    The Employment Service helps 13 million people by matching 
people who need jobs with employers who have available 
openings. The budgetary cost of the Employment Service may be 
$703 million a year, but the cost of not providing those 
services could be much higher in terms of lost wages to 
workers.

                       TRAINING PROGRAMS FUNDING

    Your budget makes more than $500 million in cuts in job 
training programs, including $173 million in cuts to youth 
training programs. When we consider the reduced lifetime 
earnings of a high school dropout, $187,000 per dropout, or I 
should say when we look at the additional costs to Government 
in social welfare benefits for people who drop out and the cost 
in terms of medical services, and in many cases incarceration, 
that $173 million cut to youth programs could wind up being 
very costly indeed over the next 20 years.
    Your budget repeats last year's proposal to slash part-time 
minimum wage community service job grants for 34,000 low-income 
senior citizens. That proposal would cut the program by $172 
million, or 33 percent, below the fiscal year 2008 level.
    It seems to me, Madam Secretary, that your Department is 
the agency that, above all others, has an obligation to try to 
reduce the gap in human potential that we have in this society 
between those who were born on third base and those who were 
not. We have a labor market that places a premium on skills 
and, yet, this budget squeezes programs that will help workers 
to develop those skills and makes inevitable the growth of the 
gap between the most well-off people in this society and other 
people who are struggling on the edges, trying to grab a piece 
of American hopes and dreams.
    So I am extremely disquieted by your agency's budget and I 
am afraid that the tenor of my questions will reflect that this 
morning. Do not take it personally. You have got your job to 
do, but we have got our job to do too, and when we see 
priorities that I think are as misbegotten as these, I think we 
have got an obligation to address them.
    Mr. Obey. Let me turn to Mr. Walsh for his comments before 
I ask you to make your statement.

                   Ranking Member's Welcoming Remarks

    Mr. Walsh. Thank you, Mr. Chairman.
    Madam Secretary, welcome. Good to have you back.
    Unless I am mistaken, you hold the distinction of being the 
longest serving member of the President's cabinet. 
Congratulations to you and thank you for your service; 
confirmed just after the inauguration in 2001, so we thank you 
for that long and distinguished service.
    I said to you last year, I believe, it is a great time to 
be Secretary. I am not sure I can offer the same this year 
because of the downturn in the economy. But, you know, these 
economies are cyclical in nature and sometimes Federal policies 
impact on that and sometimes they do not.
    Even before the Budget Committee marks up the budget 
resolution, even before we hear testimony on the fiscal year 
2009 request, already there are threats of vetoes and 
continuing resolutions. I fear the prospects of what will be 
delivered by this Congress are seemingly a muddle at this 
point.
    From my observation, Mr. Chairman, this bill has been 
subjected to political maneuvering from both parties for too 
long; from both parties, in both bodies, and at both ends of 
Pennsylvania Avenue.
    As the Nation endures another year of electoral politics 
and ultimately a transition to a new administration and new 
executive leadership, it is important to maintain some degree 
of institutional integrity across the Federal Government, and I 
believe the Congress can still do its part by providing funding 
for the continuity of these critical Labor programs.
    For all of its efforts in promoting employment 
opportunities and training services, the Department of Labor is 
often graded harshly on its monthly unemployment rate. Yet, 
according to statistics--and we have heard some statistics 
already and we will hear more--the average unemployment rate 
has steadily declined over multiple administrations, from a 
high of almost 10 percent back in the Carter years to its 
current rate of 4.9 percent today. Millions and millions of 
more Americans working today than then. So it is indeed good 
news.
    Speaking of statistics, the Chairman talked a little bit 
about this year, this current unemployment rate versus 2001. At 
one point in 2001, before the technology boom had burst, 
unemployment was fairly low. Within a year it increased by 
almost 1 percent. Part of that was because the technology boom 
burst and part of that was because of the attack on the United 
States on September 11th. But much like the recent housing 
market bubble burst, that bubble burst also, and it would be 
hard to lay blame on any individual for either of those; it was 
a sort of collective mess that we got ourselves into.
    But the unemployment rate, which hit about 5 percent in 
September of 2001, continued to go up after September 11, into 
2002, 2003, to about 6 percent, but it remained lower than the 
unemployment rate in the mid-1990s; and since that time it has 
been on a steady decline, ending in January of 2008 at 4.9 
percent.
    Mr. Chairman, this request proposes $10,500,000,000 in 
discretionary authority for the Department of Labor, including 
$2,800,000,000 for high-quality job training and employment 
services; $238,000,000 for veterans transitioning to civilian 
life, many having served multiple tours of duty in Iraq and 
Afghanistan; and $2,700,000,000 to support unemployment 
insurance.
    It also proposes some things that will have to be debated. 
For example, a 14 percent reduction in WIA programs and the 
elimination of the Employee Services Grant to States, a 
reduction of $700,000,000 that was ostensibly taken to avoid a 
duplication of services. More realistically, it was taken to 
meet an arbitrary number given by OMB.
    This request is not perfect, but we need to recognize the 
historical efficacy of these programs and services in 
maintaining consistently low unemployment, as well as our 
competitive position in the global economy.
    Mr. Chairman, I look forward to working together with you 
on this request, on this budget, and with the Secretary, and I 
yield back.
    Mr. Obey. Thank you, Mr. Walsh.
    Just one point before we begin. I think if you examine my 
opening comments, I specifically avoided trying to attach any 
blame to any specific administration for unemployment rates. 
Unemployment rates result from a variety of causes. I think 
rather than getting into a question of who shot John on 
unemployment, I think the most important issue is simply what 
we ought to be doing about the problem.
    Please proceed with whatever comments you would like to 
make. We will put your entire statement in the record. If you 
could summarize it in about 10 minutes, I would appreciate it.
    Secretary Chao. Yes.

                     Secretary's Opening Statement

    I have a statement for the record that I would appreciate 
if we can submit for the record, and I will just briefly 
summarize.
    Mr. Chairman, Ranking Member Walsh, and members of the 
Committee, I appreciate----
    Mr. Obey. Could you pull the mic a little closer, please?
    Secretary Chao. Mr. Chairman, Congressman Walsh, members of 
the Subcommittee, we appreciate the opportunity to present the 
Administration's budget for fiscal year 2009 for the Department 
of Labor. The total request for the Department is 
$53,100,000,000, $10,500,000,000 is for discretionary spending.
    The Department's fiscal year 2009 budget focuses on five 
overall priorities: protecting workers' health and safety; 
protecting workers' pay, benefits, long-term security, 
pensions; modernizing the temporary foreign labor certification 
programs; securing the employment rights of America's veterans; 
and increasing the competitiveness of America's workforce, of 
which you and I are both concerned.
    In fiscal year 2009, $1,400,000,000 is requested for the 
Department's worker protection programs. This request includes 
$332,000,000 for Mine Safety and Health Administration and an 
FTE of 2,361. We are increasing funding for enforcement. And 
while there is a slight reduction over the fiscal year 2008 
enacted level, this is due to the fact that last year's fiscal 
year budget had a one-time expense, including the overtime and 
travel expenses associated with training new inspectors. This 
current request enables MSHA to continue implementing the 
Historic Mine Act and maintains our strong commitment to Mine 
Safety and Health.
    This request also includes $7,400,000 specifically targeted 
to support and train an additional 55 Mine Safety Enforcement 
personnel, which enable MSHA to complete 100 percent of the 
mandated mine inspections. This is in addition to the 273 
enforcement personnel that were hired last year, last fiscal 
year. So the result is a new increase of 177 Mine Safety 
Enforcement personnel as of January 31st of this year, which 
brings the total number of coal enforcement personnel to its 
highest levels since 1994.
    The budget will support MSHA's efforts to finalize rules on 
Belt Air and Mine Refuge Chambers, and to vigorously enforce 
increased monetary penalties.
    The fiscal year 2009 budget request also includes 
$501,700,000 and 2,173 FTEs for OSHA. This is a 3 percent 
increase over the enacted level last year.
    The fiscal year 2009 budget request before this Committee 
for the Employment Standards Administration is for $468,700,000 
and 3,190 FTEs. The request for ESA includes $193,100,000 and 
1,283 FTEs for the Wage and Hour Division, and the request for 
Wage and Hour includes $5,100,000 to hire additional 75 
inspectors.
    ESA also requests $89,000,000 and 585 FTEs for the Office 
of Federal Contract Compliance Programs (OFCCP) to protect 
workers from discrimination by Federal contractors and another 
$110,200,000 and 872 FTEs are requested for the Office of 
Worker's Compensation Program.
    Let me note that the Department of Labor recently passed 
the $3,500,000,000 mark in compensation to Energy Employees 
Occupational Illness Compensation Program beneficiaries and 
initial decisions have been made in all of the 22,000 Part E 
cases that were transferred to the Department of Labor from the 
Department of Energy in 2004.
    The ESA request also includes $58,300,000 and 369 FTEs for 
the Office of Labor Management Standards. This is the same 
amount of FTEs requested in fiscal year 2008.
    For the Employee Benefit Security Administration, the 
fiscal year 2009 request is $147,900,000, an increase of over 6 
percent over the enacted level, and 867 FTEs.
    The Department is also committed to providing returning 
veterans with the support needed to make the transition back to 
the non-military workforce a smooth and successful one. So, for 
VETS, the fiscal year 2009 budget is $238,400,000 and 234 FTEs, 
and this is a 5 percent increase over the fiscal year 2008 
enacted level. This will help vets maximize employment 
opportunities for veterans and protect their employment and re-
employment rights.
    As you have alluded to, the United States is transitioning 
to a knowledge-based economy. New jobs are being created. In 
fact, 8.5 million new jobs have been created since August of 
2003. The majority of these new jobs require higher skills, 
more education, and, by definition, they are better paying 
jobs. Our Country's worker training programs need to keep pace 
with these developments and ensure that workers have the 
relevant skills that they need to remain competitive and 
succeed in the new economy.
    It is noteworthy that each year States have carried forward 
over $1,200,000,000 to $1,700,000,000 in unspent Workforce 
Investment Act funds. Despite the legal authority to spend 
funds over three years, we believe that there is an urgent need 
for more worker training now.
    One way to make more effective the delivery of services to 
workers in need of training and retraining is the 
Administration's proposal for career advancement accounts. 
Career Advancement Accounts would triple the number of workers 
that would be able to be trained via the workforce investment 
system. It would also ensure that workers receive relevant 
training that would actually enable them to get a real job.
    Too much of the funding these days is tied up in 
duplicative infrastructure, and reform is urgently needed to 
create a more effective training system that would truly meet 
the needs of our Nation's workers and help our Nation remain 
competitive in a worldwide economy. The Administration looks 
forward to working with Congress to update and improve the 
Workforce Investment Act this year.
    Mr. Chairman, the mission of the Labor Department is indeed 
to create hope and opportunity, and the President's fiscal year 
2009 budget provides the resources to accomplish this by 
promoting and protecting the health, safety, wages, and 
retirement security of America's workers. It also allows us to 
build on record-setting results the Department has accomplished 
for workers over the past seven years, and we also need to 
ensure that workers are indeed trained effectively and that 
they are able to compete in accessing real jobs that are 
occurring and being developed in the economy.
    Thank you.
    [The information follows:]

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                              WIA FUNDING

    Mr. Obey. Thank you.
    Mr. Walsh.
    Mr. Walsh. Thank you, Mr. Chairman.
    Madam Secretary, you just talked about the Workforce 
Investment Act funding rollover. Can you update the Committee 
on how much carryover exists within the WIA grant programs and 
explain why such balances appear to be necessary?
    Secretary Chao. In the time that we have been here, first 
of all, I want to emphasize that people in the system are all 
caring professionals. We all care about the system. We all want 
to make sure that it is effective, that it is helping workers 
by providing relevant training that would actually allow them 
to access real jobs that are developing in our economy.
    In the past seven years, we have seen year after year 
carryover in unspent balances that total about $1,200,000,000 
to $1,700,000,000 a year every single year. This year it is a 
little bit lower than that because of several other 
developments, and they range across the board.
    What happens a lot of times is the workforce investment 
systems throughout the States may contract for a training 
program, but those slots that they contract may not actually be 
used, so it would be claimed that the money is obligated 
because they contracted 400 training slots, 800 training slots, 
but at the end of the year, whether those training slots are 
actually used is questionable. Many times it is not, so you 
have the unspent balances. But the system will claim--and we 
are working with them--that there are unspent balances because 
they are obligated, but there are two very different points of 
view about the money.
    Mr. Walsh. Last year, this Subcommittee voted for a 
$350,000,000 rescission in these funds. Ultimately, in 
conference, it was settled at $250,000,000. Can you explain the 
impact on these programs by that rescission?
    Secretary Chao. Those were primarily taken out of--it was 
across the board. It was primarily taken out of ETA. And we 
have some very successful programs that have proven to be very 
effective, like the President's High Growth Job Training 
program; the Community College Job Training program, which is a 
partnership with community colleges; and also the Workforce 
Innovation Regional Economic Development program. These are 
small amounts----
    Mr. Walsh. Would you say there was a negative impact on 
this program?
    Secretary Chao. We think so, yes.
    Mr. Walsh. Pardon?
    Secretary Chao. We think so.
    Mr. Walsh. The budget proposes significant changes to this 
program this year: proposes a 14 percent cut, roughly 
$450,000,000 from 2008 level; it proposes to consolidate WIA 
Adult Dislocated Worker, Youth Activities, and Employee 
Services Grant programs into a single $2,800,000,000 State 
grant; proposes to add 20 percent State match on CAA funds.
    The CAA and State match requirement have been proposed in 
the past but denied by Congress. Why the drastic reduction in 
WIA programs?
    Secretary Chao. We have had numerous years of discussion 
and disagreement about the separate funding for dislocated 
unemployed workers for adults, youth. Basically, the 
Administration's workforce investment proposal would give 
governors much great flexibility in deciding how these funds 
are going to be used, and the rationale is the governors know 
best what is happening within their workforce investment 
system.
    Most of the money that goes out from the U.S. Department of 
Labor, as you well know, goes out on a formula basis, and 
having these separate funding streams puts all these programs 
in silos that makes it very, very difficult for these programs 
to work together at the grassroots level. So less than 5 
percent of the money stays at the Federal level; all of the 
money goes down to the State level; the governors keep about 15 
to 35 percent, depending on the program; and the rest goes into 
the grassroots municipalities and counties and cities.
    So sometimes there are developing situations in one 
district that there is a surplus of funds and other areas that 
are more unemployed workers and there are a lot of funds; and 
at the State level the governor, even, is unable to shift any 
of this around. So we are trying to enable the governors to 
have greater flexibility in deciding how these monies are to be 
used.
    There has been this discussion. It takes a long time for 
the system to respond. There is a lot of discussion, but I 
think that discussion is taking place and it is accelerating, 
and there is growing support for----
    Mr. Walsh. Do governors and State legislatures generally 
support that concept?
    Secretary Chao. Some. Not all governors, but most 
governors. There is also a partisan element, of course, to 
this. Sometimes I receive word that--you know, they will ask 
questions like why do we not have more flexibility. When I say, 
well, we have a proposal to that effect, so----
    Mr. Walsh. Thank you.
    Thank you, Mr. Chairman.
    Mr. Obey. Mr. Ryan.
    Mr. Ryan. Thank you, Mr. Chairman.

                        WORKFORCE INVESTMENT ACT

    Madam Secretary, thank you for being here. Your testimony 
does not mention the elimination of the Employment Service 
outside of the Career Advancement Account, and that was 
something that we noticed.
    This is, from my perspective, not the time to be 
eliminating this program that matches people who need 
employment with employers who have jobs to fill. I can tell you 
that in Ohio we need more of this, not less of this, and more 
job training resources, as well, to deal with the escalating 
unemployment rates and dislocations caused by foreign 
competition. We have been hearing a lot about this in the 
presidential race the last few weeks.
    Where, in your estimation, do you expect the 13 million 
participants served by the Employment Service to go for 
assistance?
    Secretary Chao. I do not think we disagree on how we need 
to help workers. The issue is how should we do so and where 
does the money go. Our Country has seen a succession of worker 
training programs that have evolved over time, dating back to 
the 1960s. We had CETA, then we had JPTA, and then we had 
Workforce Investment Act. Every new act imposes a new 
infrastructure on the old, so that we have duplicative 
infrastructure that are not helping workers. If you go to most 
One-Stop career centers, on the right is Employment Services; 
on the left is Workforce Investment Act. Many times they try to 
talk to each other, but they cannot because they are operating 
in silos, and they do not work together and they do not talk to 
one another. Something is really wrong.
    Mr. Ryan. So where are these people going to go, the 13 
million people that are being served by this program? I am not 
saying that we do not have bureaucratic problems----
    Secretary Chao. They will be served. They will be served 
through the Workforce Investment Act, which was passed in 1998.
    Mr. Ryan. Well, you are cutting that by $500,000,000.
    Secretary Chao. Workforce Investment Act and Employment 
Services train 200,000 people. Our goal is to train 800,000. 
They will be able to go to the Workforce Investment Act.
    Mr. Ryan. So you are telling me and this Committee that the 
13 million people that are currently in this program are going 
to be able to go to----
    Secretary Chao. They are not served only by Employment 
Services; they are also served by the One-Stop career centers.
    Mr. Ryan. So they are going to be able to get the same 
services through WIA that you are cutting by $500,000,000?
    Secretary Chao. Yes. That is the key.
    Mr. Ryan. That will be interesting. I mean, I cannot 
believe that.
    Secretary Chao. I would be more than glad to have my people 
come and update----
    Mr. Ryan. The WIA program now serves 900,000----
    Secretary Chao. That is why there are duplicative--what I 
am saying is there are duplicative infrastructures in place. 
That is a problem.
    Mr. Ryan. So the whole ES budget is a waste, last year, for 
example?
    Secretary Chao. It is duplicative.
    Mr. Ryan. So it was wasted money spent, the whole thing?
    Secretary Chao. You said that before.
    Mr. Ryan. I am asking. You are the one eliminating the 
program, not me.
    Secretary Chao. We believe that--we share common goals. We 
are in a worldwide economy. We want----
    Mr. Ryan. I am questioning that because of the way this 
budget looks.
    Secretary Chao. Yes. Well, because there is duplicative--
they are doing the same thing. We have a Workforce Investment 
Act that helps workers, that serves unemployed workers. This is 
a duplicative structure.
    Mr. Ryan. So the answer is yes.
    Secretary Chao. Yes.
    Mr. Ryan. All the money we put in ES last year was wasted 
money.

                          WORKFORCE INVESTMENT

    Secretary Chao. Well, I would invite you to visit a 
Workforce Investment center, a One-Stop center. You will see 
Employment Services on one side; you will see Workforce 
Investment Act on the other.
    Mr. Obey. Would the gentleman yield?
    Mr. Ryan. I would be happy to yield.
    Mr. Obey. How can a program that serves 13 million annually 
be duplicative of a program that serves 900,000, even if the 
Workforce Investment system provides job matching services? Are 
not those services available to far fewer people than through 
the Employment Service?
    Secretary Chao. We have the capacity to take them on. We 
have the capacity to serve them. That is the whole point.
    Mr. Obey. You may have, but my point is they are not 
duplicative if you have only got 900,000 people in one program 
and 13 million in the other.
    Secretary Chao. Those services can----
    Mr. Obey. That means that for 12 out of 13 people the 
services are not duplicative.
    Secretary Chao. They can be provided with--there are three 
different levels of services, but, basically, when a person 
comes in and they ask for unemployment services, that is 
provided through WIA. That is what WIA was supposed to do. That 
is what it does. It has the capacity to do so.
    Mr. Obey. I think the numbers speak for themselves.
    Thank you for yielding.
    Mr. Ryan. I think the numbers do--if they were duplicative, 
they were both doing the same thing, and you are going to move 
this group of 13 million people over into the WIA program, you 
would need additional resources to deal with those 13 million 
people. They are receiving a service anyway.
    We agree to disagree on that, and this Committee is going 
to do everything in our power to try to correct that.

                           YOUTHBUILD PROGRAM

    One question I have--because time is running--with the 
YouthBuild Program. I did see that it received a 15 percent 
cut, I believe. One of the issues with our young people who are 
trying to retrain is to get them prepared for the green collar 
jobs and the making sure the energy-efficiency and whatnot as 
they are building these new homes or refurbishing homes.
    Is there anything in your agenda long-term and in the 
budget this year to start moving this forward to help with 
maybe like a YouthBuild green-style program, where we are 
starting to get these kids and teach them the skills that they 
would need to put solar panels on houses to make sure that the 
houses are conserving as much energy as possible?
    I will let you answer that and yield back.
    Secretary Chao. YouthBuild was just moved over from HUD 
over to us, so we are in the process. I think the program works 
great. We anticipate continuing with the way it is. The green 
projects are not only popular and being considered in 
YouthBuild, but in other programs as well.
    Mr. Ryan. I would like to work with you on that.
    Secretary Chao. Great. Thank you.
    Mr. Obey. Mr. Peterson.

                      WORKFORCE INVESTMENT CENTERS

    Mr. Peterson. This was not what I was going to talk about, 
but Representative Ryan's question raises an issue that I have 
had many directors out there share with me. There is a problem 
with the system: we have all of these people housed together, 
which is good, but there is no common boss. You have State 
employees, you have Federal employees, and you have local 
employees; and there is no one who is boss over them all. And 
you will have, on one side, waiting lines where you are going 
to wait days to see a person, because they cannot see them all, 
and you have people over here balancing their personal 
checkbook or reading a magazine because they do not have a 
customer, and that is the problem with the system; it is not an 
efficient system.
    I do not know what your plan is to fix it, but I will tell 
you the directors in my district--and I have been there and I 
have talked to them on the phone--they have been frustrated for 
years: I am the manager, I am the top guy here, but I do not 
manage this person, this person, this person; they work for 
another agency--State, Federal, local. So moving them into one 
place was good, but we need to have a common manager who allows 
people to be cross-trained so that we do not have people 
sitting over here fiddling their thumbs while others are 
waiting in lines for days.
    Do you think that is a fair assessment.
    Secretary Chao. I am sorry I get so hot. I am really 
passionate about this system. I love the system. I just want it 
to do--we who are in it have to challenge ourselves to do 
better, because there are people waiting for our services and 
they deserve better.
    Mr. Peterson. Do you think that is a problem?
    Secretary Chao. Yes, it is a problem.
    Mr. Peterson. Yes. See, this is the problem: No one has 
been put in charge, so you have Federal union employees, State 
union employees, different bosses, different masters, and local 
employees, and no one who is really boss of them all. They are 
all providing different things for different people. You may 
have 20 customers today; I may not have anybody come in today, 
so I sit there waiting for the next person to come in. I may be 
busy tomorrow, but I am not busy today, but I cannot help you.
    We need to have a hearing on this, Chairman. We need to 
figure out how we make these centers a one-stop shop where 
everybody is skilled and cross-trained and we serve people 
efficiently. It is not an efficient system.
    Mr. Obey. Would the gentleman yield?
    Mr. Peterson. You bet.
    Mr. Obey. I think that is something that is perfectly 
legitimate for the authorizing committee to consider, because I 
think the gentleman probably has a good point. My concern, 
however, is that what essentially we are being told is we have 
two programs. We are eliminating the big one; we are cutting 
the remaining one by 10 percent. And somehow that is going to 
solve the problem? That does not compute.
    Mr. Peterson. Yes, but I think if we looked at it, we might 
see where, if you do have a lot of people sitting not 
efficient, then there is a lot of money there that is being 
wasted, and I think that is the case. I have had all the 
managers that manage them tell me, John, we need to put these 
programs somehow together so there is a common manager in 
charge for productivity, for serving the people, not just a 
portion of them. If we are going to put them all in one office, 
let's make them work together.
    Does that make sense to you?
    Secretary Chao. Yes, very much so. And so long as we are 
talking about reforms, which is what we have been trying--and I 
know this is not this Committee--one of the other reforms is 
these are supposed to be One-Stop centers. We also need the 
cooperation of other Departments to make sure that their 
services are also included within the WIA One-Stop center, so 
that people who go to these centers for help do not have to go 
to 16 or 17 different program offices to get the help that they 
are supposed to get. But that is another----

                             SKILL TRAINING

    Mr. Peterson. I want to talk about another issue. I think 
the growth of the economy in our country, one of its 
deterrents, I just have companies every day say that as we 
succeed, we are getting very high tech. Our manufacturing 
processing cost is very high tech. We have very sophisticated 
equipment; that is how we compete with cheap labor. It is the 
only way we can compete. But we do not have the people to run 
the machines; we do not have the people who know how to fix the 
machines, maintain the machines, because we are so far behind 
on the skill training.
    I guess do you find it frustrating that the Department of 
Education again wants to cut--what is the program?
    Secretary Chao. Voc Ed.
    Mr. Peterson. Yes, Voc Ed. But what was the member's name 
that it was named after? Perkins, yes, Perkins. God, I can't 
believe I did not think of Perkins.
    But these programs get cut, which are seed corn for my 
local vocational schools and for my--I do not have community 
colleges, but for community colleges where they have them.
    Secretary Chao. Perhaps you should ask Margaret Spellings 
that question.
    Mr. Peterson. Do you find it frustrating--you are in your 
final year, like me; we can say it like it is. They can only 
fire us. They cannot fire me.
    Secretary Chao. I am very concerned about partnering with 
community colleges, and you and I have talked about that.
    Mr. Peterson. Yes.
    Secretary Chao. Especially community colleges in rural 
areas. That is why the Community College Job Training program 
was important, because we had hoped to set up partnerships with 
community colleges which offer such relevant curricula and they 
are so responsive to the changing economic needs within the 
community. So community college partnerships are good; we want 
to partner with them on that.
    Also, distance learning is another phenomena that is 
prompted by advances in technology that we hope will have great 
promise as well.
    Mr. Peterson. See, the problem we have, though, is our 
system assumes that there is a training program in place and 
you are just going to help pay for it. In my district we do not 
have a community college. Most of the trades are taught by a 
few schools. They get $25,000 to $27,000 for a 14-month 
program, which is a compressed two-year program. So $3,000 two 
years in a row gives them $6,000. You know, another $20,000 
needed, poor people cannot do that.
    I mean, the poorest among us who need this training, who 
can be skilled workers are froze out in Pennsylvania, they do 
not have a chance. That is a Pennsylvania problem, but I am 
sure there are other States that are like that, because I have 
20 percent of Pennsylvania and there is not a community college 
within 75 miles of my district. So we just do not have that 
kind of training, we only have private schools; and very few of 
them, and many things you cannot be taught.
    Nobody teaches PLC repair in my district, and every company 
in my district has PLC computers running their machines. But 
nobody is trained in my district. We do not have anybody 
training auto mechanics within my district. Auto mechanics in 
my district for adults.
    We used to ship people over to Pittsburgh, house them to 
give them a skill after they lost their job. Pretty expensive. 
Then a lot of times they never came back because some company 
in Pittsburgh hired them once they had the skill. Real problem 
in rural areas like mine. But that is the problem, the system 
assumes you have training. Smart States do. Pennsylvania does 
not.
    Secretary Chao. Thank you.
    Mr. Peterson. Is my time up?
    Mr. Obey. Thank you. We have a roll call going on, as you 
can see. What I would like to do is have Mr. Honda take his 
questioning yet. That would still give us five minutes to make 
the vote and then the rest of us can come back.
    My understanding is there will be two votes, this 15-minute 
vote followed by a 5-minute vote, and then the next votes will 
not come for probably an hour to two hours.
    Mr. Honda.
    Mr. Honda. Thank you, Mr. Chairman.

                             WIA RESCISSION

    Welcome, Secretary Chao. In 2008, the omnibus 
appropriations negotiations during last year's hearing, you and 
the President insisted on a rescission of about $335,000,000 in 
excess State grants, funds for Youth, Adults, and Dislocated 
Worker training programs under Title I of the Workforce 
Investment Act. This rescission has had a direct impact on my 
district, forcing the award-winning North Valley Job Training 
Consortium to close its doors every Friday because they do not 
have enough funding resources to offer their services to my 
constituents.
    I guess the basic question is how do you defend a request 
to cut Training and Employment Services by 14 percent from last 
year and how do we keep these programs going with the increase 
in unemployment, increased need for these trainings? I heard 
you say there are duplications, but in that area I do not see 
that duplication, so perhaps you can tell me how we defend a 
cut.
    Also, maybe you can tell me where in my district these 
duplications are occurring.
    Secretary Chao. I answered the Congressman, Ranking Member 
Walsh's question wrong. I understand your question now. He was 
asking about----
    Mr. Obey. Could you pull the mic closer, please?
    Secretary Chao. Sorry about that.
    You were also asking about the rescission. The rescission 
came through because of the overhang in balances. In the last 
seven years, there have been excess balances of about 
$1,200,000,000 to $1,700,000,000. Because of the rescissions, 
this year it is only about $875,000,000. This is a huge issue, 
and it will come up every year. The issue is we fund this huge 
Workforce Investment system and are we truly helping workers to 
train for the jobs of the 21st Century? And there is 
disagreement about that.
    So I do not know specifically what is happening in your 
district; I should, and I would be more than glad to send 
someone, if you would like, to talk with you about that. But 
there is duplication. Notwithstanding the talks that have been 
here, there has been disagreement about where the duplication 
occurs, how the system works----
    Mr. Honda. Madam Secretary, I understand duplication. I 
understand funding unfilled positions. It seems to me that if 
you folks know that those are occurring, then targeting those 
areas that have done that and making them expend, or carry 
over, or make some sort of adjustment rather than just cut 
across and say everybody suffers because some have not followed 
the rules, or some have displeased the Administration seems 
like it is a nice long swipe of one brush hitting good programs 
as well as those who are not.
    Secretary Chao. Most of this is in formula funds, so 
basically the States could do whatever they want with it. It is 
formula funding.
    Mr. Honda. So it is the States' fault?
    Secretary Chao. No, I am not--but there is this overhang. 
California has--I do not know what California----
    Mr. Honda. I guess I am just trying to argue for the 
programs that are successful----
    Secretary Chao. No, I understand.
    Mr. Honda [continuing]. And watching their funds and then 
have to close down----
    Mr. Obey. Would the gentleman yield?
    Mr. Honda. Yes.
    Mr. Obey. You keep mentioning the overhang, but is it not 
true that a good number of States are not in fact returning 
prior year funds, but, in fact, they are returning this year's 
operating money?
    Secretary Chao. I do not think so, but you are----
    Mr. Obey. I think so.
    Secretary Chao. The overhang occurs. You are such an 
expert--I will look into that for you, but that is not my 
understanding.
    Mr. Obey. I mean, let me be clear. It is not just the 
Administration. The numbers are the Administration asked for 
$335 million in rescission. The bill that we sent to the 
President, which he voted, contained $245 million. The final 
bill that we sent to the President contained $250 million. So 
we reduced the magnitude of the cut in order to finance the 
amendment that Mr. Walsh and I were both interested in with 
respect to special education. So I think, to be fair, we need 
to recognize that both ends of the Avenue are a might 
responsible, with somewhat greater responsibility in the 
Administration's hands because they pushed for the larger 
rescission.
    But I would ask you to check to see whether or not you do 
not in fact have States turning back present year money.
    Secretary Chao. We did not have a choice about that. I 
understand that you are saying.
    Mr. Obey. Is that it? All right, why do we not go vote and 
we will resume as soon as we get back.
    [Recess.]

                      VETERANS' TRAINING PROGRAMS

    Mr. Obey. Madam Secretary, I was trying to stall until 
another member got here who I thought wanted to ask some 
questions, but I am going to proceed with some of my own until 
they get here.
    You indicated in earlier discussion today that you were 
taking care of veterans' training programs, and your budget 
does include an increase of $10,300,000 for Veterans' 
Employment and Training Services.
    The largest component of that increase is for State grants 
that support disabled veterans' outreach specialists and local 
veteran employment representatives. But, as I understand it, 
those veteran employment specialists work in the State 
Employment Service Agencies, the same agencies whose funding is 
being eliminated by the Administration's budget.
    How does that make their job easier?
    Secretary Chao. Well, as I mentioned, that is proposing an 
increase of $2 million. It is an increase of $2 million to the 
Homeless Vets and Reintegration program, $7 million for the TAP 
program to help veterans transition more effectively back into 
the workforce, and we also work with other agencies, as you 
mentioned.
    I am not aware. I shouldn't say that. I am not familiar 
with the cuts in the other agencies you are mentioning.
    Mr. Obey. No. My point is simply that you are talking about 
the increase that you are providing for these veterans' 
employment folks, but if they work in the State Employment 
Service Agencies and you are eliminating the funding for that, 
how does that improve their working conditions?
    Secretary Chao. Because we have vets' representatives and 
coordinators in WIA.
    Mr. Obey. Well, same question, WIA is a much smaller 
operation.
    Secretary Chao. WIA has the capacity to take on a lot of 
the employment services.
    Mr. Obey. It may have the capacity, but right now the 
veterans people aren't housed there to a large extent, to my 
knowledge.
    Secretary Chao. They are also in WIA. We are trying to 
consolidate these two systems so that it is for ease of access 
for clients.
    Mr. Obey. I understand, but if we are trying to gauge the 
effect of this system on veterans and the ease with which they 
have access and the opportunity they have for access, it seems 
to me that if you are shutting down the major offices in which 
they work, that is not exactly making things easier for 
veterans. That is my only point.

                         NONCOMPETITIVE AWARDS

    You heard a lot about earmarks. The President has given us 
the benefit of his wisdom on earmarks on many, many occasions, 
and yet the Administration conveniently forgets that earmarks 
are simply directed spending.
    In the congressional context, they are spending directed by 
the Congress, but the executive branch has the functional 
equivalent of earmarks many times over. They direct a lot of 
spending, and one area where you do that is the President's 
High Growth Job Training program.
    As I understand it, over 85 percent of the 150 awards made 
the first 5 and a half years out of that initiative were made 
on a non-competitive basis. Why isn't every one of those awards 
on a non-competitive basis, an earmark?
    Secretary Chao. That was only for the first year to get the 
program going. That is all.
    Mr. Obey. But I repeat the question.
    Secretary Chao. Do I have to answer it?
    Mr. Obey. Why isn't that an earmark or do you agree that it 
is an Administration earmark?
    Secretary Chao. I never thought of it that way.
    Mr. Obey. That is the problem. The President apparently 
hasn't either, and that is what has so many people, I think, on 
both sides of the aisle more than a little irritated with the 
President's attitude on this.
    My understanding is that those non-competitive awards 
accounted for $258 million or 90 percent of the funds awarded, 
and it took language in the fiscal year 2007 and 2008 
appropriation bills to ensure that this practice would end.
    The Inspector General, as I understand it, is following up 
with a second audit that will focus his findings, that matching 
requirements which were often used to justify sole source 
procurement were dropped in later grant modifications, 
potentially resulting in service levels below those intended in 
the original grants.
    Let me ask, why was it necessary to provide those grants on 
a non-competitive basis?
    Secretary Chao. First of all, I believe those were only 
done in the first year to get the program started, and again 
the effort started because of an overall effort, overall 
initiative to try to get.
    Mr. Obey. You are not saying that that money was only 
provided that way in one of the five and a half years, are you?
    Secretary Chao. They were not sole source the whole entire 
time. It was only in the beginning.
    Mr. Obey. Well, no, not the last two years because we 
forbade it.
    Secretary Chao. No. It was before that we did it. These 
were grants that were related to a program that highlighted 
what were the high growth industries in our Country that needed 
skilled workers.
    Mr. Obey. You can put in the record what your understanding 
is.
    Secretary Chao. Okay.
    Mr. Obey. I will put in the record what my understanding 
is, but my question remains. Why was it necessary?
    Secretary Chao. Do you have to go through it?
    Mr. Obey. Why was it necessary to, in fact, earmark those 
funds whenever it was done?
    Secretary Chao. They did have to go through the Procurement 
Review Board.
    Mr. Obey. I mean what is sauce for the goose is sauce for 
the gander.
    Secretary Chao. No, it is not. They also have to go through 
the Procurement Review Board.
    Mr. Obey. Well, we have a review board too. It is called 
the Appropriations Committee.
    Secretary Chao. Well, that is fine.
    Mr. Obey. My question is why was it necessary to provide 
these contracts on a sole source or non-competitive basis?
    Secretary Chao. Because the program was to find High Growth 
Job Training programs. Many of the training programs that are 
being offered right now are not relevant, and they don't help 
workers. Unemployed dislocated workers get real jobs in the 
real economy.
    Mr. Obey. What does that have to do with whether or not you 
had a competitive grant rather than a non-competitive grant?
    Secretary Chao. These were started out with a very 
systematic program in which discussions were held with a wide 
range of employers.
    Mr. Obey. My, isn't it interesting that there is suddenly 
justifications that develop for directed spending when the 
Administration does it but not when the Congress does it.
    Secretary Chao. Okay, that is fine. We will submit for the 
record. No. I am not going to defend this one. Okay? If you 
want it, we will work with you on it.
    Mr. Obey. I think I made my point.
    Secretary Chao. Yes.
    Mr. Obey. Let me suspend the rest of my questions for now 
and turn to other members now that they are here. Where did we 
leave off? It was Mr. Honda.
    Mr. Simpson.
    Mr. Simpson. Thank you, Mr. Chairman. I don't think you 
want to get into the argument with earmarks. Have you read the 
article this morning about the Memo Questions to Fairness of 
Bush Earmark Decisions? Kind of an interesting article.
    Mr. Obey. Yes it is.
    Mr. Simpson. Anyway, that has nothing to do with these 
hearings today for me.

                    EMPLOYMENT PROGRAMS FOR VETERANS

    Secretary Chao, I appreciate your being here today. Since 
this probably will be the last time you will appear before this 
Committee, I suspect, I want to thank you for your service to 
this Country over the past several years.
    You mentioned in your report on your accomplishments that 
you have implemented a number of new programs to assist 
America's veterans. Having been Chairman of the Veterans' 
Benefits Committee, I have always been very interested in what 
we do there after passing the Jobs for Veterans Act and stuff 
like that. How are we doing with our veterans in terms of their 
employment?
    Secretary Chao. It is an absolute priority with us. We have 
made substantial progress in anticipating and educating and 
outreach with employers to ensure that they know what the 
reemployment and employment rights of veterans are.
    The Congress passed USERRA in 1994. Nothing was done about 
it until we came along and implemented, issued regulations 
which took quite a long time because they were very 
prescriptive, very detail-oriented relating to pension rights, 
employment rights, and that came out in 2004. Those regulations 
have gone a long way toward increasing employer awareness as to 
what their obligations are and in decreasing the complaints by 
veterans.
    Mr. Simpson. As the veterans start returning from Iraq, 
hopefully sooner rather than later, obviously there are going 
to be a lot of veterans that are going to be looking for jobs.
    Secretary Chao. That is why we also, sorry.
    Mr. Simpson. What are we doing to anticipate those 
increased demands?
    Secretary Chao. Yes, that is why we increased our support 
for the TAP program. These are counseling, job employment 
programs that are held overseas so that we don't have to wait 
until the veterans come back or are separated from the service 
before they are informed as to what the options are and how 
they can utilize many of the services available to them.
    Mr. Simpson. We have officers or we have people overseas 
that are trying to match up employees so that veterans, when 
they are getting ready to be discharged from foreign locations, 
can access employment opportunities.
    Secretary Chao. Yes.

                            H2B VISA PROGRAM

    Mr. Simpson. Another question that comes up consistently, 
at least over the last year or six months, whatever, is concern 
in Idaho and I think across the Nation by employers about their 
inability to hire employees under the H2B visa program and that 
we have a statutory cap on that. Congress hasn't raised that 
statutory cap this year.
    Is the Administration doing anything to try to address 
that?
    Secretary Chao. The President has asked the Department to 
work on reforming H2A, and that has come out. It is open for 
comments, and we encourage people to submit their comments.
    That is a very important program. We want to encourage 
workers to come here legally, so they don't have to live in the 
shadows.
    H2B is, as you mentioned, more driven legislatively. There 
is a statutory cap which the Administration can't do very much 
about.
    Mr. Simpson. Have you recommended lifting that cap to a 
higher number? I mean I think the cap is something like 60 some 
odd thousand.
    Secretary Chao. Sixty-six thousand, yes.
    Mr. Simpson. Sixty-six thousand for the entire Country.
    Secretary Chao. It is used up very quickly.
    Mr. Simpson. Yes, by the middle of February probably.
    Secretary Chao. Yes.
    Mr. Simpson. So, consequently, we have employers all across 
this country who are looking for H2B employees but the cap has 
already been met and Congress doesn't seem willing to address 
that.
    Sometimes I think that it is time to put pressure on 
Congress to do a comprehensive reform package rather than what 
Congress wants to do, and that is secure the border and improve 
our visa programs and then deal with the rest of the problem.
    Secretary Chao. The cap is statutorily driven.
    Mr. Simpson. That is the problem.

              CARRYOVER IN THE WORKFORCE TRAINING PROGRAM

    Just one other question, you mentioned when Mr. Walsh was 
talking to you about the carryover in the workforce training 
program. You talked about this last year, and I can't remember 
if we asked the same questions, but you said there was 
$1,200,000,000 to $1,700,000,000 in unspent funds in the 
States.
    I didn't get the idea whether you thought that was an 
excessive amount or not enough. I understand there is going to 
be carryover in the States. What is an appropriate level of 
that?
    Secretary Chao. Well, we hope that it is used up and that 
it is used to help workers who need training and jobs, and the 
Workforce Investment Act has the capacity to provide those 
employment services as well as the training and core services 
that workers need.
    Mr. Simpson. But I am trying to get a sense of whether 
$1,700,000,000 or $1,200,000,000 is too much in funds out there 
that are unspent and should be spent on this program or whether 
that is a normal amount for carryover between the 50 States, I 
guess.
    Secretary Chao. Every year, it is that same amount. So that 
does indicate excess capacity and that perhaps better 
utilization of the funds or better management of the funds is 
something that we should be looking at.
    Mr. Simpson. But that could be reduced some.
    Thank you. I appreciate it.
    Mr. Obey. Thank you.
    Ms. McCollum.
    Ms. McCollum. Thank you, Mr. Chair.

                            UNION ORGANIZING

    Secretary Chao, I am here today to express my concern about 
your Minneapolis investigators' treatment of several of my 
constituent building and construction unions regarding the 
filing of several of their LM-2 reports. These actions threaten 
to impair the fundamental rights to organize a union.
    These investigators of yours are insisting that the union 
submit on the public record, itemized and detailed reports of 
their confidential organizing-relating expenses on market 
recovery programs. Now it is my clear understanding that these 
unions have a legal right not to divulge such confidential 
information because it would impair their prospective 
organizing strategy.
    Your investigators have reported to the unions that they 
will be turning the matter over to the Solicitor of Labor to 
pursue litigation against these Minnesota unions. In 
preparation for such litigation, your investigators are 
visiting union offices and inquiring about unions' organizing 
practices.
    Now I have done some looking around, and I am not aware of 
any other such similar harassing conduct towards unions in any 
other part of the United States. To me, this is unacceptable, 
and I am asking that you stop the harassment immediately.
    Your investigators have failed repeatedly to cite any 
provision of Federal Law or any case law to support their 
positions.
    I am aware of a concerted campaign against the legal 
protected market recovery programs by certain political 
organizations, and I hope that your investigators have not been 
unduly influenced by these organizations into twisting the law, 
into bullying unions in discussing their confidential--their 
confidential--organizing information since Federal law is very 
clear, explicitly clear, that they do not have to make such 
disclosures.
    I hope this is a mere oversight of the Department and that 
when your office has taken an opportunity to look into this, 
the investigators will stop this unfair treatment.
    I have a copy of the letter that I received from the United 
Association of Journeymen and Apprentices of the Plumbing and 
Pipefitting Industry, the United States and Canada, for you, 
and I have one also for the record, Mr. Chair.
    With that, if you wish to make any comments, I am fine to 
hear it. Other than that, I expect that I will hear back from 
you shortly. Thank you.
    Secretary Chao. We are all for transparency, and I will be 
more than glad to take a look at that.
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    Mr. Obey. Mr. Udall.
    Mr. Udall. Thank you, Chairman Obey.

                            EEOICPA PROGRAM

    Secretary Chao, as you know, the EEOICPA program is 
particularly important to me. For two years, I have been 
working to preserve an archive of medical records at the Los 
Alamos Medical Center that are vitally important to hundreds of 
claimants, yet they are now slated for destruction.
    Through this two-year process, your Department has taken a 
pass at being involved in protecting these records even though 
the EEOICPA law stipulates that DOL must assist in obtaining 
DOE materials that are relevant to claims. Why have you been 
unwilling to assist in this process and will you commit today 
to helping to preserve these important documents?
    Secretary Chao. I am surprised to hear that from you 
because EEOICPA is a program that we have been very concerned 
about. We have taken the lead and, in fact, I think we have 
worked very hard to be advocates of workers who have been 
adversely impacted by having worked in the Cold War uranium 
facilities. So I am disappointed to hear that if that is indeed 
true, and we will do everything we can to work with you on 
that.
    Mr. Udall. I think it is true that your Department, much 
better than some of the other agencies, has worked on some of 
these claims but in this particular case, this is a group of 
records from many years at the Los Alamos Medical Center, and 
they apply to many, many claimants. The records are slated for 
destruction, and probably these claimants will not have claims 
if that happens.
    Secretary Chao. Is that Department of Labor or is that 
Department of Energy?
    Mr. Udall. It is Department of Labor.
    Secretary Chao. Okay. I will take a look at it.
    Mr. Udall. EEOICPA is your program.
    Secretary Chao. No. It is joint. No. We work with the 
Department.
    Mr. Udall. Well, I know. Yes.
    Secretary Chao. We are the face to the public, 
unfortunately.
    Mr. Udall. But you have. For example, look at the situation 
you normally would exercise. Last year, when a Colorado vendor 
was required to produce evidence related to beryllium, you 
issued subpoenas. You asked for records. You went out and were 
very aggressive.
    This is the same circumstance. You have a depository of 
records with a medical center. The medical center is saying 
they are going to destroy the records.
    Secretary Chao. I am just trying to figure out where these 
documents are, so I can find them. I just want to make sure, 
and we can work with you on that.
    Mr. Udall. Yes, yes, yes. They are in Los Alamos. They are 
in Los Alamos.
    Secretary Chao. I need to find out where they are. Who has 
possession of them?
    Mr. Udall. The Los Alamos Medical Center has possession of 
the records.
    Secretary Chao. Okay. That is probably Energy then.
    Mr. Udall. They apply to a number of claimants that either 
are to file with your Agency or have filed with your Agency.
    Secretary Chao. If it is with another department, 
Congressman, we may need your help.
    Mr. Udall. Okay.
    Secretary Chao. Because if it is HHS or if it is Energy, we 
want to preserve those records.
    Mr. Udall. You have subpoena power. You have subpoena power 
for records and people that bring things in and find out what 
is going on.
    Secretary Chao. Okay.

                        NATIVE AMERICAN PROGRAM

    Mr. Udall. Secondly, I just want to ask about your budget 
cuts for Native American programs to the tune of about 
$8,000,000, assistance that goes to the largest single 
impoverished group in the Nation and cuts 3,000 participants 
who could otherwise have benefits from gaining important work 
and an important job and skill-based training. In my district, 
we have thousands of Native Americans who benefit from this 
program and who use it to better their lives and improve their 
communities.
    Last year, Congress refused your proposed cut in funding, 
and this year I think many others will strongly support a 
funding level that reflects the true need.
    In your budget in brief, you state that one of your goals 
for the Native American program is to emphasize training and 
talent development in high growth and high demand occupations. 
Can you expand on that goal? Which specific industries or 
occupations are you targeting?
    Secretary Chao. Our Country is currently experiencing a 
skills gap. The majority of the new jobs that are being created 
these days require higher skills and more education. So we are 
trying to target more of our training resources to help workers 
get the training that is required, that they need to access 
good paying jobs in these high growth industries. So it is a 
much more targeted approach.
    I remember well our discussion last year about the Native 
Americans, and I remember what you say. Unfortunately, we are 
going to disagree on that because the Administration's policy 
is not to have separate funding streams. In fact, this is a 
subject of great disagreement here.
    We would like to consolidate all the funding streams so 
that the governors and the States get greater flexibility in 
deploying these funds. So I am afraid my answer to you will be 
the same as last year, that we are going to disagree on that 
issue with the Native American funding. The funding will be 
consolidated and it will be gotten through the WIA One-Stop 
centers.
    Mr. Udall. If, just as you said, higher skills and more 
education, this is the population that needs it the most. You 
don't have any problem sending it to a governor that that may 
not be in his priority. I mean this is a pre-existing situation 
that has a relationship, and it is targeted to a community that 
has some real need.
    You are just saying we don't care. We just want to ship it 
back to the State.
    Secretary Chao. No.
    Mr. Udall. Plus, we want to give them less money, I assume 
too, to do the job.
    Secretary Chao. I am not anxious to disagree with you.
    Mr. Udall. Well, let me just ask you, are you proposing 
when you shift all these monies back to the States, are you 
going to give them more money and flexibility?
    Secretary Chao. We would. We can't do that because it is 
legislatively driven. That is part of the Workforce Investment 
Act reauthorization that the Administration has been working 
on. So, currently, it is on a formula basis.
    What we are proposing is a consolidation of the Employment 
Services and Workforce Investment Programs because we believe 
that is a more effective way to provide training dollars for 
the dislocated unemployed workers.
    Mr. Udall. Well, it just seems to me that these programs 
have grown up over time because there is a need there, programs 
like YouthBuild and many of the others, this Native American 
program.
    I think you are disregarding the input of Congress saying 
these programs are important. You have been through the process 
several times. You proposed these cuts.
    Secretary Chao. Yes.
    Mr. Udall. We don't put them in. I mean we don't ratify 
them. So it seems like there should be another approach here.
    Thank you very much, Mr. Chairman.

                               JOB CORPS

    Mr. Obey. Mr. Jackson.
    Mr. Jackson. Thank you, Mr. Chairman.
    Secretary Chao, welcome back to the Subcommittee. Thank you 
for your testimony.
    I apologize for being a bit tardy. We have a number of 
hearings taking place at the same time.
    I would like to ask a couple of questions regarding the Job 
Corps. Included in the fiscal year 2007 and 2008 appropriations 
bills was statutory language prohibiting the Department of 
Labor from reducing student training slots below 44,491, the 
number of slots the Department operated in the program in year 
2006 according to fiscal year 2007 budget requests.
    Yet, currently, the Department is operating only 43,459 
training slots in Job Corps. That is over 1,000 slots less, an 
equivalent to closing 3 Job Corps centers. In fact, one Job 
Corps center in Cherokee, North Carolina has been closed for 
one year.
    Can you explain why the Department has proceeded with 
reducing the overall capacity of Job Corps despite a statutory 
requirement prohibiting these actions, Madam Secretary?
    Secretary Chao. About 4,000 of these slots go unused, so 
these are not at full capacity. We are distributing them 
around. They are not used, number one.
    Number two, the particular Job Corps that you mentioned, 
North Carolina, we hope that we would actually get your 
assistance on that because the National Director of the Job 
Corps closed down that facility because of safety concerns. It 
was not hygienic. It was not a good place. We would not want to 
put our Job Corps students in that facility.
    You know who the operator is, and I am not anxious to name 
them. But we are working with our sister agencies to try to 
open that up as quickly as we can, but that is not an issue 
about money. It is an issue about safety.
    We saw mold in the ceilings. We saw paint peeling from the 
ceilings. It was dirty. It was not well maintained. That is a 
Job Corps facility that needed to be shut down, needed to be 
refurbished, and we are in the process of opening it up but 
only with the assurance that the students will be okay to 
enroll there.
    Mr. Jackson. I appreciate the answer.
    I just want to make sure for the record that to answer my 
first question, there are insufficient number of applicants for 
the Job Corps to actually satisfy the statutory requirement of 
the 44,491 slots. Is that your answer, Madam Secretary?
    Secretary Chao. There are about 4,000 slots that go unused, 
yes.
    Mr. Jackson. It is estimated that three out of five 
American youth leave school without the skills they need to 
succeed or work in higher education. According to a recent 
study conducted by the University of New Mexico, leaving these 
youth behind costs our economy about $24,000,000,000 and does 
not allow our youth to reach their full potential. Further, our 
Nation is entering an economic downturn.
    I am wondering in these difficult economic times, 
considering the disadvantaged and disconnected youth. I would 
imagine that amongst them is a tremendous amount of 
uncertainty.
    When national studies, dropout statistics in communities 
across the Nation and visits to many of our congressional 
districts make evident that youth are in need of the Job Corps 
services, I am wondering if you could expand upon this, why the 
Administration cut the number of training slots by that 4,000, 
given what at least many of us perceive in our districts as a 
tremendous need for Job Corps.
    At a time when the Nation is facing a possible recession, 
why would you reduce funding for a program that provides 
America's young people, critical vocational training and job 
placement services and activities in the middle of an economic 
downturn?
    I yield back the balance of my time, and I would appreciate 
your answer, Madam Secretary.
    Secretary Chao. I think we all agree that education and 
skills training are very, very important for today's workers 
and for young people, they need to be encouraged to stay, 
obviously, in school. If they can't stay in school, Job Corps 
is one alternative. YouthBuild is another.
    But we do have, again, 4,000 slots that are not being used. 
It is not a matter of marketing. It is a matter of takeup 
rates. There is an excess, so that is why the budget was cut.
    Mr. Obey. Thank you.
    Mr. Regula.

                  GIVING YOUNG PEOPLE A SECOND CHANCE

    Mr. Regula. Thank you, Mr. Chairman.
    Happy to see you, Ms. Secretary.
    Just a couple questions. One-Stop Career Centers are very 
effective in our area as you know.
    Secretary Chao. Yes.
    Mr. Regula. I see that you have given them a fairly good 
number in this budget.
    I would be interested in the success of your programs aside 
from the One-Stops that give young people a second chance, 
those who get GEDs, who decided after they have dropped out 
that they need to go back and get a skill, and they discover 
that the marketplace requires that. Have you had good success 
in getting development of programs that will provide what I 
call a second change for people?
    Secretary Chao. We do. Our whole Department's efforts, in 
fact, focused on helping workers and giving them a second 
chance, and so we have all these different programs that do 
offer to do that.
    We did have a robust discussion about workforce investment. 
We have many other programs for young people as well. So that 
is what the whole focus of the Department is.
    The issue was how to do this effectively because the 
majority of the new jobs that are being created require higher 
skills, more education. So we cannot continue to train the same 
way as we used to. We need to gather our resources, focus them 
on training and make sure that this training is demand-driven 
and that people who receive this training, who have invested a 
great deal of their time in training programs will actually get 
jobs when they graduate.
    Mr. Regula. Do you have programs that let young people know 
that there is this second chance opportunity?
    Secretary Chao. Job Corps is very, very active in 
marketing, and we have a whole marketing team out there, yes.

                      VOLUNTARY PROTECTION PROGRAM

    Mr. Regula. The Voluntary Protection Program--people in my 
area have been very enthused about it. Has it worked well to 
keep people safe and healthy in their workplace? I think this 
is an important program.
    Secretary Chao. VPP is not a substitute for enforcement. 
Enforcement is important. We, in fact, have one of the most 
effective enforcement programs as you can see by the injuries 
and other statistics about worker safety, but enforcement 
should be coupled with outreach, with education so that all 
stakeholders within an organization understand the culture, the 
prevailing culture must have as its core value that safety is 
number one.
    And so, injury and illness rates with VPP companies are 
actually much lower than the norm, the average.
    Mr. Regula. So you are achieving a measure of success then 
if they are lower?
    Secretary Chao. Yes.

                               MARKETING

    Mr. Regula. Lastly, one of the growing phenomenons, the P-
16 concept whereby colleges, universities, et cetera will go 
into a high school and offer courses with a twofold objective. 
One is to give the students something they can start and maybe 
transfer in as sophomores in the college program, having gotten 
it in the senior year of high school, but I think equally 
important is to let young people in schools know there is an 
alternative to going out in the marketplace and not going on to 
getting higher education. I am talking about higher education 
in the sense of technical institutes, community colleges and so 
on.
    Does the Department of Labor get involved in any great 
extent in encouraging these kinds of programs?
    Secretary Chao. We do. One of the things that the ETA 
focuses on, that the workforce investment system focuses on, 
the One-Stop Career Centers focus on is outreach and to let 
people know about the tremendous array of programs that can 
help dislocated and unemployed workers.
    Mr. Regula. I don't think often times students realize the 
opportunities that exist out there. So marketing has to be part 
of your mission, and you mentioned that in your comments.
    Secretary Chao. Talking with high schools students, talking 
with students about the fast growth industries of the future 
and where these jobs are going to be coming, where the jobs 
will be created is a routine part, not routine in terms of not 
important, but it is a regular part of the responsibility of 
the Workforce Investment Act professionals.
    Mr. Regula. Thank you, Mr. Chairman.
    Ms. Lee? No.
    Ms. Roybal-Allard.

                    JOB CORPS PROJECT IN LOS ANGELES

    Ms. Roybal-Allard. Madam Secretary, as you may know, the 
Job Corps building in downtown Los Angeles has been deemed 
seismically unsafe. The YWCA of Greater Los Angeles has been 
working very closely with the Department of Labor for years on 
plans to build a brand new and safe Job Corps building, and 
they are now ready to begin construction.
    However, the project cannot move forward without a lease 
agreement from the Department of Labor. The YWCA has assured me 
that they are anxious and ready to negotiate with the 
Department and to come to a mutually acceptable agreement in 
order to move forward.
    Now your Administration was instrumental in initiating this 
project, and I thank you for that. It also means that you 
understand the importance of this project to the community as 
well as to Job Corps and to your Department.
    Your staff has indicated that the lease negotiations will 
receive expedited consideration. Can you tell me if, in fact, 
the process will be expedited and specifically how long you 
anticipate the approval process will take?
    Secretary Chao. Congresswoman, I know you are concerned 
about it, and we are focused on this. Unfortunately, and we 
could use your help on this, there is disagreement about what 
the going market rate is.
    In the first phase, YWCA wants like $4,000,000 whereas we 
value, not we, the Job Corps professionals who do this real 
estate type of transaction, they feel that the first portion is 
only worth $1,500,000.
    Ms. Roybal-Allard. I think they understand that.
    Secretary Chao. Okay.
    Ms. Roybal-Allard. I think they understand there is a 
difference of opinion.
    Secretary Chao. Right.
    Ms. Roybal-Allard. Let's get together and meet and resolve 
it so we can go forward because the longer the delay the 
costlier the project and so on.
    Secretary Chao. Okay. Right.
    Ms. Roybal-Allard. So if you could commit to having that 
meeting, we would appreciate it.
    Secretary Chao. Sure, absolutely.

          HEALTHCARE WORKERS' PROTECTION AGAINST PANDEMIC FLU

    Ms. Roybal-Allard. Okay. Thank you.
    It has been over two years since a number of labor 
organizations petitioned OSHA for an Emergency Temporary 
Standard to protect healthcare workers against pandemic flu. In 
addition, an explanatory statement in the fiscal year 2008 
omnibus appropriations bill requested within 30 days of 
enactment a report detailing the timeline for developing and 
issuing this standard.
    The report is overdue. We have not received it, and 
meanwhile the lack of report is risking a workforce crisis 
because we have an unenforceable standard for hospitals in 
place. We should have an order to protect nurses and other 
healthcare providers.
    When will OSHA issue an enforceable standard on healthcare 
workers' protection and why has your Department ignored the 
instructions in the omnibus bill to present this within 30 days 
of the President signing the bill?
    Secretary Chao. If it is within 30 days and we missed a 
deadline, I will ask about that.
    On the issue of the Emergency Temporary Standard, that is 
very, very prescriptively, well, there are certain standards 
that must be met. It was in the judgement of the attorneys 
within the Department that issuing a standard because even 
though we are concerned about this issue, that it is not meet 
the imminent danger standard that is required to issue an 
Emergency Temporary Standard.
    But we remain very concerned about this issue. We have put 
up on the web site and engaged in all sorts of outreach efforts 
and education efforts on the need to be very vigilant about 
pandemic flu.
    Ms. Roybal-Allard. Well, obviously, there is disagreement 
with the healthcare profession but nevertheless, regardless of 
the difference of opinion, Congress did direct that a timeline 
be submitted.
    Secretary Chao. Yes. If it is late, I am sorry about that. 
I was not aware of that.
    Ms. Roybal-Allard. Okay.

                           THE ROLE OF UNIONS

    Finally, the Bureau of Labor Statistics' most recent survey 
of union membership shows that 15.4 million American workers 
belong to a union. That is 12 percent of employed wage and 
salary workers.
    BLS data also shows that full-time wage and salary workers 
who are union members had a median usual weekly earning of $833 
compared with a median salary of $642 for wage and salary 
workers who were represented by unions.
    In our overview hearing, we heard how deunionization of the 
workforce has contributed to the growing wage inequality that 
we are seeing in the economy. The issue is quite simple: union 
jobs often mean better jobs and better wages.
    Protecting those jobs and preparing for job seekers to 
qualify for them is an important component of a valid workforce 
strategy. Yet, when you talk about unions, it is never about 
these positive aspects of unionization.
    Can you discuss the role of unions in providing access to 
family-sustaining wages and what your Department does to 
support unionized workers, including partnerships to train 
workers for the highly paid jobs that the unionized segment of 
various sectors provides, whether it be healthcare, 
hospitality, manufacturing or construction?
    Secretary Chao. We work with organized labor on ensuring 
health and safety at the workplace. We have the largest number 
of health and safety partnerships with organized labor of any 
Administration.
    We also have training partnerships with them through Job 
Corps, through subcontracting some of our training.
    Ms. Roybal-Allard. I understand, but my question is a 
little bit more specific. Actually, I am asking for you to 
discuss the role of unions in providing access to family-
sustaining wages. That would be the first part of the question, 
if you could answer that.
    Secretary Chao. We are going to disagree on this. The 
skills gap is what is contributing to the wage gap. It is not 
an issue of income disparity in our view but rather that the 
majority, increasingly, the new jobs that are being created 
require higher skills and more education and because of the 
skills gap, that is why we have an income gap.
    So what we have to do is to help workers get the training 
that they need, which goes back to all of our previous 
discussions, so that they can develop career paths in these 
high growth job training industries.
    Ms. Roybal-Allard. Are you disagreeing then with the 
findings that union jobs provide better wages?
    Secretary Chao. No, I am not. No.
    Ms. Roybal-Allard. Also, let me just end with saying you 
keep going back to the need for training. But, as my other 
colleagues have pointed out, the very training programs that 
workers need to receive that training, you are cutting.
    Secretary Chao. Well, doesn't that speak to the 
effectiveness of the current training program? Shouldn't we all 
be looking at how effective are these dollars that we are 
giving to this training system?
    We need to do better. We need to do things differently, and 
we need to reform the system.
    Mr. Obey. Ms. Lee.
    Ms. Lee. Thank you, Mr. Chairman.
    I apologize, Madam Secretary, for running in and out, but 
like most members we have had several meetings today. But, good 
to see you.
    Thank you, Mr. Chairman, for this hearing.
    Let me just ask you a couple questions, one with regard to 
the authorization for the funding for Green Jobs. Is that an 
initiative that you support and, if so, what is the 
Administration's plan for investment and growth in this area 
and what are you doing to ensure that there is a skilled 
workforce for the green jobs effort in our country?

            PLAN TO ADDRESS DISPARITY RATES IN UNEMPLOYMENT

    Secondly, let me ask you with regard to what I asked you 
last year. First of all, let me just reiterate the fact that 
unemployment rates: the national unemployment rate, 4.9 
percent; African American community, almost double, 9.2 
percent; Hispanic-Latino community, 6.3 percent; Asian-Pacific 
American community, 3.2 percent.
    Last year, we included language in the omnibus bill that 
requested you to look at the continuing disparity rates in 
unemployment for these communities of color, minority groups, 
and to report to the House and Senate Committees on 
Appropriations by March 1st a specific plan to address this 
problem. So I want ask you if you have addressed this issue in 
your plan.
    Secretary Chao. We do, yes, but the plan is not ready.
    Ms. Lee. Pardon?
    Secretary Chao. Yes.
    Ms. Lee. You have? When is the plan going to be ready? I 
think the date was March 1st.
    Secretary Chao. It was. We had hoped to get it ready for 
this hearing. Apparently, it is not out yet.
    Ms. Lee. And so, what happened? When will it be ready?
    Secretary Chao. It is not my Department.
    Ms. Lee. Pardon?
    Secretary Chao. It is not in our Department.
    Ms. Lee. What department is it in?
    Secretary Chao. It has to go through clearance.
    Ms. Lee. Clearance, okay. So do we have an anticipated 
date?
    Secretary Chao. We are pushing for it.
    Ms. Lee. Next 30 days maybe?
    Secretary Chao. I sure hope so. We are going to push for 
it.
    Ms. Lee. Okay.
    Secretary Chao. You are asking for me to push for it?
    Ms. Lee. Well, yes. It was due on March 1st.
    Secretary Chao. Yes, right.
    Ms. Lee. Okay, thank you.
    Then the third question I just want to ask you--the State 
of California is pursuing Fed Ex for unemployment insurance 
payments, having determined that the company has misclassified 
some workers. In December of 2000, the IRS announced it would 
impose a $319,000,000 fine on Fed Ex for misclassifying its Fed 
Ex ground drivers as independent contractors, and that 
represents just the violations for 2002.
    So I want to see if DOL has followed up to determine 
whether any of these drivers have been denied overtime or other 
labor rights and benefits.
    Secretary Chao. I will look into it. I mean it is part of 
what we usually do and if something, if unfair practices have 
occurred, we need to do something about it.
    Ms. Lee. Could you kindly tell us how you would follow up 
and how we would?
    Secretary Chao. If you give us the information, if the 
Department is not looking at it already, we will look into it.
    Ms. Lee. Okay, so you will look.
    Secretary Chao. Yes.
    Ms. Lee. Thank you very much.

                         GREEN JOBS INITIATIVE

    On the Green Jobs Initiative, in terms of funding for 
training?
    Secretary Chao. Yes, Mr. Ryan was also interested in that, 
in that issue. We are working with the Energy Department 
because of the Energy Act. There is a provision for Green Jobs 
there, so there is a lot. We are currently discussing with them 
on how to collaborate on setting more of an emphasis on 
training workers for Green Jobs.
    Ms. Lee. Okay, but let me ask you because I haven't seen 
this in the budget. Are we funding the Green Jobs Initiative in 
this budget or not?
    Secretary Chao. No. We don't have the appropriate funds. 
No.
    Ms. Lee. We are not. Do you know why not since this is 
something that we know in this industry creates jobs?
    Secretary Chao. Yes, we thought so, but the answer I was 
given was that we were working with the Energy Department. We 
can take another look since you asked.
    Ms. Lee. This is the Department of Labor, right, and you do 
want to create jobs, right?
    Secretary Chao. But we do. We do also, again, go into 
partnerships with many other departments on the other issues 
that come up.
    Ms. Lee. Yes, but I don't feel and see a sense of urgency 
within your Department. Given this economic recession we are 
in, you would think.
    Secretary Chao. There is a sense of urgency. We just differ 
on how to do it.
    Ms. Lee. Well, then, how do you think we should do it?
    Secretary Chao. We have to consolidate. We want to have the 
career advancement accounts so that we can train more workers, 
so we can focus more dollars on training workers. That is our 
vision.

                     FUNDING FOR WORKFORCE TRAINING

    Ms. Lee. Okay. Now, speaking of training, in the budget--
again you can correct me if I am wrong--youth training funds 
for States and localities are reduced to $841,000,000. It seems 
like that is a 9 percent cut.
    Dislocated worker training funds available to States and 
localities reduced 6.5 percent below fiscal year 2008 level.
    Adult training funds that support State and local services 
that provide the One-Stop Career Centers, they are reduced by 
about 17.4 percent. No funds provided for the first quarter.
    So, if we are talking about job training and we all 
recognize that is extremely important, why in the world would 
we see such significant cuts in these programs?
    Secretary Chao. Because our workforce investment proposal 
proposes consolidation, and it proposes consolidation of the 
current system which is duplicative and which does the same 
things.
    Ms. Lee. You are saying everyone is going to get trained. 
All of our workers will be trained.
    Secretary Chao. There is a better way train through 
workforce.
    Ms. Lee. The way you are talking about consolidating, that 
we are not going to lose any training possibilities for 
Americans.
    Secretary Chao. WIA has the capacity which is why you are 
seeing, in part, the excess balances. WIA has the capacity. We 
have a duplicative training system, a duplicative employment 
services system.
    New programs are added on. The old ones are not reformed. 
So we have excess. We have this duplicative system.
    Ms. Lee. So no fewer people will be cut from training 
programs by consolidating?
    Secretary Chao. We hope to increase training of workers 
from 200,000 to 800,000. Right now, all we train are 200,000 in 
a vast system of this size.
    Ms. Lee. Okay. So consolidating will help increase the 
training opportunities for more people.
    Secretary Chao. Because it will give more dollars toward 
the training.
    Ms. Lee. Yes, okay. Thank you, Madam Secretary.

                         NON-COMPETITIVE GRANTS

    Mr. Obey. Madam Secretary, I want to return to the issue of 
the High Growth Job Training program. You suggested that these 
non-competitive grants were provided only in one year. That is 
not what the Inspector General says. So let me walk through 
what my understanding is of the Inspector General's report.
    His report indicates that over 85 percent of the 150 awards 
made under the first 5 and half years of this initiative were 
made on a non-competitive basis, that those noncompetitive 
awards amounted to $258 million or 90 percent of the funds 
awarded, and that it took language in the 2007 and 2008 
appropriations bills to ensure that that practice would end.
    So let me repeat. Of the 150 awards that CRS looked at, 
spanning fiscal year 2001 through the first half of 2006, only 
23 were awarded on a competitive basis. According to the 
report, they were in response to a competition in late 2004.
    So, as I read that, in 5 and a half years, only 1 
competition was held and the remaining 127 grants were awarded 
on a non-competitive basis. That is not a one-year startup, as 
I read it.
    Secretary Chao. We disagreed with the Inspector General, 
and we have conveyed our reasoning.
    The initial distribution of these grants were sole source, 
but that was, again as I mentioned, to bring the high growth 
sectors which were not included in WIA into WIA so that the 
system can be responsive in training workers for real jobs that 
were developing in the real economy. We were training people in 
the same old, same old for jobs that may not exist.
    Mr. Obey. That is beside the point.
    The question is whether your statement was accurate or 
whether mine was accurate. That is the question.
    Secretary Chao. I believe mine is, but we will go back.
    Mr. Obey. I think you need to because the Inspector General 
states clearly--states clearly--that that's not the case.
    Secretary Chao. We sometimes disagree. Well, we sometimes 
disagree.

                    IMPROVING PROCUREMENT INTEGRITY

    Mr. Obey. The Inspector General also included the challenge 
of improving procurement integrity in his report. He indicated 
that the Department's acquisition authority exceeded $1.7 
billion and included over 8,800 acquisition actions in fiscal 
year 2006.
    The report from the IG indicates that for several years, he 
has recommended that the Department of Labor separate program 
and procurement responsibilities to ensure program integrity.
    Why haven't you taken steps to address the Inspector 
General's recommendations?
    Secretary Chao. The Inspector General would like to put the 
procurement in the Office of the Secretary which we believe 
would be a terrible move, with all due respect to the Inspector 
General.
    Job Corps is a prime example. Job Corps was mandated by 
Congress to be moved out of the Employment Training 
Administration, so that was done so. In deference to the 
Inspector General, we moved the procurement out of Job Corps 
and put it into the Office of Management and Administration. 
That has been a move that has been very difficult for Job Corps 
and for Job Corps contractors.
    Mr. Obey. Well, the IG report concludes, ``Until 
procurement and programmatic responsibilities are properly 
separated and effective controls are put in place, the 
Department will be at risk for wasteful and abusive procurement 
practices.''
    Secretary Chao. We have great deference to the Inspector 
General.
    Mr. Obey. I can tell.
    Secretary Chao. There are going to be future Secretaries of 
Labor that are going to have to deal with this issue, and I 
have no problem moving it out and implementing this 
recommendation because my tenure is leaving. My tenure is 
shortening. But it is not a good move to move it into the 
Office of the Secretary.
    Mr. Obey. I can tell you don't agree. All right.
    Secretary Chao. Because Job Corps, we already see in Job 
Corps, some of the implications.

                  JOSEPH A. HOLMES SAFETY ASSOCIATION

    Mr. Obey. Well, the President's budget for the Mine Safety 
and Health Administration includes a provision that allows the 
Secretary to recognize the Joseph A. Holmes Safety Association 
as a principal safety association. This provision was first 
included in the Labor-H Bill about seven years ago at the 
request of a member of the Appropriations Committee.
    Information supplied to this Subcommittee indicates that 
the Joseph A. Holmes Safety Association receives non-
competitive contracts each year, presumably using this language 
as justification for sole source procurement. The funding is 
small, but it is also supplemented by official participation of 
MSHA personnel in the work of the organization.
    The Administration, as I understand it, is requesting that 
we continue this provision in the fiscal year 2009 bill even 
though we have heard repeatedly that there are no earmarks in 
the President's budget. Can you tell me why the designation of 
this organization is not an earmark?
    Secretary Chao. I am not familiar personally with this 
organization, although I do know. I do seem to remember that 
this is a longstanding practice that goes back several decades. 
I believe to the MSHA Act.
    Mr. Obey. It goes back seven years.
    Secretary Chao. No, no, it doesn't.
    Mr. Obey. The question is why is this not considered an 
earmark?
    The President says he is against earmarks. He said he 
doesn't have any earmarks in his bill. Why isn't this 
considered an earmark?
    Secretary Chao. I guess it is a matter of definitions.
    Mr. Obey. You betcha. That is our point.

                          ERGONOMIC STANDARDS

    Let me turn to OSHA. Among the milestones in your CPAC 
address was a reduction in the number of regulations during 
your tenure. I would like to take a look at how that milestone 
was achieved.
    OSHA has missed all of the deadlines for developing 
standards that it had set out in its own regulatory agendas 
over the past seven years except for those imposed by a court.
    For some hazards, your Department has balked at issuing 
standards at all, denying petitions for emergency rulemaking in 
the cases involving diacetyl which has caused lung disease and, 
as you know, even death among popcorn manufacturing workers.
    Your Department continues to drag its feet on issuance of 
guidelines to replace the ergonomic standards that the Bush 
Administration had repealed in 2001.
    In our health overview hearing in February, Dr. Paul Leigh 
told us that the annual cost of occupational injuries, illness 
and fatalities is over $160 billion. A significant portion of 
those injuries are musculoskeletal disorders. In fact, BLS 
found that those types of injuries accounted for 30 percent of 
all reported lost time injuries and that those cases resulted 
in a longer period away from work, resulting in greater impact 
to employers in lost productivity.
    When the ergonomic standards were repealed, the 
Administration promised to develop voluntary guidelines on an 
industry by industry basis.
    Nearly six years later, not much has happened. Only three 
voluntary industry guidelines for poultry processing, retail 
stores and nursing homes of the 16 recommended by your 
handpicked advisory group have been issued. In this past year, 
one additional draft guideline for shipyards was published.
    If the government wants to prevent one of the leading 
causes of workplace injuries and illness, wouldn't it make 
sense to pay a whole lot more attention to ergonomic standards 
that are responsible for nearly one third of workplace 
injuries?
    Secretary Chao. It was on a bipartisan basis that the 
Congress turned back the last Administration's ergonomic 
standards. We said that we would come out with standards and, 
as I mentioned, we have.
    On the issue of regulations, when we first came----
    Mr. Obey. Excuse me for interrupting. You can define it 
bipartisan if you want. I wouldn't. But even if you do, I don't 
care if it was bipartisan or totally partisan. It was wrong.
    The Administration hasn't done diddly to deal with the 
problems.
    Secretary Chao. Okay. The Congressional Review Act forbids 
doing the exact same thing as the regulation, that was 
overturned, required.
    Mr. Obey. Well, but where were you in developing the 
promised alternative over the last six years?
    Secretary Chao. We have. As I mentioned, we have come up 
with standards. We have done outreach, education.
    Most of all, injuries have actually fallen. The record of 
injuries has actually fallen.
    Mr. Obey. Well, if you are talking about four of the 
sixteen and you look at that as a badge of honor.
    I just think that the ergonomics area is a spectacular 
example of where this Administration has ignored its 
responsibilities both to employees and employers. You do the 
economy no favor when you allow these kinds of problems to 
continue and allow OSHA to continue to drag its feet to 
developing new standards on this or anything else.
    Go ahead if you want to comment.
    Secretary Chao. On the issue of regulations, when we first 
came in, there were 140 regulations. There are currently about 
80 regulations which we are working on.
    In whittling down the backlog of regulations, we wanted to 
focus on what could be doable. There were many regulations on 
the backlog which were there for nearly a decade. So it was 
more of a concerted effort to focus on what could be done and 
not to give the regulated community, be they nonprofit or for 
profit, an unrealistic view as to what was going to be 
accomplished.
    Mr. Obey. Well, the fact is in my view the Agency has 
dragged its feet. OSHA has dragged its feet for years in 
developing these standards. I think a lot of people are 
experiencing a lot of problems because of it, and I think OSHA 
has failed in its responsibility to avoid that.
    Those are all the questions that we have time for.
    Mr. Udall, did you have any other questions before we 
break?
    Mr. Udall. [Remarks off microphone.]
    Mr. Obey. Thank you for coming.
    Secretary Chao. Thank you.

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                                      Wednesday, February 27, 2008.

        DEPARTMENT OF HEALTH AND HUMAN SERVICES BUDGET FOR 2009

                                WITNESS

HON. MICHAEL O. LEAVITT, SECRETARY
    Mr. Obey. Well, good morning, everyone.
    Mr. Secretary, as I said several times before this year, 
this Subcommittee has jurisdiction over a lot of programs, many 
of which are aimed at helping people who start out in life a 
little behind the starting line or even a lot behind the 
starting line, and they are also meant to help a lot of people 
who fall out of the race along the way, to get them back on 
track.
    Before Franklin Roosevelt, the government pretty much let 
people alone, and they were on their own. With Roosevelt and 
the New Deal, we began to build a series of initiatives that 
tried to make quite clear this was a caring society.
    When Dwight Eisenhower took over, as the quote behind me 
notes, Eisenhower decided not to try to repeal those 
initiatives, and so we have sort of had a bipartisan consensus 
for years on the obligation of the government to do more than 
stand by and view with alarm when people are getting tossed 
around on the wild seas of life.
    Last week, this Subcommittee held several overview hearings 
to talk about the context in which these decisions are being 
made, and we had another hearing yesterday on that subject.
    Example: Between 2004 and 2005 alone, real after tax income 
jumped by an average of 180,000 bucks for the top 1 percent of 
households but increased by only about $200 for low income 
households. That, I think, paints a clear picture that we are 
continuing to have what has been a two decade long or more 
widening of the gap between the most well off in this society 
and many, many others.
    Some of these programs are meant to try to help narrow that 
gap, and others are simply meant to deal with the consequences 
of that gap. We have often talked about, well, we talk every 
year about the cost of doing certain things, the cost of adding 
money for NIH or the cost of adding funding for student aid and 
the like, but we do not focus, in my view, enough on the cost 
of not doing those things. So we have been trying to cover both 
sides.
    I am very concerned about what this budget does, given the 
context in which it is being presented because the budget that 
you are presenting today freezes funding for biomedical 
science, it spends $475 million less than last year on critical 
public health promotion and disease prevention programs, cuts 
funding for health care quality outcomes and effectiveness 
research below last year's level, and in real dollar terms 
those cuts are even more severe than they appear.
    I appreciate the $27 million increase for community health 
centers, but that increase is less than the rate of inflation 
and does not go very far to help the 40 million plus people who 
do not have health insurance.
    The proposal to terminate health professions training 
programs, I think you will find that there are people on both 
sides of the aisle in this Committee who have considerable 
doubts about the wisdom of that.
    And so, basically, at the least I am concerned about the 
inadequacy of a number of recommendations, certainly not just 
in your Department. We had a good deal of discussion yesterday 
on education about the failure of Congress over a good period 
of time and the failure of Presidents of both parties to 
adequately fund Special Education, for instance.
    I just want to make one comment before we begin. Last year 
was very frustrating, and I said the same thing to the 
Education Secretary yesterday. Last year was very frustrating 
to me because I am used to the kind of politics in which you 
have the two parties. When issues divide on partisan lines, I 
am used to the kind of politics in which people define their 
differences and fight like hell about them but then resolve 
them, and usually that resolution means that you have to have 
compromise on both sides.
    We did not get much of that compromise from the 
Administration last year. In fact, Mr. Nussle specifically 
warned me that we would not find anyone in the Administration 
interested in compromising on last year's budget, and that 
certainly proved to be an accurate description.
    This year, we face a little different situation because, as 
you know, this is the last budget that this Administration will 
present, and we will have two choices. We can either allow this 
year to turn into a wasted eight months where we go through the 
motions of debating each other about your priorities and ours 
and, in the end, get nowhere in terms of a compromise or we can 
recognize that we have different philosophies but also 
recognize for the good of the order we need to cut to the chase 
and make those compromises and get a move on.
    I would much prefer to do that than to reach an impasse, 
but it is really pretty much up to the Administration to decide 
how they want this to go. I am perfectly willing to sit down 
and compromise on virtually any item in this bill, but if we 
get clear signals from the Administration that that is not the 
path they want to go on, then we have no choice but to simply 
wait and deal with the incoming President who we expect will be 
flexible.
    So I would simply ask you for whatever it is worth, and I 
know that these decisions are made by OMB a lot more than they 
are made by the agencies, but in the end you are a lot closer 
to the needs of these programs and the people who are served by 
them than OMB is.
    So, for whatever it is worth, I hope that you and the 
Secretary of Education and the Secretary of Labor will take 
back the message that it would be good if we could work things 
out because if we do not, then the Administration will simply 
be a bystander and we will have to make these decisions with 
benefit of input from whomever succeeds the President.
    As I say, I prefer to work it out, but I will play it flat 
or play it round, however the Administration wants to go with 
it.
    So, with that, let me turn to Mr. Walsh and see what 
comments he has before we hear your testimony.
    Mr. Walsh. Thank you, Mr. Chairman. Thank you for holding 
this hearing today.
    Mr. Secretary, welcome. Nice to see you.
    The Committee, the Appropriations Committee has 
responsibility for spending, discretionary spending. Most of 
this Subcommittee's jurisdiction is mandatory spending which we 
have very little control over, but those mandatory programs are 
putting a tremendous burden on our ability to meet the needs of 
the Country through discretionary means.
    I am not sure how that is resolved, but the growth that is 
occurring in mandatory programs at the same time we have had a 
tremendous buildup in our defense spending is really squeezing 
non-defense discretionary spending. All across the 
responsibilities of the Appropriations Committee--
infrastructure, education, health care research and other areas 
that are of great concern to the American public--are being 
squeezed by both defense spending and entitlement programs.
    Both of those areas, I am sure, are going to be very 
closely looked this year and in the next Congress. So I would 
be interested in hearing any thoughts you have on entitlement 
spending which comes within your purview.
    Just a thought, the Medicaid program, as it was 
established, requires that States pay a portion of those costs. 
Certain States, southern States primarily, benefit 
substantially from the Federal largess. The Federal Government 
spends a much higher proportion of the Medicaid bill in 
Alabama, Mississippi, Tennessee and other southern States 
whereas some of the other States like mine, New York, we pay 
dollar for dollar what the Federal government pays.
    In New York, that dollar comes 50 percent from the State 
Government and 50 percent from county government. So there is a 
tremendous burden put on the local taxpayers to pay for a 
program, the Medicaid program, for which they have no control.
    I understand part of your approach is to shift costs from 
the Federal Government to the State. In my State, that creates 
a tremendous and onerous burden on county property taxpayers 
who have enough problems of their own. So it is a real cause 
for concern, this shifting of costs from the Federal Government 
to State and then to local, and I would like to explore that 
with you a little bit in the Q&A.
    Again, thank you.
    Thank you, Mr. Chairman. I yield back.
    Mr. Obey. Why don't you proceed? We will put your statement 
in the record. Why don't you summarize it, and we will get to 
the questions?

                         Secretary's Statement

    Secretary Leavitt. All right. I do not think I will follow 
my prepared statement. If you will submit it in the record, I 
will feel good about that.
    Mr. Chairman, let me just say I have been in the budget 
business a long time, as have you. Most of my experience came 
in a much smaller pond. As you know, I was a governor for 11 
years, and it was my duty to be the voice and to make all of 
the decisions.
    I am now in a much different role. I have a substantially 
larger budget and a much bigger pond, but my role is a little 
different.
    I want to express that in the context that I understand 
your statement and understand the spirit with which it is 
given. The Administration feels very strongly about the need to 
balance the budget by 2012, and I think it is a voice that has 
to be represented in this discussion.
    There is a need for the voice of the Hubert Humphrey quote 
behind you. I think there is no one in this room who does not 
understand that and believe that. I do. I take that 
responsibility very carefully. I also feel the need to keep the 
discipline that is necessary to keep government in the right 
place.
    So you will see in this budget an effort to balance the 
budget and to maintain the sustainability of the programs that 
so many people depend on.
    I will tell you I am deeply worried about Medicare. This 
budget contains $183,000,000,000 in reductions in the growth 
rate. It reduces it from 7.2 to 5 percent growth. I do not 
relish in bringing the list of things that would accomplish 
that. I know the realities of it.
    I bring it as a warning, not to you--you know it--but to 
state it publicly and resoundingly that we have to do something 
about this. Whether it is this year or another year, someone is 
going to have to deal with this.
    My testimony represents a view that simply dealing with it 
by using the same old Government-regulated price-setting 
mechanism is going to be so uncomfortable, it is likely it will 
never be done, and the better way is to change the philosophy 
of the system and begin to see it rationalize itself in a way 
that I believe makes more sense. I will not go into a lot of 
detail.
    I am anxious to have the conversation about Medicaid. I ran 
Medicaid programs for many years as a governor. I have now 
overseen them as the Secretary of Health and Human Services. I 
have great respect for the partnership that exists between the 
States and the Federal Government.
    I recognize some inequities that have historically been 
built into it. In the recent months, we have proposed a series 
of changes to Medicaid that, frankly, represents disputes in 
the partnership between States and the Federal Government.
    To be honest, and I understand this mentality as well as 
anybody in the room, States have hired consultants who, on a 
contingency fee basis, have found ways to go in and find any 
hint, any whiff of ambiguity and then have driven a wedge in 
there on a contingency fee basis where they have absolutely no 
incentive to do anything but push and push and push and push 
and push.
    Well, somebody needs to push back because many of the 
things that are being done here are simply not fair. They are 
not in the spirit of what is being done, and yet they are 
represented to be some kind of pushing things off onto the 
States when in reality we are trying to find the balance in 
this partnership. So I hope we do get a chance to talk about 
that.
    My job is to try to find the right place and right now, 
absent the capacity to push back a little bit on what is being 
done, we are being taken advantage of. That means that there is 
money going to one thing that really ought to be going to 
another.
    So, Mr. Chairman, I am prepared to have this conversation 
in a very thoughtful way. I appreciate the spirit in which you 
have addressed it, and I hope to do the same.
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    Mr. Obey. What I am going to do because I understand that 
she has to leave, I am going to yield my time initially to Ms. 
Lee because she has to get to another hearing. Then I will go 
to you, Jim, if that is all right.
    Mr. Walsh. That is fine.
    Mr. Obey. Thanks.
    Ms. Lee. Thank you, Mr. Chairman. Thank you very much.
    Good morning, Mr. Secretary.
    Secretary Leavitt. Good morning.

                         CENTERS OF EXCELLENCE

    Ms. Lee. Well, let me just say first of all, after 
listening to the testimony yesterday from the Secretary of 
Education and now hearing your testimony, it is clear that what 
is being actually cut are initiatives and programs to help 
those most in need, for example, low income individuals, people 
of color, communities of color. Here, we are seeing in essence, 
with your budget, somewhat of the same type of priorities in 
terms of who wins and who loses.
    When you look at racial and ethnic disparities, for 
example, and I do not believe in your written testimony you 
mention the need or the requirement, I think, of our Federal 
Government to address the huge racial and ethnic disparities. 
But once again, we see the proposal to zero out these programs 
that would help actually reduce these disparities which lead to 
shorter life spans, of course, sicker individuals who happen to 
be Latino, Asian Pacific American or black.
    You, again, zeroed out the Minorities Center of Excellence. 
The scholarships for disadvantaged students are zeroed out, 
eliminating support, I believe, for over 8,000 under-
represented minority students. The Healthcare Opportunities 
program is also zeroed out.
    So I do not know how eliminating over 8,000 scholarships 
for minority health students really helps us get to where we 
want to get in terms of a healthy population and in terms of 
closing these disparities. Also, why in the world would most 
programs that actually try and do something about racial and 
ethnic disparities be really level-funded at the most or cut at 
worst?
    I do not understand quite, again, what the assumptions are 
about the American people, who wins, who loses and why we do 
not address these disparities in any way. We need more funding 
if we are going to make sure that there does become equal 
opportunity in healthcare for all. So I would just like you to 
respond to that.
    Secretary Leavitt. Ms. Lee, I am not exactly sure what you 
are referencing with respect to 8,000 minority scholarships, 
but I would like to just give you.
    Ms. Lee. The Health Centers Opportunity program.
    Secretary Leavitt. The number, 8,000, does not resonate 
with me. Maybe I could give you.
    Ms. Lee. That is about how many, I think, minority students 
are benefitting from that.
    Secretary Leavitt. Let me check that. I cannot validate it 
or affirm it.
    My task was to contribute to the balancing of this budget.
    Ms. Lee. I understand.
    Secretary Leavitt. What that means is that I am faced with 
taking good and noble causes and trying to weigh which ones of 
those makes sense to continue and which ones, in those 
conditions, do not. It might be helpful for you to know the 
criteria that I instructed HHS staff to use.
    I told them I wanted to go back and emphasize services as 
opposed to infrastructure.
    I told them I wanted to take programs that were one time 
funding and look at those as opposed to continuing programs.
    I told them I wanted to look at grant activity where the 
task had been completed and not necessarily reaffirm those.
    I told them I wanted to propose places that I could see in 
HHS which is a very big place. There are a lot of places that 
we deal with an issue in multiple places, and I wanted to find 
ways to consolidate those.
    So, in many cases, what looks like it may have been a 
reduction, I may have chosen to do that because we were dealing 
with that in other places.
    When Mr. Kennedy comes, I hope we get a chance to talk 
about mental health. The Federal Government contributes about 
45 percent of all the mental health that goes into.
    Ms. Lee. Sure, Mr. Secretary, before my time is up, and I 
appreciate your explanation with regard to balancing the budget 
and having to make tough choices.
    But I think what I am saying is we all recognize that 
budgets are moral documents. This budget does reflect certain 
priorities as you balanced it in terms of who is going to lose. 
The losers again, once again, just as yesterday we saw, are low 
income individuals, poor individuals and people of color, and 
that is a shame and disgrace in this year of 2008.
    Thank you, Mr. Chairman.
    Mr. Obey. Mr. Walsh.

                                MEDICAID

    Mr. Walsh. Thank you, Mr. Chairman.
    Mr. Secretary, let's talk a little bit about those Medicaid 
regulations that we spoke of. You mentioned that some of the 
things that the States are doing I think you said are not fair. 
Could you sort of explain what the rationale is for the 
regulations that you promulgated?
    Apparently, there is about $13,000,000,000 in savings over 
5 years. Why those and what do you think the impact will be on 
the States?
    The obvious impact on Medicaid would be a reduction in 
spending.
    Secretary Leavitt. Without going through all of the 
specifics of the rule.
    Mr. Walsh. Just generally talk about it.
    Secretary Leavitt. Well, as I indicated, there is this 
partnership we have with the States, and it is to serve the 
same people. We serve the same people, and so we have entered 
into this partnership. We pay part. They pay part. We match 
their funding.
    What the States do on a regular basis is they will hire 
consultants and the consultants, who get paid a contingency fee 
on areas where they can optimize the funding, they will go 
through and look for any place where they believe they can 
justify paying for programs that are completely outside 
Medicaid.
    Mr. Walsh. So they are looking for more applications for 
Medicaid funding for these specific States that we would then 
be required to co-pay.
    Secretary Leavitt. That is exactly right.
    I mean an example is they will take someone in a school 
whose job is 90 percent--I am pulling that number out of the 
air--but 90 percent school tasks. They will give them another 
duty which is to look after a child that might not have health 
insurance, and then we will pay the entire salary.
    Now that is not fair. If they want us to pay 10 percent of 
it, okay, but not 90 percent of it.
    We end up paying for school buses. We end up building 
buildings. There are States where we are funding with Medicaid, 
programs in three different departments, none of which have 
anything to do with healthcare, but they are able to stretch 
this over. Unless I push back, then they just keep doing it 
because they get paid a contingency fee.
    Mr. Walsh. We saw in the S-CHIP debate that States can 
liberalize or expand the coverage that is provided not only to 
kids but to the kids' parents and others, and yet the 
Administration, the Federal Government, has allowed them to do 
that when it was not intended for that purpose.
    So how do we get our arms around Medicaid benefits and 
determine is there a one size fits all for the States?
    To go even further, again back to the New York State view, 
if we are paying a dollar for dollar, whatever the Fed puts up 
a dollar for what New York State puts up a dollar for and the 
counties have to pay 50 cents of that dollar for the State, it 
is a huge unfunded mandate on the counties that they have 
absolutely no control over.
    The Medicaid budget in my home county and almost every 
county in upstate New York is the largest, far and away the 
largest portion of the budget, and that falls right on the 
property tax payer. That is one of the reasons why taxes, 
property taxes, are so high in New York State because the 
counties pay a disproportionate share of that Medicaid bill.
    Secretary Leavitt. It seems to me there are two issues 
here. One is the global fairness of the FMAP and whether it is 
fair for one State to have a different FMAP than another. That 
is a matter of statute and something that the Congress has 
dealt with for a long time, and it does not fall at my level of 
discretion.
    However, the second issue, the State has a relationship 
with the county. As I tell the governors, I hope if your 
counties are treating you the way that I have felt the Medicaid 
program has been treated, that you would do the same thing I am 
doing and try to close down where people are using it for 
inappropriate things.
    I am just looking for some way to focus Medicaid and its 
limited resources on health issues, not becoming the means by 
which you can fund every other program in State Government.
    Mr. Walsh. What would you cut out? I mean again in the 
universe of Medicaid spending, what are we paying for now that 
we should not be paying for?
    Secretary Leavitt. Well, listen, I mentioned case 
management. We have several rules. We have people that are 
calling case management things that have nothing to do with 
medicine.
    Also, people have found very innovative ways to finance 
their match. For example, we give public hospitals a little 
higher payment. There are a lot of States that are taking that 
little higher payment, and they are putting it into their 
general fund, and then they are using our money to pay their 
match. It is just a cycle.
    That is not being fair. That is not being a real partner. 
So we just want them to put up real money. If we are going to 
be matching it, it ought to be real money.
    That is the kind of thing I am talking about.
    Mr. Walsh. Thank you.
    Thank you, Mr. Chairman.
    Mr. Obey. Ms. Roybal-Allard.

                                STOP ACT

    Ms. Roybal-Allard. Secretary Leavitt, in December of 2006, 
Congress unanimously passed the STOP Act. It was a bill to 
address the public health crisis of underage drinking in this 
Country. The bill and its funding in fiscal year 2008 
represented a historical bipartisan and bicameral collaboration 
that brought together all the members of the public health 
community and the alcohol beverage industry, all of whom agreed 
that the programs and grants that were included in the STOP Act 
were the best Federal response to the crisis of underage 
drinking.
    Given the major scope of the underage drinking problem in 
this Country and the strong bipartisan support for the STOP 
Act, why does your budget request propose to actually zero out 
the STOP Act programs just as they are getting started?
    For example, the Community Enhancement Grants under the 
STOP Act were authorized as four-year grants, the first of 
which will be funded this year. So how do you justify cutting 
these grants to communities just one year into that four-year 
funding cycle?
    Secretary Leavitt. This is an example where we found we 
were serving a very legitimate need in many different ways, and 
we opted, as a means of being able to get closer to a balanced 
budget, to offer communities a means of being helped in 
alternative ways. They can apply for grants in other ways, and 
we have made that known to them.
    I acknowledge this is an important priority, but this is 
one where we chose to acknowledge that in many different ways 
we were serving the same need.
    Ms. Roybal-Allard. Well, with all due respect, the reason 
we were finally able to bring this, in some ways, unusual 
coalition of healthcare providers and the alcohol beverage 
industry together is because those programs and what you had in 
place were not working.
    What the STOP Act actually does is coordinate all the 
various activities that are being done by the Federal 
Government by creating an interagency coordinating committee. 
The Surgeon General himself has said that the Federal 
Government should fund and actively support the STOP program 
because this is a different approach that everyone agrees is 
going to be much more effective than what has been done 
already.
    It is very, very disappointing. This is a serious crisis in 
our Country with our children, something that has been worked 
on for seven years. These groups were not together in the 
beginning and finally came together and in agreement as to the 
STOP Act and its provisions were the best way to address the 
underage problem in this Country.
    So it is very disappointing to see that this program is 
basically eliminated by the lack of funding.

                                NURSING

    On another issue, we are currently facing a dire shortage 
of nurses in our Nation's hospitals and medical clinics. During 
the 1970s nursing shortage, Congress appropriated a significant 
increase in funding for nursing schools and students to help 
meet that demand.
    However, in this nursing shortage crisis, the President's 
2009 budget proposal calls for a reduction of 30 percent in 
Title VIII funding which is a $46,200,000 decrease in 2008. Why 
would the Administration so significantly cut Title VIII 
funding when the programs have been a proven solution to past 
nursing shortages?
    Secretary Leavitt. This is a budget proposal that we have 
introduced several times now because we fundamentally believe 
that we ought to be focused on providing services as opposed to 
providing infrastructure, but I would like to take up the cause 
of nurse training for just a moment with you.
    I, like you, am concerned about it. I think we are going 
about it the wrong way.
    I think we need to begin to focus on new models of nurse 
training. We need to be investing in ways and means by which we 
can utilize the hospitals and utilize the medical training and 
facilities we have to begin to nurture more and more nurses. We 
are starting to see models, alternative models like this 
develop.
    You could fill up all the nursing schools in America and 
increase substantially their capacity, and we still would not 
be meeting the need that you have eloquently spoken of. We have 
to change the model, in my view, and begin to focus on 
competencies and competency-related education as opposed to 
simply the way we do it now.
    But that is a subject for a different day. I know you have 
other things you want to mention.
    Ms. Roybal-Allard. I would just like to point out, Mr. 
Secretary, that you will not be able to provide services unless 
you have the nurses and the health professionals to provide 
those services. So it is important and should be one of the 
first steps is to be able to have educated nurses in the system 
so that you can move towards providing what you are calling the 
infrastructure and the services.
    You cannot have one without the other. And so, by not 
investing in these programs, you are really undermining your 
very goal of providing services which are badly needed.
    I have another question in regards to the Advanced 
Education Nursing program. Again, in light of this nursing 
shortage and the great need for more primary care providers, 
again what is the rationale for eliminating the Advanced 
Education Nursing program that each year helps prepare almost 
14,000 graduate nursing students to serve as nursing faculty 
and advanced practice nurses in rural, urban and under-served 
areas?
    [The information follows:]

                                Nursing

    Secretary Leavitt. The President's budget directs resources to 
nursing programs that provide direct patient care in areas where nurses 
are critically needed through scholarship and loan repayment programs, 
including an increase of $16 million for basic nursing programs, 
including the Nurse Loan Repayment and Scholarship Program, Nursing 
Workforce Diversity, Nurse Faculty Loan Program, and Nurse Education, 
Practice, and Retention. Programs for advanced practice nurses may be 
assumed by surces other than the Federal government, such as, State and 
local governments, foundations, private sector endowments, and health 
care organizations.

    Secretary Leavitt. That specific program, I am not sure I 
have. That is one I am probably going to need to respond to you 
in writing on. It is at a level of granularity I am not able to 
respond today at this table.
    We are going to be adding funding for 800 nurses in a 
different part of the budget, but on that specific program, 
Congresswoman, I think I will need to respond to you. I do not 
have a response.
    Ms. Roybal-Allard. All right, but that is an important 
program because it is a program that focuses on nurses who are 
willing to work in under-served areas. That is very, very 
critical, given the health problems in many of our under-served 
and minority communities that just do not have enough 
professionals working in those areas.
    Mr. Obey. The gentlewoman's time is expired.
    Mr. Simpson.

                        BUDGET SUBMISSION TO OMB

    Mr. Simpson. Thank you, Mr. Chairman.
    Welcome, Secretary Leavitt. It is good to have you here 
today.
    I have several questions I am going to submit for the 
record because there are too many to talk about, and some 
things I will ask you about this afternoon at the budget 
hearing since I am on that Committee also.
    You mentioned balancing the budget and the need to 
participate with the rest of the Federal agencies. I think 
everybody agrees with that. Could you tell me what your 
original request was to OMB?
    Secretary Leavitt. Well, as you know, our budget process 
works like any other budget process where we line up our needs, 
we line up our wants, and we line up our aspirations, and then 
we begin to whittle those down.
    Mr. Simpson. Were any needs whittled away?
    Secretary Leavitt. Well, that is the way budget-making 
works.
    Mr. Simpson. I know. I have done it for years.
    Secretary Leavitt. You have to then balance it against 
different priorities. The same thing in my Department.
    Mr. Simpson. The reason I asked this, though, is because 
you have to work with OMB. We do not, essentially.
    We look at what the needs are and stuff. OMB might be a 
participant in that. It might not be a participant in that. But 
we are not constrained, quite frankly, by OMB like you are.
    OMB, quite frankly, sets policy without knowing what they 
are doing. So I have asked every agency what their original 
request was to OMB because I want to know what you thought was 
appropriate to start with, even realizing that you were not 
going to get it all, because that might be relevant to the 
Committee in how we make our decisions on what we think is 
appropriate.
    Secretary Leavitt. I understand. Congressman, I am here to 
defend the President's budget. There are parts of it that I 
might have changed.
    Mr. Simpson. That is fine. I am just asking what you 
originally requested.
    Secretary Leavitt. Well, my job here is to defend the 
President's request.
    Mr. Simpson. Will you get me a copy of what you originally 
requested?
    Secretary Leavitt. You would have to get that from OMB.
    Mr. Simpson. See, Mr. Chairman, that bill that I talked 
about is a good one.
    Mr. Obey. If the gentleman would yield.
    Mr. Simpson. I would certainly yield.
    Mr. Obey. I mean for years with various administrations, we 
have gone through these arguments. With all due respect, this 
Committee has a right to know what the professional experts in 
the agencies thought would be necessary before the political 
judgments intervene on the part of OMB.
    Mr. Simpson. That is exactly my point, and that is why I 
have been asking the question because I want to know when we 
make decisions on how we are going to appropriate money. It may 
be more than you requested. It may be less than you requested. 
I would like to know what the professionals wanted.
    Mr. Obey. The Administration has a perfect right to make 
any changes it wants in the agency budgets but, for God's sake, 
this is not classified material. This is not national security 
information. People have a right to know what the President is 
being asked to provide.
    The President gives us lectures about transparency, I would 
like to see a little transparency in the executive branch.

                             DENTAL HEALTH

    Mr. Simpson. I agree, and I will start my five minutes over 
again. Let me ask you a couple of specific questions.
    In your fiscal year 2009 highlights, you address the unmet 
needs for dental care, and I appreciate that. The President 
added $11,000,000 to hire 214 dentists--being a former dentist 
in the real world, that is important to me--through the 
National Health Service Corps and this is more than has been 
done before.
    However, you eliminated $19,000,000 for dental programs for 
training and State projects. What was your rationale for 
cutting the $19,000,000 for dental training programs?
    Secretary Leavitt. Well, again, we have tried. There are a 
lot of places in this budget that touch on dentistry, and we 
took each program. I had gone through a series of the way we 
prioritize them.
    In some ways, we felt one program was actually delivering 
services and the other one might be building infrastructure, 
and we wanted to emphasize limited funds on actually delivering 
services.
    Mr. Simpson. Is that what it was, building infrastructure?
    Secretary Leavitt. In fact, we were. In most cases, it was.
    Mr. Simpson. The Committee increased funding in the fiscal 
year 2008 budget for the Dental Health Improvement Act from 
$2,000,000 to $5,000,000. The $2,000,000 covered grants to 18 
State projects. Originally, 36 States applied for the funding.
    Could you tell the Committee how your Department plans to 
disburse the new grant money?
    [The information follows:]

                             Dental Health

    Secretary Leavitt: HRSA is preparing a new competition for the FY 
2008 appropriation of $3 million for Grants to States to Support Oral 
Health Workforce Activities. This competition will be open to all 
States, including those that applied in FY 2006 and were not funded. 
The funding opportunity is planned for release by the end of April and 
the awards will be made prior to the end of FY 2008.

    Secretary Leavitt. Yes, we can respond in your written 
questions. We will be happy to respond.
    Mr. Simpson. Okay.
    Last year, the Committee designated $10,000,000 for the 
General Practice and Pediatric Dental Residencies programs 
under Title VII health professionals. Can you tell the 
Committee how many applicants there were and how many requests 
were approved and how many were funded?
    [The information follows:]

                             Dental Health

    Secretary Leavitt: In FY 2007, 40 grant applications were received 
for the general practice dentistry and pediatric dental residency 
programs. Of those applicants, 34 were approved for funding and 28 were 
funded. The dental residency training grant awards totaled $10,272,394.

    Secretary Leavitt. We will be happy to respond. That is not 
a level of information that I have.

                       BONE MARROW DONOR PROGRAM

    Mr. Simpson. Okay.
    One other question, on January 17th, the other members of 
the Idaho delegation and I sent HRSA a letter regarding recent 
changes to the rules governing the National Bone Marrow 
program. Part of those rules are to significantly increase the 
minority registration requirements.
    While recruitment and minority participation are important 
goals, I am concerned that the new rules do not take into 
account the demographic reality of States such as Idaho and 
Utah and put programs such as the one operating in Idaho at 
risk of closure. Would you be willing to work with me to 
provide the needed flexibility to accommodate the demographics 
of all States and regions including my own State of Idaho?
    Secretary Leavitt. Your request has been made known to me 
previously and understanding the demographic realities of 
Idaho, yes, we would.
    Mr. Simpson. I appreciate that, and I look forward to 
talking to you this afternoon in the Budget Committee about the 
changes in philosophy to the system rather than the Band-Aids 
we seem to have been putting on the Medicare and Medicaid 
system over the years, which is one of my biggest frustrations.
    Secretary Leavitt. Thank you.
    Mr. Simpson. I appreciate it. Thank you.
    Mr. Obey. Mr. Kennedy.

                                MEDICAID

    Mr. Kennedy. Thank you, Mr. Chairman.
    Welcome, Mr. Secretary.
    Rhode Island is probably not unlike a lot of States with a 
huge deficit it is facing. We have an over $435,000,000 
deficit. It does not sound like a lot, but it is a lot in a 
small State like mine.
    The governor has proposed saving more than $66,000,000 by 
reducing Medicaid spending, largely by diverting seniors and 
disabled adults from nursing homes. The governor says one would 
not be forced from a nursing home or prevented from entering 
one, but he needs to divert more than 690 seniors, 300 youths 
from child welfare services and dozens of developmentally 
disabled people to less expensive programs to meet the budget 
targets.
    The Department of Human Services Director, Gary Alexander, 
said the $66,700,000 is predicated in part on reducing overall 
number of Medicaid patients in private nursing homes next year 
by 690. That assumes 125 leave voluntarily, 565 are diverted to 
other services such as home care. The average number today, 
6,500.
    The budget also cuts eligibility for the State subsidized 
healthcare program, Rite Care, for parents with incomes above 
185 percent of Federal poverty level which is $32,000 for a 
family of 3 to 133 percent, $23,000 for a family of 3. An 
estimated 7,396 adults would be affected.
    The governor also wants to cut the school breakfast program 
entirely, eliminating State funds for the program, thinking 
that the Federal Government will somehow come in and operate 
the program without State subsidies. How that will be done, I 
do not know.
    The eligibility for the State's welfare program known as 
the Family Independence Program will also be cut by two years 
as well as huge, substantial cuts in Head Start, Rhode Island 
Meals on Wheels, Crossroads Rhode Island, Rhode Island 
Community Food Bank.
    The point I am making is: Has the President of the United 
States coordinated with my governor, Governor Carcieri--both of 
them talk quite frequently--about the cumulative impact of the 
budgets that the President is proposing and Governor Carcieri 
is proposing?
    Has there been any connection? Because if you are looking 
at your budget on top of what we are doing in Rhode Island, 
there is a disconnect.
    Secretary Leavitt. Well, you read a long list of things 
there. There are some where they would undoubtedly come to HHS 
and say, here are some impacts we are having. Can you help us 
with this or do we have an authority to do that?
    Mr. Kennedy. Right. Right.
    Secretary Leavitt. One, for example, is in the area of 
diverting people from nursing homes. We see that as a positive, 
and we would be anxious to cooperate in seeing that occur. We 
would like to see people cared for where they want to be, in a 
way they would like to be. Frankly, it is less expensive and 
people like it.
    So, to the extent that we are cooperating on programs where 
we have overlapping jurisdiction, the answer would be yes. In 
terms of coordinating the development of our budget, no.
    Mr. Kennedy. But you cut administration on aging. I mean 
you cut administration on aging. You cut the kinds of programs 
that are going to help us be able to do these things. Of 
course, these other programs that are being eliminated are not 
going to make these problems easier.
    All I am saying is I do not know to what extent there has 
been any Federal coordination from Washington with these 
States. These are all difficult. Some of these States are going 
to be in a really particularly difficult time.
    Is there any connection between you and your respective 
counterpart at our State level in terms of the cumulative 
impact between what this is offering and what is going on at 
the State level?
    Secretary Leavitt. I hear regularly from States as to the 
impact that the Federal budget, one way or the other, will have 
on their budgets.
    Mr. Kennedy. Yes.
    Secretary Leavitt. Obviously, they do their budget. We do 
ours.
    Sometimes what they do has an impact on us as well. For 
example, we mentioned earlier changes that States have made in 
Medicaid where, frankly, we have pushed back because they have 
an impact on our budget.
    Mr. Kennedy. Yes.
    Secretary Leavitt. We have seen situations where we do 
things that they push back, and so there is a push and pull. It 
happens, but we do our budget independently. I am sure that the 
effect is, at times, cumulative.
    Mr. Kennedy. We are all serving the same people.
    Secretary Leavitt. We are.

                             MENTAL HEALTH

    Mr. Kennedy. I just get concerned. One of the things that I 
want us to look obviously more at is the holistic view of this 
and not in a stovepipe mentality that this is a Federal program 
and this is a State program. It is how we are working together.
    One of the things this year obviously is--I know you 
mentioned before I came about mental health programs--that this 
year we get a better sense of all mental health research under 
HHS.
    A lot of the mental health research that is going on is 
going on at the VA now because of traumatic brain injury and 
because of post traumatic stress disorder. A lot of it is going 
on in DOD because of the obvious interest that the Department 
of Defense has for those same reasons. A lot of it is going on 
in other agencies as well.
    We are really interested in making sure, even with NIH. 
There is a whole plethora of brain and nervous-related research 
that goes on that is not coordinated with NIH.
    So would you be willing to work with us to try to 
coordinate the existing research that goes on within the 
Federal Government under HHS so that we can get it to the FDA 
and professionalize more FDA in terms of brain/nervous system 
research so that this brain and mental health related research 
can get out to the public in a more expedited way?
    We found that with all the dollars that we are spending 
right now approximately $6,000,000,000 through the NIH and over 
an additional $3,500,000,000 through other agencies. It is 
really not being organized, and the one hand does not often 
know what the other is doing. We find that for an additional 
$200,000,000 we can coordinate it.
    If we professionalize the FDA more, we would better be able 
to get that out to the public maybe through some SBIR efforts 
as well. We would love to work with you on that.
    Secretary Leavitt. I am a big believer, first of all, that 
government is way too siloed. That is true inside HHS as well 
as throughout the broad government.
    I would argue that the better place to coordinate it might 
be NIH, not FDA, but nevertheless I am certainly in agreement 
and willing to be a participant in better coordination.
    Mr. Kennedy. Okay, great.
    Well, I appreciate the increases in drug courts and mental 
health courts. Obviously, I am distressed about the overall 
cuts in substance abuse prevention and funding services and 
mental health prevention, SAMHSA, but I know we will look 
forward to working with you to rectify some of those cuts.
    Secretary Leavitt. Thank you.
    Mr. Obey. Mr. Weldon.
    Let me explain to the Committee, we have this vote going 
on. What I would like to do is to get through Mr. Weldon's five 
minutes of questions and then break to go vote.
    Mr. Weldon. Thank you, Mr. Chairman.
    Secretary Leavitt, it is a pleasure to see you again.
    Secretary Leavitt. Thank you.

                                 AUTISM

    Mr. Weldon. I want to commend you for your service. You 
have a tough job. I am not sure how many opportunities I will 
have to see you between now and when I leave. I am retiring at 
the end of this year.
    I did want to bring up a budget issue related to your 
agency, and that is the vaccine/autism connection question. I 
appreciate the concern that you have expressed about this issue 
and the time you have taken to meet with me in the past.
    I do not know if your staff has brought it to your 
attention. We had a lot of discussion in the Committee about 
the mercury issue and should we mandate the mercury getting 
out, but there was a case that was settled in the vaccine claim 
court. Are you aware of it?
    Secretary Leavitt. I am aware of that.
    Mr. Weldon. It involved a claim that a mercury-containing 
vaccine was the cause of the autism. Your legal counsel, using 
appropriate legal language, said, ``concluded that compensation 
is appropriate.''
    I think that is about as far as they went in the 
commentary, but the thing that caught my interest is one of the 
doctors who was involved with the case.
    Just so members of the Committee know, it was a little 
girl, again with regressive autism. The parents claim she was 
fine. She got her shots, became autistic, and the claim was 
that the mercury was responsible and a settlement, a lifetime 
settlement now. The Federal Government is going to be paying 
for this kid's care.
    But one of the doctors involved claimed it was this 
mitochondrial disorder. Do you know about that part?
    Secretary Leavitt. I know sketchy details about the suit 
and about the litigation and the fact that it was settled.
    Mr. Weldon. Okay. Well, let me tell you what caught my 
attention about the case. This Dr. Zimmerman published in the 
Journal of Child Neurology, a respected journal, that their 
research shows that 38 percent of kids with autism have 1 
marker for this condition, 47 percent have a second marker.
    As I understand it, all these doctors taking care of these 
autistic kids now are going back and testing these kids for 
this mitochondrial disorder.
    If this pans out, granted, this has to be validated and 
there has to be a lot more research on it, but if it pans out, 
just my back of the envelope estimation is we have 500,000 kids 
with autism today in America. If you just assume an average 
payout to care for the child over the course of its life of a 
million dollars, it could be a $500,000,000,000 claim against 
HHS, hopefully not in one year, Mr. Chairman.
    What really, I guess, kind of forced me to bring this up 
today, and I realize this is not going to be perhaps your 
problem to deal with. It will be whoever follows you. Did you 
see this ad in the USA Today yesterday, a full page ad?
    Secretary Leavitt. I did not. I did not.
    Mr. Weldon. One of the guys who helped fund it was Jim 
Carrey of all people, you know, the guy who played the Grinch 
in that movie. But, basically, they are indicting the vaccine 
program as the cause.
    Over the last 10 years, I have had just dozens and dozens 
and dozens of parents say to me: My kid was normal. My kid got 
the vaccines. My kid became autistic.
    A lot of the professionals in the pediatric community have 
been just pooh-poohing it and pooh-poohing it.
    This is, in my opinion, a huge issue from two aspects for 
HHS and for CDC and for the medical profession and the 
pediatric profession. Obviously, if something like this is 
ultimately determined to be true, there are huge financial 
consequences for the government, but as well it undermines the 
integrity of our vaccine program, and these vaccines do save 
lives.
    Now I know you have responded and NIH has responded, and 
the amount of research dollars has increased significantly. I 
just wanted you to be aware of some of the details of this. I 
do not expect you to respond to what I am saying.
    And I just wanted to bring it up before the Committee that 
this could, if this is ultimately shown to be true and the 
complaints of thousands of parents for the last 10 years 
ultimately are shown to be valid, it could have huge, gigantic 
implications for budget and as well for the public confidence 
and integrity in our medical profession and in our vaccine 
program. Obviously, whoever follows in your footsteps could end 
up having to deal with this.
    Secretary Leavitt. Mr. Chairman, may I just respond 
briefly?
    I hear those voices. No one can hear them and not feel 
compassion, and yet the finest scientific minds we have in this 
government at CDC continue to tell me that the basis, 
scientifically, is not there.
    So I hear the voices. I respond to them, but I think it is 
important in the context of what you said to recognize that 
there is another side to this story and it will undoubtedly 
play out in lots of ways over the course of time.
    Mr. Obey. I would suggest we go vote.
    [Recess.]
    Mr. Obey. The Committee will come to order.
    Mr. Secretary, we have lost the inmates. [Laughter.]
    Mr. Peterson. We have lost the inmates. One inmate is here.
    Mr. Obey. Let's see. Who is it?
    All right, Mr. Udall.

                              RURAL HEALTH

    Mr. Udall. Thank you, Mr. Chairman.
    Mr. Secretary, thank you so much for being here today, and 
we really appreciate your service.
    You are from the West. You were governor of Utah for 11 
years. You are familiar with some of the challenges that 
western States with rural populations face in delivering 
quality and affordable healthcare, and you are aware of the 
access problems residents of the West have.
    Yet, again, you come to us with a budget that absolutely 
decimates programs for rural healthcare. It also is yet again a 
series of classic unfortunate robbing Peter to pay Paul 
scenarios. It is more of the same bad ideas that have been 
rejected time and time again, and yet here we are.
    I want to ask you specifically about the rural healthcare 
programs and Title VII in particular. As you know, Mr. 
Secretary, when you have rural areas and they are under-served, 
it is very, very difficult to get physicians and nurses and 
other healthcare professionals out into those areas.
    When I look at your budget here--National Health Service 
Corps, health professions, Title VII non-nursing--I mean that 
is completely eliminated. Title VII non-nursing goes completely 
eliminated and a cut to national service health care. Could you 
explain to me what you are thinking about there and putting on 
your western hat here if you can?
    Secretary Leavitt. Thank you. I am proud of being a 
westerner, and I do, as a result, have some sensitivity on 
rural health.
    I would like to recognize and remember that in 2003 
Medicare Modernization Act, we added $25,000,000,000 that we 
believe will raise the level generally in those areas. I would 
also like to ask you to recognize that we have added in this 
budget 800 new nurses and 200 new doctors, and many of those 
will be focused in under-served areas.
    I would also point out that some of the programs that we 
have de-emphasized, we de-emphasized because they were not 
particularly effective. Only 35 percent of the individuals 
trained and supported in some cases, in some of our programs, 
went into medically under-served areas. We did not think they 
were working, so we have tried to emphasize other programs to 
meet the need you have spoken of.
    Mr. Udall. Mr. Secretary, I must say that I find that 
explanation unconvincing, and the reason is the provisions in 
the MMA were never meant to replace the HHS Rural Healthcare 
Grant programs.
    The MMA was about preserving access and helping providers 
keep their doors open. The MMA even reauthorized the Rural 
Hospital Flexibility program which is eliminated by your 
budget. The MMA provisions also have all expired and Congress 
has yet to extend them.
    The HHS grant programs are meant to improve healthcare 
quality and innovation in rural areas. Even with the benefit of 
the MMA, many rural providers still struggle with costs. The 
proposed cuts only roll back the clock on rural healthcare.
    I think you are going to see some bipartisan opposition on 
this basis.
    Once again, back to Title VII, the Administration has 
maintained its reason for not funding them is they are 
ineffective. This Committee has restored some of the funding 
because we know they are important programs.
    Could you tell the Committee when the Department seeks 
grant applicants for these funds, the nurses, the doctors that 
are going into rural areas, do you get more approved requests 
than you can fund?
    [The information follows:]

                              Rural Health

    Secretary Leavitt: Appropriations received for Titles VII and VIII 
programs must first be utilized to fund non-competing continuations and 
then the remaining funds are used to support new applications. On 
average, 34% of approved applications are funded.

    Secretary Leavitt. I do not know at this table today 
whether that is true or not. I will respond to you in writing 
if you would like, but I am not able to respond.
    Mr. Udall. Do you have anybody with you?
    I mean I would be amazed if we did not get a lot more. You 
just do not know?
    Secretary Leavitt. You have stumped the panel.

                        COMMUNITY HEALTH CENTERS

    Mr. Udall. Oh, with all those health experts out there, 
hard to believe that.
    Let me see how I am doing on time here.
    Could you talk to me about the community health centers and 
what you are intending to do there, Secretary Leavitt?
    Secretary Leavitt. Well, as you know, the President set a 
goal to have 1,200 new or expanded health centers. We have now 
met that.
    We continue to move forward. We are focusing on areas that 
have low income, particularly in low income communities.
    Mr. Udall. Is this going to take away from existing 
centers?
    Secretary Leavitt. No. We intend to expand the number. We 
have actually met that goal. In the last fall, we hit the 
1,200th new or expanded center.
    We have intended to try to use them to serve broader 
populations including, in some cases in urban areas, Indian 
health needs in this budget. We see community health centers as 
continuing to be a very important part of the way we serve 
under-served populations.
    Mr. Udall. Great. Thank you very much, and I hope maybe to 
ask you about some of the Native American issues in another 
round.
    Thank you, Mr. Chairman.
    Mr. Obey. Mr. Peterson.
    Mr. Peterson. Thank you, Secretary. Welcome to the 
Committee and thank you for your service.
    Secretary Leavitt. Thank you.

                                 MEDPAC

    Mr. Peterson. I guess my predecessor here just teed up the 
issue. I am from rural. I represent the second most rural 
district east of the Mississippi. I have 17 hospitals in my 
rural district.
    I guess when I came to Washington, I had chaired health at 
the State level for a decade and worked on the issues for 19 
years as House and Senate member. I guess I was just stunned at 
the lack of attention to rural. I mean between 28 and 30 
percent of our Medicare/Medicaid recipients are in rural.
    So I guess the first issue I would like to ask you is I 
know you do not appoint them, but how do we get a fair 
representation of people from rural on MedPAC?
    The deck is stacked. We are used to that. Urban/suburban 
health interests always dominate.
    When I first became House member in the Pennsylvania 
Legislature, the hospital association and I became good friends 
and it was because I had been on a hospital board and health 
issues were important. But I soon learned that my rural 
hospitals had a different message than the State association 
had because they are rural and the State associations are 
driven by suburban/urban because of volume numbers and dues 
they pay. I understand how it works.
    But the process here of having it fair, I mean 30 percent 
of America is rural. We have maybe one member on MedPAC that 
really understands rural. Some say you might give credit of one 
and a half or two but one for sure that really does.
    We ought to have five people on MedPAC that understand 
rural healthcare when they make their decisions, that they are 
not all urban/suburban slanted decisions.
    Could you help us with that? Can you play a role in that? 
You come from a lot of rural area.
    Secretary Leavitt. I wish I had advice for you today on the 
MedPAC appointment process. I do not. I think it is a split 
between a number of different sources.
    Mr. Peterson. Well, GAO recommends them. We do not approve 
them.
    Secretary Leavitt. I have a vague understanding of this, 
but I believe that there are those that are nominated from a 
number of different sources, and the belief must have been that 
if you have people nominating from a number of different 
sources, you will get a more balanced view.
    I do not know the dynamics, and I do not know why there 
have not been as many rural members as you believe, but I am 
sympathetic to your view.
    Let me just make one other point--and that is something we 
have not focused as much as I think we should when it comes to 
rural health--is the positive impact that Medicare Advantage 
has had.
    We are seeing a lot of people who are signing up for 
Medicare Advantage being in rural areas and particularly those 
who are in under-served populations and minority communities, 
and they are doing it because they have an easier opportunity 
and a better chance to get a physician. We are seeing fewer 
problems in that area under those who are enrolled in Medicare 
Advantage.

                           MEDICARE ADVANTAGE

    Mr. Peterson. Well, yes, it has helped in part of my 
district, but I have counties that do not have a shot at that 
too. I have areas that that has not penetrated.
    I was just told we have 20,000 Medicare recipients, but I 
am sure we have more that do not have that option. You do not 
have that option where I live, to be part of Medicare 
Advantage.
    But I guess the part in your budget, and we just heard a 
little bit about it, whether it is rural outreach, rural flex, 
rural access to emergency, rural community facilities, CSGB, 
the rural issues, and I have found this across other budget 
lines.
    I mean for some reason this Administration's OMB does not 
appreciate rural. They are small programs, and they like to cut 
small programs. They just whack them. But these programs, you 
know we get measurably less for the same treatment.
    I had a member of Congress my first year here tell me, oh, 
John, I am from rural too, but we need to close rural hospitals 
to save money.
    And I said, how are you going to save money because when 
you close a rural center or hospital, they matriculate to an 
urban center who gets paid 30, 40 or 50 percent more for the 
same procedure? So nobody saves any money.
    The constituents are disadvantaged. They are further from 
home, and that is not a part of the healing process when you 
are 150 miles from home in an urban area. It is a crazy system.
    I have been in business all my life. When we go to Wal-Mart 
or Target, the big store, we expect to pay the bottom price. 
When we got to the little stores, we expect to pay more.
    Well, healthcare is the only place where it is inverted 
where the little guy gets paid less. He still has to have MRI 
services and CAT scan services and all these other diagnostic 
tools. He does not get to use them as often to pay for them, 
but we pay him measurably less. That is the only business in 
America that gets the short end of the stick right off the bat.
    Then we have these little grants that we do to try to help 
rural hospitals recruit doctors, help them be competitive, and 
we eliminate them. How does that happen?
    Secretary Leavitt. If you are complaining about the 
differential pricing, and you should, I am with you. I think 
the system we use in setting prices in Medicare is antiquated, 
wrong, illogical and ineffective, and I think the fact that 
your statement points out. We subsidize the wrong things, and 
we overpay things we should not. It is because there is no 
market sensitivity, and we have a price-setting model. How else 
can you justify the wide variance between one State, one 
region, one county? You can take counties in particular areas 
and see 10 miles from another place, they get paid a lot more 
for the same procedure.
    Mr. Peterson. Suburban/urban MSA.
    Secretary Leavitt. I cannot justify that system. I would 
change that system if I had the sole power to do so.
    Mr. Peterson. Have you ever proposed that to Congress?
    Secretary Leavitt. We have had a lengthy conversation. Yes, 
I mean it has been proposed many times.
    Mr. Peterson. But how do you rationalize cutting?
    You have admitted. You have agreed with me. It is 
inequitable. But these outreach grants, flexibility grants, 
these help the little guys kind of keep it together, and you 
take away the little support system we have because we know 
they are not paid fairly.
    Secretary Leavitt. Well, Congressman, we could go through 
each and I could give you my justification. We have done the 
best we can to be sensitive to the need and balance the budget.
    Mr. Obey. The gentleman's time is expired.
    Mr. Peterson. I will take a dollar cut in rural for every 
dollar cut urban gets, but that does not happen.
    Mr. Obey. Mr. Jackson.

                      TITLE VII HEALTH PROFESSIONS

    Mr. Jackson. Thank you, Mr. Chairman.
    Secretary Leavitt, welcome back to this Subcommittee and 
thank you for your testimony and for your service to the 
Nation.
    With that said, Mr. Secretary, I cannot tell you how 
disappointed I am in this budget.
    In your written testimony, you say throughout the entirety 
of this Administration's two terms, the President has sought to 
increase access to affordable healthcare, protect our Nation 
against health threats, advance medical research and ``serve 
the needs of our most vulnerable citizens.''
    Yet, your budget says the exact opposite because it 
eliminates all funding for Title VII health professions 
programs.
    Again, according to your written testimony, I assume you 
are going to justify eliminating funding for these programs by 
saying, we have identified under-performing, inefficient or 
duplicative programs and redirected our resources to programs 
that provide a greater benefit for our tax dollars.
    Your written testimony leaves me with a couple of 
questions. If under-performance, inefficiency or duplication is 
the justification for eliminating Title VII funding, number 
one, what program or programs have you identified that provide 
a greater benefit for our tax dollars and accomplish what Title 
VII actually does?
    Secondly, if under-performance and inefficiency are reasons 
to terminate programs, then why do we continue to not only ask 
for funds for abstinence only education but ask for increases 
when study after study shows that abstinence only education 
does not work?
    Who in the Administration has determined that Title VII 
health professions is under-performing, inefficient or 
duplicative?
    I hope you do not say OMB because when my constituents need 
healthcare advice, they do not go to H&R Block and request it.
    Five years ago, the National Academy of Sciences, the 
Institute of Medicine wrote a report called Unequal Treatment 
Confronting Racial and Ethnic Disparities in Healthcare at the 
insistence of this Committee so that this Committee might have 
a path for funding programs that could close profound gaps that 
exist in our society. We needed a road map.
    To end ethnic and racial disparities in healthcare, the 
report stated we must, one, increase the proportion of under-
represented U.S. racial or ethnic minorities among health 
professionals. To the extent largely permissible, affirmative 
action and other efforts are needed to increase the proportion 
of under-represented U.S. racial and ethnic minorities among 
health professionals.
    So the recommendation of the M.D.s and the Ph.D.s, not the 
bean counters, is to increase the diversity of health 
professions, exactly what Title VII does.
    From your perspective, Mr. Secretary, what do you propose 
funding that does exactly what Title VII does?
    Secretary Leavitt. We are proposing the funding of 800 new 
nurses and 200 new dentists as a very good example.
    We believe that comprehensive abstinence sex education is, 
in fact, effective. I know you disagree.
    I suspect we would disagree on many of the decisions we 
have made, but nevertheless they are our judgments and we put 
them forward as our budget.
    Mr. Jackson. Mr. Secretary, I have a report prepared 15 
months ago by two M.D.s from your Health Resources and Services 
Administration, from HRSA. This report, in essence prepared by 
your Department, says:
    ``One, under-represented minority health professionals, 
particularly physicians, disproportionately serve minority and 
other medically under-served populations;
    Two, minority patients tend to receive better interpersonal 
care from practitioners of their own race or ethnicity, 
particularly in primary care and mental health settings; and
    Three, non-English speaking patients experience better 
interpersonal care, greater medical comprehension and greater 
likelihood of keeping follow-up appointments when they see a 
language concordant practitioner.''
    Your report goes on to say, these findings indicate the 
greater health professions diversity will likely lead to 
improved public health by increasing access to care for under-
served populations and by increasing opportunities for minority 
patients to see practitioners with whom they share a common 
race, ethnicity or language.
    Race, ethnicity and language concordance, which is 
associated with better patient-practitioner relationships and 
communication, may increase patients' likelihood of receiving 
and accepting appropriate medical care.
    Mr. Secretary, your agency's October, 2006 study makes a 
pretty strong case for support of programs which contribute to 
workforce diversity such as COE and the HCOP program. The 
Administration's budget again contradicts the recommendations 
of the M.D.s in this report and other science-based evidence 
which I have presented to the Subcommittee in the past.
    Mr. Secretary, is ending healthcare disparities really a 
priority for this Administration and, if so, why should we 
listen to the people at OMB over the M.Ds and the Ph.Ds who are 
recommending a completely different strategy?
    Secretary Leavitt. Well, again, I will point to the 800 new 
nurses and 200 new dentists, and I will make clear that we are 
making it a priority and believe, as you have suggested, what 
the report reflects. We need to focus and target those areas, 
and we think that is what we are doing here.
    Mr. Jackson. Mr. Chairman, I plan to offer amendments in 
Subcommittee and at full Committee that will restore Title VII 
to current funding levels, and I would ask the support of the 
Committee in offering those amendments at the appropriate time 
and, if necessary, I plan to make my case regarding Title VII 
on the floor.
    Thank you, Mr. Chairman.
    Mr. Obey. Ms. McCollum.

                               HEAD START

    Ms. McCollum. Thank you, Mr. Chair.
    Secretary Leavitt, you have been asked about workforce a 
lot, and I want to talk about the future workforce, the 
children of this Country. I was, to say the least, very 
disappointed in the Administration's budget proposal in its 
approaches to services for children.
    To remain competitive in a global economy, we need our 
children to be not just educated but well educated. We need 
them to be safe, and we need them to be healthy.
    Your budget flat funds maternal/child health in Healthy 
Start. It eliminates newborn hearing screening which is a very 
popular thing. It gets eliminated all the time. We know that if 
early detection for hearing loss is found, it makes all the 
difference in a child's ability to communicate and cuts down 
the special education costs, saves so much money for the 
Federal Government at the other end.
    You flat fund childcare and welfare programs at a time 
where families are struggling with rising fuel oil and food 
prices.
    Head Start gets a small increase. You were a governor. You 
know how many kids you had on your waiting list for Head Start, 
and I do not see us moving forward to really eliminate the 
waiting list for Head Start under this program.
    Now if you believe in investing and if you know in that 
investment you are going to have a return on your dollars, it 
would seem very shortsighted to me not to focus on and fund 
these children's services because we know scientific 
information is out there that there is significant improvements 
in their life and their health.
    So I do not know how we can expect to compete as a Country 
if we as a Country are not doing what is in our capability to 
make all children succeed. So can you tell me what is your 
rationale for flat funding programs?
    I want to point out something I do in my district. 
President Bush and I came to the Hill at the same time. He was 
in the White House, and I was in Longworth.
    But I can figure out math pretty good. If I have a program 
and it is cut, zeroed out, everybody comes in and scrambles. We 
fund it at 75 percent. Zeroed out the next year. Everybody 
comes in and scrambles at 75 percent. Zeroed out again.
    So this flat funding and these cuts are more than just this 
year. This has been going on for a long time.
    Can you tell me what your proposal is to do about the 
children in this Country who continue to be on a waiting list?
    Secretary Leavitt. Congresswoman, again, let me indicate I 
agree many of the proposals you have referenced have been 
proposals we have made several years concurring because we do 
not believe that they are an effective or efficient way to 
serve those populations.
    You talked about children's health. I will remind you that 
the President's budget has a nearly $20,000,000,000 increase 
for S-CHIP which will increase the number of children that are 
being covered. We believe that it is consistent with our view.
    Ms. McCollum. Sir, I asked you. Let's just stick with Head 
Start then because you just said Head Start is a program that 
did not work.
    Secretary Leavitt. No, I did not say Head Start. No, I did 
not.
    Ms. McCollum. You said we cut programs that did not work. 
That is why I am giving you an opportunity to go back.
    Secretary Leavitt. What you said earlier was we did fund 
Head Start with a slight increase, and then you listed a number 
of programs that we did not.
    What I suggested to you was there are a number of programs 
that we have year after year proposed that they either be 
reduced or eliminated.
    We have done that this year on the basis of whether they 
were providing direct services as opposed to infrastructure, 
whether it was one-time funding that may have existed. We 
looked at grant activity that, in fact, had been completed. We 
looked for programs where we were serving the same need in 
different places.
    Many of the programs that you have referenced, and you have 
given me a long list, fall into each of those categories.
    We also looked for places where, well, I think I have 
mentioned the fact that many of the programs you have talked 
about, we fund in different ways.
    Ms. McCollum. Well, sir, Head Start, the dollars that you 
have in this budget for Head Start will not even serve the 
current number of children we are serving, let alone address 
the waiting list.
    Secretary Leavitt. I do not think that is correct. We will 
fund, in fact, those that are there, and we will add to it. 
This budget accomplishes that. It does not take care of the 
entire waiting list, I acknowledge, but it does in fact cover 
more children.
    Ms. McCollum. How much is the increase for Head Start?
    Secretary Leavitt. One hundred and forty-nine million 
dollars.
    Ms. McCollum. One hundred and forty-nine million, does that 
cover transportation costs that the Head Start centers are 
going to have to absorb?
    Secretary Leavitt. Well, it is $149,000,000 more money. It 
is an additional appropriation. I suspect it will be different 
in every case. Every Head Start program will manage their 
program according to their priorities.
    Ms. McCollum. Secretary Leavitt, I would very much 
appreciate if you would break out for me how this current 
budget takes in account all the inflationary increases that we 
know are out there so that I know, at a minimum, no children 
will be removed from the Head Start rolls.
    Secretary Leavitt. I do not represent that we are covering 
inflation for every program.
    I am, however, representing that we are adding additional 
dollars to the Head Start program that by our calculation will 
not only cover existing children but a small population 
increase of others.
    Ms. McCollum. Mr. Chairman, if we are not covering 
inflation for programs, how can programs be expected to serve 
the same numbers?
    Mr. Obey. Well, all I would say is that it has long been my 
point that if you do not adjust for both inflation and 
population growth, then you in fact have a real per capita 
reduction in services in any program that does not do that.
    Ms. McCollum. Thank you, Mr. Chair.
    Mr. Obey. Very belatedly, Mr. Rehberg. I am sorry.

                                 LIHEAP

    Mr. Rehberg. Mr. Chairman, that was Archie on your 
shoulder, saying, do not forget me.
    Secretary Leavitt, I find myself in the unique position 
with the untimely retirement of Mr. Peterson of taking up the 
banner of natural gas. I hope I can get your charts to present 
to this Committee in particular because this Congress has a 
difficult time recognizing the connection between American 
energy and low income energy assistance.
    While we limit our access to our own supply and the very 
people, the majority of the people that are both voting and on 
the East and the West Coast that are exacerbating the problem 
are usually the ones that are stepping forward and saying, what 
about our poor that cannot afford their home heating because of 
the price of energy?
    The solution is American energy. We have natural gas off 
both our east shore and west shore that is inaccessible. Enough 
being said to that because I know this Administration is 
recognizing that.
    But in this budget then, the low income energy assistance, 
you have brought a budget forward that is at least $800,000,000 
less for low income energy assistance than in the last budget. 
Is that in anticipation that Congress is going to come to their 
senses and open up new sources of energy because the price of 
energy is going up?
    Or, is it a recognition that we will always backfill with 
emergency dollars and so Congress will do the right thing and 
appropriate the money to help the low income?
    Or, is it just you are using the money to balance the 
budget and Congress, you figure the problem out?
    Secretary Leavitt. Well, Congressman, without respect to 
making a statement on energy policy which is not in my 
portfolio.
    Mr. Rehberg. But you certainly understand the issue.
    Secretary Leavitt. I certainly do, and I thought your words 
were eloquent on that matter.
    We do have a commitment under LIHEAP to help those who have 
high energy bills and who cannot afford them, and we meet that. 
The Administration has long demonstrated a willingness to 
appropriate more money when it was needed.
    We estimated what we thought would be needed this year and 
put it in the budget. If it turns out we need more, then the 
Administration obviously would step up and support whatever was 
necessary to meet that obligation.
    Mr. Rehberg. I guess I do not understand how the 
Administration can take the position that it is anticipated to 
be less costly than the prior year based upon a 7 percent 
increase in natural gas prices, 50 cents per gallon in propane. 
Just the cost of the energy alone is going to force additional 
revenues necessary.
    Secretary Leavitt. If it turns out that is the case, then 
we will be happy to cooperate in solving that problem.
    Mr. Rehberg. Okay.
    One of the things that happens to us and you having been a 
governor and me being in the executive branch at one time as 
well, we tend to point fingers somewhere else other than 
ourselves. So we have a governor in Montana that is pointing a 
finger at you, saying, you did not get our low income energy 
money out to Montana soon enough.
    As we do the research, it looks as if you did it on a 
timely basis, but they did not get it out in a timely way. 
There is somehow a lack of a sense of urgency within the State 
of Montana to distribute the funds.
    And so, I guess my question is do you, within the 
Administration, have a mechanism that requires States to get 
the money out to the people that need it in a timely fashion so 
that we do not have all the finger-pointing because a sense of 
urgency does matter when people are cold?
    Secretary Leavitt. We allocate on as timely a basis as we 
know, or know how to, the money when it is needed.
    Mr. Rehberg. But do you require then the States to turn it 
around?
    Secretary Leavitt. The States essentially act from that 
point forward on their own timetables.
    Mr. Rehberg. Could there be or should there be some kind of 
a mechanism within our appropriation or maybe an authorization 
requiring the States to have a rapid turnaround because you can 
see the problem?
    It happens with bureaucracies. They sit on the money or 
they have their own thing they have to go through. At a time of 
emergency, which is what I assume low income energy assistance 
is supposed to be about, should not there be some kind of a 
mechanism requiring States to turn the money around faster?
    Secretary Leavitt. Again, the federalist in me will come 
out here and suggest that I think we are probably better off 
maintaining a limited role of the Federal Government and 
allowing those who are closest to the problem. Now, if they do 
not respond, then their voters ought to hold them accountable, 
but our job is----
    Mr. Rehberg. But they are blaming you.
    Secretary Leavitt. Well, there is nothing new about that. I 
have come to understand that that is part of this job, but 
another part of the job is to make certain people have LIHEAP 
funds when they need it. We will do our best to meet that 
demand.

                          COMMUNITY PHARMACIES

    Mr. Rehberg. The second question then having to do with the 
community pharmacies, and thank you for the community health 
centers. They are working very efficiently and effectively in 
Montana.
    Mr. Peterson, I have 67 hospitals in my district. So I 
certainly know what rural health is all about.
    The rural pharmacies are having difficulty because of the 
reimbursement time in the Medicare Part D. Is there something 
going on within your Administration to speed up the time 
difficulties in the reimbursement?
    Secretary Leavitt. Well, we have made clear to the payers 
or to the plans that they need to meet their contractual 
obligations, and if they do not meet their contractual 
obligations, then we are prepared to use the force of Federal 
law to assure that they do.
    However, the problem with the pharmacy, between the 
pharmacies and the plans is that they have negotiated 
contracts, and the pharmacies and the plans need to work out 
different reimbursements if, in fact, that is not meeting the 
need of rural pharmacies.
    Mr. Rehberg. Unfortunately, part of the problem is that the 
plans do not necessarily have to negotiate fairly with the 
small rural pharmacies, and so they are at a negotiating 
disadvantage. So it would be nice if you had the ability to 
require the plans, if they file electronically, to do it in a 
much more timely fashion.
    Mr. Obey. The gentleman's time is expired.
    Mr. Honda.
    Mr. Honda. Thank you, Mr. Chairman.
    Welcome, Secretary Leavitt.
    Secretary Leavitt. Thank you.

                              TUBERCULOSIS

    Mr. Honda. Under the CDC budget justification, you indicate 
that there is a decline of TB cases in the United States. 
However, you have a designation called the CDC Metropolitan 
Area for Special Attention relative to TB, and that is where 
Baltimore, San Francisco and New York City have a funding level 
of about $10,000 per case of TB.
    Santa Clara County, however, has only $4,000 per case. In 
California, we represent probably the largest incidents, well, 
20 percent of the Nation's TB cases, and Santa Clara County has 
the largest incidents of that. What do we have to do in order 
to have the same funding level as the other three cities or how 
do we become a CDC Metropolitan Area for Special Attention 
relative to TB?
    [The information follows:]

                              Tuberculosis

    Secretary Leavitt: The number of TB cases in the U.S. has declined 
by almost 50% since 1992, due to the successful implementation of 
effective TB prevention and control strategies. CDC publishes TB 
surveillance data by state as well as metropolitan statistical area 
(MSAs) with populations greater than 500,000. In California, the 
following MSAs have the highest number of cases of TB in 2006 (in 
descending order): Los Angeles, San Francisco, San Diego, and Santa 
Clara. Only a few large cities in the United States receive direct 
funding from CDC for TB control. Most large cities in the United States 
receive federal funds from allocations made to them by the States. In 
addition to allocating federal funds to local governments, the States 
(primarily public health departments) provide vital support to TB 
related activities including: surveillance, training, outbreak 
response, and medical consultation.
    At percent, CDC allocates 35% of its TB grant funds based on 
current case numbers and other factors complicating the treatment of 
those cases. As a result of the TB formula, CDC increased funds 
allocated to the State of California by slightly over one million 
dollars (adjusted for a Congressional rescission) in FY 2008. In turn, 
it is our understanding that the state of California distributed its 
funding using a formula that was determined by the State.

    Secretary Leavitt. I do not know the answer to that. I 
would be happy to respond to you in writing as to what the 
formula is, but sitting at this table today I do not know the 
answer.
    Mr. Honda. Sure, okay. It might be helpful also if you 
would direct us to an individual that we can work with also.
    Secretary Leavitt. Thank you.

                               HEPATITIS

    Mr. Honda. In the area of hepatitis, the Division of Viral 
Hepatitis has essentially been flat funded for the past four 
years, and it has been stated before that flat funding is 
essentially a passive cut, if you will, in budgets.
    It was stated that the acute hepatitis cases have 
decreased, but the number of chronic cases continues to grow. 
In the area of Hep B, that is about 100 times more which is 100 
times more infectious than HIV. In some communities such as 
Asian American communities, Hep B has high incidents.
    I was concerned that those who do not receive treatment 
will essentially end up with cirrhosis of the liver or liver 
cancer. In light of those costs to our Country both in human 
costs and real costs, I would like to just indicate that and 
urge CDC to look at it again and find ways to increase the 
funding at least in those areas.
    I understand that you are trying to meet what we call 
fiscal responsibility, but I think that given the ways we have 
been spending money in the last few years, we might be able to 
find ways to sort of get a bit more money in that area.
    Secretary Leavitt. I was, earlier this week, visiting some 
homeless shelters, and I spent time on a van that is in part 
paid for, in major part paid for by programs you have spoken of 
where we go out into communities and seek out those who might 
be suffering. I was told by a physician who operated the van 
that hepatitis is one of the most common things they are seeing 
and while it is not necessarily increasing, they see it on a 
regular basis.
    So your words resonate with me. I understand what you are 
saying.
    Mr. Honda. Yes. That might be Hep C.
    Focusing just on Hep B which affects a population of about 
12 million, that is Asian Americans in this Country, and these 
are not homeless folks but people who travel a lot or people 
who do not know that they are carriers.
    We know that there are ways to treat it if we can find it 
in time. Having community programs like health fairs where we 
can test folks, we might be able to prevent a greater cost in 
the future in terms of the chronic forms of Hep B.
    Secretary Leavitt. Well, thank you for informing me.
    Mr. Honda. Perhaps you folks can look at that and maybe 
work with our community. Thank you.
    Thank you, Mr. Chairman.
    Mr. Obey. Mrs. Lowey.

                              SKIN CANCER

    Mrs. Lowey. Thank you and welcome, Mr. Secretary. The 
absence of many of us have nothing to do with the interest of 
this hearing but other responsibilities at other committees. I 
am delighted to have a chance to have a conversation with you 
about a few key issues that have been concerning me.
    You know that over one million in the United States are 
diagnosed with skin cancer each year, and the cancer is 
preventable with the proper use of sunscreen. But what we have 
seen in many of these studies is people who lather themselves 
with sunscreen. If it does not protect against the appropriate 
UV rays, it does not do them any good, and they are the ones 
that are getting melanoma and other kinds of cancers.
    Unfortunately, as you know, there are no standards for how 
much protection sunscreens must provide against the ultraviolet 
rays that cause skin cancer. I introduced legislation last year 
requiring the FDA to create such standards and HHS to conduct a 
public awareness campaign about the dangers of overexposure to 
the sun and ways to protect oneself.
    Last August, in response to my legislation, the FDA 
proposed new standards that will better inform consumers of the 
level of protection that a product offers against skin cancer-
causing rays.
    Now I understand that FDA is not under the jurisdiction of 
the Committee, but I would expect that you would be working 
with Commissioner von Eschenbach on this issue. So, first of 
all, I would like to know when the final rule on sunscreen 
regulations will be issued.
    You probably know that the last time this scenario took 
place was 1999, and there was never a final rule. It sat on the 
shelf for years and was never fully implemented. I understand 
this time that there is similar pressure from some 
manufacturers to indefinitely delay the rule yet again, which 
is beyond me.
    I cannot understand it because there are products that 
exist. Why, when you go in to buy sunscreen, there currently is 
a seal of the American Cancer Society, and all it means is they 
contributed to this effort. It has nothing to do with 
validating the product.
    So I would like you to commit to me today that this will 
not happen again. It is outrageous that we do not have specific 
guidelines that are mandated and that the industry should be 
able to prevent this from becoming final.
    Number one, I would like you to do that, and I would like 
you to commit to implementing a public awareness campaign on 
sun safety and skin cancer prevention at HHS.
    Secretary Leavitt. Congresswoman, those both seem to be 
rational requests, and I will respond with respect to 
information on the rule. I am aware that there are, in fact, 
campaigns that are done at HHS. Interestingly enough, when I 
was at EPA we had a campaign on skin cancer related to the 
rays.
    So I will check on both and get back to you. I do not have 
solutions today. I do not have a response for you today.
    Mrs. Lowey. Well, I would just respectfully suggest that we 
need you to make it clear that one million deaths from skin 
cancer is unacceptable and that they have to move and get this 
rule final. Actually, the rule is a pretty good one compared to 
1999. Because of all the additional information, we are making 
progress.
    So I would hope that you would make it very clear that it 
is unacceptable to let this sit on the shelf while people are 
dying from skin cancer.
    Secretary Leavitt. I have a scar right across my nose that 
is a very good reminder of all of that. Thank you.
    Mrs. Lowey. I thank you, and I would appreciate your 
getting back to me.

                                 AUTISM

    Another issue that is astonishing to me, to see the growth 
of autism. I go to the march every year in my district. There 
are tens of thousands of people who have autism in their 
families, and the Federal Government has recently increased its 
commitment to autism research, diagnosis and tracking.
    However, there continues to be a great need for information 
on effective treatments, interventions, services. I hear from 
families. They will go from one place to another, all day long, 
with their youngster to try and get the treatment that they 
need, and they have difficulty finding trusted sources of 
information. They are overwhelmed, frankly.
    So I would like to know what activities, if any, already 
underway at HHS are there to assist families with autistic 
children and is the Department collecting best practices or 
models created at the State level when it comes to resources 
for families with autistic children that can be used at the 
Federal level?
    Secretary Leavitt. Much of that work is going on at the 
Centers for Disease Control and Prevention.
    About three or four weeks ago, I met with the board that we 
have assembled of experts around the country in every 
discipline, representing every perspective, to begin helping us 
allocate the money that Congress has appropriated for this 
purpose. I expect we will see a well-coordinated effort flow 
from their efforts, one that will have been informed by all 
perspectives as intended in the legislation.
    Mrs. Lowey. I thank you very much, and I am hoping we can 
get this information out as soon as possible because parents 
are just desperate.
    And, I thank you, Mr. Chairman.

                          UNIVERSAL HEALTHCARE

    Mr. Obey. Thank you.
    Mr. Secretary, at the beginning, you responded to our 
concerns about the tightness of this budget by saying that the 
Administration had to take seriously its fiscal 
responsibilities.
    Let me simply say, I hope you will forgive me if I take 
that response or at least that rationale with a grain of salt 
because this is an Administration which does not mind providing 
$51 billion in tax cuts this year for people who make a million 
bucks a year or more. They do not mind asking Congress for an 
extra $170 billion for the misbegotten War in Iraq. Then they 
try to reclaim the mantle of fiscal responsibility by cutting 
$18 billion out of items on the domestic side of the ledger 
that we just appropriated last December.
    It seems to me that something considerably different than 
fiscal responsibility is at work here, but we can disagree 
about that.
    Let me talk about the future. In my view, the next 
President is very likely to pursue passage of a universal 
healthcare bill. Let's assume that they do, and let's assume 
that it is based on an essentially private delivery system.
    It seems to me that what this Committee needs to be looking 
at is the question of which programs under our jurisdiction 
need to be beefed up in order to prepare for the eventuality of 
universal health coverage. You have to beef up certain aspects 
of the system, and yet it seems to me that a number of programs 
that the Administration is cutting are some of the very 
programs that we will need to, in fact, buttress if we are to 
meet the new world with universal health coverage.
    Yet, you are recommending nurse training reduction, $46 
million; health professions training, $194 million reduction; 
National Health Service Corps reduced by $2 million.
    We have already heard a lot of talk about rural health. We 
have the children's hospital GME program terminated.
    We have the NIH budget essentially frozen. We have outcomes 
research cut by $9 million.
    Am I reading it wrong? Are these programs not programs that 
are going to have to be expanded in order for us to prepare 
ourselves for our obligations if we have universal coverage?
    Secretary Leavitt. Mr. Chairman, you and I had a brief 
conversation, and I have welcomed an opportunity to talk about 
this.
    I think one of the things we can agree on is that there is 
a widely held aspiration for every American to have health 
insurance. I think we could also agree that there are two 
philosophies on how to approach that. One has a different role 
for government than another.
    However, there are some things that I believe are common in 
those two visions and I believe that is the place where the 
Committee would be well intended or well directed to begin 
focusing on.
    One of them is in the area of how we can provide more cost 
and quality information for those who use the system. If, in 
fact, consumers were provided with that information, I believe 
we could begin to focus more on value and that many of the 
inefficiencies that I currently believe are in our system could 
then begin to be found.
    I do not find us to be particularly skilled or accurate as 
a society in being able to use government as the means of being 
able to eliminate the areas where there is inefficiency. I do 
believe if consumers had that information, if we organized our 
system, whether it was a universal system as you advocate or 
whether it was a more private system, that we would start to 
see.
    Mr. Obey. No, no, no. No, no, no. I mean do not equate 
universal with public. That is a game that is often played when 
we talk about universal coverage. We are not talking about 
going to the Canadian system.
    We are talking about having everybody covered. You can do 
that under private approach just as much as you can do it under 
public approach.
    So do not set up that false dichotomy, please.
    Secretary Leavitt. Well, then let me pursue. I am heartened 
by those words. I can see a vision where quite clearly we could 
achieve every American having access to an affordable basic 
plan in a relatively short period of time.

                           OUTCOMES RESEARCH

    Mr. Obey. But here is my point: Let's skip a lot of these 
other programs. Let's take something as neutral as outcomes 
research. We are spending a hell of a lot of money in this 
country on medicine that is not the right medicine and is not 
the most effective way to deliver treatment for specific 
diseases.
    Shouldn't we be greatly beefing up outcomes research so if 
we are facing universal coverage with higher bills, we have 
ways to reduce those bills?
    Secretary Leavitt. There are three places that I would 
recommend you look seriously at funding in a way that would 
make a difference. The first is in electronic medical records 
because I think at the hub of that, at the hub of effectiveness 
research you will find the need to collect information on what 
works and what does not.
    The second area would be in measuring and developing 
measurable quality standards so that we know what we are 
measuring against when we measure, when we try to find 
effectiveness.
    The third would be making a more rational system of 
measuring cost where we are beginning to group cost into 
buckets of care that are meaningful to people both as consumers 
and as institutions.
    If we were to invest in those three things, our capacity to 
measure effectiveness would be enhanced dramatically. Right 
now, our capacity to measure effectiveness is impaired by our 
inability to gather information in a way that can be used in 
meaningful research.
    Mr. Obey. Okay. Let me move on.
    A lot of people in this country are getting increasingly 
terrified of the prospect of going to a hospital simply because 
of infection rates. What are you doing to see that the 
hospitals really get serious about this because, as you know, 
the performance level varies widely and some hospitals are 
incredibly careless in that regard?
    Secretary Leavitt. I would go back to the same response. We 
need to figure out who they are, and we need to expose them. 
When people understand which hospital in fact they go to that 
has more risk, they are going to avoid it and the hospital will 
change.
    Mr. Obey. What are you doing to try to intensify hospitals' 
attention to the problem?
    Secretary Leavitt. The first thing we are doing is 
gathering information, and we are publishing and providing 
information on hospital-borne diseases as fast as we can gather 
it. People deserve to know which hospital it is.

                                  NIH

    Mr. Obey. Absolutely. Absolutely.
    NIH, I have never had anybody come up to me and say, Obey, 
why don't you get your act together and cut cancer research, 
and yet over the last two years the NIH budget that you are 
recommending will have cut roughly 600 grants out of the NIH 
budget. Why is that a responsible action?
    Secretary Leavitt. Not every grant at NIH shows the promise 
in the third and fourth and fifth year that it does in the 
first year.
    Mr. Obey. The success rate for grants has been incredibly 
diminished over the last decade.
    Secretary Leavitt. We have been working at NIH with the 
available resources to prioritize those, and we continue to see 
a steady stream of new investigators.
    Mr. Obey. But you mentioned fiscal responsibility. It seems 
to me that we have a responsibility to make the investments 
necessary to reduce future costs. That is a savings too. It 
just does not happen to occur in this election cycle, but it is 
nonetheless important.
    Secretary Leavitt. I do not disagree with that.
    Mr. Obey. If you let me give you an example, if you take 
Lou Gehrig's disease, it is estimated we spend about 43 million 
bucks nationally on research on that disease. My understanding 
is you have about 30,000 people in this country who have the 
problem. If you measure the cost of that on an annual basis, 
you are probably looking at seven to eight billion dollars.
    Now, admittedly, we are far away from finding ways to treat 
or cure that disease, but you can take any disease you want to 
name and carry it out. We will be spending a huge amount of 
money over the next 10 years to deal with that disease. Doesn't 
it just make good sense from a fiscal standpoint to be upping 
significantly our research budget for NIH?
    Secretary Leavitt. Prevention in any form is the best and 
most efficient way, and you will get no argument from me.
    When you look at, however, where the money for research is 
going, when you look at where the money in States is going from 
public health, when you look at where money is going away from 
education, it is because we are paying higher healthcare costs. 
It all goes back to the need for us to begin to constrain the 
cost of healthcare.
    Now, does that mean adopting Medicare reductions in the 
growth rate? Well, I mentioned earlier I have a lot of 
skepticism about that system.
    What I do believe can happen is if we begin to create a 
system where people have access to information and we have 
comparative effectiveness information, where we have some way 
for people to know whether they are getting their money's 
worth, we will see the quality go up and the costs go down.
    Mr. Obey. I think that is just fine.
    Secretary Leavitt. And we can put more money in NIH and 
cure more diseases. It is the inefficiency of this system that 
is driving the problem you are mentioning.
    Mr. Obey. With all due respect, let me grant that what you 
say is partially true. But at the same time, within the budget 
this year, if you take a look at the budget broadly, the 
Administration has chosen to conclude that tax cuts for 
millionaires are more important than added research for medical 
problems.
    I know that is not your decision to make, but I think the 
question is much more broad than simply inefficiencies in 
healthcare.
    Secretary Leavitt. But I do think it is related in that the 
Administration believes that what is vital to having the money 
to fund any of this is a vibrant economy, and they believe that 
by having money in the economy and leaving it in the hands of 
people who use it to generate wealth and enterprise, that it 
stimulates more jobs and more taxes and, hence, the ability to 
do it.

                                 LIHEAP

    Mr. Obey. I do not happen to believe in the trickle-down 
theology, but we can have that debate another time.
    LIHEAP, you know we can talk all we want about how that 
program is targeted between one State and another, but the fact 
is you have a 22 percent reduction in that program in your 
budget request. That is really at the 2001 level. You have had 
energy prices go up by 65 percent during that time.
    I have people in my State. It was 38 below zero three 
weekends ago. Two weekends ago, it was 26 below zero, and I am 
not talking chill factor. I have people in my district with 
bills, heating bills, of four and five thousand bucks.
    Now there is a moratorium on the fuel company shutting off 
the supply until April, but then that moratorium expires. Where 
in hell are these people going to find the help to pay that 
kind of heating bill if they are making 15 or 18 grand a year?
    How can I, with a straight face, say, it is perfectly 
reasonable to give $51 billion in tax cuts to millionaires but 
cut this program by 22 percent?
    Secretary Leavitt. It is probably not just a tax policy 
issue. It might be an energy policy issue too.
    Mr. Obey. Absolutely. We are paying the price because since 
Jimmy Carter walked out of the White House no President has 
been worth a plug nickel in terms of energy policy in either 
party in my view.
    Secretary Leavitt. I have a lot of opinions. It is not in 
my portfolio. So, maybe over lunch, we can talk about that. I 
would very much, Mr. Chairman.
    Mr. Obey. This is so bad, I would rather do it over a drink 
rather than lunch. [Laughter.]
    Secretary Leavitt. Mr. Chairman, I would, however, like to 
have some time a very serious conversation.
    When we talk about our healthcare system, we really do not 
have a healthcare system. What we have is a big, unwieldy 
healthcare sector. There is nothing in it that would 
approximate a system, and we have to get serious about creating 
an economic system out of healthcare.
    Mr. Obey. I absolutely agree with that, and that is why I 
think that Medicare reform has to come in the context of 
overall healthcare reform in the Country.
    Secretary Leavitt. Amen to that and both of them need to 
begin to be more sensitive to real value.
    The budget I presented to you today is a pro forma based on 
a spreadsheet. The system itself does not allow us to start 
talking about reform. This is not reform. It is a budget. We 
have to have a serious conversation about reform.
    Mr. Obey. I understand, but again that is above my pay 
grade and yours.
    Secretary Leavitt. It is certainly in our avenue of 
interest.
    Mr. Obey. Our responsibility is for the moment to deal this 
year with this set of programs in the Subcommittee, and so let 
me simply close by saying what I said in the beginning.
    We are not going to buy this kind of cuts in the low income 
heating assistance program. We are not going to buy the 
elimination of vocational education. We are not going to buy 
the elimination of the SEOG student aid program. We are not 
going to buy the kind of deep reductions in health professions 
training that this budget contains, and I honestly do not think 
that the Administration expects us to.
    So I hope that recognizing that we can sit down with the 
Administration and work out a reasonable compromise between 
where you want to go with your budget and where we think we 
ought to go.
    Secretary Leavitt. Thank you.
    Mr. Obey. It would be nice if we did something besides 
shake our fingers at each other for the next eight months. It 
would be nice if we could actually get something done.
    Thank you. We appreciate your coming.

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                                          Wednesday, March 5, 2008.

                    HEALTH ISSUES AND OPPORTUNITIES

                               WITNESSES

ELIAS A. ZERHOUNI, M.D., DIRECTOR, NATIONAL INSTITUTES OF HEALTH
JULIE L. GERBERDING, M.D., M.P.H., DIRECTOR, CENTERS FOR DISEASE 
    CONTROL AND PREVENTION, U.S. DEPARTMENT OF HEALTH AND HUMAN 
    SERVICES
TERRY L. CLINE, PH.D., ADMINISTRATOR, SUBSTANCE ABUSE AND MENTAL HEALTH 
    SERVICES ADMINISTRATION, U.S. DEPARTMENT OF HEALTH AND HUMAN 
    SERVICES
CAROLYN CLANCY, M.D., DIRECTOR, AGENCY FOR HEALTHCARE RESEARCH AND 
    QUALITY
    Mr. Obey. Well, good afternoon, everyone.
    This morning, we held a very interesting hearing. We had a 
variety of panelists talking to us about what this Committee 
should be doing by way of strengthening programs within the 
jurisdiction of this Subcommittee to prepare for what I believe 
to be the reality that the next President is going to have no 
choice but to deal with the issue of universal health coverage. 
It would be kind of nice if we were ready for that, and it 
would be kind of nice if we were spending money on things that 
actually worked especially since a lot of that money is going 
to be the taxpayers'.
    We also talked about the fact that so often in 
appropriations hearings we talk in dollar terms rather than 
human terms, and when we do talk in dollar terms we usually 
talk in terms of what it costs to do A, B or C or D in any 
given field. But what we also need to do is to balance that off 
by asking what does it cost us not to do certain things. And 
so, that is what I would hope our witnesses could focus on and 
remind us of today.
    For instance, doctors, when we had the meeting in the 
Speaker's office earlier this year, I used the example of Lou 
Gehrig's disease. We know that the Country spends a little over 
$40 million, it has been estimated, to try to understand that 
disease. But we have, what, 30,000 people who are afflicted 
with that disease, and it costs us many times that amount in 
lost wages, in medical treatment, et cetera, et cetera.
    So I think we would be more inclined to invest more money 
in some of these research efforts, in some of the public health 
efforts and a number of other areas if we gave as much 
attention to what it costs us not to proceed as it does to 
proceed.
    I think my attitude toward the Administration's healthcare 
budget this year is well known. I have minimum high regard for 
it, to put it politely. Nonetheless, the budget is here.
    The Administration has submitted a budget that freezes all 
funding for biomedical science, spends $475 million less than 
last year on critical public health promotion and disease 
prevention programs at CDC, cuts funding for healthcare 
outcomes and effectiveness research below last year's level, 
and cuts funding for substance abuse and mental health 
treatment and prevention activities.
    I think we need to face squarely what these programs cost 
us, but I also think we need to face squarely what the 
consequence of inadequate attention to these problems winds up 
being for the Country, and that is what I hope we can cover 
today. So I will happy to call upon the witnesses for whatever 
comments they want to make after I have asked Mr. Walsh for 
whatever comments he might have.
    Mr. Walsh. Mr. Chairman, we have a lot of witnesses before 
us. I think I will just allow them to go ahead and proceed and 
hopefully have some questions afterward. But thank you for 
holding this hearing, and we welcome the witnesses.

                           Opening Statement

    Mr. Obey. All right. We have with us Dr. Elias Zerhouni, 
Director of the National Institutes of Health; Dr. Julie 
Gerberding, Director, Centers for Disease Control and 
Prevention; Dr. Terry Cline, Administrator, Substance Abuse and 
Mental Health Services Administration; and Dr. Carolyn Clancy, 
Director of the Agency for Healthcare Research and Quality.
    Dr. Zerhouni, why don't we begin with you? Did you bring 
your musical instrument?
    Dr. Zerhouni. Thank you, Mr. Chairman.
    Mr. Obey. You are not going to answer that question? 
[Laughter.]
    Dr. Zerhouni. I am sorry.
    Mr. Obey. You didn't bring it?
    Dr. Zerhouni. I was trying to avoid answering it because I 
think that instrument would be the focus of attention instead 
of the NIH.
    I thought it was a great opportunity to come in front of 
you and members of the Committee to explain, the overall 
strategy of the NIH and focus my comments on the highlights of 
the testimony we have submitted for the record. I've identified 
four essential points that I think need to be understood to see 
where medicine and discovery and healthcare need to go over the 
next few years.
    The first point I would like to make is the investment of 
the American people in the NIH has paid dividends that are 
difficult to overstate. The reduction in mortality of heart 
disease alone by 70 percent and stroke by 70 percent has 
allowed an economic return that is much greater than the 
spending that we incurred in terms of researching heart 
disease.
    I think we have made progress on many fronts to the point 
where acute diseases that were short-term and lethal in the 
past are no longer the main challenge. The main challenge has 
become chronic diseases, and chronic diseases represent 75 
percent of our expenditures.
    It is clear that this rise of cost in healthcare is 
unsustainable. No one today believes that there is a 
straightforward strategy to sustain these costs over time. No 
one believes that what we have done in the past and the 
strategies we have followed in the past are going to be 
effective in the future.
    As Einstein said, a bad scientist is a scientist who keeps 
trying the same thing, hoping for different results. We have to 
change our strategies.
    The challenge in front of us, obviously, is that in the 
past, a certain paradigm of healthcare was to strike the 
disease once it had struck the patient--waiting for the disease 
to really appear before we did anything. This sort of late 
reactive episodic type of care is no longer what will be needed 
in the future to manage chronic diseases.
    We will have to be more proactive and this is what we call 
the new era, whereby the research we do enables us to 
understand disease at its beginning before it strikes the 
patient. We call this the four Ps of modern medicine.
    We need to be more predictive. We need to find the markers, 
whether it be genetic markers or other markers that identify 
the risk of an individual.
    We need to understand the environment.
    We need to understand how to prevent disease. In many 
cases, we may not be able to do so but we need to continue our 
efforts to find ways of delaying the onset of the disease or 
reducing its complications and continue to do the research 
needed to alleviate the suffering of millions of patients who 
currently suffer from these diseases.
    So the landscape of disease has changed. Our strategies 
have to change, and those strategies have to be a lot more 
proactive, more prospective than they have been in the past.
    The NIH will continue to do the research we do today but 
also expand into new areas of science, areas of science that 
will allow us to understand not just at the atomic level or 
molecular level but also at the cellular level, the tissue 
level, the organ level, the mind and body level, all of the 
components that lead one from a healthy life, healthy status to 
an unhealthy status. Therefore, the scope of our research has 
grown.
    Last but not least, I would like to say that life sciences 
are going to be the critical challenge of this century for any 
nation, just like physical sciences were in the past century. 
Those who develop the knowledge to overcome the challenge of 
rising healthcare costs and find a way of not just improving 
how they deliver care but what care is being delivered are 
going to be the nations that will sustain their 
competitiveness.
    This will require us to focus, which is my last point, on 
the next generation of scientists. Nothing keeps me awake at 
night more than the fate of early career scientists who get 
discouraged from entering science at a time when the Nation 
needs more scientists, more engineers from all walks of science 
to be able to meet those challenges.
    Our budget reflects these priorities. We try to maintain a 
number of investigator-initiated grants. We try to create 
programs that encourage early career scientists to remain in 
science to the greatest extent possible.
    Those are the comments I wanted to make to highlight the 
priorities that the Agency has at this point. I will relinquish 
the rest of my time for questions.
    [The information follows:]

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    Mr. Obey. Dr. Gerberding.

                           Opening Statement

    Dr. Gerberding. Thank you very much. It is a real honor to 
be here and to have a chance to appear with my colleagues. I am 
sure I am going to learn a lot more from this hearing than I 
will contribute, and I am very grateful for that.
    I would like to pick up where Dr. Zerhouni left off and 
talk a little bit about how health happens.
    There are three questions that plague us at CDC. One is 
why, if we are the Nation that spends the most on health, 
aren't we the healthiest Nation? We are actually 37th in the 
world according to the WHO. Why might our children have shorter 
lifespans than their parents and, fundamentally, why is obesity 
becoming a national security concern in the United States?
    I think those are all three reflections of the fact that we 
just simply do not have the value in our health system that we 
need, and part of that has to do with, again, fundamentally 
rethinking about how health happens.
    So if I can have my slides, I want to just start with the 
traditional healthcare delivery system, starting with the 
discovery phase at the NIH and CDC and elsewhere, moving to 
patients through translation, bench to bedside, then 
translation into evidence-based practice guidelines, something 
my colleague Dr. Clancy knows a lot about, and from there 
really being translated into widespread clinical practice so 
that everybody can benefit and, finally, we hope, the fourth 
level of translation into achieving the kinds of true health 
outcomes and benefits to all people.
    The problem in our Country right now is that this last 
element is particularly blocked. People are worried about 
access and cost in care. It doesn't matter if you read the New 
England Journal or whether you are Republican or Democrat, this 
is a major concern for people everywhere, and we know that we 
have major problems in these areas.
    But even if we alleviated these problems, we would still 
not necessarily have the health that we want because the health 
in our Country has more to do with things that happen outside 
of the doctor's office than it does with thing that happen 
inside of the doctor's office. That is where the public health 
system comes in, and that is why the investments that we make 
there are so very, very important.
    So we think that there is a comparable highway to health 
that is not one that is receiving the attention that it 
deserves, but one that is equally, if not more, important in 
getting us to a healthy Nation.
    It starts again with research. That gets translated to 
people in communities and schools and the workplace. From 
there, we develop public health practice guidelines, evidence-
based practices, the things we know work. Then we need to 
translate those into widespread uptake so that health 
departments in communities everywhere can benefit from them. 
Finally, then, we see that health, as we measure it in a 
holistic way in our society, ultimately will be achieved.
    Both of these highways have to be functional, and 
investments in both of these areas contribute to people's 
health and, I think, ultimately to our ability to be one of the 
healthiest nations in the world, a status that we do not 
currently enjoy.
    There are lots of things that we know work and lots of 
things we can talk about scaling up, ways we can put health and 
policies beyond the policies in this Committee, health in 
agriculture, health in transportation policies, health in 
commerce policies.
    I think there is also a very important need to market what 
we know works and to get it diffused and disseminated and taken 
up widely, using some of the new technologies that we have at 
our disposal today so that people everywhere can benefit.
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    Mr. Obey. Dr. Cline.
    Dr. Cline. Mr. Chairman, members of the Subcommittee, thank 
you very much for the opportunity to be here today. I would 
like to request that my written testimony be submitted for the 
record.
    During my tenure as SAMHSA Administrator, I have had the 
benefit of traveling across the Country and seeing the amazing 
results of SAMHSA-funded work. I have seen men and women 
reunited with their children after conquering addiction. I have 
seen people who are managing their mental illnesses and getting 
jobs and reclaiming their lives and becoming contributing 
members of our society.
    At SAMHSA, helping more people have that opportunity to 
achieve these same results is a focus of work. We have also 
been working to move upstream to prevent many of these 
conditions from occurring in the first place by emphasizing the 
public health approach to well being, and I think this is a 
theme that you will see throughout the afternoon.
    I learned the value of taking that public health approach 
as a freshly minted psychologist on the streets of Cambridge 
and Somerville and Boston, Massachusetts. My first professional 
job was providing home-based therapy to families who were 
living in low income housing developments in those areas.
    So, as I walked to my appointments everyday, I would walk 
by many other families who I knew needed help as much as the 
family I was going to see, but I simply didn't have the time to 
work with the other families. I was only able to offer that 
therapy one family at a time.
    So, walking by 15 families that I knew were in need to 
reach that one family just didn't seem like the right thing to 
do. It certainly wasn't right to do that then. It is not right 
to do that today. Something significant needs to change.
    I remember thinking that there had to be a better way to 
deliver services. There had to be a better way to reach more 
people in need of mental health and substance abuse services in 
our Country.
    I thought of the opportunities with those families to 
intervene earlier. I thought of those opportunities to actually 
prevent many of the problems that they were experiencing from 
occurring at all. That experience is why I believe so strongly 
that we need to adopt a public health approach in our overall 
work that we do.
    The public health approach really involves us moving 
upstream while continuing the work that we are doing 
downstream. So while we continue to rescue those drowning 
individuals, we also need to move upstream and prevent to keep 
individuals from falling in the river in the first place.
    The public health approach, as you know, recognizes that 
behavioral health is inextricably linked to overall health, and 
the integration of these is valuable and necessary. That is why 
I am so passionately convinced that mental illness and 
substance use disorders should be and must be treated with the 
same urgency as other health conditions.
    One way to accomplish this goal of service integration is 
to strengthen the relationship with primary care providers. 
Primary care practitioners have access to a much larger segment 
of the population than we see in the specialty services. We 
need to take behavioral health services to the people where 
they are and not wait until people are in crisis.
    By encouraging healthcare professionals to identify at-risk 
populations and to intervene early in their lives, we can 
significantly reduce the burden of substance abuse and mental 
illness among Americans and our social institutions.
    There are several models of primary healthcare and 
behavioral healthcare integration. One particularly useful 
model focuses on behavioral health screening through primary 
care. So I would like to talk just briefly about that.
    For example, through one grant program that focuses on 
substance abuse, SAMHSA is implementing screening, brief 
intervention, referral and treatment services in trauma 
centers, emergency rooms, community clinics, federally-
qualified health centers and school clinics. These programs 
provide screening strategies for intervention before the 
individual needs those more extensive or more specialized 
services.
    So far, our grantees have screened over 545,465 individuals 
across our country. Of those screened, 22.9 percent of those 
individuals required a brief intervention, brief treatment or 
referral to a specialty treatment.
    At six months post-intake, 74 percent of those individuals 
reported lowering their drug or alcohol consumption after 1 or 
more brief interventions. So, of those individuals, 48 percent 
reported no substance use at all.
    Through technology and training, we must continue to keep 
working to bring new knowledge, treatments, preventive 
strategies developed by our research institutes to daily 
community-based practice. We have never, ever before known so 
much about the prevention and treatment of mental illness and 
substance use disorders. Now we need to actually do what we 
know.
    Mr. Chairman, members of the Subcommittee, I am optimistic. 
I look forward to the day when mental illness and substance use 
is treated with the same urgency as other illnesses.
    I look forward to the day when a public health model 
ensures that preventing illness is as much a priority as 
treating illnesses in this Country, and I look forward to the 
day when we have policies and systems in place that will build 
resilience and facilitate recovery. Then, and only then, will 
we have a truly rich and healthy Nation.
    I would like to thank you for the opportunity to be here 
today, and I look forward to answering any questions you may 
have. Thank you.
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    Mr. Obey. Thank you.
    We are halfway into a vote on the House floor. So I think 
we had best recess at this point, go over and vote and then 
come right back. We will then hear from Dr. Clancy.
    [Recess.]
    Mr. Obey. Dr. Clancy.

                             AHRQ'S MISSION

    Dr. Clancy. Mr. Chairman, members of the Committee, I am 
honored to be here today.
    As you may know, AHRQ's mission is to improve the quality, 
safety, efficiency and effectiveness of healthcare for all 
Americans as shown on this slide. So our mission is driven by 
the needs of people who use the research: patients, clinicians, 
health system leaders and policy-makers.
    A major focus for us is translating findings of our 
research into practice and policy, and to that end we work very 
closely with the organizations directed by my colleagues here. 
We also work as a science partner to CMS and have had the 
opportunity to collaborate with the VA and the Department of 
Defense as well.
    The next slide just demonstrates that while our research 
agenda is broad and spans promoting healthcare information 
technology to reducing medical errors to supporting comparative 
effectiveness to enhancing Americans' healthcare quality that 
they get right now. This map just shows that we have a broad 
geographic reach.

                   COMPARATIVE EFFECTIVENESS RESEARCH

    Today, I would like to highlight first for the Committee 
our work in the area of comparative effectiveness research 
which has been the subject of a great deal of interest 
recently.
    Under the MMA, AHRQ was authorized to conduct and support 
research with a focus on outcomes, comparative clinical 
effectiveness and appropriateness of pharmaceuticals, devices 
and healthcare services. The focus of this research is based on 
the top 10 conditions that are common and costly for those 
whose healthcare is funded by Medicare, Medicaid and S-CHIP 
programs. The list of priority conditions shown in the written 
statement was developed with substantial input from the public 
and private stakeholders.
    Since 2005, we have released 14 comparative effectiveness 
reviews. These reviews range from diagnostic evaluation of 
technologies for abnormal breast cancer screening to 
comparative effectiveness of drugs for depression to treatments 
for prostate cancer.
    As one example, one review found that drugs can be as 
effective as surgery for management of gastroesophageal reflux 
disease, better known as heartburn. This turns out to be one of 
the most common health conditions in older Americans and 
results in $10,000,000,000 annually in direct healthcare costs.
    Among the other topics are treatments for localized 
prostate cancer, a decision that many men and their providers 
are facing every day, as well as examining the benefits and 
harms of all oral medications for patients with Type 2 
Diabetes.
    We place a great deal of value in ensuring that our work is 
credible and scientifically sound, and we have made investments 
to make sure that the methods and processes for performing 
comparative effectiveness research are of the highest quality.
    We are very excited that our comparative effectiveness 
research is now being increasingly used by the Consumers Union 
in their Best Buy Drugs project and in other reports on health 
treatments. The National Business Group on Health is also 
making this research available to employers and their 
employees.
    I think that you are all aware how excited the CBO has been 
about the possibility for comparative effectiveness research to 
give us better evidence about which treatments work for which 
patients. Their report further suggests that this research can 
help reduce healthcare spending and improve quality and value.
    The bottom line, actually, is that doing the right thing 
for the right patient at the right time, using comparative 
effectiveness research to improve the quality of healthcare 
will enhance the value of our investments in healthcare.
    I want to thank you and the Committee for allowing us to 
double our investment this year from $15,000,000 to 
$30,000,000. We expect to double the number of reviews and 
technical briefs and so forth.

                     HEALTH INFORMATION TECHNOLOGY

    But it is very important to recognize that simply better 
research is not necessarily going to translate into better 
value. We have to be anticipating up front how this information 
will be used and how it can be immediately available to 
clinicians and patients when they are confronting tough 
decisions right now.
    So that is why the research investments that we have made 
in the use of health IT to improve healthcare right now are 
particularly important. They will allow health information 
technology and electronic medical records to gather better 
information to do future reviews and to also serve as a 
platform for putting that information into the hands of 
clinicians and patients now.
    Technologically, we know how to do this. When I logged on 
to Amazon not too long ago, they helpfully reminded me that 
Bruce Springsteen had a new CD out and they did not tell me 
that Britney Spears had any new work for me to be interested 
in.
    Technology is not the hard part. The hard part is having 
good content that clinicians and patients need today. We know 
that health IT is not a magic bullet.

                             PATIENT SAFETY

    I wanted to also just highlight for you some very important 
work we did in patient safety to give you a sense of the 
successes we have had. We supported a project at Johns Hopkins 
University which worked with all the hospitals in Michigan to 
implement a very simple checklist to reduce serious infections 
for patients in ICUs. Many of these hospitals were actually 
able to reduce that infection rate to zero.
    I heard a healthcare leader, not too long ago, refer to 
this as one of the most important developments in a generation. 
What he meant by that was when he and his colleagues were 
providing ICU care, they always thought that these infections 
were very tragic but unavoidable, part of the ticket price of 
admission for getting intensive care. Now this study was able 
to show that, in fact, they are almost totally avoidable and in 
some cases can be eliminated altogether.
    I wanted to also mention that very recently in the New 
England Journal, there was a terrific article called Eulogy for 
a Quality Measure. The title comes from the fact that it has 
now become such routine practice to give patients who have had 
a heart attack a drug called a beta blocker which reduces 
subsequent mortality. It happens so routinely now, which has 
not always been the case, that we no longer have to track it in 
quality report cards.
    This is a success story and suggests that measurement and 
public reporting is a good idea. That is the good news.
    The slightly less good news is the people actually did the 
landmark trial 25 years ago when I was a resident, and I think 
we can and have to move much, much faster to translate the 
investments that the taxpayers have made in scientific research 
into the healthcare that people get right now. I think 
investments in our essential programs will be pivotal to 
actually making that translation happen.
    Thank you very much.
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                               NIH BUDGET

    Mr. Obey. Thank you.
    Let me try to ask four quick questions.
    Doctor Zerhouni, I have said before that I have never had 
anybody come up to me in my district and say, Obey, why don't 
you guys get your act together and cut cancer research, and yet 
that is what the previous Congress and the President did. For 
two years, we actually reduced the number of research grants 
down at NIH.
    This year, you have a freeze. You have indicated that that 
means that we will lose about 6,000 scientists. Why should the 
Country give a damn?
    Dr. Zerhouni. I believe if you look at the impact of the 
below inflation budget, we need to understand that the capacity 
of our Country to react to both its current problems and its 
future problems will depend on a trained, committed, talented 
scientific workforce.
    Seventy to eighty percent of our expenditures, depending on 
what you do, is related to people, trained scientists. It takes 
about 20 years to train a scientist, and it costs about 
$100,000 a year.
    Every time we can't sustain our purchasing power, it hits 
scientists primarily and especially early career scientists. 
This is the concern that I expressed when I said that at the 
end of the day, all of this impacts people.
    This isn't just dollars. This is an investment in people, 
the people who know how to deliver better healthcare and the 
people who will deliver the new healthcare of the future.

                         GENES AND ENVIRONMENT

    Mr. Obey. One more question, there is a lot of focus on 
molecular biology, a lot of focus on genetic predisposition to 
certain diseases, and I understand that.
    But I guess one of the principal critiques of medical 
research in this Country on the part of some would simply be 
that while we invest a whole lot to try to understand that end 
of the equation, we are not doing nearly enough to figure out 
what the environmental triggers for some of these problems are. 
What would your response be?
    Dr. Zerhouni. I think there is truth to the fact that we 
need a multi-pronged approach. I think your genes are only half 
of the reasons why you suffer from a disease. The environment 
is just as important.
    The fact is we have environmental measures we feel at NIH 
are good at a population level, but they are not good at the 
individual level. The medicine we are talking about is going to 
have to be personalized to your own genetic risk factor and to 
your own environment. This is why the NIH launched the Genes 
and Environment Initiative two years ago to look at the ten 
most common diseases and develop new measures of environmental 
exposures at the individual level.
    So I agree that we need to do better in measuring both the 
environmental factors as well as your natural predisposition or 
risk profile. Both have to come together.

                          HOSPITAL INFECTIONS

    Mr. Obey. Dr. Clancy and Dr. Gerberding, as you know, the 
old maxim in healthcare is first do no harm, and yet a lot of 
people run into harm accidentally when they go to a hospital. I 
would like to ask both of you, what do you think can be done to 
send a message to every hospital in America that we are dead 
serious about their getting dead serious about doing some of 
the basic things that are necessary to reduce those 
unacceptable infection rates?
    Dr. Gerberding. I will start. First, let me thank you for 
asking the question because this has been my career. Hospital 
infections is where I started and why I came to CDC in the 
first place.
    I think the one thing we know for sure is that if you 
measure this problem and you require it to be reported either 
within the hospital or outside of the hospital, that it will 
improve.
    In our reporting system that we have operated for more than 
3 decades, we have seen a 50 percent reduction in these 
infections in the hospitals that participate and in other 
hospitals in Pittsburgh and Michigan where the problem has been 
accurately measured by people who know what they are doing. We 
can achieve dramatic reductions in these kind of preventable 
patient safety issues.
    But if you ignore the problem or you take a name-shame-
blame approach to it, it stays underground and it is only until 
something tragic crops up like the case of hepatitis C virus in 
Nevada right now that is related to an egregious medical error, 
that it really comes to the light and the public understands 
what the true hazards really are.
    So we need to measure it. We need to do the science to 
identify the interventions that work, and then we need to 
market those interventions as widely as we can and hold systems 
accountable for making sure that they are properly executed.

                                  MRSA

    Dr. Clancy. Just to build on that, let me say that this 
year we have the opportunity, thanks to this Committee, to 
invest an additional $5,000,000 squarely focused on hospital-
acquired infections with a specific focus on the methicillin-
resisitant staphylococcus avreus (MRSA) and we will be also 
looking for other sources of what is happening in nursing homes 
and so forth.
    This is very practical research, and a big focus of this 
research is actually going to be making sure that the conduct 
of the work is done in healthcare settings in such a way as 
that it becomes part of core practice.
    You know in the hospital, if you are in the operating room 
and you don't wash your hands or do the correct sterile 
technique, virtually everyone is empowered to tell you to stop. 
It doesn't matter how powerful a surgeon you are, whatever. The 
show stops then.
    You walk through those swinging doors out to the rest of 
the hospital and it is something like the wild west, and I 
think that is the approach we need for infections.
    If you asked patients who have been harmed by medical care, 
what they want, they want three things. They want an apology. 
They want to know what is going to happen to them. Is this a 
permanent injury or will I get better? And, they also want to 
know that the institution is doing everything it can to make 
sure this doesn't happen again to someone else next week, which 
happens all too often right now.

                      PATIENT SAFETY ORGANIZATIONS

    I am very pleased that we have out for public comment the 
regulation from the Patient Safety and Quality Improvement Act 
so that by the end of this year we will have the opportunity 
for hospitals, physicians and many others to work with patient 
safety organizations. They won't get more money for this, but 
it will remove the fear of liability from this equation because 
doctors agree with the three things patients want, but they are 
very worried about any information generated as a result of 
measuring and tracking that will be used against them.
    I will also say that CMS will implement, as you know, next 
year a plan to not pay for some types of harms done to 
patients, and I would say that has a lot of people's attention 
very squarely.

                          ACCESS TO HEALTHCARE

    Mr. Obey. One last question, the same question we asked 
this morning, if you take a look at all the programs over which 
this Subcommittee has jurisdiction, what are the three or four 
programs that you think we should most emphasize in order to 
increase access to healthcare?
    This morning's panel indicated that outside of doing basic 
medical research which is the most basic of all preventive 
actions, they suggested that we needed more funds into outcomes 
research, into State risk pools, into community health centers 
and in professional training, all to get us ready for the day 
when we do have universal healthcare.
    What would your response be to that question, whomever?
    Dr. Zerhouni. I think there are several factors that you 
will need to address to improve access to healthcare.
    If you look at the statistics, I think my colleague was 
mentioning statistics in terms of how much we pay and what we 
receive in terms of healthcare, levels of healthcare and 
performance. We do spend quite a bit more than equivalent 
countries. If you look at our expenditures relative to Germany, 
we spend 50 percent more than Germans, and it is hard to see 
where you would have a public health general population 
advantage.
    We do have better acute care and top-notch facilities that 
provide care that could not be achieved elsewhere.
    So, first is cost. Access is proportional to cost. If it is 
too costly, people cannot access care.
    The second is, in my view, to take into account the fact 
that medicine has to move from curative large facilities to a 
much more preemptive participatory type of medicine where 
community implementation of appropriate programs is going to be 
key to maintaining the health of the population.
    I think this shift to more dispersed facilities with modern 
technologies including health information technologies, with 
easy access to patients and communities and participatory 
approaches is the key to making sure that at the end of the 
day, you don't end up with an emergency room that is 
overwhelmed with problems that shouldn't be in the emergency 
room in the first place.
    A three-pronged approach which finds ways to reduce costs 
and redistribute where healthcare is provided. At the end of 
the day, understand that it is not just how we improve 
delivery, but managing what is being delivered.

                         PUBLIC HEALTH APPROACH

    Dr. Cline. Just to add a couple of clarifications to those 
points, one would be really in shifting the incentives that we 
see in our systems and moving those incentives to the front end 
in our healthcare system in places where we know that people 
are beginning to struggle with their illnesses. We see very 
effective programs that are able to screen and provide very 
brief interventions for individuals at the front end of their 
illness cycle, and we know that the outcomes are very 
impressive.
    So I would encourage, again, a realignment of those 
incentives away from the sole focus on the very, very acute 
level of care where someone is in crisis or in the emergency 
room but moving that to the front end, moving services where we 
find people in their natural elements. It may be school 
clinics. It may be other places where people are congregating 
on a regular basis.
    For people with mental illness and people with substance 
abuse and addictions, we know that when we don't provide that 
service up-front, eventually they will bump into our systems. 
Huge costs associated with that are borne by the public at 
large. So we need to shift those incentives to the front end.

                       ACCESS TO CARE AND QUALITY

    Dr. Clancy. When I think about what is under the 
jurisdiction of this Committee, I think the key question is 
access to what?
    Right now, what we are seeing as a result of the annual 
reports we submit to the Congress every year on quality is 
healthcare quality goes up every year 1 to 2 percent, a very 
small amount. The spending keeps going up in the ballpark of 7 
to 8 percent. So we have a big disconnect.
    Ultimately, to expand access, we have to make sure that we 
are getting the return that we want. So I think additional 
investments in research that help us identify what the highest 
value services and how do we provide them most efficiently is 
definitely going to be part of the foundation that we will need 
in thinking about getting to universal access to care.
    Dr. Gerberding. I would agree with Dr. Zerhouni that access 
is more than cost, although you have to allow for the cost to 
be affordable.
    It is also about awareness. Many people right now have 
technical access to care, but they don't avail themselves of 
the services because they are not aware of what they need or 
they are distracted by other priorities in their life.
    Some don't have the ability. I learned this in the AIDS 
clinic a long time ago. We had care for our AIDS patients, but 
many could simply not get on the bus and get there, or they 
were a mother with children and they didn't have child care or 
many other things that mitigated their ability to come in and 
get their anti-retroviral drugs.
    So true access has to embrace those broad issues.
    Having said that, from the Committee's perspective, I would 
also hope that we would be talking about access to health and 
not just healthcare delivery. In that light, thinking about 
what can the labor and education parts of the Committee do to 
encourage or incentivize or, through a policy mechanism, ensure 
that health can happen in the workplace or in our schools or in 
other community settings.
    Health isn't just about what happens in the healthcare 
delivery system, and there are lots of ideas that we have about 
policy mechanisms to create environments that are healthier for 
people or motivate people to be able to access health services 
in other contexts.
    Mr. Obey. Thank you.
    Mr. Walsh. Thank you, Mr. Chairman.
    Today, on the floor of the House, we are debating a bill 
that would require health insurance providers to provide for 
parity between physical health insurance and mental health, 
which is a good thing. There are obvious issues within that 
universe, that equation, that are difficult, but it is a goal. 
It is a worthy goal, and I think most of us support it.
    This is not analogous, but I am looking at the budget 
before me: National Institutes of Health, $29,000,000,000; CDC, 
$6,000,000,000; community health centers, $2,000,000,000; 
SAMHSA program level, $3,300,000,000. We are not spending 
anywhere near what we are spending on physical health through 
government services.
    I note that in every one of these categories the 
Administration has proposed a cut: 6 percent in the program 
level, 14 percent in mental health block grants, 2 percent in 
substance abuse treatment, 18 percent in substance abuse 
prevention, and there is also a proposed cut in homeless 
programs. We all know that most homeless people have a 
substance abuse problem of some sort.
    You made a very compelling statement at the beginning of 
this testimony, Dr. Cline, about walking past 15 families to 
get to 1. You are going to be walking past 17 or 18 families at 
this rate to get to that 1. Would you care to comment on the 
disparities here?

           SUBSTANCE ABUSE AND MENTAL HEALTH HEALTHCARE NEEDS

    Dr. Cline. Thank you for the opportunity.
    Today, in our country, we have 23.6 million people who are 
in need of substance abuse treatment and currently about 2.5 
million individuals who are receiving treatment at a specialty 
clinic.
    When we look at mental health and the need on the mental 
health side, we have about----
    Mr. Obey. Would you repeat that number?
    Dr. Cline. Twenty-three million, six hundred thousand who 
are in need and two million, five hundred thousand who are 
actually receiving treatment from a specialty clinic.
    On the mental health side, we have about 24.9 million 
individuals who are in need of services and about half of those 
individuals are receiving treatment.
    One of the findings that came out of the President's New 
Freedom Commission on Mental Health was that our system 
basically is fundamentally broken. We need to completely 
transform our system. It is not about adding a few more 
programs here, adding a few more programs there. We need to 
radically transform the way these services are delivered.
    As someone who grew up in this system as a psychologist, I 
can tell you, there was a time when we were very, very much on 
the margins of the healthcare system, if involved at all. We 
were certainly on the margins of the public health system, very 
much isolated, very much on our own.
    There may be developmental reasons that took place in terms 
of the field finding its own identity and putting its feet on 
the ground as a discipline. However, that has come at a 
significant cost, being isolated and marginalized from the rest 
of the system.
    So what we are proposing is that integration, that cross-
fertilization take place wherever possible because we have paid 
an incredible cost by being at the edges of the system.
    And, as a result of that, in the majority of States that 
you will visit and the majority of programs that you will 
visit, we are not talking about a healthcare system, we are not 
talking about a behavioral health care system. We are really 
talking about a crisis management system that is entirely 
reactive. You need to be very, very ill to be eligible for most 
services in most States.
    The equivalent, if you were in the healthcare system--I 
have used this example before--would be that you would go to 
your primary care physician, and complain about having pains in 
your arm and shortness of breath and dizziness and profuse 
sweating. The doctor would tell you to come back after you had 
a heart attack.
    That is what we have done in the mental health and in the 
substance abuse system. Wait until you are incredibly ill 
before you are eligible for those services.
    So we need that fundamental shift to be able to move to the 
front end, to completely transform. Tweaking it around the 
edges simply will not get us there. The gap is so huge at this 
stage.
    Mr. Walsh. Do you have a proposal?

                 MENTAL HEALTH PROMOTION AND PREVENTION

    Dr. Cline. Well, that proposal is to focus on early 
intervention. As part of our budget proposal, we are proposing 
an increase to the Children's Mental Health Services Program.
    We just recently directed a report to Congress that is 
focused on promotion and prevention in mental health, 
strengthening resiliency, strengthening parenting and enhancing 
resiliency. Those were concepts that were alien to this field 
only five or ten years ago, the idea of prevention and 
promotion in mental health.
    So we are moving radically in that area, but again it takes 
that complete transformation.
    One of the things that has taken place, again as a result 
of the President's New Freedom Commission on Mental Health, is 
a Federal executive steering committee which is made up of 
representatives across nine different cabinet levels in the 
Federal Government, where all of those representatives of the 
agencies are coming together with a specific focus on 
behavioral health as it affects all of these different areas 
and looking at those areas.
    Mr. Walsh. If I could because time is limited, those are 
all worthy goals, but you can't get there, going backwards on 
your funding. It is pretty simple.
    Just one thought, at our veterans hospital in Syracuse, 
there is an agreement between the hospital and the psychiatric 
community that everyone who goes for any level of treatment 
will get a holistic examination, physical and mental health.
    It is unusual, it is unique, and it is a pilot program. But 
I think it will be very interesting to see what is determined 
by that program, and it may have applications for the broader 
society.
    Thank you.
    Dr. Cline. Sounds like a wonderful program. Thank you.
    Mr. Obey. Thank you.
    Just to back up what Mr. Walsh is talking about, mental 
health treatment and prevention, cut $127 million, substance 
abuse prevention cut by $36 million. That is like scoring a 
home run by going to third base first. It doesn't work very 
often that I have seen.
    Who is next?

                          VACCINE FOR CHILDREN

    Ms. Roybal-Allard. Dr. Gerberding, the Vaccines for 
Children program has been admittedly successful and, for the 
most part, childhood immunization rates in the United States 
are enviably high. However, CDC recently released new data on 
immunization rates showing that adults continue to be woefully 
under-vaccinated.
    Given the fact that approximately 50,000 adults die from 
vaccine-preventable diseases each year, in your opinion, what 
are the major barriers to adult immunization?
    Dr. Gerberding. There are several different barriers, and I 
should mention in the same breath adolescent immunization which 
is also extremely challenging, now that we have these wonderful 
new vaccines for adolescents, but we don't have the kind of 
structured system for delivering them.
    One barrier, obviously, is that patients don't have a 
uniform medical record and don't understand when and how many 
and how often their vaccines should be delivered. So one is a 
patient barrier.
    A second is a system barrier where absent appropriate 
health information records that travel with the patient from 
point to point. It is impossible to really keep track of who 
has been vaccinated when vaccines are due or what vaccines are 
needed.
    There are also issues around access to care and cost, co-
payments and so on and so forth. We are seeing with the 
influenza vaccine, where we have an excellent reimbursement 
rate for Medicare patients and an excellent system for 
delivering it, that we still have individual barriers for 
people just deciding they don't want to get their vaccine for 
whatever reason even when they know they should have it and 
they have access to it.
    So a lot of work needs to be done in this area to really 
achieve the promise.
    We monitor influenza vaccine because it is the easiest to 
keep track of, but when we really assess adult vaccines across 
the board, it is a missed opportunity to really save lives and 
save hospitalization. So it needs to be a higher priority.
    Ms. Roybal-Allard. Given the success of the Vaccines for 
Children program, what are your thoughts of having a Vaccines 
for Adults program that would give poor and uninsured American 
adults access to lifesaving vaccines?
    Dr. Gerberding. Well, I think we need systems that not just 
deliver a vaccine here and there, but actually track and 
monitor people over the course of the many places where they 
receive health services.
    So I actually think one of the major missing pieces to 
accomplish what you are suggesting is a health information 
record or at least a vaccine record. This record may start when 
you are zero years old but stays with you throughout your 
lifetime so that wherever you are, you know what you need and 
anyone can easily identify that.
    We have adults with many points of contact with the system, 
but you may not recognize that this would also be a good time 
to give you your tetanus shot or your flu shot or your 
pneumococcal vaccine or whatever else it is that you need. We 
just have too many missed places because providers can't put 
their hands on the information that would tickle them to know 
what they need to do.
    Ms. Roybal-Allard. Well, given a recent survey that has 
shown that few Americans really know what it is that they need, 
what would your thoughts be about having an adult immunization 
media campaign to raise awareness?
    Dr. Gerberding. I would love it. I would absolutely be 
thrilled to be able to do that.
    I think it is a well-known fact at any age group that 
vaccines are cost-saving, not just cost-effective but cost-
saving. It is one of the best investments we can make in health 
and to have the capacity to really create an exciting campaign, 
a full court press in a comprehensive and holistic way, would 
just be terrific.

                         UNDERINSURED CHILDREN

    Ms. Roybal-Allard. Just one more question on immunization, 
as we discussed, the children's vaccine program has had 
remarkable success, providing uninsured and underinsured 
children with lifesaving vaccines at no cost.
    However, there is a problem because while uninsured 
children can get these vaccines in multiple locations, 
underinsured children can only get these vaccines at federally-
qualified health centers. This limitation has made it very 
difficult and sometimes impossible for many underinsured 
children to get vaccines.
    Should we not be opening it up so they can get their 
vaccines at any public health clinic?
    Dr. Gerberding. Absolutely, and we have tried to promote 
some changes in the language that allows underinsured children 
to have this kind of access, but we also got clarification from 
Congress that the intent of Congress in their existing 
legislation was to allow us to declare public health 
departments and similar entities as federally-qualified venues 
so that we could deliver these vaccines to these children in 
these environments.
    So we are seeing more States now take advantage of this 
interpretation, and we are trying to promote all of them to do 
this so that these underinsured kids are no longer missed in 
the system. It is a critical gap, and it needs to be solved.
    Ms. Roybal-Allard. So do States need to be made more aware 
then about this possibility? That is what we need to do about 
that?
    Dr. Gerberding. Yes. Exactly, and we have worked with the 
Association of State and Territorial Health Officials, ASTHO, 
to try to get the word out.
    We have been working with Congressman Waxman on this to 
make sure that we were not misunderstanding congressional 
intent, but we got a strong clarification that the intent was 
that we would be able to provide these through federally-
qualified health facilities that weren't previously designated 
that way.
    Ms. Roybal-Allard. Thank you.
    Mr. Obey. Mr. Regula.

                        BUILDING AND FACILITIES

    Mr. Regula. Dr. Gerberding, I am particularly interested in 
the way you have invested a great deal of taxpayer dollars in 
the improvement of the CDC facilities in Atlanta. Please share 
with us the status of facility construction on the campus and 
how these improvements are improving CDC service to people.
    Dr. Gerberding. Thank you for asking the question.
    As you know, my predecessors for many years engaged in a 
buildings and facilities improvement planning process at CDC, 
and we were able to accelerate a 10 year plan into a 5 year 
plan.
    We are not done yet with the master plan, but we have made 
such extraordinary progress that I don't think you would 
recognize the CDC from your last visit. I know the Committee 
has visited the CDC a while back, and it would be 
unrecognizable to you today. It is a beautiful campus.
    Our laboratories are now safe. They are modern. They are 
well-equipped. We have more to go in terms of getting them all 
rehabilitated, but it is a tremendous asset.
    I would also say in the interest of the concern about 
climate change and sustainability, that our laboratories are 
LEED certified, meaning we built them to the standards of a 
sustainable and responsible citizen so that they conserve water 
and electricity and have excellent staircases and so on and so 
forth. We are very fortunate to have made progress.
    It is very difficult now, candidly, because the campus 
looks so good that people think they are done. Unfortunately, 
we still have people working in some labs that are not ready. 
They are still not modernized.
    We have a number of people scattered all over the City of 
Atlanta, not to mention some real old facilities that NIOSH is 
occupying in Cincinnati and Pittsburgh as well. So I am not 
trying to focus entirely on buildings and facilities, but I 
can't recruit the best talent if I can't put them in safe and 
modern laboratories just like Dr. Zerhouni has those similar 
concerns.
    We are very grateful for the progress. It is just so 
exciting, but it is also challenging to try to communicate that 
we need to get the job finished and we are not quite there yet.
    I will say one of the challenges that has occurred is that 
new buildings may be efficient and effective, but they are not 
necessarily inexpensive to run and operate. Now that we own 
more buildings, we have to be sure to be able to keep up their 
maintenance so that we don't end up where we started with 
buildings that are poorly maintained and in need of more 
expensive repairs. We do have some unmet needs in terms of 
maintenance and repair.

                         EMERGENCY PREPAREDNESS

    Mr. Regula. Infectious diseases of animals and plants are 
one of the leading causes of economic loss to producers in the 
U.S. and Ohio. In the U.S., animal and plant diseases annually 
cost producers $17,500,000,000 and $30,000,000,000 
respectively, and we have similar losses in Ohio.
    The NIH has developed a model to construct regional BSL-3 
laboratories throughout the United States to assist CDC and 
State health departments in the research and management of 
infectious disease outbreaks in the human population. 
Unfortunately, a similar model for dealing with threats of 
infectious diseases to animals or plants is not yet developed 
on the national level.
    In the event of a national crisis such as an avian flu 
pandemic, will current Federal laboratories have sufficient 
personnel and infrastructure to address the threat, and how are 
you working with USDA on these threats?
    Dr. Gerberding. We have been working very hard on pandemic 
preparedness, and laboratory capability is obviously an issue 
domestically and a much bigger issue internationally. In the 
United States, our preparedness plan, which we are exercising 
too, allows us to scale and get the kind of throughput we need 
in the early phases of a pandemic.
    Once a pandemic has arrived, you don't need to necessarily 
test every patient because you can assume that they have the 
pandemic strain. So early on at the beginning is the time when 
you need the rapidly accessible diagnostics. We believe our 
laboratory response network has made extraordinary progress and 
is up to that challenge.
    But what we don't have is a point of care rapid test so 
that if you come into the emergency room, we can tell right 
away if it is the pandemic strain. We can tell you have flu, 
but we can't tell if it is the pandemic strain at that level of 
specificity. So there is work going on in the industry to try 
to develop better diagnostic tests.
    In terms of our interaction with USDA, interactions can 
always improve, but we have an extraordinarily good 
intersection. We actually have one of the senior USDA 
scientists housed at CDC, who works in our emergency operations 
center when we are involved in any number of these animal-human 
disease outbreaks, like SARS or monkey pox or whatever.
    We share scientific expertise in Atlanta through the 
University of Georgia. In Fort Collins, Colorado, we work side 
by side with Colorado State in their USDA facilities there. So 
we have tried to position our programs in locations where there 
is a natural connection.
    Also, the head of our new National Center for Zoonotic 
Diseases is a former dean of the Michigan State University 
School of Veterinary Medicine, and he has created a huge 
network. We just had a whole bunch of veterinary students at 
CDC to get interested in public health veterinary medicine. So 
we are trying to build those bridges at every layer of the 
organization.
    Mr. Obey. Before I call on Ms. Lee, let me simply say that 
Mr. Walsh demonstrated one inconsistency in the 
Administration's budget request a minute ago.
    I think Mr. Regula has demonstrated another one because you 
have talked to us about the needs for buildings and facilities. 
The Administration has zero budgeted that this year. Last year, 
they provided $20,000,000. We provided $55,000,000.
    If I can tell one story, a very well-known American 
businessman from Atlanta came into my office a few months ago, 
asking me to please approve a large increase for CDC buildings. 
He was a fellow who had contributed $125,000 to the President's 
campaign.
    And so, I asked him. I said, why are you talking to me? Why 
aren't you talking to Karl Rove?
    His response was I already talked to Karl, and Karl said, 
oh, don't worry about budgets. They are just a game.
    So what we hear today is the result when these issues are 
treated as though it is just a game.
    Ms. Lee.

                      HIV/AIDS PREVENTION PROGRAMS

    Ms. Lee. Thank you very much, Mr. Chairman.
    Good afternoon. I want to thank all of our panelists again 
for being here. I can't believe a year has passed.
    I want to specifically ask Dr. Zerhouni and Dr. Gerberding 
a couple of questions with regard to the HIV-AIDS prevention 
programs that CDC funds based on the behavioral research that 
is conducted by NIH.
    Recently, I think CDC released a report called Updated 
Compendium of Evidence-Based Interventions that are considered, 
I believe, the best interventions for HIV prevention programs.
    Now my understanding, and you can clarify this for me, is 
that there were no abstinence programs, not a single one 
included in that list. If that is the case, I would like you to 
say something about that. If it is not the case, then I would 
like to find out what is in that.
    Also, it included 49 evidence-based interventions, yet only 
4 were newly identified for the MSM community who account for 
about 50 percent of the new infections. None of the 
interventions were primarily focused on black MSMs and none 
focused on Latino MSMs, which are two groups disproportionately 
affected by HIV and AIDS.
    Let me just read something that the report says: ``Some of 
the populations hardest hit by the HIV-AIDS epidemic or at 
greatest risk of infection or transmission were not 
represented. These populations include African American, 
Hispanic and other MSM of color, young MSM, particularly young 
African American and Hispanic MSM, substance-using MSM, 
transgender persons, HIV-positive intravenous drug users and 
rural populations.''
    So let me just ask you what accounts for the lack of 
approved interventions for the MSM community and what are you 
doing really to address this and also for transgender persons, 
HIV-positive IV drug users and rural populations?
    Then, secondly, how are we ever going to address prevention 
in the United States if we don't have approved interventions 
based on the research for communities that are most impacted by 
this disease and how are your priorities established?
    Then I just want to ask Dr. Gerberding about the testing, 
the HIV-AIDS testing that CDC has mounted in communities of 
color and how that is going and is it moving fast enough for 
us, given the rates of infection that we are unfortunately 
witnessing again.
    Dr. Zerhouni. Well, thank you for the questions.
    From the standpoint of the NIH, as you know, our budget for 
HIV-AIDS research is almost 10 percent of the NIH budget. About 
one-third of it is related to prevention, and we are completely 
aware of the greater risk of transmission in the populations 
that you have indicated.
    I will have to go on the record and check our facts because 
I know that our strategy for HIV-AIDS research based on 
prevention, vaccine development and new therapies has a high 
focus and priority on the populations that you refer to.
    The prevention issues for the programs that you mentioned 
are attached.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T3195B.049
    
    [GRAPHIC] [TIFF OMITTED] T3195B.050
    
    Dr. Zerhouni. But our commitment is in line with our 
colleagues at CDC and is where the research on effective 
prevention measures adapted to the appropriate environment of 
the individual needs to be focused.
    Ms. Lee. Please do because I don't believe this report took 
into consideration those populations that I mentioned.
    Dr. Zerhouni. Right. I am a little surprised at that 
because, frankly, I know for a fact.
    Ms. Lee. Also, the abstinence-only programs in this report, 
I didn't find any that were identified as best prevention 
interventions.
    Dr. Zerhouni. I am sure that Dr. Gerberding has more 
knowledge of that, but I will check into that and let you know 
about it.
    Ms. Lee. Thank you.
    Dr. Gerberding. With respect to the testing program, for 
those who aren't familiar, we recognize that in America men who 
have sex with men and particularly African American men who 
have sex with men is the fastest growing population in terms of 
HIV infection. Sadly, the epidemic is going in the wrong 
direction in that population as I know you know.
    I do want to say that among injection drug users, among 
children and among women, we have lowering incidence rates. So 
we are seeing progress in some populations, but this one truly 
stands out as an area that needs urgent attention.
    A year ago, we convened the national opinion leaders from a 
variety of sectors including basketball and sports and 
everything, entertainment and faith-based groups to try to 
create a coalition of community advocates around awareness that 
this is a problem in the African American community and 
advocacy for people to reach out and get tested and kind of de-
stigmatize the problem.
    So we estimate in the last year we were testing about a 
million people and that we were detecting somewhere between 
twelve and twenty thousand infections that otherwise would have 
gone missed.
    Now, testing is very helpful to the individual in terms of 
treatment, but testing is also an important intervention for 
prevention because we know when people know they are infected, 
they are less likely to infect somebody else. So this testing 
is part people need care but also part people need awareness so 
that they protect others.
    I think this is our first year, and I can't really say the 
return on the investment at this point, but I am really 
optimistic that if we can continue and hopefully scale this, we 
will see a difference.
    That goes part and parcel with our routine testing program 
now which is finally 27 years into the epidemic, getting an HIV 
test is a routine part of medical care if you come into the 
health system in more and more States. It is not true in every 
state yet because some still haven't finalized their regulatory 
changes needed to make that happen, but it is now a routine 
practice for people who are in the age group of people at risk 
to get an HIV test or opt out of it.
    It does not require the elaborate, in some cases, time-
consuming and somewhat invasive informed consent process that 
was a barrier to getting tested in these settings before.
    Mr. Obey. Mr. Lewis.

                          NIH PRIORITY PROCESS

    Mr. Lewis. Thank you very much, Mr. Chairman.
    I am tempted to immediately pursue the discussion that Ms. 
Lee is raising regarding HIV. But before going to that let me 
mention it was, for a short time, my privilege to chair this 
Committee as Mr. Obey has that privilege presently. Until I had 
that job, I never had a chance to come to this Subcommittee for 
I had never served on it.
    It is one of the most magnificent areas to work around here 
that I have experienced in public affairs, no small part 
because of that which NIH is about and those people who serve 
with you, Dr. Zerhouni. It really is a privilege to be 
associated with people who are doing the work that you are 
doing.
    My Chairman wrung his hands a while ago about the fact that 
there is not enough money to go around and probably if you 
really want to deal with the whole world, there never will be. 
For example, when we were talking about the CDC building last 
year in conference because we had other priorities, it was the 
House who pushed back against the Senate's desire to increase 
the building and facilities fund as I recall.
    Setting that aside, Dr. Zerhouni, you and I have talked a 
lot about my concern that there is not enough money to go 
around and thereby a need to rethink the way we spend money and 
readjust priorities from time to time, rather than just 
responding in responding to somebody who got a flow of funding 
last year and assuming that person ought to be the first one in 
line next year.
    You have done a lot regarding those concerns with the 
common fund and the roadmap initiatives, but still the process 
whereby money flows to individuals or grants has not 
significantly changed. So I would like to have an update on 
where you think we are going in connection with that.
    Dr. Zerhouni. This is an excellent question in terms of 
understanding the systems of research and what we do when the 
priorities, as we just heard from our sister agencies, change.
    How does the NIH adapt to that? It cannot adapt overnight 
to a new paradigm. It has to move in a rational way towards the 
opportunities. In fact, we have over the past four years.
    I can show you the areas of NIH funding that have had to 
decrease because of the priority setting process. For example, 
clinical trials, we have reduced our commitment to clinical 
trials by almost $500,000,000. Why? Because we believe that you 
need to also focus on what we call translational research.
    We have also launched a program called the Clinical and 
Translational Science Initiative because we have found that 
scientists who come up with great ideas and the ability of the 
industry to develop new therapies, but in the middle, there is 
a need to prove that what is discovered in a lab is going to 
work in the human population.
    We have rearranged our portfolio. If you look at our 
portfolio, we still favor fundamental research because it is 
the route to fundamental progress.
    But at the same time, I think, as you mentioned, the 
Roadmap, the Common Fund. If you look at a number of trans-
institute initiatives today, there is the blueprint for 
neuroscience research which really relates to both mental 
health as well as behavioral research. The diabetes programs 
are now integrated across their dimensions in terms of heart 
disease impact as well as other consequences of diabetes.
    I think we have made progress, and I would like to thank 
Congress for reauthorizing the NIH through the NIH Reform Act 
of 2006, which I think is going in the direction of what you 
and I talked about: How do you better coordinate both within 
this Agency as well as within our agencies within HHS?
    Mr. Lewis. Thank you. I just wanted to make sure you didn't 
think I had forgotten about my interest in that.
    But back to my colleague from Northern California, Ms. Lee, 
it was 1972 or 1973--in the VA-HUD Subcommittee where Lou 
Stokes and I worked so closely together, that I was involved in 
providing the very first funding for research in an arena known 
as AIDS at a time when almost nobody knew what it was about.
    If we work together in a fashion that suggests that none of 
these major issues have anything to do with partisan politics 
but rather solving human problems, I think we can make real 
progress.
    I must say that you will be intrigued, Dr. Gerberding, with 
the fact that a couple of years ago I had a visit in the 
Capitol from a guy by the name of Bono, and Dr. Gerberding and 
I had recently talked about problems in Africa.
    Bono was going to see the President the next day, and his 
reason was to go and talk about HIV and AIDS in Africa. I 
suggested as he had the conversation, that HIV/AIDS was the 
highest priority, but there was another challenge we might do 
something about in the village called malaria.
    A day and a half later, Bono is meeting with the President. 
He had two things to talk to him about, and both were impacted 
because of our addressing real human problems, recognizing that 
dollars can make a difference, but they really make a 
difference if we work together rather than fight with each 
other.
    So thank you for that, Mr. Chairman.
    Mr. Obey. Thank you.
    Let me simply say with respect to CDC buildings, last year, 
the President asked for $20 million.
    Mr. Lewis. I didn't want to sidetrack.

                        BUILDING AND FACILITIES

    Mr. Obey. We gave him $147 million bucks in the bill that 
he vetoed.
    We then came back after that veto and provided $55 million 
which, as I figure, is almost triple what the Administration 
requested. We did that even though the President insisted that 
we not have a dime above his requested level in the overall 
appropriations bill.
    So I would say given the Administration's resistance, we 
did pretty well by CDC buildings last year.
    Dr. Gerberding. May I just say that I think Congress has 
really been very supportive of CDC's buildings and facilities 
for the five years that we have been building them, and we know 
that. We also started in a pretty dreadful place. So it is 
important to remember that when you are out of the Beltway, 
sometimes you are out of sight and out of mind, and we kind of 
had a lot of catching up to do.
    Mr. Lewis. The desperate condition took place over maybe 20 
or more years. Presidents come and go, and parties come and go. 
Human problems are constant.
    Mr. Obey. And sometimes those problems are magnified by 
what humans do.
    Okay, is Mr. Udall here or did he leave?
    All right, Ms. McCollum.
    Ms. McCollum. Thank you.
    I will kind of build on the conversation here, Dr. 
Zerhouni. You talked about efforts, research versus the 
increase in healthcare costs, and how that is a tension, that 
it is a race that we are in.
    I believe that health research is our best hope for not 
only decreasing costs but for improving the quality of people's 
lives. So it troubles me when I see the budget and I see things 
flat funded, especially with what we know of what is going on 
currently with even the fuel prices to heat the buildings you 
are in. There is inflation.
    And so, if you don't start counting in for inflation and 
the funding we know could always be increased. There is more to 
work on than you have time to work on and than the Congress 
will be able to fund right now. But then you add the flat 
funding and what you really have is a cut, in my opinion, a 
cut.
    So I have had a lot of constituents in my office over the 
past several weeks and over the past several years, making the 
case for greater investment. Now, with flat funding and with 
what is going, what we are actually seeing is a cut in this 
budget.
    I believe that you think we should be putting more into 
research. Do you have any idea? Did you have any conversations? 
As to when the Administration was making its proposals to you, 
what kind of dialogue takes place?
    I would be curious in that because, Dr. Gerberding, in your 
testimony too, you talked about obesity and CDC plays a great 
role in keeping America healthy. I have been impressed by the 
Agency's attitude towards solving problems and doing things.
    But I don't really see how we move forward on curing and 
prevention childhood obesity when we have cuts to school health 
programs, where we have the children so much, to put it as a 
former teacher, as a captive audience to be working with and 
finding out what kind of interventions work.
    We also know, from what happened with smoking, children go 
back home and reinforce the message back home with parents and 
grandparents and that as well.
    When I see these kinds of cuts and flat funding, I really 
wonder how you are going to be able to achieve, one, the goals 
that the American people have asked you to achieve and, two, 
your own goals. If you don't have the funding to accomplish 
what you know you can accomplish in one year, how can you build 
on that to really make the goals and objectives come true for a 
healthy America?
    If you would both kind of tell me the conversations that 
get put in place. I don't mean to be disrespectful. I am just 
trying to understand this because there is going to be a new 
Administration, whether it is Democratic or Republican the next 
time around.
    Enlighten me. What are some of the conversations that you 
have with the Administration when you put together these 
budgets?
    Dr. Zerhouni. Well, the Chairman referred to my musical 
instrument playing, there are days where I would rather play 
that instrument than engage in that forceful dialogue, I can 
tell you.
    Clearly, I think these are very difficult times. In my 
whole career, I have never had to manage a stretch of very, 
very difficult priority-setting, in a sense that would maximize 
the dollars that we have. Obviously, we could do more with 
more.
    But I think it is important to realize that the most 
important dialogue that we can have is to stress the fact that 
historically, we are at the flexion point whereby the costs are 
going, as you heard, at 6 or 7 percent by my colleague, Terry 
Cline, and yet GDP, the gross domestic product, is not growing 
at the same rate.
    Something has to be done. I don't believe that you can do 
it without a systemic view that includes educational issues. I 
don't believe we can change health behaviors without an 
intervention very early in the school years. We have shown this 
over and over again.
    The dialogue is very forceful. Obviously, I believe that 
these times require you to make priority decisions and priority 
calls. At the end of the day we are also in need, in my view, 
to truly address the challenges in front of us. That will 
require a transformation, a transformation through discovery of 
the entire concept that we have currently of healthcare in this 
country.
    Dr. Gerberding. I would stipulate at the table are all 
agency heads, and there is probably not an agency head at HHS 
or across the government that couldn't think of really good 
things to do with resources if we had them.
    We think if you invest in CDC, you get results. People care 
about those results, and we sure care about them. But we also 
know that the time and environment that we are operating in is 
a very challenging time from a budget perspective, and we can't 
have everything we wish we could have.
    CDC has a unique situation, in a sense, because we have two 
major portfolios.
    Mr. Obey. Could I ask you a favor?
    We have a problem. We have four votes coming. That is going 
to blow away the rest of this hearing, and I would like to give 
each member of the Subcommittee who hasn't talked at least a 
couple of minutes to ask questions. So could I ask you to 
respond further for the record and call on Dr. Weldon?
    Dr. Gerberding. Perfect.
    Mr. Obey. If you could limit yourself to about three 
minutes, then we all will get there in time to vote. Mrs. Lowey 
hasn't asked a question yet either.

                         MITOCHONDRIAL RESEARCH

    Mr. Weldon. Mr. Chairman, I will make every attempt to be 
quick.
    I want to thank all the witnesses, and certainly it is a 
pleasure to see you back here again. I thank you for all your 
hard work.
    I just had a couple of quick questions, and it may be 
necessary to respond later.
    We had the Secretary in last week. I mentioned to him about 
a case of a girl who the vaccine court had settled that her 
autism was caused by the injections and that she had an 
underlying defect in oxidated phosphorylation, a mitochondrial 
disorder.
    I called one of the pediatric neurologists that was 
involved with the case, a fellow by the name of Zimmerman at 
Kennedy Kreeger. He was speculating that somewhere, maybe in 
the 10 to 20 percent of these autism cases, it may be possible 
that they have maybe not a mitochondrial disorder but 
mitochondrial disfunction.
    But he said something to me that was really interesting. He 
said, this is kind of an unusual hypothesis and it is out of 
the mainstream of what NIH is funding.
    Dr. Zerhouni, are you aware of this at all? Has anybody 
brought it to your attention? Does CDC know about it, and is it 
something that we can get some investigative funds looking at 
if we get good grant proposals in?
    Dr. Zerhouni. I would say a direct connection between a 
vaccine and a mitochondrial disease that affected the child to 
developing an autism spectrum disorder is a pretty unique set 
of events.
    However, we just had a symposium in January about the issue 
of mitochondrial disease. There are over 40 conditions that can 
affect, in fact, metabolism in humans that could then tip them 
over, not just in the case of vaccination, but where the 
fundamental energy-generating organ now, called a 
mitochondrion, can play a role in many diseases.
    We are looking at that in the context of diabetes, heart 
disease and obesity.
    Yes, we knew that mitochondrial disease is an important 
topic. I was not aware of this particular connection, and we 
are looking into that.
    Mr. Weldon. Yes, the vaccine court settled it, and one of 
the clinicians involved is investigating this, whether there 
may be some kind of a link. So I am glad what I hear you saying 
is it is an area of research you are pursuing.
    My other quick question, I sent you a letter, Dr. 
Gerberding, on the MRSA issue. I don't know if you staff 
brought that to your attention.
    I thought it was very interesting, very concerning. 
Particularly, obviously what caught my attention is I trained 
in that town and, as I recall, you had done as well. Certainly, 
I commend CDC for doing the research.
    Were you going to be able to get back to me on the letter 
that I sent?
    Dr. Gerberding. [Remarks off microphone.] Obviously, I have 
been caught up.
    Mr. Weldon. Right.
    Dr. Gerberding. [Remarks off microphone.] So I haven't 
responded to you directly, but yes, I saw your letter and read 
it myself. We have had a conversation about the appropriate 
response.
    But I also am pleased to be able to tell you we are doing a 
lot of things about the MRSA problem. So I can update you on 
that when you have time.
    Mr. Weldon. Yes, I figured you probably were.
    Thank you, Mr. Chairman.
    I thank the witnesses.
    Mr. Obey. Mr. Ryan.
    Mr. Ryan. Thank you, Mr. Chairman.
    I just want to make a quick statement. First, I would like 
to just kind of back up what my colleagues have said with 
regard to the budget. I mean we see this behavior all the time 
on the ground back in our districts, of what the need is, as 
you see it every day. This is clearly inadequate, and we all 
know that. To the extent that we can fix it, we are going to 
try to fix it.
    I just would like to make one statement and, Dr. Cline, we 
have had conversations about this.
    I feel like when we talk about a lot of these issues of 
public health, mental health, that it gets back, especially a 
lot of the stuff we watch on TV. It gets back to how American 
citizens deal with the level of stress that they have to deal 
with every single day and how that affects their behavior, how 
they deal with each other as kids in a classroom, how they 
react by grabbing a gun and ending up killing people. There is 
a variety of these issues.
    I am just going to make a statement and submit some 
questions for the record, but I think if we want to get to the 
root of a lot of these issues: health, physical or mental.
    I think we have to figure out how to teach our society and 
our citizens how to deal with the stress that they are put 
under every day, economic, how they pay for healthcare, what 
kind of job they are going to have, how their kids are going to 
go to college. These are all things that day after day after 
day affect their physical health and their mental health and if 
we don't figure out how to deal with a lot of those issues.
    Some are policy, but some are habits that they can get into 
them, and we are going to need your help to do that.
    I am going to yield the rest of my time to my friend, Mrs. 
Lowey.

                            ANTI-DEPRESSANTS

    Mrs. Lowey. Thank you very much to my colleague. Actually, 
it is a great segue to my question which I will express very 
briefly.
    I don't know. You probably didn't see the New York Journal 
News on February 27, 2008, but you probably read about the New 
England Journal of Medicine study which was cited in that 
article. This is really for Dr. Cline and Dr. Gerberding, if 
you could respond. I don't know if we will have time today.
    It was questioning the effectiveness in widespread 
prescription of anti-depressants, particularly to women and 
children. Parents in my district say many students in their 
children's school have been prescribed anti-depressants for 
behavior problems, that everyone is ADD.
    It is on record that there is supposed to be a 40 percent 
increase in bipolar--I don't know if you call it a disease--and 
bipolar children. However, according to the psychiatrists I 
have spoken to in the district, this is impossible.
    So I am very concerned about that. Are you familiar with 
the New England Journal and Medicine cited in this article?
    Can you comment on research related to the over-
prescription of anti-depressants and other drugs to children? 
And, you probably have about two minutes to address this issue.
    So the bottom line is in talking to parents, PTA meetings 
that I attend, the use of anti-depressants among kids is so 
widespread. Give them Zoloft. Give them this. Give them Prozac. 
Could you comment?
    Dr. Cline. Certainly, and we would be happy to send you 
some information based on the data that we have accessible. I 
don't know. Dr. Clancy, I am sure you have some as well.
    One of the things we know very, very clearly is that 
antidepressants prescribed appropriately and for the 
appropriate diagnosis can be very, very effective. It can 
indeed be lifesaving for individuals.
    Part of the concern that we see at times is when something 
like that comes out is that then we see kind of a backlash, and 
we see under-prescribing that can take place as a result. There 
has been some concern about spikes in suicide as a result of 
the pendulum swinging so far the other direction.
    So it is a complicated issue, and I want to make sure that 
we have enough information that is provided to you that is more 
comprehensive. It is a very complicated issue. I appreciate the 
question very much.
    [The information follows:]

     Mrs. Lowey: Can you comment on research related to the over-
prescription of antidepressants and other drugs to children?
     Dr. Cline: Certainly, and we would be happy to send you some 
information based on the data that we have accessible. (See attachment)

                            Anti-Depressants

    SAMHSA appreciates the opportunity to comment on recent articles 
regarding rates of prescription of anti-depressants, particularly rates 
of prescription to women and children, and whether growth in the rates 
at which anti-depressants are prescribed should be a source of concern.
    It should be noted that the Food and Drug Administration, the 
Centers for Disease Control and Prevention, the National Institutes of 
Health, and the Agency for Healthcare Research and Quality all have key 
Federal responsibilities in this area and can most authoritatively 
comment on the appropriate uses of specific medications, off-label use 
of medications, and trends in drug usage.
    According to noted experts in child and adolescent mental health, 
standards for medication management for children are a challenging 
issue for the field because relatively few randomized controlled 
studies have been conducted. As a result, medication choices are 
frequently based on the experience of the individual practitioner or on 
standards of care for adults. At the same time, prescription 
medications are considered to be an important tool for many families 
and practitioners.
    Within the Substance Abuse and Mental Health Services 
Administration, our mental health service programs are designed to 
promote evidence-based practices that may include a combination of 
clinical therapy and supportive community services. In clinical 
practice, it is common for medication treatments to be combined with 
psychosocial strategies.
    A key principle for SAMHSA is to ensure family-driven care in which 
families are active and informed consumers of services. Because the 
family plays a major role in the social and emotional development of 
children, family-focused interventions have long been a part of child 
and adolescent mental health treatment and it is critical that families 
play an active role in reviewing the potential benefits and side 
effects of medications in close partnership with mental health service 
providers.

    Mrs. Lowey. I would appreciate that information.
    I would also like to know, Dr. Cline, what kind of 
information is shared with parents, principals, teachers and 
the correct advice that they perhaps could give to parents. 
Maybe go see the doctor, don't ask me. But I would appreciate 
that.
    Thank you very much.
    Dr. Clancy. If I could just add, this is an area where we 
plan to be making some investments in comparative effectiveness 
research, particularly focused around ADHD, so that parents 
understand what are the benefits and harms of treatment and 
that they can get this information in language and ways that 
they can understand.
    Mrs. Lowey. Are you aware of the New England Journal of 
Medicine study?
    Dr. Clancy. Yes.
    [The information follows:]

    Mrs. Lowey: I would like to know what kind of information is shared 
with parents, principals, teachers ad the correct advice that they 
perhaps could give to parents. Are you aware of the New England Journal 
of Medicine study? Could you just make a quick comment on that?
    Dr. Clancy: Yes, I think it would easier if I did it for the record 
so that I have a chance to review it. I have read the abstract but not 
the full study. (See attachment)

                            Clinical Trials

    This study highlights the impact of publication bias, where studies 
with positive findings are more likely to get published in peer 
reviewed medical journals that those with negative findings. 
Registering clinical trials with ClinicalTrials.gov helps to identify 
studies that are on-going or completed and allow researchers to learn 
which study findings have not been published. Clinicians and patients 
depend on syntheses of existing literature to guide diagnostic and 
treatment decisions, so minimizing the number of studies that remain 
unpublished in incredibly important.
    AHRQ's Effective Health Care program examines the effectiveness and 
comparative effectiveness of diagnostic and therapeutic interventions 
for high priority areas, and relies on syntheses of existing studies 
and other sources of information. A high priority for our work in 
minimizing bias, emphasizing the importance of transparency in all 
phases of our work, and a strong focus on improving methods of 
synthesizing and documenting research to provide the most accurate 
scientific information possible. We approach the manufacturers of drugs 
and devices that are the subject of our comparative effectiveness 
reviews to submit any study findings that are not represented in the 
published literature to ensure we have the true denominator of studies 
available.
    In regard to the effectiveness of anti-depressants, AHRQ has 
published a comparative effectiveness review that includes a 
translation for clinicians caring for patients with depression and for 
patients who suffer from depression. The guide for clinicians can be 
found at: http://effectivehealthcare.ahrq.gov/health 
Info.cfm?infotype=sg&DocID=9&ProcessID=7 and the guide for patients can 
be found at: http://effectivehealthcare.ahrq.gov/
healthInfo.cfm?infotype= sg&DocID=10&ProcessID=7 To research many 
different groups of patients, the patient guide is available on the 
Web, in print, in audio versions, and soon in Spanish.

    Mrs. Lowey. Thank you very much.
    Mr. Obey. Thank you.
    Let me simply say if you can serve in this institution and 
not require antidepressants, it is a miracle. [Laughter.]
    Mr. Walsh. Mr. Chairman, you are going to have to speak for 
yourself on that. Oh, I did just announce I am retiring. 
[Laughter.]
    Mr. Obey. Well, that was your first mistake and our loss.
    Let me simply thank all the witnesses today. We appreciate 
your service and your being here.
    The Committee will resume at 10:00 tomorrow with the 
Secretary of Labor. 

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                                        Tuesday, February 26, 2008.

          HEARING ON THE PRESIDENT'S EDUCATION BUDGET FOR 2009

                         SECRETARY OF EDUCATION

                               WITNESSES

HON. MARGARET SPELLINGS, SECRETARY OF EDUCATION
THOMAS P. SKELLY, DIRECTOR, BUDGET SERVICE

                       Chairman's Opening Remarks

    Mr. Obey. The Committee will come to order.
    This morning, we will be hearing from the Secretary of 
Education who will be outlining the President's requested 
budget for education for the coming fiscal year and, 
undoubtedly, we will hear a lot of discussion about the cost of 
meeting our obligations in the area of education. This 
afternoon, we will hear from a second panel which will focus on 
the cost of not providing our obligations to education.
    Madam Secretary, we welcome you here. Unless some future 
President has some plans for you of which I am not aware, this 
is your last appearance before the Subcommittee on a regular 
bill.
    Secretary Spellings. I am assuming that it is. [Laughter.]
    Mr. Obey. Let me simply say this. I think it is fair to say 
we have had a good number of disagreements with the 
Administration on education policy as well as education 
budgeting, but nonetheless I simply want to say that you are 
obviously a person of ability and dedication. I appreciate the 
service that you have given to the country, and I hope that we 
can make this coming year a productive one. I think we have a 
problem, and I hope we can overcome it.
    If we take a look at the President's budget from last year, 
across the board on domestic funding, he essentially, with a 
few exceptions here and there, he essentially presented a 
budget to us which was a freeze. This year, what he has done is 
to send a budget to us on the domestic side which cuts about 
$18 billion out of accounts that the Congress just approved a 
few months ago.
    The bill that was passed last year was an extremely tight 
bill which caused consternation, I think it is safe to say, on 
both sides of the aisle. In fact, we had 51 Republicans voting 
with Democrats to override the President's veto on the Labor-H 
Bill because the President's budget was seen as being so tight.
    This year, the situation is considerably more grim because 
it isn't just a freeze. It represents a determination and makes 
some very deep cuts in a lot of programs in and outside of 
education.
    We are going to have a choice to make this year, and we are 
essentially, in the Congress and in this Committee, going to 
have two options. The first option is to try to reach a 
compromise with the Administration on its budget 
recommendations. That would be my preferred route.
    The kind of politics I believe in practicing dictates that 
we first define our differences and we can have at each other 
on those differences, and then we are supposed to try to 
resolve those differences. It is hard to do if one side or the 
other is stuck in a my way or no way approach to things.
    So I think we have two choices. We can try to work with the 
Administration and hope that the President will show some 
flexibility in both his policy prescriptions and his numbers. 
If he does, fine. We can find agreement, and we can try to pass 
the bill through both houses.
    If he chooses, as he did last year, to simply say, sorry, 
not going to compromise on the numbers, then there is very 
little incentive for this Committee to do anything except say, 
well, the President has dealt himself out of the game and we 
will simply have to wait for a new President who is more 
flexible in order to deal with the problems.
    Those are the two choices open to us, and it is going to be 
largely up to the Administration which path we wind up 
following. I hope it is the former because I think there is 
important work that we can still do if we work together. 
Example: No Child Left Behind, it has come under a lot of 
criticism.

                 FUNDING LEVEL FOR NO CHILD LEFT BEHIND

    I voted for it. I voted for it for two reasons: number one, 
because I thought that we needed to try to focus on 
strengthening standards for all kids and, secondly, because I 
thought it was the President's first domestic initiative out of 
the box and because of that I thought he was entitled to the 
benefit of the doubt, but it was also based on my assumption we 
would stick reasonably closely to the budget numbers that were 
provided in that legislation.
    Now I have been around here a long time. I don't expect 
every authorization bill to be fully funded. In fact, I would 
not support that in many instances. But I do think that we had 
a right to expect that if we were going to require all of the 
things that were required of State and local people under that 
legislation, that we stick fairly closely to the implied 
commitment on the financial front that was represented by that 
bill.
    For the first year the President did that, but then in 
succeeding years the increases that he asked for, for 
education, each year were about half of the increase of the 
previous year. As a result, we are left far behind in terms of 
our financial commitments.
    So I would hope that we can see considerable flexibility on 
the President's part, and if we can, we ought to be able to 
reach reasonable agreement. If we can't, then it turns this 
year into a waste. We have a choice as to whether this year is 
going to be eight months of wasted time or eight months of 
trying to tie up a lot of loose ends and getting some 
constructive things done.
    I think which of those paths the Congress has to take is 
going to be largely determined by the other end of the avenue, 
and I hope that we are met with a willingness to compromise 
that we did not see last year. Last year, when I talked to 
Budget Director Nussle and told him we were looking for ways to 
compromise, he told me that he could find nobody in the White 
House who had the slightest interest in compromising. That is 
not going to be a way to use our time very productively this 
year.
    So let me simply stop at that point and call on Mr. Walsh 
for his comments before I invite you to make your statement.
    Mr. Walsh.

            EDUCATED WORKFORCE AND LONG-TERM COMPETITIVENESS

    Mr. Walsh. Thank you, Mr. Chairman.
    Madam Secretary, welcome. I would like to echo the comments 
of the Chairman regarding your abilities and your character. I 
think you have done a great job as Secretary, and I appreciate 
the effort that you have put into it and the thoughtful 
approach that you have taken.
    I think we all agree that a well-educated workforce is 
critical to our long-term competitiveness as a Nation and that 
quality education must begin early in the home and in our 
elementary schools.
    The budget you have sent us makes choices, some of which I 
think are good choices, others I will question, but nonetheless 
it makes choices and sets priorities, and I commend you for 
that.
    I will tell you I agree with the choice to provide yet 
another increase for elementary and secondary education. While 
the Federal Government contributes less than 10 percent of 
funding for education in this country, I think the investment 
we make at the Federal level is very important, particularly 
for schools that serve low-income children. I subscribe, 
though, to the view that public education should be the purview 
of the local communities, supported by local taxes as best they 
can.
    I am also very pleased to see that you have requested a 
significant increase for special education programs. I would 
like to ask you a little bit more about that as we go forward. 
But, as you know, these are critical funds that school 
districts use to help kids with learning disabilities and that 
has been a priority of this Subcommittee historically.
    So I look forward to your testimony, and I yield back, Mr. 
Chairman.

                Opening Statement of Secretary Spellings

    Mr. Obey. Madam Secretary, why don't you summarize your 
statement, and we will put your full statement in the record?
    Secretary Spellings. Thank you, Mr. Chairman, and thank 
you, members. I, too, am pleased to be back visiting before 
you.

                       FEDERAL ROLE IN EDUCATION

    As you said, Mr. Walsh, all of us agree that in today's 
competitive world, developing human capital is a top priority. 
We also know that we have limited resources to invest and that 
our primary role at the Federal level has always been to serve 
our neediest students, such as those from low-income families, 
those with disabilities and those learning English as a second 
language. Accordingly, we must ensure that taxpayer dollars are 
allocated in the most effective and efficient ways.

            PRIORITY INVESTMENTS IN FEDERAL EDUCATION BUDGET

    Since becoming Secretary, I have traveled the country, 
discussing No Child Left Behind and its implementation and 
gaining insights on ways to strengthen and improve this law. 
Everywhere I go, I have been talking with educators and 
policymakers who are deservedly proud that student achievement 
is rising under No Child Left Behind and that gaps between poor 
and minority students are closing.
    In addition, they all share common challenges. First, 
educators need proven strategies to strengthen instruction, 
especially in reading. Second, they need resources to help 
students and schools improve. Finally, they need help to make 
college more accessible and affordable for students of every 
background and income level.
    These are the priority investments in the President's 
budget request.

                             READING FIRST

    First, instruction: One thing we know for sure is that we 
will not be successful in education until every child can read. 
Reading opens the door to every other subject and is a critical 
foundation for all learning. That is why I am pleased that the 
President's budget restores funding for the Reading First 
program to $1 billion, the level you supported for 5 years.
    In response to concerns raised about the Department's 
initial management of the Reading First program, I adopted 
every recommendation my inspector general issued in September, 
2006. Shortly thereafter, I put in place new leadership to 
oversee this program and enhanced guidance on how it should be 
administered. I implemented a new system to strengthen the peer 
review process and took further steps to prevent conflicts of 
interest.
    Reading First builds on more than 20 years of independent 
research funded by this Congress and conducted by the National 
Institutes of Health. If ever a program was rooted in science 
and research, this is it.
    The 60 percent cut to the 2008 appropriation for Reading 
First is hurting our elementary schools. It is one of the top 
concerns I have heard in every State I visit, and I urge you to 
support the President's request to restore funding so that over 
one and a half million students can once again benefit from 
this program.

            STUDENT, TEACHER AND SCHOOL IMPROVEMENT PROGRAMS

    Second, struggling students and schools: I am sure you have 
heard concerns, like I have, raised that No Child Left Behind 
labels too many schools as failing. In actuality, no part of 
this law ever uses the word, failing.
    What No Child Left Behind has done is to help identify 
about 2,300 out of 100,000 schools nationwide that have missed 
annual targets for 5 or more years. The fact that just 2 
percent of schools are chronic under-performers does not seem 
overstated, particularly when we consider that only half our 
minority students graduate from high school on time.
    To help educators improve struggling schools, our budget 
provides nearly $5 million in school improvement grants. It 
raises Title I funding for high-poverty schools by $406 
million.
    It more than doubles the size of the Teacher Incentive Fund 
by providing $2 million to attract our most effective teachers 
to work in our neediest schools and reward them for results, 
and it provides additional funds for students who need extra 
help, including an increase of nearly $5 billion for students 
with disabilities and an increase of $3 million for those with 
limited English skills.

                      PELL GRANTS FOR KIDS PROGRAM

    In addition, as we triage low-performing schools, we must 
also offer lifelines for families. That is why the President 
called for a new Pell Grants for Kids program in his State of 
the Union address. This program offers $300 million in 
scholarships to enable poor students in struggling schools to 
transfer to a new school of their choice. This program begins 
to answer one of parents' most vexing questions: If I have 
given my public school every chance to meet my child's needs 
but it hasn't, what options do I now have?

               ACCESSIBLE AND AFFORDABLE HIGHER EDUCATION

    Third, higher education: All of us know that making a 
college education more affordable is a real concern for 
students and families. So I am pleased that our budget raises 
the Pell Grant award to $4,800 this year, the largest amount 
ever.
    I am proud that this issue has strong bipartisan consensus, 
but as we work to reauthorize the Higher Education Act, we must 
remember that more money is not the only answer to questions of 
access and affordability. We must also curb the dramatic rise 
of tuition costs and streamline the financial aid process.

                 ELIMINATIONS BASED ON OMB PART PROCESS

    Finally, focusing on these priorities has required that we 
make tough choices just like you must do every year. And, 
accordingly, using the Office of Management and Budget's PART 
process, we have redirected funding away from programs that are 
ineffective, duplicative and small in scale, and we have 
eliminated earmarks in keeping with the President's government-
wide call.
    In closing, especially because as you said, Mr. Chairman, 
this may be my last opportunity to appear before you, I want to 
thank all of you for your commitment to improving our schools. 
Mr. Chairman, by choosing to lead this Subcommittee in addition 
to the full Committee, you have shown dedication that benefits 
all of us under your jurisdiction.
    In my experience, education has been an issue that unites 
people of every race and background from both sides of the 
aisle, especially as our global economy places greater demands 
on our schools. Not only are many of us parents, but we also 
realize that even as administrations come and go, schools 
remain open and educators and policy makers all over this 
country and in this body remain committed to extending 
opportunity to every corner of our Nation.
    I look forward to working with you to support them in that 
essential work.
    Thank you, Mr. Chairman. I would be happy to answer your 
questions.
    [The prepared statement and biography of Secretary of 
Education, Margaret Spelling follow:]

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                FEDERAL SHARE OF SPECIAL EDUCATION APPE

    Mr. Obey. Mr. Walsh.
    Mr. Walsh. Thank you, Mr. Chairman.
    Madam Secretary, last year, we, this Subcommittee, moved 
money from a workforce training program, unexpended funds, into 
the IDEA fund. It was a fairly popular decision, tough call, 
but a fairly popular decision, and it was in the neighborhood 
of $300 plus million. Even with the increase that was requested 
by the Administration, adding that to it, we only went from 17 
percent of our commitment to about 17.2 percent of our 
commitment.
    The Administration this year is requesting an additional 
$337 million for Special Education State grants. It is a very 
substantial amount of money, and yet we are still just holding 
even. As you know, Congress's commitment initially in 
authorization was to provide 40 percent of the cost.
    This is a high priority for all communities, but can you 
explain why we just can't ever seem to catch that goal?
    Even with these substantial increases, why? Is it the cost 
of teaching kids with disabilities? Is it the number of kids 
being listed? Is it a lack of commitment on the part of 
Congress to meet this goal?
    Secretary Spellings. Well, Congressman, I think you are 
right.
    A couple of things: Yes, average per pupil expenditure 
costs of educating special education students certainly have 
gone up as have identification and diagnoses costs of such 
students. We now have 13 or 14 percent of our students 
nationally who are diagnosed. We have gotten more 
sophisticated. We have gotten better at it.
    And, as young babies who previously were not saved are now 
living and being educated and living fruitful lives, more of 
those kids, of course, are in our public schools. I think that 
is one of the reasons that we find getting that Federal share 
of APPE up so vexing.

               SPECIAL EDUCATION AND NO CHILD LEFT BEHIND

    I do think one of the things from a policy perspective that 
has been very useful is with No Child Left Behind, as you know, 
those students are subject to the accountability features there 
as well. It has provided us some opportunity to be much smarter 
about how we assess and remediate and intervene with those 
learners, and it has built a lot of demand to build better 
practice, better science and better interventions for those 
kids because we are holding our schools accountable.

                    AUTHORIZED FEDERAL SHARE OF APPE

    But, again, as you rightly said, more kids, higher costs 
make it harder for us to continue to move the needle.
    Mr. Walsh. This is such a challenge. Do we abandon this 
goal of providing 40 percent?
    After 20 plus years, we are still not even at half of our 
commitment. Is there some way to get a quantum leap in how we 
deal with kids with learning disabilities?
    We are continually criticized. The Federal Government is 
criticized for not providing enough resources for these kids 
because of this commitment that we made. Is it still realistic 
to think we can cover 40 percent of the cost?
    Is it not an unfunded mandate when we tell school districts 
to do these things?
    I just think we have a very praiseworthy goal, but we never 
seem to attain it, and I think it bedevils us.
    Secretary Spellings. Yes. As you rightly observed in your 
opening statement, we are a 9 percent investor in education 
from the Federal level overall, and so that 40 percent 
commitment in IDEA is clearly well beyond that.

           EFFECTIVENESS OF SPECIAL ED DIAGNOSIS/INTERVENTION

    A couple of things I would say: One is we have gotten, I 
think, much more effective with respect to diagnosing and 
intervening and correcting special ed kids who are there 
because they had an undiagnosed and uncorrected reading 
difficulty. That is one of the things that has proven very 
effective about Reading First, to make sure that the kids who 
are diagnosed as special ed are the ones that actually ought to 
be there and served in that way.
    Secondly, as I said, No Child Left Behind has done a great 
deal to build demand for better, more effective and, frankly, 
more efficient ways to serve those youngsters. When we had this 
``put the money out, hope for the best'' kind of approach, I 
think the science around our best practices was more limited.
    We are starting to see better assessments, better response 
to intervention, better techniques around how to meet those 
learners. Theoretically, as that improves, costs will modulate.

                  TEACHING CHILDREN WITH DISABILITIES

    Mr. Walsh. Just one last thought on that and then I will 
yield back my time. I think one of the problems is teachers in 
many school districts are not prepared to teach kids with 
learning disabilities. Kids learn differently.
    I don't know how you do that because everybody is 
different. Everybody has different abilities. Every child 
learns, well, not every child learns in a different way, but 
some kids learn in different ways.
    Is there a way to get at the teacher aspect of this also?
    Secretary Spellings. Absolutely. I think, frankly, one of 
the pioneering parts of teacher education or of education 
policy has been the special ed community. They have been 
leaders. They are the people who first used the brain research, 
the reading research most effectively, and some of our best 
prepared teachers, frankly, come out of that sector.
    I think in the general education programs, we have a lot to 
learn from them. Again, I think this focus on raising 
achievement levels of every kid to grade level and so forth has 
really built more demand for that, and certainly that is what 
our educators are calling for.
    Mr. Walsh. Thank you for your indulgence, Mr. Chairman.
    Mr. Obey. Thank you.
    Ms. McCollum.
    Ms. McCollum. Thank you, Mr. Chair.

                  PROPOSED CUTS IN EDUCATION PROGRAMS

    Secretary Spellings, once again in my opinion and I think 
the facts bear this, the Administration has proposed a budget 
that doesn't come near meeting the stated policy goals of 
improving student achievement, of meeting what was promised in 
No Child Left Behind or improving global competitiveness.
    It recommends cuts. It eliminates programs that Congress 
has rejected time and time again where we know, as Chairman 
Obey pointed out, where there are clear differences and the 
Administration has continued to ignore Congress's differences 
on these.

                 EDUCATION FINANCE ISSUES IN THE STATES

    School districts in Minnesota and all around the country 
are facing incredible financial challenges. What this means 
back home are levies on property tax payers, senior citizens, 
working poor over and over and over again, and many States, 
including Minnesota, are now facing a deficit.
    In my school districts, there is no more fat to cut. We 
have all seen the facts. Forty percent of school districts 
across the country are cutting music, social studies, physical 
education and even lunch. Minnesota and other States are 
considering to opt out of No Child Left Behind because of the 
broken funding promises.
    The President's budget cuts. It underfunds the very things 
that children need to be successful.
    Your reply back in the budget is if States want to make up 
for these cuts in some areas, and I will use drug-free schools 
for an example, school districts can just take the funding from 
a different source. But, as I have pointed out, we have cut to 
the bone.
    Since this budget is inadequate across the board, I want to 
know what the Department's suggestion is to make up for cuts in 
special education. It does go down.
    I have read that school districts are spending more on 
special education than they are on general education in some 
cases because of rising costs, the flat funding for Title I 
while the number of students grows and the challenges faced by 
the districts increase, the cuts to the after-school programs--
I already mentioned safe and drug-free schools--and the 
elimination of counseling and mentoring.
    To make up for the lost funding, what should they do?
    Do I tell them to cut teachers, cut curriculum, to continue 
to increase taxes on local property payers or should we tell 
students and families in our districts they can get by with 
what will be the new quality public education, underfunded, 
cuts, less opportunity?
    Now I want to make it clear. I am for accountability, and I 
have worked on that as a State legislator as well as here in 
Congress, but it is clear to me that there is some very serious 
analysis that has to be done about the effects of these 
programs and what they are having on our schools.

              COSTS AND GAINS OF EDUCATION ACCOUNTABILITY

    So I have a couple of questions: How much are we spending 
nationally, and I mean how much are the Federal, State and 
local governments spending on testing for No Child Left Behind?
    How many hours, individually and collectively, are we using 
of our students' time to take the test for No Child Left 
Behind?
    Are we getting enough results from the expenditures of this 
money and this time to justify the expense for the results we 
are seeing?
    Does the Department have any analysis of what schools are 
giving up when they are shifting resources to testing?
    What are the effects that dwindling resources have on the 
long-term success of our students?
    I want to move past the rhetoric. I want to bring everyone 
to the table. I want to put together a plan for public 
education that moves our country forward and prepares the next 
generation to be globally competitive.
    I have an addendum to my prepared statements. You mention 
that only 2 percent of the school districts, I believe, are not 
making adequate yearly progress. Yet, I have submitted both in 
this Committee and in the Policy Committee a report from 
Minnesota State Auditor Jim Nobles, a nonpartisan number 
cruncher. He says, by 2016, Minnesota schools in general, all 
Minnesota schools, will not be meeting adequate yearly 
progress.
    So I have some doubt to how you came up with the statement 
that you used for the 2 percent, Madam.
    Thank you.

                   GROWTH-BASED ACCOUNTABILITY MODELS

    Secretary Spellings. Thank you, Congresswoman. Lots of 
issues to tackle there. Let me begin with the issues related to 
No Child Left Behind and the last point you made. In your 
State, there are 7 schools in restructuring. Seventy percent 
today make the No Child Left Behind targets.
    One of the things that is going on as you all work here in 
the appropriations process is our look at reauthorizing No 
Child Left Behind under Chairman Miller's committee. One of the 
things that would mitigate against--I mean I assume his 
assumption is that the same pace of identification that we have 
had would continue in the future--is for us to start to look at 
a growth model, a value-added approach for us to look at ways 
to potentially be fairer in establishing accountability for our 
schools.
    I have given waivers to nine States to start to look at 
that method and have recently made that opportunity available 
to every State nationally. So what I am trying to say is we met 
the need for a new approach.
    Ms. McCollum. Is there money in the budget, in the 
President's budget for developing this new growth model for the 
States?
    Secretary Spellings. This is largely about State data 
systems, yes, and we have additional funds for States to 
develop methods, data system methods to track that progress 
over time. So, yes, and I will get to the specific dollar 
amounts with respect to that last point.
    Ms. McCollum. And you had to cut something to do that, 
okay.

                   NO CHILD LEFT BEHIND TESTING COSTS

    Secretary Spellings. On testing, we spend about $400 
million at the Federal level on assessments. What is required 
under this law is that States test one time a year in reading 
and math and they report that information in a disaggregated 
way.
    To the extent that States or local school districts go 
beyond that and assess at benchmark points throughout the 
school year, that is certainly within their purview, but it is 
not required by No Child Left Behind.
    Ms. McCollum. My question was just for the funding for No 
Child Left Behind, how much is it costing States and school 
districts to fund No Child Left Behind testing?
    Secretary Spellings. The full cost of assessment under No 
Child Left Behind is about $400 million and is paid for as part 
of this Act, the full cost.
    Now, as I said, to the extent that others go beyond and put 
additional assessments in or additional subjects, then that is 
certainly their prerogative, and I would have no way of knowing 
what those costs are.
    Finally, I would just say that with respect to your issue 
of narrowing curricula and so forth, the Federal role as part 
of No Child Left Behind is around grade level achievement in 
reading and math, and that has been the focal point of this law 
because this was certainly a bipartisan agreement that those 
were the gateway skills necessary to be effective in science or 
social studies or whatever. And so, that is kind of our 
discreet, yet vigorous, role around issues of reading and math.
    In conclusion, I would say that one of the things that you 
need to know--because I know we have, obviously, these 
perennial discussions about adequacy of resources--is that 
funding is up 63 percent in Title I since the President took 
over and there is a 41 percent increase in NCLB funding. Those 
are all the programs that go under the NCLB rubric. That has 
absolutely kept pace with increases in expenditures at the 
State and local level.
    So, to the extent that, pardon me.
    Mr. Obey. Finish your sentence.
    Secretary Spellings. I was just going to say, to the extent 
that costs are up at the State and local level, we have 
certainly accommodated those increases at the Federal level as 
well.
    Mr. Obey. Mr. Rehberg.
    Mr. Rehberg. Thank you, Mr. Chairman.

          IMPACT OF BUDGET REQUEST ON NATIVE AMERICAN STUDENTS

    One of the problems that I have is that while I supported 
No Child Left Behind and we can claim a lot of success or use 
it as a way of claiming success, the difficulty I see is in 
matching the dollars that we spend at the Federal level for the 
kids that are identified under No Child Left Behind as having 
the problems.
    As I go through the President's budget again, much the same 
as my criticism of the last budget that the President presented 
to this Subcommittee, it is the cumulative effect of what it 
does to my Native American population. It isn't usually one tax 
that gets a business or one regulation. It is the cumulative 
effect of all the taxes and all the regulations.
    When you have schools with students that are having 
difficulty and then the President brings in the budget once 
again that sorely underfunds Impact Aid, especially the 
construction programs, zeros out for any increase, rural 
education, slight increase in IDEA, TRIO, zero percent 
increase, tribal colleges, cutting of $23 million, it is the 
cumulative effect of all of that that we just don't see the 
support coming out of No Child Left Behind.
    You can say it does. You can put all the platitudes on it 
that you want, but the tribal schools in my State and the 
tribal colleges in my State will tell you that this 
Administration doesn't get it.
    So, aside from hanging on to the No Child Left Behind, how 
can you defend the budget that is impacting the tribal schools 
within the State of Montana?
    Secretary Spellings. Well, as I said, Congressman, the 
approach of the Administration has been to make a priority of 
programs that are large in nature and that have a lot of 
latitude around them: IDEA, Title I.
    Mr. Rehberg. Large in nature? I thought No Child Left 
Behind was about the individual child.
    Secretary Spellings. It is.
    Mr. Rehberg. Cumulatively, you are affecting those 
individual children by either not increasing the funding within 
those particular programs or cutting in the case of the tribal 
colleges. So I don't get it.

              AUTHORIZED FEDERAL SHARE OF SPECIAL ED APPE

    And, what I really don't get is, this Administration 
convinced us to pass No Child Left Behind in 2001, and IDEA was 
reauthorized in 2005, and the 40 percent figure was still in 
it. If they didn't intend to fulfill the commitment, then why 
did they come in and support a reauthorization level of 40 
percent. Why didn't we just zero it out then?
    Secretary Spellings. As I said, the approach of the 
Administration has been to prefer programs that are large in 
nature and have a lot of latitude for States and local 
districts--IDEA, Title I, Reading First and the like--over 
programs that are small in nature and small in scale, and that, 
with respect to the PART process, OMB's performance review, 
have been ineffective. And so, there is a lot of latitude 
around those larger programs.
    All of the increases in these larger programs can be used 
on Native Americans kids, rural kids and so forth, and that 
provides more local control, preferred over particular silos of 
individual programs.

                   EFFECT OF IMPACT AID PROGRAM CUTS

    Mr. Rehberg. But with Impact Aid, we have no ability. We 
have no tax structure because it is federally-owned property or 
tribally-owned property. There just is not the ability to 
replace that based upon the local taxing authority.
    And so, when you don't show a commitment there, you are 
just undercutting any of the successes that you might have seen 
in No Child Left Behind. It shows a fundamental either 
misunderstanding or contempt for those of us who have large 
Federal properties or tribal properties within our State to 
continually hang on thinking, well, No Child Left Behind will 
come in and fill the void. It just doesn't.
    I don't know what you guys are smoking over there, but it 
ain't working. It just isn't working, and so maybe a new 
Administration with new leadership will get it because it is 
just really frustrating to see our tribal schools falling 
further behind while No Child Left Behind is supposed to be the 
answer. It isn't working.
    Hence, I voted to override the President's veto and will 
continue to do it again as a Republican.
    Secretary Spellings. All right. [Laughter.]
    Mr. Obey. Ms. Lee.
    Ms. Lee. Thank you, Mr. Chairman.
    Good morning, Madam Secretary. Let me ask you a couple of 
questions.

                        UPWARD BOUND EVALUATION

    First of all, as you know, for nearly a year the 
Congressional Black Caucus has been concerned about this 
evaluation study or this evaluation that was really basically 
flawed and that some students in a control group--this has to 
do with Upward Bound--would never again be able to participate 
in Upward Bound. And so, last year in the appropriations bill, 
we included language that really barred funding for this study.
    Lo and behold, we found that the study was continuing 
anyway, and we wrote you a letter. Subsequent to that, we 
received a copy of a letter to Upward Bound grantees, 
indicating that now it would be best to terminate the 
evaluation.
    So I just want to clarify what happened. Why did you 
continue with this.
    You knew what the intent was of Congress to stop this, and 
it took a letter by several of us to write to you to be able to 
get a response. I still don't know if the grantees have 
received that response yet. This was a copy of a letter.
    So that is the first question.
    Secretary Spellings. They have.
    Ms. Lee. They have?
    Secretary Spellings. They have been notified that the 
evaluation has ceased.
    I would just say that this is the only program under the 
jurisdiction of the Department of Education that has a 
prohibition against evaluation. As a former State policy person 
where we invested State resources around Upward Bound and 
programs like that, not having the ability to make the case on 
behalf of effective programs I think is going to ultimately 
hurt.
    Ms. Lee. Sure, but it was not being against the evaluation. 
It was the design of the evaluation and the discriminatory 
nature of the evaluation, and so that was the problem.
    Secretary Spellings. It has been canceled, and grantees 
have been notified.
    Ms. Lee. Thank you.

                   BUDGET CUTS IN EDUCATION PROGRAMS

    The second question I have has to do with this budget, and 
I just want to get your assumptions as it relates to especially 
low-income children, poor children and minority children and 
youth based on this budget.
    I just want to mention a couple of the programs that have 
been cut: The 21st Century Community Learning Centers, that is 
after-school centers, down 26 percent. Safe and Drug-Free 
Schools State Grants, down, well, that is zeroed out. Mentoring 
programs, zeroed out. School counselors, zeroed out. Vocational 
education, zeroed out. Supplemental Education Opportunity 
Grants, zeroed out. Hispanic-serving institutions, down 20 
percent. Historically black colleges, down 35 percent.
    I mean what is going on as it relates to the commitment to 
educate children who don't have a lot of money, children who 
come from families who live in low-income communities, children 
who are minority and poor?
    These cuts directly impact their educational ability, their 
ability to learn and to move forward and to develop the type of 
life that we want them all to develop in terms of the skills 
and knowledge, and so it is really cutting their educational 
opportunities.
    We see problems all over the country now in school safety, 
violence on campuses. But mentoring, school counselors, safe 
and drug-free schools, those are certainly initiatives that 
help identify early on problems, children who need some 
intervention before incidents of violence break out.
    I have to ask you, what do you all think over there? What 
is your rationale for all this?

              EDUCATION PROGRAMS PROPOSED FOR ELIMINATION

    Secretary Spellings. There are 47 programs that are cut 
from the Department of Education budget. Twenty-seven of them 
are small in nature, $25 million or less, and have been rated 
ineffective by the PART process and/or are so small in scale 
that it is hard to get critical mass around them.
    Ms. Lee. So school counselors are ineffective?

               EDUCATION PROGRAMS PROPOSED FOR INCREASES

    Secretary Spellings. In favor of, Congresswoman, 
investments in other programs like a giant Pell increase, and 
increases for Title I, IDEA, Reading First and programs that 
have a lot of latitude and flexibility for local school 
districts. Certainly Title I funds can be used for school 
counselors and those sorts of things.
    Ms. Lee. Yes, they can be used, but they are not designated 
to be used for school counselors, mentoring programs, safe and 
drug-free schools.
    You are saying now that if schools decide they want to use 
funds for these programs, they can. But if they don't, given 
the minimal resources and the choices that schools have to 
make, why in the world would we put the squeeze on them like 
that?

             BUDGET TRADEOFFS MADE FAVORING LARGER PROGRAMS

    Secretary Spellings. Well, as I said, a couple of answers 
are, one, the programs are found to be largely ineffective by 
virtue of the OMB performance review process and, secondly, 
they are so small in nature that it is hard to get critical 
mass around those sorts of activities.
    You mentioned safe and drug-free schools. There is a 
preference toward statewide activities, and this is certainly 
what we saw in the aftermath of Virginia Tech, that can be more 
strategic, more effective because they are looked at in the 
context of State laws and so forth.
    Ms. Lee. And Hispanic-serving institutions, historically 
black colleges cuts?
    Secretary Spellings. With a very large and substantial 
increase in the Pell grant. As I said, tradeoffs have been made 
with a preference toward large programs.
    Ms. Lee. Thank you, Mr. Chairman.
    Mr. Obey. Mr. Regula.
    Mr. Regula. Thank you, Mr. Chairman.
    I appreciate the good job you have done, Ms. Secretary.
    Mr. Chairman, I want to submit a number of questions for 
the record, but I will have a few here.

            CONNECTION BETWEEN READING FIRST AND SPECIAL ED

    I appreciate the fact that you made the point that Reading 
First is tied to special ed. I think we overlook the 
connection. The failure of one creates the problem in the 
other, and you are right on.

                         TEACHER INCENTIVE FUND

    A couple things: Teacher Incentive Fund, what is the 
experience thus far of getting money to support teachers who 
are willing to go into very challenging situations in low 
income neighborhoods where it is so important to have that good 
teacher? Does this program help that to happen?
    Secretary Spellings. Absolutely, it does, Mr. Congressman, 
and thank you for your help in obtaining those resources.
    There is almost $100 million invested in a series of pilot 
programs, about 34 grants around the country. They are 
sometimes statewide efforts, such as Ohio is looking at urban 
school districts, rural communities, to find ways to get our 
best teachers doing our most challenging work.
    We often do just the opposite in education. Our most 
experienced, most credentialed people are in our least 
challenging settings.
    As you know, the program also focuses on principals in 
addition to teachers.
    We believe that this practice is just being developed 
around the country, and that is why the President's request is 
to double that program to $200 million so we can do more of 
that. We are just learning the best approaches, and I would be 
glad to share that with you as it is developed.
    Mr. Regula. Well, I am glad to see you recognized that with 
the increase, and it also leads to my second question. What is 
happening on the dropout rate?

                     ADDRESSING THE DROPOUT PROBLEM

    One of the things that has really concerned me is the 
percentage nationwide of students that drop out, and I think 
part of it goes back to a failure to learn to read and perform. 
This dropout decision stems from first, second, third, fourth 
grade, and that is the reason we need to encourage these good 
teachers to go into those situations.
    Are we making any progress in reducing the number of 
dropouts, a terrible waste of human capital?
    Secretary Spellings. Not enough is the short answer. 
Certainly there are places and States that are working on that, 
more customizing of education around those needs as well as 
helping struggling students, who have been left behind 
previously, catch up in basic skills like reading.
    Really, our kids drop out for two reasons. One, they are 
unprepared to be successful in high school, as you mentioned. 
That is why we need to have a Striving Readers Program that can 
take some of this reading focus to our middle and high schools.

                       ADVANCED PLACEMENT PROGRAM

    But also, it is often because kids don't see enough rigor 
or relevance in their high school, no reason to show up, and 
that is why the President has called for expanding the Advanced 
Placement program that can provide opportunities for kids to 
get additional training particularly in our inner city schools 
where we often ration rigor away from those communities 
currently.
    Mr. Regula. Well, I want to say those work because in my 
community the colleges are putting their faculty members in the 
high schools in order to inspire these kids to think about 
going on because a lot of them don't get much incentive 
otherwise to go beyond the high school.
    Secretary Spellings. Exactly.
    Mr. Regula. I think that program offers great possibilities 
in the dropout situation, and it has worked there. I think it 
is part of the P16 program which started in Georgia, which to 
me has a lot of pluses to make communities aware of this need.

                           TWO-YEAR COLLEGES

    You don't talk about the 2-year colleges. We always think 
when we say college we think 4 years, and yet there are so-
called junior colleges that offer an Associate's degree and a 
skill that they can take to the marketplace after 2 years.
    Secretary Spellings. Right, community colleges.
    Mr. Regula. Or, if they discover that they have an aptitude 
and desire for a 4-year diploma, they can move on.
    Do you think we do enough to support and incentivize these 
2-year programs that are growing in popularity?
    Secretary Spellings. They are growing in popularity, and 
they are very attainable and usually the most cost-effective 
option for students. That is why about 35 percent of our Pell 
recipients attend community colleges.
    Mr. Regula. That is interesting, yes.
    Secretary Spellings. They do work-related education that is 
very much related to the workforce, as you know, and I think 
that is developing around the country.
    In places like Florida and North Carolina, they have done a 
lot of common course numbering and dual enrollment so that kids 
are getting a high school diploma simultaneously with an 
associate's degree and the like, but the primary Federal 
investment in our community colleges, of course, is around the 
Pell Grant where many of those students attend.
    Mr. Regula. In our community, a technical institute which 
is just half of the community college, if you will--it is 
strictly an Associate's degree--has gone from zero to nine 
thousand in a relatively short time because people get on the 
bus and get there. If a company moves out, they can go and get 
a new skill and so on.
    Secretary Spellings. Exactly.
    Mr. Regula. I am glad to hear that we are moving on that.
    Thank you, Mr. Chairman.
    Mr. Obey. Ms. Roybal-Allard.

             DECREASES IN PROGRAMS SERVING LATINO STUDENTS

    Ms. Roybal-Allard. Madame Secretary, as you know, the 
Latino population is the largest and fastest growing ethnic 
group in the United States. In 2003, Latino children accounted 
for 18.5 percent of our Nation's total public school 
population.
    As these numbers continue to grow, our country will 
increasingly look to Latino children to be a major part of our 
Nation's next generation of teachers, doctors, health care 
providers and entrepreneurs, and this is going to be a 
difficult task to achieve considering that Latino and other 
minority students are more likely to attend impoverished 
schools, demonstrate lower performance in core academic 
subjects and have a higher dropout rate than their white peers.
    Now, the President's budget touts its $30 million increase 
to the English Acquisition Program and its $23 million increase 
to the Migrant Education Program. The fact is, however, that a 
mere $30 million increase for English Language Acquisition does 
not keep pace with ELL enrollment, which has nearly doubled 
over the past 15 years. Nor will a $23 million increase to 
Migrant Education begin to make up for the cuts that have been 
made to the program since No Child Left Behind became law. 
Consistently low funding for this program has also made it 
impossible to implement the Migrant Student Record Transfer 
System which is an essential tool for tracking severely at-risk 
and mobile migrant students.
    Equally alarming is that the President's budget also dis-
invests in other programs serving Hispanic and minority 
students that are critical to ensuring our country has an 
educated workforce that can compete in our highly technological 
and global economy.
    For example, the President cuts $66 million from Even 
Start, a family literacy program that serves many Hispanic 
families. It cuts $18.8 million from Hispanic-Serving 
Institutions, which are the principal enrollers of Hispanic 
college students. The President freezes funding for the very 
successful HEP and CAMP programs which help migrant students 
graduate from high school and go on to college, and he cuts 
$38.9 million from the Parental Information and Resource 
Centers, even though these centers provide a majority of 
Hispanic families with resources about college access.
    Can you please explain the rationale behind cutting so many 
valuable programs especially designed to serve this extremely 
vulnerable population?
    Secretary Spellings. Congresswoman, thank you.
    As you rightly noted, there are increases in some of those 
programs like the migrant program, of course, Title I and other 
things that certainly serve Hispanic students.
    Again, based on the performance review process that OMB has 
established, we look at programs that are small in nature. We 
look at all programs and whether they are effective or not. The 
programs that are recommended for reduction or elimination are 
those that have been found to be ineffective with preference 
being given to larger-scale programs like Title I, IDEA, 
reading, Title II for teacher development and so forth, so that 
those kids can be on grade level by 2014, as No Child Left 
Behind calls for them to be.
    I would also say just as a matter of policy--and I know you 
are aware that this is all being debated in Chairman Miller's 
Committee as we speak--that No Child Left Behind has done more 
to focus attention and resources and accountability around the 
needs of Hispanic learners than anything that I am aware of in 
the last 25 years I have been involved in this, and I think it 
is to the good of Hispanic kids.
    We are just beginning to develop the right interventions, 
the right strategies and that, in my mind, is because of this 
intensity of focus that has been developed because of this law.
    Ms. Roybal-Allard. Madam Secretary, let me just point out 
that the fact of the matter is that the President has created a 
Title I shortfall of over $65 billion during his time in office 
and a near $406 million increase is hardly impressive nor is it 
going to do the job that we need to do in order to educate our 
children.
    That is certainly true when it comes to the programs that 
are important to Hispanic students. As we heard last year in 
expert testimony, unless that population is properly educated, 
this country is going to be in trouble because Hispanic 
students are going to be or should be an important part of our 
workforce.
    Secretary Spellings. Absolutely. Absolutely.
    Ms. Roybal-Allard. I am afraid that this budget certainly 
does not recognize not only the important role that this next 
generation of Latinos and other minority students will play but 
the role our children will play in general.
    Mr. Obey. Thank you.
    Mr. Simpson.
    Mr. Simpson. Thank you, Mr. Chairman.

             INCREASED FOCUS ON PUBLIC EDUCATION FROM NCLB

    Welcome, Secretary Spellings. I agree with you. No Child 
Left Behind has done more to focus attention on education not 
only of Hispanic kids but of all kids than probably anything 
that has been done in years. That doesn't mean that it is 
perfect.
    Secretary Spellings. I agree.
    Mr. Simpson. There are things that need to be changed in 
the reauthorization, and I know you are working with the 
appropriate committees on reauthorization.
    Sometimes I don't think the President gets enough credit 
for really focusing attention, whether you agree with it or 
not, with focusing attention on education and the need to 
improve quality of education.

                         BUDGET REQUEST TO OMB

    Let me ask you a couple of questions. First, what was your 
original request to OMB for your budget this year?
    Secretary Spellings. I don't know off the top of my head. 
As you know and I am sure are well aware, there is a lot of 
``toing'' and ``froing'' between the Department and OMB as we 
settle on a final number.
    Mr. Simpson. But I assume you put together the original 
request as to what you think is necessary to move the 
Department and move education forward.
    Secretary Spellings. Yes, sir.
    Mr. Simpson. Then it gets whittled down as things go back 
and forth.
    Secretary Spellings. In the context of other priorities and 
other competing agencies and so forth, yes.
    Mr. Simpson. You don't know what the original request was 
at least?
    Secretary Spellings. Well, I certainly can find out. I 
don't know off the top of my head.
    Mr. Simpson. Could you get that information for us?
    Mr. Skelly. We can provide that, Mr. Simpson.
    Mr. Simpson. I would appreciate it. I would like to see 
that.

                     CAREER AND TECHNICAL EDUCATION

    One of the other things that bothers me a little bit, as 
you know, we have the Idaho National Laboratory in Idaho.
    Secretary Spellings. Yes.
    Mr. Simpson. As I talk to companies, nuclear companies and 
so forth, the one thing they say that is going to hold back the 
advancement of nuclear energy and so forth in this country is 
the lack of technical skills of welders, electricians, those 
types of individuals, because we aren't training them, and you 
have eliminated the career and technical education part in your 
budget.
    Secretary Spellings. As you know and as I have said, we 
look at programs and whether they are effective or not. One of 
the things that we were encouraged about is more alignment with 
rigorous academic skills and so forth in our vocational 
education programs, but we have yet to see that. That is why, 
again, we focus on investments that are effective, Title I and 
others, in favor over those that have proved to be ineffective 
to date.

            MATH AND SCIENCE EDUCATION AND TEACHER TRAINING

    Mr. Simpson. What are you going to do to meet those demands 
that are going to be coming up?
    Secretary Spellings. Well, the President has called for 
expansion of the Advanced Placement Program to provide more 
rigor in math and science and other subjects in our high 
schools.
    He has appointed, and actually they will soon conclude 
their work, a math panel to look at the best research, the most 
effective practices that can be shared with educators about how 
we can be better in that area.
    Obviously, we need to focus on teachers. As you are well 
aware, many of our teachers, particularly in math and science 
fields in the elementary and middle school levels, are not 
sufficiently rooted in those areas to be effective, and so 
there is a major focus, obviously in Title II, for professional 
development.
    But, frankly, we have seen good gains on No Child Left 
Behind in the math arena that have really outpaced reading. So 
there are really some signs for encouraging feelings because of 
the increases that we have seen so far.

                       NARROWED CURRICULUM FOCUS

    Mr. Simpson. One of the things that concerns me, quite 
frankly, and I agree with the emphasis on math and science. We 
need to do that, but I think we are leaving other parts of 
education behind by doing that.
    You are seeing programs dropped in schools. I think the 
arts are important in schools, but you are seeing more and more 
of those dropped, and less emphasis on those programs as money 
is diverted into math and science and other things. We need a 
well-rounded education, not just a math and science geek, if 
you know what I mean.

                          TEACHER RECRUITMENT

    The other thing that really concerns me is if you look at 
the number of teachers in this country that are aging and could 
qualify for retirement or will retire within the next 10 years. 
What are we doing to replace those teachers and make becoming 
an educator an important choice when someone goes to college?
    You have to have a quality teacher at the front of that 
classroom. That is not the profession that a lot of students 
are choosing when they go to college now.

            COLLEGE COST REDUCTION ACT AND TEACHER TRAINING

    Secretary Spellings. You all, as part of the CCRA last 
year, took some steps to provide additional loan forgiveness 
for teachers or prospective teachers who want to enter the 
profession. We are in the rule-writing process and adressing 
that to, obviously, try to recruit and retain more people into 
this profession.
    Also, obviously, support for Teach for America and Troops-
to-Teachers, other programs like that provide resources to get 
folks, effective folks into our classrooms.

                   EDUCATION CURRICULUM--FEDERAL ROLE

    With respect to this narrowing of the curriculum thing, I 
think obviously our attention and what we all look at in 
education, is what is the Federal role as a 9 percent investor 
in this enterprise. What is the point of entry? For 40 years, 
it has been around our Nation's poor kids.
    Mr. Simpson. Nine percent participant in terms of funds, 
but what percent in terms of direction, rules and regulations?
    Secretary Spellings. It is around reading and math, getting 
kids on grade level by 2014. We don't have a giant title 
program centered around arts and science, arts or other 
programs.
    So I would say this is a necessary but not sufficient first 
step. This is a shared partnership with States and localities, 
and I think they are adapting with our focus on achievement for 
everybody in the context of the other things they want and 
should do.

                          PELL GRANTS FOR KIDS

    Mr. Simpson. Let me ask you one question as time runs out, 
quickly. The Pell Grants for Kids program, that you have 
proposed, a cute name for a voucher program for parents that 
want to send their children to some other school if they have a 
failing school, theoretically. What are you doing for those 
failing schools and the students we leave behind in those 
schools?
    It is a very small percentage of parents that are going to 
choose to send their student to another school. What are we 
doing for the resources for that school that we left behind?

                        SCHOOL IMPROVEMENT FUNDS

    Secretary Spellings. Asking for $500 million in additional 
school improvement funds to, as I said, to triage some of those 
schools.
    One of the things that we are debating, again as a matter 
of policy, are ways to make distinctions across the 
accountability spectrum between those chronic under-performers, 
5 or more years of not making it, and those in-range schools. 
And so, additional resources ought to be spent on those that 
are nearing that sort of condition.
    However, those kids who have been in those schools and on 
those campuses for 5 or more years need a lifeline to a 
different, better opportunity. I was encouraged that 
Congressman Emanuel is about to introduce something that is 
that notion for charter schools, so that kids can take 
resources with them to charter schools outside their district.
    Mr. Obey. Mr. Honda.
    Mr. Honda. Thank you, Mr. Chairman.
    Welcome, Secretary Spellings. I appreciate your being here.

             INCONSISTENCY IN EDUCATION FUNDING PRIORITIES

    I guess you wouldn't argue the fact that public education 
in this country is critical in terms of having a good, strong 
democracy.
    Secretary Spellings. Absolutely.
    Mr. Honda. You probably wouldn't argue the fact that having 
a strong public education in this country is akin to a good 
national security policy too.
    But your written testimony is very confusing to me because 
you say that it is a push ahead budget, yet there are 
astonishing increases in different programs. So if that is the 
case, then there must be astonishing cuts in other programs.
    You just mentioned that you have cut something like 27 
programs that are $25 million or less because they were 
duplicative or they didn't prove to be successful. The question 
I have regarding that is you established a program where you 
took some money out of a teacher improvement program that was 
larger and more flexible and successful. You took $100 million 
out, and you created, what did you call it, a Teacher Incentive 
Program?
    Secretary Spellings. Teacher Incentive Fund.
    Mr. Honda. Yes, and you created a smaller program that 
hasn't been tested. How does that match the comments that you 
are making when you cut close to $625 million out of smaller 
programs?
    Secretary Spellings. Well, clearly, those are resources 
that are developed around teachers and teacher needs. As Mr. 
Regula----
    Mr. Honda. Excuse me, but the money out of the program from 
which you took has the same direction and same mission, it 
seems to me. And so, it sounds like you have a reason for 
cutting programs, but then you create other programs that seem 
to fit the same characteristics.
    You cut ESEA funds for elementary. You put it as secondary. 
I don't know how you sustain a good district-wide program when 
you take money here, and you put it back up over here, and then 
you leave the lower grades where a lot of that work is needed 
and expect any kind of growth for those students.
    Then the minority-serving institutions, higher education 
institutions, you cut them by 27 percent. You said, but we 
provide. I assume you are saying you provide an equal amount of 
money for Pell grants, but the Pell grants are for students and 
that money goes back into the institutions. But institutions 
need the money just to maintain their functionality.
    It just feels like you are setting up a system that is 
going to be, at best, nonfunctional or is going to have a 
difficult time trying to meet its goals.
    The other thing is I guess the $300 million Pell Grant for 
Kids scholarship, that in itself, the way you describe it, is 
really money for people to escape a situation. I am not sure 
what that really addresses. It is not really a lot of funds for 
those students who are Latinos. I would like to see the numbers 
for how the demographic breaks down in terms of the types of 
kids that are leaving.
    There is a lot of inconsistency in your budget, and I think 
that the amount of money that you cut out of programs, the 27 
programs, amounts to about $625 million which is about the same 
amount of money that was put into other programs.

           ACADEMIC COMPETITIVENESS AND SMART GRANTS PROGRAM

    There is a program you were responsible for that you talked 
about, the Smart Program, something like that.
    Secretary Spellings. AC/SMART grants, the Pell enhancement 
or advanced placement program.
    Mr. Honda. Right, and that has something like $960 million 
in it?
    Secretary Spellings. Yes.
    Mr. Honda. How much did you return back to the budget?
    Secretary Spellings. Six hundred and fifty million dollars.
    Mr. Honda. So, essentially, a good proportion of that money 
was never touched.
    Secretary Spellings. Because we didn't have enough kids who 
were qualified.
    Mr. Honda. You didn't have enough kids who qualified?
    Secretary Spellings. That is correct.
    Mr. Honda. Well, did you have a system that was well 
designed so that people knew that it was available?
    This was supposed to be on top of Pell grants also?
    Secretary Spellings. It is. It is on top of Pell grants.
    Every State has certified. The law calls for them to 
certify in conjunction with me a rigorous course of study that 
makes them eligible for this additional financial aid.
    The first year it was enacted it was about an $800 million 
program. By virtue of these various State programs, who they 
identified, who had taken those, the kids who had taken those 
programs, we spent about $450 million of those resources.
    Mr. Honda. And then this time, you spent even less than 
that.
    Secretary Spellings. Based on the kids who are taking these 
programs. It shows us the need to continue to work on our high 
schools. I grant you that, absolutely.
    Mr. Honda. It is interesting to me.
    Mr. Obey. The gentleman's time is expired.
    Mr. Honda. Thank you.
    Mr. Obey. Mr. Peterson.
    Mr. Peterson. Good morning. Secretary Spellings, I would 
like to thank you for your public service.
    Secretary Spellings. Thank you, Congressman.

                NO CHILD LEFT BEHIND FOCUS ON EDUCATION

    Mr. Peterson. I think the Bush Administration's 
introduction of the concept of No Child Left Behind has 
probably been one of the best academic debates in this country 
and hopefully will continue to be because we shouldn't leave 
anyone behind. We shouldn't even think about it.

                     CAREER AND TECHNICAL EDUCATION

    But I will say, yesterday the House passed a resolution 
honoring the goals of Career and Technical Education Month. I 
want to tell you in my view, and I have been on this Committee 
throughout the Bush Administration, those that are technically 
gifted in America do not have equal access or opportunity to an 
education as those who are academically gifted.
    Ninety percent of the companies in this country employ 
people who are trying to stay here, trying to compete here and 
not move offshore, are screaming for skilled workers. Your 
budget, year after year, puts a zero priority on technology 
education.
    Fifty percent of the kids that attend my schools and the 
teachers I talked to in the classrooms I visit, don't know what 
academics are. They don't know what the word means. They are 
attending school. They come from poor families. They are 
struggling. Nobody is telling them that they need to get a good 
education and they need to go to college.
    But our whole program is about those who are going to 
college. I am all for them, but half the kids that are 
attending our schools don't know even the possibility of a 
college education in rural America. They are just attending 
school.
    A lot of them are technically gifted. They are born with 
the skills to take things apart, fix things, and it is amazing 
to watch how technically gifted some kids are, but this 
Administration doesn't value that.

        RELEVANCE OF ACADEMICS SEEN THROUGH TECHNICAL EDUCATION

    Those are the people that run our factories. Those are the 
people that make things work. I have seen a lot of kids. When 
you put highly modern, technical classrooms in a school, the 
poorest among us get excited, and then academics become 
relative to them when they learn how to do something.
    I will never forget when I was in a computer classroom to 
repair computers. It was a very poor school in my district, and 
I had gotten them some funding and they put in a computer 
repair program.
    The kids that were in there, and I asked the class, how 
many of you have a computer at home? Seventy percent of them 
didn't have a computer at home. They were poor kids, but they 
were excited because this one kid said to me and I will give 
his exact words.
    He said, I tore this sucker apart. Those were the words he 
used. I put in a new motherboard, and I put in this, and I 
plugged it in, and it worked.
    Computers are going to be relevant in the rest of his life, 
just repairing a computer. Information now is important to him.
    This Administration has just written that all off as a 
waste of money, as a waste of time. Folks, that is the engine 
that will drive this country economically. We are not short of 
academic people to run things. We are short of people to do 
things.
    The cars of today have 50 to 100 computers in them. When I 
was growing up, you learned to be a mechanic in the backyard 
because you were poor and you were always working on your dad's 
car. That was how you became a mechanic.
    Not today. You have to go to a certified school. It needs 
to start in high school, not at college level.
    PLC, what is a PLC? A program logic controller, it is a 
computer that runs a machine in our manufacturing plants. I 
have 20 counties. I don't have a school that teaches how to 
repair a PLC, a program logic controller, a computer that runs 
a machine. We have to bring in technicians from out of the area 
because we don't teach them.
    I talk to every growing company in my district. Their 
number one problem is skilled workers because they are only 
growing because they have invested heavily in modern machinery. 
It takes skilled people to run it, not academicians.
    But when young poor people, specifically, get skilled 
training so they can accomplish something, then the academics 
become relevant to them.
    I think you have it backwards. The dropout rate in the 
cities would be a lot less if they had skilled training there 
for the kids who can do things with their hands.
    Over half of Americans shouldn't be academicians. Twenty-
three percent need a college education, theoretically. More 
than that is better. But our whole focus, your whole focus is 
on academics, and you have thrown the baby out with the bath 
water by continually de-funding technology education.
    I would be interested to hear your thoughts.

       ACADEMICS AN ESSENTIAL PREREQUISITE TO TECHNICAL EDUCATION

    Secretary Spellings. I would grant you that there is 
absolutely an emphasis on grade-level achievement in reading 
and math as the absolute necessary requisites to be successful 
in a modern manufacturing plant or in any kind of endeavor, 
technical or otherwise. It is not a skill. Basic literacy is 
not a skill that is only for the college-going, and we are a 
long way from doing that.
    In fact, these new technologies that you describe require 
virtually algebraic knowledge and experience to work in those 
sorts of arenas. An ability to read and cipher on grade level 
is an absolute prerequisite to success in that and every other 
endeavor.
    Mr. Peterson. But when the Federal Government abandons 
technology education like you have, we won't have technology in 
the schools.
    We don't fund the majority of our schools, but the Federal 
Government has always been the leader of what we ought to be 
doing. We are the idea, and then the States partner with our 
money. To get our money, they do what we think they ought to 
do. That is what they do.
    We give them a little bit of money to lead them down the 
road, and you are saying technical education is not important 
because you don't fund it.
    Secretary Spellings. We have spent more than $30 billion 
through the E-rate tax.
    Mr. Peterson. That is not appropriated money. That doesn't 
count. You can't get by with that. I am sorry.
    Technical education has not been a priority of the Bush 
Administration, and it just astounds me.
    Mr. Obey. The gentleman's time is expired.
    Mr. Jackson.
    Mr. Jackson. Thank you, Mr. Chairman.
    Secretary Spellings, thank you for your service to the 
Nation.

                       FEDERAL ROLE IN EDUCATION

    Let me first begin by saying my attitude and disposition 
about this budget is not too far from what I heard Mr. Peterson 
say, and I want to begin with a little context.
    I heard one of my colleagues say, what is the appropriate 
role of the Federal Government in education, and I want to put 
all my cards on the table for my colleagues, both on the 
Republican and on the Democratic side of the aisle and 
certainly for you, Madam Secretary.
    I believe our role as a Committee and as elected officials 
is to build a more perfect union amongst the States.

          CLOSING THE EDUCATION ACHIEVEMENT GAP BETWEEN STATES

    It is the States, from my historical perspective, that have 
created the separate and unequal education system.
    It is poor children and their families. It is African 
Americans and their families. It is Latinos and their families. 
It is the disabled and their families. It is young women and 
their families who petitioned their government to close the gap 
that exists between the States and their opportunity in our 
public education system.
    It is not the Federal Government that has maintained that 
separate and unequal system. I could go back through our 
Nation's very troubled history on this question. We have even 
sought the intervention of the Federal courts to try and close 
gaps between certain sides of town and other sides of town, to 
close the profound gaps that exist in education.
    As the Secretary of Education, I see your role--and maybe I 
am getting this wrong, Mr. Chairman--as the primary champion 
for the Federal Government in closing the gaps in the States.
    We don't need a States Righter, someone coming to us or 
even members of this Committee, arguing that the Federal 
Government should have a limited role and the States are doing 
a good job. They are not doing a good job. They are separate 
and they are unequal.
    In fact, this Committee actually funds a number of studies 
that actually rank the States, and every year that we serve on 
this Committee we hear who is doing the best job, number one 
all the way down to number 50. So there are 49 States every 
year that are not quite in the number 1 position.
    And so, the American people petition their government 
through our Committee, through this budget and through this 
appropriations process to close the gap in the States so that 
all of our children, whether they are in Idaho, Massachusetts, 
whether they are in the southern part of the United States, the 
western, the northeastern part of the United States, to close 
the gaps that exist from access to quality, to books, to size 
of classrooms to teacher quality to teacher training to access. 
You name it.
    So in the final analysis, if we are not interested in 
building a more perfect union amongst the States, we ought to 
just say that because this budget does not reflect in some of 
the cuts and some of these programs do not reflect that we are 
trying to close the gaps that exist in the States.
    If we are the Committee of last resort to giving all of the 
American children an equal opportunity in the States, then yes, 
we have to fund the technical assistance programs that Mr. 
Peterson is talking about. We have to fund the career 
opportunity programs that I am talking about and the GEAR UP 
programs and the TRIO programs because the States don't have 
comparable programs that can give children an equal opportunity 
to participate in the Nation's education system.
    So let me first start with my premise even though I 
recognize that my time will expire before I even get to the 
questions because once I lay out the premise, once I lay out 
the premise, then this is a bunch of garbage.
    I don't mean to say that the staff has not put in 
significant work, but the premise is wrong, that there should 
be some limited role of the Federal Government when we are the 
body of last resort to give children in our Nation's public 
education system some opportunity in the States.
    The great tragedy of this Committee is that we rank the 
States, the best State versus the other 49 States that need to 
catch up to the best State every year, and then we come back 
and talk about whose State is number one and whose State is 
number 50 with Mississippi usually being consistently number 50 
and then my State, 19, 20 or whatever it is.
    Then I come here, arguing for more resources to close the 
gap between my State and the number one State only to be told 
through some budget process or through some President's budget 
request that there is never enough money to close the gap for 
the children during the educational life of my constituents in 
the course of a given process.

                            VOUCHER PROGRAMS

    So, with that said, I have questions about the proposed 
Pell Grants for Kids program. The President is once again 
requesting $300 million for a school voucher program tied to No 
Child Left Behind despite Congress' repeated rejection of the 
idea.
    Why does this Administration continue to attempt to funnel 
Federal tax dollars to private schools with no pretense of 
requiring those schools to adhere to the very same public 
accountability standards by which our public schools continue 
to be judged?
    Lastly, oh, my time is expired.
    Mr. Obey. You can take 20 seconds.
    Mr. Jackson. I appreciate that. I will yield my 20 seconds 
to the Secretary for the answer, and I will submit the rest of 
my questions. [Laughter.]
    I will submit the rest of my questions for the record, Mr. 
Chairman.
    Mr. Obey. We will run a slow clock on you, Ms. Spellings.

                  FOCUS OF EDUCATION IS ON EVERY CHILD

    Secretary Spellings. All right. Thank you, Congressman.
    I can assure you I am the primary champion for leveling 
that playing field. That has been the 40-year role of the 
Department of Education in the Federal Government. Title I, 
IDEA, these programs were created on behalf of poor and 
minority kids, and that has been the expectation.
    Six years ago, when we passed No Child Left Behind, we said 
to ourselves: We are for real. We mean it. We are going to hold 
the schools accountable for at least grade-level achievement by 
2014 for every one of those kids by disaggregating data.
    And, I can assure you there is discomfort in the States in 
many places because of that focus on every single child. I 
don't dispute that at all, and it has been powerful.

                    ADEQUACY OF EDUCATION RESOURCES

    With respect to resources, as you know, this is a perennial 
discussion between all of us. Funding is up 63 percent in Title 
I and No Child Left Behind since the President took office. Is 
it enough? We will continue to debate that, obviously, but I 
can assure you disaggregation of data has done more to attend 
to the needs of poor and minority kids than any policy we have 
ever put in place.
    Mr. Obey. Mr. Ryan.
    Mr. Ryan. Thank you, Mr. Chairman.
    Budgets, as my colleague from Connecticut suggests a lot, 
Ms. DeLauro, reflect our values. I think from the looks of what 
you have submitted here and what the Administration has 
submitted here, I think we have clearly a set of different 
values as to where we should put our money.
    I think in some instances when you say we are cutting these 
programs of $25 million or less or some of these programs, 
Advanced Placement, the mentoring, that don't have a lot of 
money in them and then somehow suggest that they are not 
working and if you think that $50 million is somehow going to 
provide enough money to have a successful mentoring program in 
the United States of America, given all the challenges that we 
have, I think is an unfair assessment of what is going on here 
because there is just not enough money in there for it to be 
successful.
    So I don't think it is an adequate representation of 
whether or not the program would succeed. The question should 
be would it be a successful program if it was adequately 
funded.
    So I just want to join my colleagues here to say I don't 
think this reflects the values of the Committee and, as we did 
last year, I think there is going to be a lot of changes made 
here.

       TECHNICAL EDUCATION AND 21ST CENTURY AFTER-SCHOOL PROGRAMS

    I want to add one comment to enjoin Mr. Peterson and Mr. 
Simpson on the career and technical side, critical in northeast 
Ohio, old manufacturing. We are looking for new things to do. 
Energy is a major component of that. Getting these kids engaged 
in the learning process, that is the trick. You learn to love 
learning, and then you will be fine regardless of where you end 
up.
    And so, with that, I have just a couple of quick questions. 
One is the 21st Century Learning Opportunities. Mr. Regula 
mentioned dropouts, and I think your comment was that yes, of 
course, you were against it. This is an after-school program. 
This is one of the key programs I think that would prevent kids 
from dropping out.
    My question is this: We have in a couple of our schools 
locally, in Warren, Ohio, Warren Harding has a great robotics 
program, just phenomenal. I mean you want to talk about 
lighting kids up and getting them interested in learning. You 
throw a bunch of stuff on the floor and tell them to put it 
together, and all of a sudden they are engaged in the learning 
process, what Mr. Peterson was saying earlier.
    My question is in this 21st Century Learning Opportunities, 
although there is a cut of $300 million, is that something that 
a robotics program, a local robotics program could access and 
be a part of?
    Secretary Spellings. Potentially, yes, Congressman. We also 
have a kind of programmatic change to make this program look 
more like the supplemental service program where parents take 
that amount of resource and spend it where they like. And so, 
clearly, programs of multiple different approaches and designs 
are eligible for this sort of funding.
    Mr. Ryan. You would say the robotics program would fit into 
this?
    Secretary Spellings. I would have to, obviously, know more 
about the program and whether it meets the other requirements 
and so forth but potentially, yes.
    Mr. Ryan. Okay. Well, they compete in the national first 
robotics competition.

           ENVIRONMENTALLY-FRIENDLY, ENERGY EFFICIENT SCHOOLS

    Lastly, as I am sure time is winding down here, one of the 
issues we have in Ohio, as I am sure a lot of other States are 
having, they either secured or got a lot of money from the 
tobacco settlements and they put that money into the schools.
    One of the issues is the schools, not only the new schools 
but the older schools. They are not really environmentally 
friendly. They are not really energy efficient. They don't have 
the best and latest technology for conserving energy.
    I know there are some Youth Build green programs that are 
just starting to pop up around the country. Is there anything 
that you are doing to try to help these schools save money 
energy-wise, use the school as a laboratory in a sense where, 
as the school is updating and becoming more energy efficient, 
that is actually a kind of laboratory for these kids to learn 
about alternative energy?
    Are you doing anything along those lines?
    Secretary Spellings. Actually, my colleague, Sam Bodman at 
the Department of Energy and I have partnered together on some 
of that sort of thing, although the programs themselves are in 
the jurisdiction of the Department of Energy and are not under 
our budget. But there are some new models for energy-efficient 
construction and they are all over the country now. I know you 
are aware of that, but that is all under the jurisdiction of 
the Department of Energy.

        EDUCATIONAL VALUE DERIVED FROM ENERGY EFFICIENT SCHOOLS

    Mr. Ryan. Okay. I just want to suggest the more we can make 
these schools into laboratories and places where these kids, 
where everything that is going on around them is teaching them 
something or trying to stimulate them in some way, the better.
    At Oberlin College, they have an environmental science 
building that has been carbon neutral for years now, but the 
carpeting is recycled. The lights go on only when the motion 
sensor goes off. The heat and the cooling is regulated by the 
number of bodies that are in the room, all of these things.
    I don't even want to say this, but they recycle the toilet 
water into a fauna system. I wish you would gavel me down right 
now, Mr. Chairman, before I get too into this. [Laughter.]
    Mr. Ryan. But the whole building is a laboratory for this 
kind of 21st Century education.
    The more we can do that, especially in the communities, as 
Mr. Peterson suggested, that aren't used to the technology, 
aren't used to these kinds of things, I think the better off we 
are going to be. We only have 300 million people in the 
country. We need them all on the field, playing for us.
    So I appreciate your coming.
    Secretary Spellings. Thank you.
    Mr. Obey. Mr. Udall.
    Mr. Udall. Thank you, Mr. Chairman.
    Thank you, Secretary Spellings for being here.

                       GEAR UP AND TRIO PROGRAMS

    On the GEAR UP program and the TRIO programs, I have seen 
these firsthand in the communities across my congressional 
district and seen how good they are in terms of tutoring, in 
terms of mentoring, the college scholarship part, but it just 
seems that there is a disconnect here with the Administration 
because in recent years the discretionary funding for these 
programs has declined significantly in both nominal and real 
terms.
    Is it that you don't believe these programs are effective 
or where are you coming from on this?
    Secretary Spellings. They are flat-funded in the 
President's budget. They are not reduced.
    Mr. Udall. Yes. Yes, I know they are flat-funded.
    Did you believe there?

       IMPORTANCE OF COLLEGE AWARENESS AND PREPAREDNESS PROGRAMS

    Secretary Spellings. Well, I certainly do believe that high 
school college awareness programs are something that we need 
and these connections between postsecondary education and 
higher education are critical.
    I would say that as we look at reauthorizing No Child Left 
Behind and collaborate with the authorizing committee about 
what the policies and what approaches, what accountabilities, 
and what our policy points of emphasis should be as part of the 
reauthorization on high school, that we ought to align our 
philosophy and the program resources we invest, including TRIO 
and GEAR UP and other things, around that philosophy.
    It is right before us at the moment.
    Mr. Udall. The philosophy, as I understand it, is to 
encourage at-risk students to graduate from high school and 
prepare for college, and that is what you have been saying 
here, that the focus of the Federal Government has been to do 
that. That is where we target the money.
    And, yet, you flat-fund these programs. What is going on 
there?
    Secretary Spellings. Well, I think the question is: Are 
those the most effective and efficient ways to do it and are 
they in keeping with whatever policy we will embrace as part of 
a reauthorized No Child Left Behind?
    Are we going to ask our schools to expand rigor? Are we 
going to ask them to focus on reading? What are the other 
things that are before us, which is why the President has 
recommended flat-funding those programs until we determine 
where we go next as a matter of policy.
    Mr. Udall. Thank you.

              INDIAN EDUCATION AND TRIBAL COLLEGE FUNDING

    I want to agree with Congressman Rehberg from Montana 
earlier where he talked about Indian education and Indian 
funding and tribal colleges.
    I see, talking about Hispanic-serving institutions, 
tribally-controlled colleges, we have a cut in there of $139 
million, 27.2 percent below last year's level. That doesn't 
make any sense to me. I note that funding for Indian education 
programs is flat at $119 million.
    Are you aware of the challenges that our tribes face?
    Flat funding is simply standing still, which is nowhere 
enough to make the progress we need to against the challenges. 
Could you comment on that?
    Secretary Spellings. Yes, sir. As part of the 
appropriations bill last year, there are mandatory funding 
streams that support those institutions, and so we believe that 
these programs are adequately funded through those other 
funding mechanisms on the mandatory side.
    Mr. Udall. Are you aware that most of these tribes have a 
very, very young population that is a growing population?
    This young cohort that is moving through needs significant 
help in terms of these kinds of programs, and it is the one 
place where young Native Americans and African Americans and 
Hispanics can learn from each other and then go on and be very 
productive. So do you believe these are effective, good 
programs and should be expanded and moved forward?
    Secretary Spellings. As I said, they are funded on the 
mandatory side and are part of the President's budget in that 
regard. So I mean, yes, I think value can be had from some of 
those programs.
    Mr. Udall. Well, let me just say from my perspective that I 
really believe that the President's budget on education is so 
lacking when it really comes to supporting the needs that are 
out there.
    I hope. Mr. Simpson asked for what your original request 
was. I sure hope your original request was a lot more 
aggressive than what we see in this budget.
    Then let me just note finally that mandatory increases only 
apply to tribally-controlled colleges, not Indian education. 
So, with that, if you want to make any further comment, that is 
fine.
    Secretary Spellings. I would just say I certainly will 
provide that letter, but that was before we had a final budget. 
So I would just want that to be looked at in the context of 
where we ended up versus where we thought we were ending up 
last summer when we were beginning the negotiations with OMB.
    Mr. Obey. Ms. DeLauro.
    Ms. DeLauro. Thank you very much, Mr. Chairman.
    Welcome, Madam Secretary. I apologize for being late, but 
there are all kinds of hearings going on.
    Secretary Spellings. Yes, I bet there are.

                            VOUCHER PROGRAMS

    Ms. DeLauro. First, let me just correct the record, and I 
haven't had an opportunity to talk with him--he usually speaks 
for himself and does it very well--but Congressman Emanuel is 
not introducing a voucher program nor would he take money from 
public schools to utilize those funds in private schools. As 
for the many years that I know him and where he stands on 
public education and in support of public education, I think it 
is a little bit of a mischaracterization and a little bit of 
innuendo about what direction Mr. Emanuel is going in.

                  FEDERAL EDUCATION BUDGET PRIORITIES

    Let me further state that you can say and you can write 
down that education is a priority. You can go to schools, and 
you can take pictures with youngsters and talk about how much 
you care about their education and their future. Something that 
my colleague from Wisconsin, the Chair of this Subcommittee and 
the full Committee, has been known to state in the past, is 
that you can pose for holy pictures.
    Quite frankly, the photographs and the budgets that we have 
seen in the last several years from the Administration with 
regard to education are, in essence, posing for holy pictures. 
In the parlance of today and with regard to the British comment 
about this, ``it is all fur coat and no knickers'' is what we 
have here.
    And, when you begin to go down the list, I say this with 
annoyance. I say it with anger, and I say it as a kid whose 
family would have not been able to get her to school but for 
the work that they did and the opportunity from the Federal 
Government to make it a reality. So I can sit in this chair, 
and I have the opportunity to look at public policy and try and 
do something about it.
    We have a role, and that is where fundamentally the problem 
comes with this Administration and, I believe, more and more 
with Democrats and Republicans as was pointed out by Mr. 
Peterson. We have a role. We, government, have a role to engage 
in issues that make opportunity real for people, and education 
is the single biggest opportunity that we can make real for 
people in this Nation. It is their road to success, and that is 
what it is about.
    Watch what Mr. Eisenhower said here, and you look at it, 
and you understand who we are and what we are about.
    I will just say to you flat out, over the last several 
years--and you can get annoyed at me. I am glad this is the 
last budget on education. I am glad because what we have seen 
day in and day out, year after year, is posing for holy 
pictures.
    No Child Left Behind, you can talk about $63 billion, 63 
percent. The facts, it is all in the facts: $86 billion 
shortfall for this program.
    Mr. Peterson's comment, why? You tell me why.
    Help me to understand why if we are talking about 
competitiveness and increased need for high school employees. I 
went to my chamber of commerce in the Valley this week. They 
are crying for skilled people.
    Why do you take a Perkins program and you just throw it out 
the door?
    Why do you want to take an after school program and turn it 
into a voucher program?
    Why is there no understanding of the essence of the Federal 
role in education and its ability to turn people's lives 
around?
    Answer me on the programs: the shortfall on No Child Left 
Behind, the Perkins grant, vouchering the program for after 
school programs, eliminating 50 programs. How do you come here 
and tell us that education is a priority?
    Secretary Spellings. Well, as I said before you arrived, 
Congresswoman, the philosophy of the Administration has been to 
emphasize larger-scale programs like Title I, IDEA, Reading 
First and so forth over----
    Ms. DeLauro. IDEA. IDEA? And you do travel around.
    I don't know any special education teacher in this country 
that believes that what you have done to and what you are doing 
to IDEA represents Mr. Ryan's comments about our values and how 
we want to try to educate children with disabilities. We are 
hurting those children.
    I am not a special ed teacher. I am not, but I have 
listened to enough of them to know that your policies on IDEA 
and special ed are failures.
    Mr. Obey. The gentlelady's time is expired.
    Mrs. Lowey.
    Mrs. Lowey. Thank you very much, Mr. Chairman.
    Madam Secretary, welcome. I apologize with my colleagues, 
but we are all being pulled to different hearings today, but I 
am very pleased to have the opportunity to focus on two issues 
that I don't think have been addressed by my colleagues.

               FEDERAL FINANCIAL AID CALCULATION FORMULA

    As you well know, a student applying for Federal financial 
aid must complete the Free Application for Federal Student Aid 
form in order to determine how much his or her family will have 
to contribute towards tuition. Unfortunately, in many cases, 
families are expected to contribute much higher amounts than 
they can reasonably afford.
    This is, in large part, due to the flawed formula used by 
the Federal Government which has not been significantly altered 
to reflect the changes in family spending patterns or the 
dramatic increase for necessary items such as health care in 
recent years. Even more shocking, the Federal Government does 
not take into consideration that some regions of the country, 
like New York, have higher costs of living.
    So that means that a family in my congressional district, 
spending most of its income on housing or other necessities, 
may find that their expected family contribution is difficult 
or impossible to meet, leaving them with enormous gaps in their 
ability to pay for college.

                  EXPECTED FAMILY CONTRIBUTION FORMULA

    If you can, explain to me why the Federal Government 
doesn't update its formula for calculating expected family 
contribution to better reflect the spending patterns of today's 
families and to take into account that some areas have a 
significantly higher cost of living and do you believe that it 
is fair to essentially penalize families who live in high cost 
regions of the country by not considering those additional 
expenses when calculating their expected family contribution?
    By the way, and I am not going to get into the subprime 
crisis during this hearing, but there are those who have done a 
really important job on this. Their studies have shown that the 
majority of the money that families are spending is for 
mortgages and for health care.
    So they don't have anything left. They are not going out to 
buy fancy refrigerators. They are not going out to buy TVs. It 
is all going to health care and to pay their mortgage, and this 
is what is happening in my district.
    Why can't we realistically look at what a family is 
spending their money on and do something about the cost of 
living adjustment?

                  HIGHER EDUCATION ACT REAUTHORIZATION

    Secretary Spellings. Congresswoman, some of those changes 
were made as part of the College Cost Reduction Act which was 
recently enacted. As I know you know, the HEA is being 
reauthorized or discussions about reauthorization are going on 
now, and that is frankly in conference and nearing completion. 
So some of that is absolutely in the mix.
    Mrs. Lowey. And you have been advocating for cost of living 
adjustments?
    Secretary Spellings. Because, obviously, this gets down to 
sort of distributional type of politics, we in the 
Administration have not engaged as much on that as we have on 
the need for simplifying financial aid and to make sure that 
every one of our kids gets as much Federal aid as they can get 
before they turn to private sources. I think that is one of the 
things that is very important.
    As you know, it is a highly complex and confusing system 
for families because of the 16 different programs. I am sure 
you have heard how difficult it is to even apply for financial 
aid. We are working to make sure that every kid gets all the 
financial aid due them and that we do that in a simple way as 
well as looking at legitimate cost differences around the 
country, as you all have prescribed for us under the CCRA.

                21ST CENTURY COMMUNITY LEARNING CENTERS

    Mrs. Lowey. Well, I won't pursue that because we have 
limited time, but I want to mention another issue that I think 
you have to take direct responsibility for, and it was 
referenced by my colleague. Not only does the President's 
budget cut funding for after school by $281 million, it 
radically restructures the program into a voucher type 
scholarship initiative.
    Last year, when you came before the Committee, I informed 
you personally that the Port Chester-Rye School District--this 
is just one example--has just been notified that they will not 
be able to access additional 21st Century funds for its 
program. This is just one school that has been impacted by 
years of inadequate funding with the exception of the increase 
provided by this Committee last year under the leadership of 
Chairman Obey.
    By one estimate, the President's proposal would close 
10,000 21st Century Community Learning Centers.
    If you could explain to me, how many students will be 
unable to access services with this level of funding, how many 
States would be unable to award new grants, and then if you 
could give me an idea of what I should tell these families, the 
educators, community leaders in my district that are in 
jeopardy for losing these programs?
    According to the After School Alliance--my time is up, but 
if you could respond very briefly.
    I don't understand this. This is such a good program. It 
makes such sense. I can't understand how you could actually in 
good conscience even think of cutting it.
    Secretary Spellings. The reason that the programmatic 
change is made is to align it with what we have done in No 
Child Left Behind, and that is the supplemental services, the 
tutoring that is a feature of No Child Left Behind and that is 
based on a kid and his or her ability to select a variety of 
providers, or a family, a parent. This would make the after-
school program look more like that which we do in Title I of No 
Child Left Behind.
    With respect to the cut, as I have said, there are 
priorities in this budget that the President has established 
and other accommodations, reductions have been made to 
accommodate the priorities.
    Mrs. Lowey. So after-school programs are not a priority, I 
guess, to this Administration.
    Let me just say, because my time is up, simplification is 
not the same as realistically looking at costs. It is my 
understanding, CCRA does not address this issue in the way that 
I am talking about to really look at costs. What it does is 
simplify the form.
    So I do hope, Mr. Chairman, that we can continue talking 
about those two issues. But I am particularly distressed not 
just about the COLA but the fact that in a community like Port 
Chester, New York or Rye Town, New York, where I would say 85 
percent of the people have two parents working and these after-
school programs are absolutely critical in helping kids not 
only do their math and their English, their just basic, basic 
studies.
    I think it is an embarrassment that the President should 
think it is not a priority.
    Thank you very much.
    Mr. Obey. Thank you.

             CONTEXT FOR REVIEWING EDUCATION BUDGET REQUEST

    Madam Secretary, I just want to make, I think, three 
observations.
    First of all, when we look at your budget request, I think 
we have to look at it in context. Here is the context that I 
see:
    The President is asking us, according to Secretary Gates, 
to provide an extra $170 billion for the misguided and 
misbegotten War in Iraq. The budget also allows $51 billion in 
tax cuts this year to be provided to people who make over a 
million bucks a year. The President is then recommending on the 
domestic side of the ledger that we cut $18 billion from 
program levels that we just approved in December for the 
previous fiscal year.
    So he is asking us to spend almost 10 times as much in new 
money in Iraq as he is trying to cut out of domestic funding.
    That decision comes in this context: Annual after tax 
income for the top 1 percent of Americans grew by 228 percent 
or $745,000 per household between 1979 and 2005 while annual 
after tax income for the bottom 20 percent grew just 6 percent 
or $900 over that 26-year period--900 bucks gain over 26 years.
    So the rich got richer while the poor have been scraping 
by, and the same is really pretty much true of the middle 
class. That is the context in which we are considering these 
programs.

                GEAR UP AND TRIO PROGRAM BUDGET REQUESTS

    Now most of these programs are aimed not at that top 1 
percent but at the bottom 40 percent of people in this society. 
You mentioned that you had flat funded TRIO and GEAR UP. The 
problem is that since 2002 those programs, as I understand it, 
are serving about 450,000 fewer students.
    Your own budget submission, this document, says that TRIO, 
for instance, is moderately effective. It doesn't say it is 
ineffective. It says it is moderately effective. That is better 
than adequate. It is certainly better than ineffective.
    Yet, if you take a look at your budget which lays out on 
page 53, on the budget summary, number of student aid awards, 
there is a cut of 558,000 awards from 2008 to 2009 as I read 
it.
    And, yet, we face the fact. One of the witnesses who will 
testify this afternoon says this: Only about half of the 
college graduates from the bottom 40 percent of the income 
distribution go to college within a year after graduation from 
high school compared to about 80 percent of those from the most 
affluent families.
    So it seems to me that your budget contributes to the 20-
some year trend in this country of widening the gap between the 
top dogs in the society and those on the bottom half of the 
totem pole.
    Now Ms. DeLauro--and, God, I love her--she made the comment 
that education is the door-opener for opportunity.

                             TITLE I, ESEA

    Your statement on the front page makes the claim that this 
Administration has generously supported key priorities that we 
believe are improving student achievement. You talk about how 
much more is in your budget in 2009 than was the case a few 
years ago for Title I, for Special Education, for Pell Grants, 
and you point out that your discretionary request for education 
is $17 billion more than 2001.
    Well, that may be true, but I think before you leave the 
impression that the Administration was in support of that, I 
think we need to look at the facts. Title I, it has increased 
by 59 percent since 2001.
    But if the Congress had approved the President's request 
for Title I, $502 million less would have been provided and 
when inflation and population growth are taken into account, 
the President's proposed 2009 Title I level falls more than 
$650 million or 4.4 percent below the 2004 level.

                           SPECIAL EDUCATION

    You talk about IDEA. We have had a number of comments on 
it. Nobody on the Subcommittee has worked harder than Mr. Walsh 
to try to increase that funding.
    You talk about how much it has increased over the years, 
but if the Congress had approved the President's request for 
IDEA Part B, $637 million less would have been provided than 
was actually provided.

                 EDUCATION DISCRETIONARY APPROPRIATIONS

    If you take a look at discretionary appropriations for 
education in total, yes, they have increased by $16.4 billion 
or 38 percent since 2001. But if Congress had approved the 
President's budget request for the Department, $15.3 billion 
less would have been provided. That means Congress provided $15 
billion of the $17 billion that you are taking credit for.

                          NO CHILD LEFT BEHIND

    With respect to No Child Left Behind, I feel snookered on 
that program because I voted for it with the assumption that 
the Administration would make a good faith effort to meet the 
financial commitments that were implied in that authorization. 
I didn't expect full funding, but I certainly expected a 
reasonable effort.
    Instead, after the first year, where I will fully admit the 
President stuck to the deal, since then the Administration has 
been in a rapid race against living up to the commitments of No 
Child Left Behind.
    So if the Congress winds up not continuing that program, I 
think the Administration is going to have to look in the mirror 
when they ask the question why. Because you have walked away 
from your own program, and you have made it possible for people 
to attack that program for legitimate and illegitimate reasons.
    But the driving force behind the anger and resentment that 
I hear about No Child Left Behind in my area is because of the 
lack of financial commitment on the part of the Administration. 
You have to recognize that whenever you flat fund a program, 
that means that the local and the State governments are being 
forced to pick up the cost.
    You are really shifting costs back to the State and to your 
local school districts every time you flat fund a program 
because you are not allowing for inflation. You are not 
allowing for population growth. So the per capita assistance 
that is being provided in real dollar terms to people is 
steadily declining. That is not what I call a priority when 
programs are being treated like that.

                             READING FIRST

    Then lastly, my last bone to pick is with the letter that 
you sent out to Chief State School Officers with charts, 
complaining about the fact that this Committee had cut Reading 
First and informing them what damage was going to occur to 
local districts because of those cuts.
    Your letter didn't point out that the Department's own 
actions on Reading First caused the reduction in those funds in 
the first place, and it certainly fails to point out the other 
increases that this Committee provided for other programs. You 
know why Reading First was cut deeply by this Committee.
    The President lectures Congress on earmarks that we make, 
and yet an earmark is nothing but directed spending. It is a 
decision by the Congress to direct a specific number of dollars 
from Point A to Point B or from Program A to Program B or from 
Community A to Community B. That is all an earmark is.
    Every time your Department makes a choice about which 
community is going to get funded, which school district is 
going to get funded under Reading First, that too is directed 
spending.
    The Inspector General had some not very nice things to say 
about the way that program was managed or I should say 
mismanaged by the contractor. He had some not very nice things 
to say about the lack of protection against conflict of 
interest in that program.
    People talk about conflict of interest in the case of some 
members who have asked for earmarks, and they make a Federal 
case, and they attack virtually every member of Congress 
because a few idiots on Capitol Hill asked for funding which 
benefitted them personally.
    Yet, if you take a look at what the IG said, it said that 
the Department still has not established controls to ensure 
that the Department does not promote curriculum or create the 
appearance that the Department is endorsing certain products. 
The IG found that Department officials deleted references in 
the 2002 guidance for the Reading First program to early 
intervention and reading remediation materials that could have 
been construed to permit such programs as Reading Recovery in 
the program which the Department opposed on Success for All and 
Reading Recovery.
    Now those are two programs that have generally good 
reputations, and they have been validated as effective. Yet, 
they are still not seen as appropriate for Reading First in 
many States, and the Department has done nothing to change 
that.
    So, if you are going to tell school districts that the big, 
bad Congress cut this wonderful, peachy program, then I think 
you ought to tell them why. I think you ought to understand 
that, just as the President has a right to criticize faulty 
earmarks on Capitol Hill, we have a right to criticize the 
mismanagement of programs that have effectively produced the 
same effect on the executive end of Pennsylvania Avenue. So I 
would appreciate if that message would be delivered.

          EDUCATION FUNDING NEEDS TO BE COLLABORATIVE PROCESS

    Lastly, having gotten that off my chest, I still want to 
come back to the point I made in the beginning. This year will 
either be a waste or it will be constructive, and that will be 
determined by whether or not both ends of the avenue are 
willing to make compromises.
    If the President has sent down his education budget and 
says, thou shalt not raise my number one dime, as he said so 
many times over, then you can't deal with people who won't 
deal.
    Let me put it bluntly. I can put together a deal with 
anybody if the other party wants to deal, but I am not about to 
waste the time of this Committee or this Congress or anybody in 
the country who is watching with a needless 8-month squabble 
over numbers if the President simply intends to stick by his 
original budget, not change a dollar amount, not change a 
comma.
    What I would appreciate is if you will take back to the 
White House and to OMB a simple question: Do they want to work 
things out or do they want us to wait until a new President is 
in office who will act like an adult when it comes to 
negotiating?
    That is very simply where I am coming from, and we will 
find out over time, I assume, where the White House is coming 
from. I hope they are coming from the right direction.
    Now, if you want to comment, be my guest.
    Secretary Spellings. So noted, Mr. Chairman. Again, as you 
mentioned, all the various things you observed, the President 
did finally sign those previous budgets. I hope that that 
represents a willingness to work with you, and I hope that that 
will be the case this year as well.
    I will certainly carry your messages to my colleagues at 
the White House and OMB.
    Mr. Obey. Okay. Thank you.
    Secretary Spellings. Thank you.
    Mr. Obey. Mr. Walsh, do you have anything else?
    Mr. Walsh. At the risk of pulling a scab off a wound, I 
would just like to make a point.

            FEDERAL CONTRIBUTION FOR SPECIAL EDUCATION APPE

    Ms. DeLauro, who is not here to defend herself, made the 
point that the Administration is at fault on IDEA. That may be, 
but the fact of the matter is that when Congress implemented 
this law they pledged 40 percent reimbursement to the school 
districts and for a dozen years at least, under a Democratic 
majority, they never exceeded 9 percent of that commitment or 
one-fourth of that commitment.
    When we became the majority, we got it up. We doubled that 
to approximately 18 percent.
    There is credit to be given, I think, to the Democratic 
Party for implementing this idea and guilt to be assigned for 
not meeting that commitment. We did our level best to increase 
that amount, and we did, and we could be criticized for not 
getting it higher.
    But I think to hang this all on the Administration is 
absolutely unfair. We are the body that has the power of the 
purse, not the Administration.
    There is a game played by every Administration, and that is 
they fund their priorities and they cut ours. Clintons did it, 
and the Bushes have done it.
    Clinton, singular, I should say. I should not be 
prospective. [Laughter.]
    Mr. Walsh. It is a game. It is part of the process. It is 
not the most delightful part of the process, but it is part of 
the process.
    If blame is going to be given and credit is going to be 
given, we should share it equally on not meeting that 
commitment to our school districts and to those kids with 
disabilities.
    Mr. Obey. Well, let me just simply say I agree with the 
gentleman that, with respect to IDEA, the actions of both 
parties have been deficient, but we are dealing with the now.
    The fact is that this Committee tried to make a substantial 
increase in IDEA last year. The effort to do so was vetoed by 
the Administration and the Administration's request this year 
does nothing to increase the Federal share of funding IDEA, 
which I regret. That is one program.
    But there is no doubt if you take a look at the whole range 
of programs funded by this bill. The Administration, on many 
occasions, we have had to drag them kicking and screaming into 
accepting higher numbers. I think that is a fair statement.
    But I do want to disagree with one thing the gentleman 
said. It may be seen as a game, but it is not a game with me, 
and I just want to tell one story to illustrate what I mean.
    About six months ago, a fellow came into my office from 
Atlanta. He owns one of the largest chain store operations in 
the country. He was also $125,000 contributor to George Bush in 
the last campaign.
    He came into my office, asking that I approve an increase 
of close to $100 million above the Administration's request for 
buildings at the Centers for Disease Control in Atlanta, a 
worthy cause because a lot of those buildings are in bad shape.
    I tried to explain to him that given all of the other 
shortfalls in the Administration's budget, that there was no 
way we could reach the number that he was asking for.
    Then I said, look, why are you here seeing me? Why don't 
you simply go down and talk to the White House? I said, why 
don't you go talk to Karl Rove?
    He said, oh, I already did that. But when I went in, Karl 
said, oh, don't worry about budgets. They are just a game.
    No. I don't regard them as a game.

                  COMPROMISE NEEDED IN BUDGET PROCESS

    True, games are played by everybody on Capitol Hill. There 
is a lot of role playing. Some of that is constructive, and 
some of it is destructive. But in the end, after all the games 
are played, we ought to be able to put aside our kitty toys and 
our tinker toys and make some compromises for the good of the 
order.
    Mr. Walsh. Yes, absolutely.
    Mr. Obey. And that is what was absent last year. Last year, 
the Administration said, our way or no way.
    Now they had their way last year. This year we got a safety 
valve. So if the Administration doesn't want to deal, if they 
don't want to compromise, if they don't like that word, then we 
are simply in a waiting game and we will deal with a President 
who does.
    I hope that we can deal with this one because it would be 
good if we finished our work, so we didn't leave leftovers for 
the next President to handle. That would be very nice if we 
could get it done that way.
    Thank you for coming, and I look forward to working with 
you.
    Thanks, Jim.
    [The following questions were submitted to be answered for 
the Record:]

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                                       Thursday, February 28, 2008.

 REDUCING THE DISABILITY BACKLOG AT THE SOCIAL SECURITY ADMINISTRATION/
                        FY 2009 BUDGET OVERVIEW

                               WITNESSES

MICHAEL ASTRUE, COMMISSIONER, SOCIAL SECURITY ADMINISTRATION
PATRICK O'CARROLL, INSPECTOR GENERAL, SOCIAL SECURITY ADMINISTRATION, 
    OFFICE OF THE INSPECTOR GENERAL
RICHARD E. WARSINSKEY, IMMEDIATE PAST PRESIDENT, NATIONAL COUNSEL OF 
    SOCIAL SECURITY MANAGEMENT ASSOCIATIONS
MARTY FORD, CO-CHAIR, CONSORTIUM FOR CITIZENS WITH DISABILITIES SOCIAL 
    SECURITY TASK FORCE
RONALD G. BERNOSKI, PRESIDENT, ASSOCIATION OF ADMINISTRATIVE LAW JUDGES

                        Introduction of Witness

    Mr. Obey. Good morning, everyone. Sorry to be late; we had 
one of those quaint things called caucuses, and once in a while 
something is actually accomplished in them.
    This morning we are going to be discussing the Social 
Security Administration and the case backlog that seems to be 
plaguing that Agency. The backlog, I should stipulate at the 
beginning, is not the fault of the Agency; it is the fault of 
the policy makers who have allowed it to develop and continue.
    We have been holding a number of hearings in this 
Subcommittee to not just hear from Administration witnesses 
about the money it is that they are asking, and not just to 
hear from people about the cost of providing whatever the 
Administration is asking. We have also been holding some 
hearings to try to highlight the cost of not providing funding 
for a number of activities.
    The programs administered by the Social Security 
Administration touch the lives of every American. Benefits are 
distributed to almost 60 million people and they are equivalent 
to approximately 20 percent of Federal spending and 5 percent 
of the Nation's gross domestic product. And, yet, the waiting 
times to receive benefits under the disability program are far 
too long. Americans who have been out of work as a result of 
their disability for over a year have to wait, on average, 
another year and seven months to receive the benefits that they 
are entitled to under the social contract of disability 
insurance that we have developed in this Country. That can have 
profound impacts on the families of those affected.
    Until this past year, Congress did not provide the 
appropriations needed to keep SSA funded at adequate levels to 
ensure that the benefits that it receives are administered in a 
timely fashion. In fiscal year 2008, for the first time since 
1992, over 15 years, we provided the SSA with the President's 
funding request. In fact, we provided $150 million more.
    For fiscal year 2009, the Administration proposes an 
additional $582 million. Even with these additional resources, 
it is my understanding that the average processing time for 
disability hearing decisions in fiscal year 2009 will decline 
by only 29 days, from 535 to 506 days, nearly 17 months. In 
fiscal year 2000, the processing time was approximately 300 
days.
    At the end of the fiscal year, over 680,000 hearings will 
be pending and will take another five years, until 2013, before 
the backlog is reduced to the 400,000 level that I understand 
SSA deems optimal.
    Services to the public that have been declining will, at 
best, be maintained at already reduced levels. Since the 
beginning of fiscal year 2006, 17 field offices have closed and 
merged, and services to the public have suffered from the 
combined impact of staffing reductions and lack of funding for 
overtime.
    There is a lot more that I could say. I just want to make 
clear we are not here today to talk about who shot John. We are 
simply here to talk about what the problem is, what the nature 
of the problem is, how adequate the resources are that are 
being proposed to deal with it, and what resources we would 
have to provide to actually begin to reduce these backlogs to 
manageable proportions and, I would hope, eventually come close 
to eliminating them.
    So we are going to hear from the Commissioner today and 
then, as I understand it, after the first round we will be 
hearing from a second panel to comment on the situation from 
the outside.
    Before we ask the Commissioner to testify, let me ask Mr. 
Walsh if he has any comments.

                   Introduction of Witness Continued

    Mr. Walsh. Thank you very much, Mr. Chairman, for holding 
this hearing. It is a very important topic that affects tens of 
millions of Americans.
    Welcome, Commissioner Astrue, this morning.
    We have before us an issue that affects the health and 
retirement security of millions of Americans. We have all said 
before that Social Security is a sacred trust between the 
Federal Government and our Nation's seniors. That trust must be 
upheld and continued.
    Today there are nearly 57 million Americans receiving 
Social Security benefits, and with the over-65 population 
expected to increase nearly 60 percent over the next two 
decades, myself included, ensuring the solvency of Social 
Security for future generations must remain at the top of our 
priority list.
    Mr. Commissioner, your budget request appears to be focused 
on three specific areas: begin to eliminate the disability 
backlog, increase staff productivity and efficiency, and 
increase investment technology.
    I don't intend to minimize my interest in your testimony, 
but I, like all my colleagues in the Congress, am very 
concerned at what has happened with Social Security disability 
and how quickly it has happened. It is not simply the fact that 
the backlog has grown to 750,000 cases, which is a very large 
figure, although I am told that the actual backlog is closer to 
350,000 to 400,000 cases are normally in the system because of 
the normal ebb and flow of cases.
    But I am concerned at what I see when I look at the root of 
the problem: insufficient or appropriate staffing, grossly 
disparate productivity across the field in hearing offices, an 
inefficient and dated technology infrastructure, and apparent 
institutional problems within each phase of the disability 
determination process. And with those deficiencies, the Social 
Security Administration plans to distribute nearly $110 billion 
in disability benefits to 9 million beneficiaries. This is a 
stunning number.
    Within those numbers, I am told by staff, $1 billion from 
the trust fund will go directly to trial lawyers. I am also 
told that an average judge adjudicates roughly 500 cases per 
year. What about judges who consistently perform under that 
standard? Conversely, what policies are in place to control 
those judges whose pay rates are considered excessive?
    One example that was given to me, a judge who has paid over 
8,000 cases in four years. That is a 98 percent pay rate. With 
an average cost of $250,000 per claim, that amounts to $2 
billion. Judges that pay too many claims should be held 
accountable, as well, for the impact of their excessive 
determinations on the trust fund.
    Additionally, you have proposed that part of the problem in 
resolving the backlog is hiring more administrative law judges. 
Well, that is great, but if you don't staff them up, how can 
they do their job? You have judges doing the clerical work and 
not getting anywhere near the number of cases done. And I am 
told also that this backlog will not be filled by hiring these 
additional judges; that there has been so much of a reduction 
because of retirements and otherwise that this will not really 
fill the backlog. And the staff hiring that is required is not 
going to be met for these additional judges.
    So there is a lot to cover. I look forward to your 
testimony and that from the second panel.
    And, Mr. Chairman, again, thank you for holding this 
hearing, and I yield back whatever time I have.
    Mr. Obey. Thank you.
    Mr. Commissioner, why don't you proceed to summarize your 
statement, and we will place the entire statement in the 
record?

                           Opening Statement

    Mr. Astrue. Thank you, Mr. Chairman. Before I begin, let me 
say it is an honor to be back before the Subcommittee for the 
first time in 15 years. I want to express my sincere 
appreciation to all of you on behalf not only of our employees, 
but, more importantly, the people we serve, for the efforts 
that all of you made last year to secure additional funding for 
the Agency. We greatly appreciate it.
    Fiscal year 2008 should be a watershed year for SSA. For 
the first time in 15 years, as you mentioned, Mr. Chairman, 
Congress has appropriated not only the President's budget 
request, but an additional $148 million to address Social 
Security's disability backlog with the plan that we laid out in 
detail last May before the Senate Finance Committee.
    On behalf of the American public, I am very grateful for 
this support and want to assure you that your decision to 
support this backlog plan is going to make a big difference in 
the coming years.
    Due to the aging of baby boomers, SSA is now facing an 
avalanche of retirement and disability claims at the same time 
that it must address large backlogs due to years of increasing 
workloads and limited resources. Over the past few years, as 
Social Security offices lost staff in dramatic fashion, waiting 
times increased, lines grew longer, and busy rates in our field 
offices deteriorated. Without sustained adequate funding, the 
situation will only worsen.
    Furthermore, we must reduce the disability backlogs which 
have dramatically and unacceptably damaged many applicants' 
lives. It is a moral imperative to reduce these backlogs, which 
have simply just caused too much heartache for disabled 
Americans.
    With the additional funding provided by Congress, SSA will 
begin to implement all the key features of our hearing backlog 
reduction plan. We will build a firm foundation for the future 
with automation improvements, fast-track reviews, 
Administrative Law Judge hiring, and other initiatives so that 
we can significantly reduce waiting times while also improving 
accuracy.
    While fiscal year 2008 will allow us to make significant 
inroads, sustained adequate funding is critical so that we can 
continue to make the progress that you wish us to make.
    Over the next 10 years, SSA's traditional workloads will 
increase substantially: retirement claims by over 40 percent 
and initial disability claims by nearly 10 percent. The first 
of over 80 million baby boomers has already applied for 
retirement benefits. Baby boomers are also applying for 
disability benefits in far greater numbers than previous 
generations.
    At the same time that SSA faces increasing workloads, the 
Agency must also address non-traditional workloads, such as the 
Medicare prescription drug program and immigration.
    Year after year SSA commits to and achieves annual 
productivity improvements. Although the budget assumes a 2 
percent increase in productivity for 2008 and 2009, as it has 
for many years, productivity alone cannot offset the increase 
in our workloads.
    Furthermore, inflationary growth and mandatory costs--such 
as rent, guards, employee salaries, and benefits--have more 
than offset increases in SSA's budget in recent years, leaving 
the Agency with even fewer resources to address our critical 
workloads. SSA currently requires over a $400 million increase 
each year simply to keep up with increases in fixed costs.
    The 2009 President's Budget will enable SSA to build upon 
the accomplishments for fiscal year 2008 and continue to make 
progress. At $10,460,000,000 for SSA's administrative expenses, 
the President's Budget provides a nearly $600 million, or 6 
percent, increase over fiscal year 2008. SSA's administrative 
budget includes $10,327,000,000 for the Limitation on 
Administrative Expenses account, $98 million for the Office of 
the Inspector General, and $35 million for research.

                       Opening Statement Continued

    At this funding level, we expect to make substantial 
progress with our hearings backlog reduction plan by processing 
85,000 more hearings in fiscal year 2009 compared to fiscal 
year 2008, ultimately reducing the number of hearings pending 
from over 750,000 to 683,000 in one year. We will be able to 
reduce the initial disability claim pending level to the lowest 
level in 10 years, below 500,000 for the first time since 1999.
    Finally, the fiscal year 2009 budget will put us in a 
better position to handle the onslaught of work we are 
confronting due to the aging of baby boomers. We plan to 
process over 400,000 additional retirement claims in fiscal 
year 2009 as compared to fiscal year 2007, enabling SSA to keep 
up with the influx of baby boomer claims.
    SSA's budget provides the necessary resources to begin to 
halt the decline in customer service by preventing further 
staffing losses and investing in needed technology. However, 
SSA will not be able to process all of its less visible work, 
generally work that is done after an individual is approved for 
benefits. This budget is a fiscally reasonable and responsible 
approach, recognizing that the effects of limited resources 
cannot be undone in one year. A multi-year effort is necessary 
to eliminate our backlogs and our other issues.
    Thank you for this opportunity to present our budget 
request and to share with you our intentions with regard to the 
backlog. I ask for your support and welcome any questions you 
might have.
     [The prepared statement and biography of Commissioner 
Astrue follow:]

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                     HEARINGS BACKLOG REDUCTION PLAN

    Mr. Obey. Thank you.
    Mr. Walsh.
    Mr. Walsh. Thank you, Mr. Chairman.
    Let me begin by referring to the document that you posted 
on your website, Plan to Reduce the Hearings Backlog, et 
cetera. I am particularly interested in the conclusion, which 
says the Administration's plan to dramatically reduce the 
number of hearings pending, and basically you say it is an 
issue of adequate funding and, two, greater flexibility in 
utilization of the appropriations.
    Is the only way to right this ship by putting more money 
into this budget?
    Mr. Astrue. No, Mr. Chairman. In fact, we have to accept 
that we need to do things significantly differently if we have 
any hope of dealing with these issues. We have put in a number 
of reform efforts to improve productivity. We are going to need 
improved productivity across the board in order to meet the 
expectations.
    ALJ productivity is up. It is a great credit to the ALJ 
corps. At a time when the number of ALJs has been dropping 
dramatically, they did increase their productivity from about 
2.1 dispositions per day to 2.3. As the number of ALJs has gone 
down, the backlogs are not worse than we feared they would be a 
year ago.
    One of the things you need to understand about the system 
right now is that we are running two inadequate support 
systems. We have an antiquated paper system that we have put a 
priority on getting rid of. That timetable has been moved up; 
it should be substantially gone by the end of the year. Our new 
electronic system is going to be an improvement. However, it 
still has issues; it still has need for improvement.
    I really face three difficulties. One is we had a 
disability backlog that was increasing at about 75,000 cases a 
year. If you take out an anomalous year of the Medicare 
transfer cases, there was an increase of about 75,000 cases a 
year in total pending. The staffing was going down 
dramatically. Until the end of last December, during my whole 
time as Commissioner, we have been on a continuing resolution 
with contracting resources.
    We also had a number of difficulties with the plan that the 
previous Commissioner implemented to try to deal with issues in 
disability. A number of things were not only not working, but 
were actually aggravating the problem. We had to spend most of 
the first four months figuring out what was working that we 
could accelerate, instead of following the 10-year rollout 
plan, and we have done that with some things like Quick 
Disability Determinations.
    We now have computer models at the front end that pull out 
some of the cases that should be close to automatic, and we are 
now deciding those cases in eight days. It is about one percent 
of the cases nationwide now. That is going to increase until 
next summer and should peak at about three percent of the 
cases, and then we are going to slowly increase that until we 
hit the limits of the model. We don't really know what the 
limit of the model is.
    We have historically neglected the rare diseases and 
conditions. Although no one disease and condition adds up to a 
lot of the workload, they are a disproportionately high 
percentage of the cases that go off track and actually 
aggravate the backlog, while also creating heartache for 
people. We are also moving to a system of presumptive 
disability for those diseases and conditions where we know, by 
nature of the disease or condition, that the person is never 
going to be able to work. Then we don't have to go through the 
rest of the five-step process.

      PRODUCTIVITY AND ACCOUNTABILITY OF ADMINISTRATIVE LAW JUDGES

    Mr. Walsh. If I could interrupt, because it is kind of a 
long answer.
    Mr. Astrue. Sorry.
    Mr. Walsh. It is a complex problem, but this strikes me as 
very similar to the situation the Veterans Administration has 
had over the years in the backlog of disability claims, and 
they implemented a number of different strategies. I think 
Tiger teams was the term that one or two of the secretaries 
used.
    Would it make sense to restructure the process, beginning 
with the judges themselves and their staffing requirements, and 
reordering the workload and division of labor within those----
    Mr. Astrue. We are looking at those. We don't assume the 
status quo. One of the things that we are trying to do, for 
instance, is try to come up with more robust systems at the 
first level of review that might mean that the second level of 
review becomes extraneous at some point. But we are not there 
yet. We are experimenting with Administrative Law Judges 
actually having their own staff. Part of the problem now in a 
number of the hearing offices, in my opinion, is that there is 
no ultimate accountability. I am not allowed, by statute, to 
discipline for productivity unless there is an absolute extreme 
case, as part of the legacy of the 1980s.
    They also don't manage their own staff, and a lot of the 
Administrative Law Judges are frustrated by that. The union 
doesn't believe that it needs to manage its own judges, but 
ultimately, my view is, if you are going to move these cases--
--
    Mr. Walsh. Say again, the union doesn't----
    Mr. Astrue. Doesn't believe that the judges should manage 
their own staff.
    Mr. Walsh. Oh.
    Mr. Astrue. They are testifying later, and you can ask them 
about that.
    Mr. Walsh. Okay.
    Mr. Astrue. My view is that it is at least a debatable 
proposition that we could get substantially greater 
productivity if we ended all the finger-pointing in the hearing 
offices between the paralegals, the senior attorney advisors, 
and the ALJs, and simply ran much more on a model that most 
Federal and State courts run now. We are testing that now. We 
don't have enough data yet to tell you whether that will be a 
significant improvement or not.
    Mr. Walsh. We are out of time, so I am going to have to cut 
you off.
    Mr. Astrue. I apologize for being long-winded, Mr. Walsh.
    Mr. Walsh. Thank you, Mr. Chairman.
    Mr. Obey. Sure.

                   ADMINISTRATIVE LAW JUDGE STAFFING

    Ms. McCollum.
    Ms. McCollum. Thank you, Mr. Chair, and thank you for 
having this hearing. It is unfortunate that we are having this 
hearing, but I can't tell you the frustration I have every week 
in my congressional office when I sit down and talk to one of 
my outstanding staff people who spends a lot of time working on 
this very issue. And I will tell you why it is so important to 
me. This is what I hear from my constituents when things aren't 
going right. I will just paraphrase some of their words.
    They go broke because they don't have health insurance 
because Medicaid doesn't begin until 24 months after receiving 
Social Security benefits and the COBRA only last so long. They 
can't pay medical bills and they are on disability.
    They have had homes foreclosed or started to go through 
foreclosure because they can't pay the mortgage. They are 
evicted from apartments. And I have had to intervene and just 
really explain to people that the Federal Government has taken 
too long to take care of things. But we have actually had some 
success with landlords helping us out, but then they are not 
getting paid either.
    Lack of food. More visits to food shelters.
    Can't pay for transportation. Sometimes that means they 
have to let their car go because they can't keep even minimal 
repairs up on a car.
    Get behind in utilities.
    Rack up debt on their credit cards trying to make all those 
other things happen.
    Go to family members on a regular basis, depleting their 
funds as well, having to beg for help.
    Their medical problems worsen. Some of them start becoming 
depressed, which makes their medical problems even worse.
    And I have even had a few die while waiting for a decision.
    So I appreciate what you said about trying to scale up and 
that. I don't think it is enough, but I would like to just ask, 
out of the 150 or so judges that is bantered around, typically, 
support staff--my understanding--would be three to four?
    Mr. Astrue. It is actually higher on my watch. I will have 
to double-check the numbers because it depends a little bit on 
the time period when you count, but support staff has actually 
increased on my watch. We got about--
    Ms. McCollum. No, my question was out of the 150 judges 
that are going to be put on--and as Congressman Walsh put out, 
some of them are just going to be filling retirements, so you 
don't need any more staff, because you are really not 
increasing the number of judges, are you?
    Mr. Astrue. Actually, we are, very substantially. We made 
144 offers. They are staggered; they started this week. I 
think----
    Ms. McCollum. How many FTE positions and judges are 
currently not filled?
    Mr. Astrue. There is no definition of not filled. It 
depends on whether you count judges actually deciding cases or 
judges on duty----
    Ms. McCollum. Do you have enough judges?
    Mr. Astrue. We don't.
    Ms. McCollum. Okay, so how many FTEs are not filled?
    Mr. Astrue. What we have----
    Ms. McCollum. If you were going to really take care of this 
backlog and clear it up in a year and a half, how many judges 
would you need?
    Mr. Astrue. What we are aiming for and what we have said in 
previous testimony is for this year we are aiming for 1,175 
judges actually deciding cases. That is up from just over 1,000 
now.

              ADMINISTRATIVE LAW JUDGE STAFFING CONTINUED

    Ms. McCollum. I am trying to get to the bottom line here. 
How many retirements do you have in the year you are replacing 
the judges?
    Mr. Astrue. Let me answer the previous question a little 
bit. What I testified before is that we think the minimum we 
need on an ongoing basis--and this might be a little low--is 
about 1,250. This budget takes us to about 1,175. But that is 
probably as much as we can absorb and train in one year. The 
fiscal year 2009 budget would take us up to that 1,250. And 
although there has been misinformation floating around about 
inadequate support staff, that is simply not true. The Office 
of Disability and Adjudicative Review budget under our plans is 
going over 8,000 this year, for the first time in many years. 
We hired support staff with the supplemental to the continuing 
resolution last March----
    Ms. McCollum. What is your retirement rate for your support 
staff in the next couple of years? Do you know that? Could you 
get it to us?
    Mr. Astrue. I will have to supply that for the record.
    [The information follows:]

       Attrition Rate for Administrative Law Judge Support Staff

    The attrition rate for ALJ support staff was approximately 6 
percent in FY 2007.

                       CHICAGO REGION WAIT TIMES

    Ms. McCollum. Because that is the other thing, as you lose 
expertise.
    Mr. Chair, I am just going to put some numbers into the 
record here. In the Chicago region, which we are part of: Title 
2 Social Security disability, 81.1 days; Title 16, 87.8 days; 
hearings--this is just Minneapolis recipients--2,302; 
dispositions, 1,778; pending, 10,335; averaging processing 
time, 541 days for Minneapolis.
    And as I know my time is running out, Mr. Chair, I just 
want to end with a quote. And I won't mention the constituent's 
name, I will paraphrase what he shared with me. He has cerebral 
palsy and diabetes. He had a stroke. He has been unable to 
work. He has no health coverage and provides a home for his 
deaf mother. He had to take out early withdrawals from his IRA, 
incurring a 10 percent penalty because he was not declared 
disabled by Social Security.
    Mr. Chair, I am glad you are having this hearing, and we 
need to fix this problem. Thank you.
    Mr. Obey. Thank you.

                          DISABILITY WATERFALL

    Dr. Weldon.
    Mr. Weldon. Thank you, Mr. Chairman. It is a subject of 
personal interest that we are discussing today. When I 
practiced medicine prior to my election, I would get, 
obviously, involved in a lot of these things and some of them 
were very clear cut--massive stroke, renal failure--and there 
would usually be quick determinations.
    I just want to clarify a couple things about this backlog. 
All of the people in the appeal process have had a denial from 
Social Security Administration staff at the State office 
levels, correct?
    Mr. Astrue. Most of them have----
    Mr. Weldon. I am talking about people who applied in the 
obvious cases with a clear disability have gotten their 
disability determination. So these are for all the people that 
have been denied the claim that they qualify, correct?
    Mr. Astrue. Yes. Depending on the State, they have either 
had one or two denials by the time they get into the Federal 
system; you are correct.
    Mr. Weldon. Okay. Now, the average Administrative Law Judge 
sees about, I don't know, 600 of these cases a year and----
    Mr. Astrue. Actually, less than that.
    Mr. Weldon. Less than that? And ultimately makes a 
determination that they qualify for disability in about two-
thirds of the cases, is that correct?
    Mr. Astrue. I think the most recent is about 62 percent of 
the cases, yes.
    Mr. Weldon. Okay. Now, to me, from my perspective, you 
know, the question I have is--from my perspective, if I am a 
lawyer advertising on TV for disability claims and you have got 
a system where two-thirds of the people who get denied, you are 
going to get them a disability benefit, doesn't that create an 
incentive for more appeals to the process? I mean, are you 
looking at that component of it, that we have basically created 
an industry to appeal these claims?
    And as I also understand it, even in front of the 
Administrative Law Judge, after there is a denial, if there are 
new developments in a case, typically, the doctor makes a new 
diagnosis or something like that, there is a second appeal or 
there can be a third appeal, is that correct?
    Mr. Astrue. That is substantially correct. There are 
several key points here. One of the things--and I appreciate 
the opportunity to clarify--that we get criticism on, but I 
don't think people are looking at the waterfall correctly, is 
that we get about 2.5 million applications a year. It is the 
largest system of justice in the world. We allow, up front, a 
little under 1 million cases. A little over 1 million people do 
not appeal.
    What you see in the hearings and appeals process is a 
little over half a million people. That is about 20 percent of 
the overall cases. They are, by definition, the close calls. 
The reason the allowance rate has gone up from more of a 
historic rate of about 50 percent is because the backlog has 
increased. It is quite reasonable--it is a sign, actually, the 
system is working the way it is supposed to that the allowance 
rate goes up because we have an open-ended system. There is no 
lock-down as in a traditional legal appeal----
    Mr. Weldon. Final denial.
    Mr. Astrue. Right. A number of the people that we see have 
diseases or conditions that are progressively debilitating, and 
they don't qualify up front, but they are in the process for a 
long time and at some point do. The ALJs are not restricted to 
the evidence that the State saw, so they are free to say, okay, 
you are now disabled.
    The other thing that happens, too, is there is a face-to-
face hearing at the ALJ level. There is often key evidence that 
is brought out at that hearing that was not available earlier. 
The claimants are more likely to be represented at that point, 
which is often helpful to them. In fact, one of the things----
    Mr. Weldon. Well, I am not opposed to an appeal process. I 
am just trying to get a little bit of perspective here, because 
I get the same kind of cases the gentlelady from Minnesota was 
talking about coming to my office, where it seems like there 
should have been a determination. I am just trying to look at 
the other side of this. Are we feeding a monster, I guess, is 
what I am trying to say.
    Now, I had one other question, because I am going to run 
out of time too.
    Mr. Astrue. Okay.

                DISCIPLINE OF ADMINISTRATIVE LAW JUDGES

    Mr. Weldon. And the gentleman from New York mentioned this. 
A particular judge who sees, in a community, two or three--who 
runs through two or three times the number that every other 
judge does and he has a 98 percent approval rate. So if I am a 
lawyer advertising on TV to appeal Social Security cases for 
that jurisdiction, I have got a 98 percent chance. And my 
question for you is do you have any tools to basically evaluate 
the judges and discipline the judges? And I think you said this 
in your opening comments, you really can't do anything.
    Mr. Astrue. No.
    Mr. Weldon. You have to be egregious?
    Mr. Astrue. Part of the long-term price for the disability 
wars in the 1980s is that Congress made a decision to tie the 
Commissioner's hands with regard to those issues in the name of 
the independence of the ALJs. I think there is an argument that 
that was an overreaction because----
    Mr. Weldon. So there is nothing that you can do to this one 
particular judge who is running through thousands more cases 
than other judges and awarding 98 percent of the cases?
    Mr. Astrue. No. As a practical matter, even for gross 
misconduct--and we have much more of that than I would like to 
see--there are special rules for the judges, and they stay on 
full pay while we pursue cases at the Merit Systems Protection 
Board, which has a track record of just slapping them on the 
wrist. We have got some egregious cases of fraud against the 
government, violence against women, and the judges basically 
get a paid vacation while we take the case to the MSPB.
    We have stood up much more, in my opinion, than any 
Commissioner in a long, long time to say these things aren't 
acceptable, but I would urge you to take a look at that 
process. I am not allowed to volunteer names and specific 
examples, but I think you ought to look at that as part of your 
oversight responsibility and decide whether you are comfortable 
with judges who have pled guilty to prostitution, who have 
struck women, who have defrauded the Federal Government by 
collecting two Federal salaries at the same time.
    Again, most of the ALJs are wonderful, well-intentioned 
people. They are frustrated with our systems and support. I 
don't blame them. Most of them are trying their best and are 
good people, but we have bad apples, and they also tend to be 
the people that are corrosive in the workplace and don't 
produce cases.
    We have judges that do 2,000 cases in a year. We have, I 
believe, one judge that hasn't done a case in seven years. We 
had a judge that did 40 last year. If I come up with a proposal 
unilaterally, I get hit with I am compromising the independence 
of the judges. I am telling you the facts. I think it is a 
problem and I would encourage you to take a look at it.
    Mr. Weldon. Thank you.

                      SSA'S ADMINISTRATIVE BUDGET

    Mr. Obey. Ms. Lee.
    Ms. Lee. Thank you, Mr. Chairman.
    Good morning.
    Mr. Astrue. Good morning.
    Ms. Lee. Let me ask you about your administrative budget.
    Mr. Astrue. Yes.
    Ms. Lee. It is my understanding that about $100,000,000 
will be cut from that. Is that accurate or not?
    Mr. Astrue. I don't think so. No, this is a 6 percent 
increase over FY 2008--and, among the domestic agencies, as far 
as I know, this is one of the best increases.

                    CALIFORNIA FIELD OFFICE CLOSINGS

    Ms. Lee. Okay. Then let me ask you about the administrative 
costs, though, as it relates to closing of offices and where we 
would identify that in the budget.
    Mr. Astrue. Yes.
    Ms. Lee. It is my understanding--and I know in California, 
and I would just like to ask you about the office closing 
there, that you do plan to close some offices. Secondly, I want 
to ask you about the use of technology and, of course, the 
Internet, which we all agree with in terms of upgrading and 
making sure that we are in the 21st century.
    Mr. Astrue. Right.
    Ms. Lee. But we do have a huge digital divide still in our 
country, especially with seniors and with the disabled 
community. So as you move toward closing offices, I know you 
are talking about relying more on technology, so how do you 
propose to make sure, first of all, that this works and that it 
makes sense.
    Mr. Astrue. Sure.
    Ms. Lee. And I know for a fact that now--I know in 
California and in my area, you know, seniors and the disabled 
have to travel 50 to 100 miles in many parts of the country 
also.
    Mr. Astrue. Right.
    Ms. Lee. So how does this make sense for the population of 
people that need offices close to where they are and need to be 
able to access staff to help them out?
    Mr. Astrue. Multiple great questions there, and if I don't 
answer them all fully, come back to me. I am going to do my 
best.
    There is some misinformation about the field office 
situation. The Agency, for 30 to 40 years, has had a very 
similar process for doing a limited number of consolidations 
and closings as leases come up. Generally, it is to get a small 
amount of efficiency because we don't have the budget to 
increase the number of field offices to try to move some 
resources into rapidly expanding parts of the country. The 
number of field offices in the last decade has stayed 
approximately the same; it has gone from about 1,287 to 1,261.
    There is nothing dramatic happening in terms of the field. 
There has been a slight drift down. And we may have a few 
smaller; we may stay level.
    That is not as much of an issue as the fact that it doesn't 
do any good to have a field office if the lights are on and 
there aren't any employees there. This is a problem that we 
have in a number of offices. The continuing resolution and the 
fact that we couldn't hire staff to put people in some of these 
offices was a factor in deciding to consolidate and close a few 
of them last year.
    In general, we need to do much more in terms of technology 
in order to take some of the burden off of people in the field. 
No one wants to substitute for those important, complicated, 
intimate conversations that the staff has to have with the 
public, but right now they are doing a lot of routine work, and 
we are moving very fast to try to automate that as quickly as 
possible.
    Right now, when attorneys file appeals, even though the 
system is substantially electronic, they send a piece of paper 
that goes into the field office, and the field office staff has 
to input it in order to get it into the system. And, if they 
are overloaded, that can add six weeks of delay for the 
claimant, which is bad, and it also distracts the field office 
staff from the things they ought to be doing.
    We have got the system coming in place now so attorneys can 
file online, and at some point we may look at mandating it, 
because that is a huge deadweight burden on people.
    Our online electronic forms are just not satisfactory; they 
were put up very quickly eight years ago and they are not 
sufficiently user-friendly. We had a peak of up to about 10 
percent of the people using them and then we stopped. So we 
have got a whole overhaul going. It is going to happen in two 
parts. We will be about halfway there in September; the rest 
will come in----
    On the technological divide, there are some urban legends 
out there that aren't true, even within our Agency. You have a 
terrific Regional Commissioner out in San Francisco, I believe 
in your district, who is experimenting with some things that 
are very important in that regard because there is a myth that, 
for instance, filing online can't benefit SSI applicants, and, 
in fact, we----
    [Clerk's note.--Later corrected to ``are working with the 
homeless through advocacy groups to begin their SSI application 
online.'']
    Since those social workers often find it difficult to 
actually get the applicants into the field office, it turns out 
to be not only an efficiency for us, but a blessing for the 
applicants because they are much more likely to get the 
benefits that they are qualified for promptly since the people 
who are trying to help them can file online.

               CALIFORNIA FIELD OFFICE CLOSINGS CONTINUED

    Ms. Lee. And do you plan to close more offices in 
California?
    Mr. Astrue. I don't believe that we have very much. We have 
a small number of consolidations and closings at any point. I 
actually don't find out unless there is essentially community 
and political opposition. Actually, you find out before I do. 
My understanding is there are about six that are under review 
for some sort of consolidation or closing now, but we will 
submit for the record.
    [The information follows:]

                    California Field Office Closings

    There is only one office currently under consideration for closing 
in California.

                          DISABILITY WATERFALL

    Ms. Lee. Thank you very much, Mr. Chairman.
    Mr. Obey. Mr. Commissioner, let me ask you just four or 
five questions, and then we are going to have to move on to the 
next panel before we get devoured by roll calls on the House 
floor.
    Mr. Astrue. Sure.
    Mr. Obey. My understanding is that, initially, 65 percent 
of applicants for disability are denied. Is that right?
    Mr. Astrue. That is approximately right, yes.
    Mr. Obey. At the end of the process, what does that number 
turn into?
    Mr. Astrue. That affects a little under a million people 
who get the benefits----
    Mr. Obey. I want to know what is the percentage in the end 
that are denied.
    Mr. Astrue. About 85 percent of the decisions hold from the 
State level, so the overall percentage would be around 40 
percent. We will provide you with a precise number for the 
record.
    Mr. Obey. Clarify that for me. So you are saying that 
initially 65 percent of people are denied.
    Mr. Astrue. Right.
    Mr. Obey. And you are saying eventually that----
    Mr. Astrue. Subtract about 5 percent. So if you are talking 
about denials--I like to think in terms of allowances rather 
than denials, but if you do it the other way around, I think it 
is about 60 percent. Yes, about 60 percent.
    Mr. Obey. So you are saying that only 5 percent of those 
cases see their outcomes change?
    Mr. Astrue. One of the frustrations that we have with the 
system is there is a certain percentage of people that 
shouldn't be applying in the first place, and they are there 
either because private insurance companies or States require 
them to file with us----
    Mr. Obey. I understand, but I don't have time for 
elaboration.
    Mr. Astrue. Sorry.
    Mr. Obey. I just want to know the bottom-line answer.
    Mr. Astrue. I think that your bottom-line answer is 
approximately 60 percent.

                        HEARINGS PROCESSING TIME

    Mr. Obey. I understand that your request will result in 
processing time being cut by 29 days.
    Mr. Astrue. That is a very rough number. We are actually 
ahead of schedule now.
    Mr. Obey. What do you consider to be an optimal processing 
time and when will you reach it?
    Mr. Astrue. That is a very fine question. Right now, the 
Agency--and it is a rough number--assumes about 270 days. I 
think it is an open question whether we can do better than 
that, but we do need to be----
    Mr. Obey. Just give me a bottom-line response. What do you 
think the optimal response time would be?
    Mr. Astrue. I think it is somewhere between 180 and 270.
    Mr. Obey. And when do you think we will get there?
    Mr. Astrue. Using the 270, right now we are on track, 
assuming that we get the appropriations that we request through 
2013.

                         COMMISSIONER'S BUDGET

    Mr. Obey. In the law, as you know, you are required to 
prepare an annual budget that is submitted to Congress without 
revision.
    Mr. Astrue. Yes.
    Mr. Obey. And that budget proposed an additional $100 
million for administrative resources.
    Mr. Astrue. Yes.
    Mr. Obey. That is $100 million above the President or $100 
million above base?
    Mr. Astrue. I think it was a little less than $100 million. 
Seventy-six million, Mr. Chairman.
    Mr. Obey. Can you detail for us what you will do with those 
resources?
    Mr. Astrue. With----
    Mr. Obey. If you had them.
    Mr. Astrue. Well, the $76 million included two differences. 
One is I erroneously assumed that we would be doing the same 
number of CDRs as in the past, and OMB was more flexible about 
that. We will give you detailed information about that. So the 
only real difference is about $20 million in the technology 
budget.
    Mr. Obey. So you are saying that the only thing that would 
have happened if you had gotten the extra money that you 
requested initially would be on the technology front?
    Mr. Astrue. There is a marginal difference on the 
technology side, yes.
    Mr. Obey. That is all?
    Mr. Astrue. Yes, I think that is right.

               HEARINGS AND APPEALS REGULATION CRITICISM

    Mr. Obey. We have already had some comments. Let me simply 
say that I think it is safe to say that not just members of 
this Subcommittee, but a lot of the stakeholders in the 
Congress and out are concerned with your proposals for changing 
the process, and I wonder whether, given the criticism that you 
have heard from sources so far, you have changed in any way 
what your plans are likely to be.
    Mr. Astrue. If I correctly understand what I think you are 
alluding to, we took some criticism about a couple--we have 
about a 100-item hearings and appeals regulation, where two or 
three of the items took substantial criticism. We have already 
indicated to the Congress that we are going to step back from 
those, and we have been working pretty collegially with the 
advocate community. I think that the vast majority of what we 
are going to do, pretty much everything we are intending to do, 
seems to be the consensus and non-controversial at this point.
    Mr. Obey. Let me interrupt my question because Mr. Rehberg 
is here.
    Mr. Rehberg. [Remarks made off microphone.]
    Mr. Obey. Why did he do that? [Laughter.]
    Voice. I always do differently than he does.
    Mr. Rehberg. So I will not re-plow the old field. Thank 
you.
    Mr. Obey. Well, that is the first time. [Laughter.]
    We do get along on this Subcommittee once in a while, don't 
we?
    I am anxious to get to the next panel. We are only going to 
have about 35 minutes, I think, before we have some roll calls.
    Let me simply say you expressed concern about what the 
Congress had done as a result of what happened in the 1980s.
    Mr. Astrue. Yes, I did.

               INDEPENDENCE OF ADMINISTRATIVE LAW JUDGES

    Mr. Obey. I was on this Subcommittee in the 1980s and I 
remember those days, and in those days there was a very 
distinct atmosphere which sent the message that there was great 
pressure being applied from the top to try to push people into 
denial of claims. And what it reminded me of was the old 
comment that Ray Bliss said many years ago.
    Ray Bliss, many years ago, under the Eisenhower 
Administration, was the party chairman, and he said once, to a 
number of people in his party's caucus, he said, boys, you 
don't have to vote against that stuff, we can just administer 
it to death. And that is what was going on in the 1980s.
    Mr. Astrue. Mr. Chairman----
    Mr. Obey. The Congress didn't legislate the kind of 
shrinkage of rights that wound up being provided----
    Mr. Astrue. And, Mr. Chairman, I am not disagreeing with 
you on that, so let me clarify because I was also part of the 
cleanup in the late 1980s.
    I agree that there should be substantial independence of 
ALJs, but in the Agency we have a number of policies that had 
the absolute best intentions when they went in and over time 
had unintended consequences. I do think that the statute, which 
makes it difficult to take prompt action, hinders us when 
basically an ALJ has stopped working, assaults a colleague, or 
assaults someone else. I just think that we need to go back and 
revisit the statute.
    Mr. Obey. I understand----
    Mr. Astrue. I am not suggesting that we reopen that, Mr. 
Chairman. We are on the same wavelength on that.
    Mr. Obey. I understand. My point is simply that regardless 
of what happens, the pendulum swings from one direction to the 
other.
    Mr. Astrue. Yes, that is right.
    Mr. Obey. You wind up, you hope you reach a happy medium, 
but you are often veering off in one direction or the other. I 
just wanted the record to be clear about what the problem was 
and why the actions were taken at that time.
    Mr. Astrue. I think we are in agreement, Mr. Chairman. I am 
not arguing with what was done and why at the time. I supported 
those types of things at the time. All I am saying is I think 
it may be over-broad now and the edges of it ought to be 
revisited.
    Mr. Obey. Is there anything else you would like to say 
before we move on to the next panel?
    Mr. Astrue. Mr. Chairman, I am listening to you and all the 
advocates about the frustration that they have about the 
process, and the only thing I want to say is I share that, too. 
I had been out of government a long time. I came back 
specifically to try to fix this, and it has been a difficult 
and frustrating year. I think every year is going to be 
difficult and frustrating, but I don't think that I have any 
more important use of my time than to try to make this 
situation better, which is what I am trying to do.
    Mr. Obey. Okay.
    Any other member of the Committee have any questions?
    Mr. Obey. All right, Mr. Commissioner, thank you very much.
    Mr. Astrue. Thank you.

                       Introduction of Witnesses

    Mr. Obey. We have asked that the Commissioner arrange for 
several Agency officials to remain available for questions, as 
we hear from the next panel.
    The next panel--and I would ask them to come to the table 
at this time. First of all, Inspector General Patrick 
O'Carroll, has been serving in that capacity since November 
2004, after having served in other positions in the SSA OIG 
organization, including Assistant IG for Investigations and 
Assistant IG for Internal Affairs.
    Rick Warsinskey is Immediate Past President of the National 
Council of Social Security Management Associations. He has been 
District Manager of the Downtown Cleveland Social Security 
Field Office for nearly 13 years.
    Marty Ford is Co-Chair of the Consortium for Citizens with 
Disabilities Social Security Task Force. She has over two 
decades of experience on Federal public policy issues affecting 
people with disabilities.
    Ronald Bernoski, Administrative Law Judge who has been 
hearing Social Security disability cases in someplace called 
Milwaukee, Wisconsin for 25 years. Judge Bernoski serves as the 
President of the Association of Administrative Law Judges.
    If you are ready, why don't we begin with Mr. O'Carroll? 
And let me simply ask you to summarize your statements. We will 
put your full statements in the record.
    Mr. O'Carroll. Good morning, Chairman Obey, Congressman 
Walsh, and members of the Subcommittee. I thank the 
Subcommittee for this invitation to testify today. Like the 
Subcommittee, my office is committed to doing all it can to 
confront the many challenges that SSA faces.

                   QUANTIFYING THE DISABILITY BACKLOG

    Of all the challenges SSA faces in administering the 
world's largest social insurance program, none is greater than 
the backlog of disability claims. SSA's most recent data 
indicates that the current number of cases awaiting a hearing 
decision is over 750,000, leading to an average waiting time of 
499 days. The waiting time for appeals is unacceptable.

                   BALANCING SERVICE AND STEWARDSHIP

    From the time of the OIG's inception in 1995, we have 
sought to help SSA strike the balance between service and 
stewardship. Action must be taken to reduce and then eliminate 
the lengthy delays faced by disability applicants without 
compromising the integrity of the system.

                    AUDIT: INITIAL CLAIM PROCESSING

    As we all know, providing additional funding and resources 
to SSA creates an obligation to use those funds wisely. In 
2004, we conducted an audit entitled Disability Determination 
Services Claim Processing Performance. We discovered that poor 
performing offices experienced the most attrition, had the 
lowest examiner-to-staff ratio, and purchased the most 
consultive examinations.

                  AUDIT: HEARING OFFICE BEST PRACTICES

    Of course, the disability backlog occurs primarily in the 
hearing and appeals phase, rather than the initial 
determination process. In 2004, we released another audit 
entitled Best Practices in the Highest Producing Hearing 
Offices. We found that SSA issued a list of 24 best practices 
to hearing offices in 1993, but then issued 191 best practices 
in 2002 and then, in 2003, they issued another list of 271 best 
practices. The sheer number made it difficult for hearing 
offices to determine which to implement, and some were even 
contradictory. We recommended that SSA revert to a shorter, 
clearer list of best practices.

                     AUDIT: HEARING OFFICE STAFFING

    Next, in 2005, we issued an audit report entitled The 
Effects of Staffing on Hearing Office Performance. We found 
that during the five previous years the number of dispositions 
per ALJ had improved, from 2.03 to 2.4 cases. Yet, the 
timeliness had declined, from 316 days to 391 days. We also 
found that the national average staffing ratio was 4.7 staff 
per ALJ. However, office staffing ranged from a national low of 
3 per ALJ to a high of 18.5 to an ALJ.

          AUDIT: ADMINISTRATIVE LAW JUDGE CASELOAD PERFORMANCE

    Sixty-three percent of the offices with a ratio below the 
national average had disposition rates below the average. Our 
most recent review in this area examines ALJ caseload 
performance. We found wide variations in ALJ performance among 
hearing offices, ranging from 40 to 1,805 dispositions per 
year. We noted that if the performance of ALJs at the low end 
of the spectrum continues, it will have a negative effect on 
the disability backlog.
    We further surmised that the lack of any formal performance 
accountability is a key reason for this inconsistency. So we 
recommended that SSA establish standards, examine offices where 
ALJs have high productivity, identify offices where ALJs have 
low productivity, issue best practices, and then take 
corrective actions.

              AUDIT: JUDGE AND HEARING OFFICE PERFORMANCE

    At the request of Chairman McNulty and Ranking Member 
Johnson from the SSA Subcommittee, we are conducting a review 
of Administrative Law Judge and hearing office performance. We 
are examining performance factors, ODAR management tools, and 
initiatives aimed at increasing ALJ productivity. We expect to 
complete this work in June.

                    AUDIT: HEARING OFFICE TECHNOLOGY

    On another front, we looked at technical support for the 
hearing operation. In 2006, we examined the Case Processing 
Management System, or CPMS, to assess its ability to improve 
workload management at hearing offices. We found that ODAR 
management did not always use CPMS reports in their caseload 
management, particularly with respect to stagnant cases.
    In 2007, we conducted an audit of management's use of 
workload status reports at hearing offices. We found that more 
than 50 percent of the cases were not being tracked at all, 
including hundreds of thousands of unworked cases. Most 
recently, we have initiated a review involving the timeliness 
of medical evidence submitted to the hearing offices.

                     CONTINUING DISABILITY REVIEWS

    Finally, there is no more important aspect of stewardship 
than the continuing disability reviews, the process by which 
SSA learns that beneficiaries' disabling conditions may no 
longer preclude them from working. I applaud the Subcommittee's 
support of these reviews and encourage your continued support 
of stewardship.
    Thank you. I will be happy to answer questions.
    [The prepared statement and biography of Inspector General 
O'Carroll follow:]

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    Mr. Obey. Thank you.
    Mr. Warsinskey.
    Mr. Warsinskey. Chairman Obey and members of the 
Subcommittee, my name is Richard Warsinskey, and I represent 
the National Council of Social Security Management 
Associations.
    Chairman, let me say that many of the remarks you made at 
the very beginning I concur with. I think you were right on the 
mark.
    I also coordinate the activities of the Social Security SSA 
Advocacy Group and I have been a manager of a Social Security 
office in Downtown Cleveland for 13 years.
    I am pleased to have this opportunity to submit this 
testimony.
    We are appreciative of the fact that Congress appropriated 
$150,000,000 more for SSA in fiscal year 2008 than the 
President recommended. Even with this additional funding, we 
are very concerned about SSA's ability to provide a good level 
of service to the American public. Why?
    First, the hearings backlog projection remains at 682,000 
hearings in fiscal year 2009, well over the 312,000 hearings 
that were pending at the beginning of this decade. Over 400,000 
of these hearings will eventually be approved. Hearings 
processing times are projected to be still in the 500 day range 
in fiscal year 2009, which continues to be an unconscionable 
amount of time to wait. The delays will continue to wreak havoc 
on the lives of thousands of individual Americans and their 
families. People will die waiting for an answer from Social 
Security.
    Second, the Office of Disability Operations, which handles 
the back end of disability cases, has about 750,000 actions 
pending. The average amount of time it takes for a benefit 
authorizer to process a case they are assigned is 401 days. For 
a claims authorizer it is 484 days.
    Third, the field office telephone service is deplorable. I 
repeat, deplorable. Over 50 percent of the 60 million-plus 
callers that try to contact Social Security offices receive a 
busy signal.
    Fourth, visitors to field offices are at record levels and 
waiting times are climbing, while we are seeing increasing 
numbers of baby boomers filing for disability or retirement 
benefits and needing our assistance. The combined pressures of 
increasing numbers of visitors and telephone calls can be seen 
in a recent statement by a field office manager: We are 
juggling the impossible. The employers are dedicated and proud 
of their service to the public. The shortage of staff makes it 
harder to get done what needs to be done in an accurate and 
timely manner. We have all but given up on answering the phones 
because there is no one to do it.
    Fifth, a significantly fewer number of medical continuing 
disability reviews and SSI re-determinations are being 
reviewed, costing taxpayers billions of dollars.
    Sixth, staffing in SSA field offices, payment centers, and 
DDSs continues to drop. The agency staffing is at its lowest 
level since 1972, before we took responsibility for the SSI 
program. SSA staff retirements are accelerating due to a 
retirement wave within the agency itself. It takes a number of 
years for new staff members to be fully trained to handle the 
wide range of responsibilities.
    A field office assistant manager recently described this 
challenge: We are trying to keep too many plates spinning with 
continual reductions in staff due to retirement, promotions, 
and transfers. The best people, those with institutional 
knowledge, needed to keep this boat afloat, have been leaving 
and will continue to leave.
    We certainly support at least the President's level of 
$10,327,000,000 funding for SSA for fiscal year 2009. But to 
really address the challenges in SSA, we believe there needs to 
be a reserve fund of no less than $240,000,000 established for 
program integrity workloads, plus an additional $200,000,000 to 
$250,000,000 in funding above the President's level. This 
increased level of funding would begin to immediately address 
the areas where SSA services need to be improved.
    We realize that this is a significant increase in funding, 
but truly believe it is the level of funding necessary to begin 
to address the growing challenges facing SSA. We believe the 
American public demands and deserves to receive good and timely 
service for the tax dollars they have paid to receive Social 
Security.
    Mr. Chairman, I thank you for this opportunity to appear 
before the Subcommittee.
    [The information follows:]

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    Mr. Obey. Thank you.
    Ms. Ford.
    Ms. Ford. Thank you, Chairman Obey, Ranking Member Walsh 
and members of the Subcommittee. Thank you for this opportunity 
to testify.
    Social Security and SSI benefits as well as Medicare and 
Medicaid coverage are the means of survival for millions of 
people with severe disabilities. They rely on SSA to promptly 
and fairly adjudicate their claims for disability benefits.
    However, as you are aware from your own constituent 
services staff, delays and backlogs have reached intolerable 
levels. When a decision is appealed, individuals and their 
families can wait years for a hearing, wait again for a 
decision and then wait again for actual payment of benefits.
    In the meantime, their lives are unraveling. Families are 
torn apart. Homes are lost. Medical conditions deteriorate. 
Financial security crumbles, and many individuals die before a 
decision is made. The media has reported on this extensively.
    Other key services, such as action on a lost check or 
having earnings promptly recorded, have also diminished. Some 
local field offices have been threatened with closure and, 
despite dramatically increased workloads, staffing levels 
throughout the Agency are at their lowest since SSI payments 
began.
    The primary reason for the increasing disability backlogs 
is that SSA has not received adequate funding for many years. 
The Agency does not have the resources to address its current 
workload or to face the retirement and disability applications 
from baby boomers along with the retirement of its own baby 
boomer workforce. While the system is clearly in crisis, 
without adequate appropriation, service will deteriorate even 
more.
    The President's request for fiscal year 2009 is encouraging 
but does not go far enough for SSA to provide its mandated 
services at a level expected by the American public.
    To meet its responsibilities, we believe that SSA needs at 
least $11,000,000,000 for the fiscal year 2009 administrative 
budget. This should allow the Agency to significantly reduce 
the backlog as well as keep local offices open, provide 
telephone service to the public and maintain the integrity of 
the programs by performing more continuing disability reviews 
and SSI redeterminations.
    We also recommend that SSA's administrative budget be 
removed from discretionary spending limits. The cost of running 
SSA is driven by its ever increasing workload. Most of the 
administrative costs are borne by the trust fund. Other 
important programs in the Labor HHS Appropriations Bill should 
not be impacted by the ever growing cost of administering 
Social Security.
    Management issues will not be resolved solely with 
additional funding. SSA must continue to streamline and operate 
more efficiently. The Agency has already begun technological 
and other improvements in its business processes in numerous 
areas. We expect that these initiatives will assist in 
restoring the Agency's abilities to meet the needs of 
applicants and beneficiaries.
    My written testimony includes recommendations for 
additional improvement. This includes improved development of 
evidence earlier in the process by doing a number of things 
including providing more assistance to the claimant at the 
application stage, having the State DDS obtain necessary and 
relevant evidence, improving reimbursement rates to providers, 
giving better explanations to physicians and other sources 
about what evidence is needed, giving more guidance and 
training to adjudicators, improving the use of the current ways 
to expedite cases and improving the overall quality of 
consultative examiners or examinations.
    While there may be additional ways to improve 
decisionmaking from the adjudicators' perspective, such 
initiatives must be tempered by how the process would affect 
the claimants and beneficiaries for whom the system exists, 
those who need the program and meet the criteria.
    People who find they cannot work at a sustained and 
substantial level due to disability are faced with a host of 
personal, family and financial circumstances that will impact 
how effectively they can maneuver the very complex disability 
determination system. Many will not be able to address the 
requirements for proving eligibility without substantial 
assistance.
    SSA must continue and improve its well-established role in 
ensuring that an individual's claim is fully developed before a 
decision is made and must ensure that its rules reflect this 
administrative responsibility.
    We urge Congress to provide SSA with the resources 
necessary to carry out its mandated responsibilities and to 
substantially improve its service to the public.
    Thank you for this opportunity.
    [The information follows:]

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    Mr. Obey. Let me explain what is happening. These votes 
have come earlier than we had expected, and they will probably 
take close to 40 minutes by the time everything is done, and 
they are the last votes of the week so everybody is going to be 
running to the airports. So you are going to get off easy, I 
think, in terms of not having to answer any questions.
    I would like to get Mr. Bernoski's statement in yet if we 
can and if we have time for a couple questions before we have 
to go vote, we will slip them in. If not, you will get off 
early and easy, and let me thank you for coming.
    Now, go ahead, Mr. Bernoski.
    Mr. Bernoski. Mr. Chairman, thank you for inviting us to 
testify before this Subcommittee today.
    Our organization represents the administrative law judges 
in the Social Security Administration, and we deal with the 
problems of the Social Security case backlog in our hearing 
offices on a daily basis, and it troubles us to see the 
American people waiting long periods of time for hearings on 
their claims.
    Mr. Chairman, our judges have been working hard, and we 
have been rendering case dispositions in record numbers. For 
example, last year, we issued dispositions in over 550,000 
cases for an average of over 40 cases a month per judge.
    This is important to us because we are concerned with the 
long delays, but at the same time we must take enough time to 
provide a full and fair hearing to both the claimant and the 
government. It is important to the taxpayer that the proper 
claims are paid.
    It should be noted that a study was done by the Agency in 
1994 which concluded that if a judge devoted about 3 to 7 hours 
to a case, the judge would produce between 25 to 55 cases a 
month. We do not believe that 7 hours is too long to spend on a 
claim that may cost the trust fund $250,000. As the evidence 
shows, we are working well within the top end of that range.
    As we know, the funding is the life blood of programs in 
both the public and private sectors, and in the case of Social 
Security, it has been underfunded for the past years. The lack 
of funding has had a profound impact on the Agency, and it has 
been unable to hire sufficient staff and administrative law 
judges to handle the increasing number of disability claims 
that have been filed with our hearing offices.
    In addition to hiring new support staff, we have made 
suggestions to the Agency to address this staff crisis by other 
means and to supplement the crisis. By example, we have 
suggested that the Agency recall retired administrative law 
judges from the existing OPM Senior Judge Register. These 
judges are trained and do not need a learning period to become 
productive for the Agency, and they also cost the Agency less 
money in salary.
    Secondly, we suggest that the Agency employ retired Social 
Security workers on a contract basis. These retired employees 
are familiar with the work of the Agency and require little 
training.
    And, third, we suggest that the Agency hire law school 
students as interns to help in decision-writing which remains a 
major weakness in our program.
    However, I must emphasize that hiring judges without staff 
is not sufficient. Each judge requires, as the Commissioner 
indicated, about four to five staff persons for assistance in 
support in hearing and deciding cases, and the Agency has not 
been replacing our staff on a one-on-one ratio as we have been 
losing them.
    In the recent past, the Agency has attempted to shift some 
of the clerical work to judges, and this is counterproductive 
because it uses expensive employees to do clerical work which 
slows down the productivity of the judge and is very costly for 
the government.
    Recently, we have noticed a definite tendency of the Agency 
to attempt to shift the blame for the disability backlog to the 
judges. In this regard, we note a December 2007 GAO report that 
stated that the backlogs have been a problem with the Social 
Security Administration for many years and that the 
contributing factors to the backlog include: one, an increase 
in applications; two, a loss of key personnel including 
administrative law judges; and, three, management weaknesses 
which is evidenced by the many failed reform initiatives that 
we had for the past 20 years or so.
    In fact, in a recent disability roundtable hosted by our 
association, it was the consensus of the panel which included 
the Comptroller General of the United States, Mr. Walker, that 
no single group in the Agency is responsible for this backlog.
    Now we are of the opinion that some basic or systemic 
reform is needed for the Social Security process, and these 
include adopting rules of practice and procedure for our 
judges.
    Another is having the claimants' attorneys be brought into 
the process and serve as officers of the court. There is a 
tremendous pool of talent here that is available that the 
Agency should take advantage of.
    And, third, by adding what we call a Social Security 
counsel to the process. This person would have many of the same 
responsibilities as the reviewing official had in SDI, and that 
was implemented by the former Commissioner Barnhart.
    The objective is to create a system that pays the 
appropriate claim as early in the process as possible and only 
having the most difficult cases move on to hearing. That would 
address the issue raised by Representative McCollum earlier in 
the hearing, and also the Commissioner alluded to that also.
    The goal is to reduce both processing times and the 
backlog. We can no longer afford to hear 90 percent of our 
cases and bring those to a full hearing. The cases that should 
be paid should be handled quicker in the process and to move 
our process along more smoothly.
    Now this reform will cost some money, of course, because we 
have a very large system. We are the largest. Probably one of 
the largest governmental systems in the world is housed within 
the Social Security Administration. But, ultimately, it will 
have an impact, a beneficial impact on the American people.
    Mr. Chairman, in closing, I just say that the Social 
Security disability program has significant systemic problems 
which need correction. We also need more funding for judges and 
staff. However, the systemic problems need separate 
legislation, and money alone is not enough.
    We look forward to assisting Congress and this Committee in 
working on these changes.
    As a matter on the systemic changes, we had prepared a 
paper in December of last year, a 24-page paper which we have 
disseminated as part of our roundtable and have given to the 
Social Security Subcommittees. I am not going to offer it as 
part of the record because it is 24 pages, but I will give it 
to you for your information.
    I apologize for not making copies for other members of the 
Committee, but quite frankly I forgot, and I will send copies 
in the mail to everyone else on the Committee.
    [The information follows:]

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    Mr. Obey. All right. Thank you.
    We have about six minutes before the clock expires.
    Because Mr. Ryan hasn't asked any questions yet, let me 
just yield to him to see if he has a question he would like to 
ask.
    Mr. Ryan. I appreciate it, Mr. Chairman. I just have one 
comment.
    Mr. Warsinskey is from the great State of Ohio and from 
Cleveland, and he is the office that we work with. I just want 
to say what a phenomenal job you do.
    Mr. Warsinskey. Thank you.
    Mr. Ryan. We know you are in very difficult circumstances 
but a total class operation. You guys are truly professionals, 
and we know how hard it is because we are part of the front 
line of defense there in the Congressional offices, but we 
appreciate it and thank you very much for your service.
    Mr. Warsinskey. Thank you.
    Mr. Obey. Mr. Walsh.
    Mr. Walsh. Mr. Chairman, given what you said regarding the 
schedule, I am going to yield whatever time I have back, but I 
would just like to ask that Judge Bernoski's report be allowed 
to be entered into the record of the hearing.
    Mr. Obey. Sure.
    Mr. Walsh. I thank you very much.
    Thank you, witnesses, all.
    Mr. Obey. I have six or seven basic questions which I had 
wanted to get in. We will just have to get them to you, and you 
can respond in writing. If you would do that, please, I would 
appreciate it.
    I apologize for the truncated nature of the hearing. We had 
to push it along in order to try to get everybody on the 
record. I appreciate your taking the time, and I appreciate the 
work you do.
    Mr. Bernoski. Mr. Chairman, the Commissioner also raised 
several points if we could respond to in our written comments 
with relationship to the electronic file, the disciplining of 
judges and our relationship to the staff and our policy with 
staff.
    Mr. Obey. I would be happy to see that.
    Mr. Bernoski. Okay. Thank you very much.
    Mr. Obey. Okay. Thank you very much.

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                           W I T N E S S E S

                              ----------                              --
--------
                                                                   Page
Astrue, Michael..................................................   695
Bernoski, R. G...................................................   695
Chao, Hon. E. L..................................................     1
Clancy, Carolyn..................................................   465
Cline, T. L......................................................   465
Ford, Marty......................................................   695
Gerberding, J. L.................................................   465
Leavitt, Hon. M. O...............................................   191
O'Carroll, Patrick...............................................   695
Skelly, T. P.....................................................   599
Spellings, Hon. Margaret.........................................   599
Warsinskey, R. E.................................................   695
Zerhouni, E. A...................................................   465


                             I  N  D  E  X

                              ----------                              

                         DOL Secretary of Labor

                                                                   Page
Acceptable Level of Carryover Funds..............................   183
American Time Use Survey and FY 2009 Budget......................   144
Carryover in the Workforce Training Program......................    32
Characteristics of WIA Program Participants.....................114-116
Claims Affected by Revisions to NIOSH Scientific Methodology.....   173
Combustible Dust Standard.......................................137-138
Community-Based Job Training Grants.............................177-178
Contract FTE.....................................................   100
Contracting..............................................52-99, 108-108
Cuts in Training and Employment Services.........................   177
DEEOICP Claims Process Audit.....................................   173
Determination of Farmworker Wages.............148-149, 159-160, 179-181
EEOICPA:
    Final Bulletins.............................................172-173
    Ombudsman...................................................167-170
    Part E Definition of ``Toxic Substance''.....................   175
    Program...................................................... 38-39
Employment Programs for Veteran..................................    31
Employment Training..............................................   151
Ergonomic Standards.............................................. 50-51
Farmworker Housing.....................................158-159, 178-179
Federal Lawsuits Challenging Denial of EEOICPA Benefits..........   176
Funding for Workforce Training................................... 47-48
Giving Young People a Second Chance.............................. 41-42
Green Jobs Initiative............................................    47
H2B Visa Program................................................. 31-32
Healthcare Workers and Pandemic Flu.............................186-187
Healthcare Workers' Protection against Pandemic Flu..............    44
High Growth Job Training Initiative.............................184-186
Improving Procurement Integrity..................................    49
Job Corps........................................................ 40-41
    Backlog of Unfunded Building Maintenance and Repair Needs...116-117
    Construction Needs..........................................163-166
    Project in Los Angeles....................................... 43-44
    Staff Compensation..........................................162-163
    Student Training Slots......................................161-162
Joseph A. Homes Safety Association............................... 49-50
List of Diseases with No Casual Link to Toxic Exposure...........   175
Marketing........................................................ 42-43
Migrant and Seasonal Farmworkers................................183-184
MSHA Staffing...................................................140-141
Native American Program.......................................... 39-40
Non-Competitive Awards........................................... 29-31
Non-Competitive Grants........................................... 48-49
OLMS Restitution Orders.........................................118-137
Occupational Safety and Health Administration (OSHA):
    Follow up on Ergonomic Hazard Alert Letters.................139-140
    Referrals for Criminal Prosecution.................141-142, 182-183
    Report on Status of Key Rules................................   138
Participation of Migrant and Seasonal Farmworkers in WIA Training 
  Programs......................................................152-154
Payment of Benefits under EEOICPA Part E........................173-174
Plan to Address Disparity Rates in Unemployment.................. 46-47
Presumptive Disease Lists.......................................175-176
Program Year 2004 Lapsed WIA Funds by State.....................111-114
Proposed Changes to the H-2A Program...................150-151, 160-161
Proposed H-2A Regulations..............................144-148, 154-158
Role of Unions, The.............................................. 44-46
Secretary's Opening Statement....................................  4-19
Site Exposure Matrices...........................................   172
Site Exposure Matrix............................................174-175
Skill Training................................................... 25-26
Special Exposure Cohort.........................................170-172
Staffing Request for ESA's Office of Labor Management Standards.188-189
Staffing Request for ESA's Wage and Hour Division................   187
Standard Setting for Combustible Dust and Diacetyl.....143-144, 181-182
State Employment Services Funding................................     2
Training Programs Funding........................................   2-3
Union Organizing................................................. 32-38
Veterans' Training Programs...................................... 28-29
Voluntary Protection Program.....................................    42
Welcoming Remarks:
    Chairman's...................................................   1-2
    Ranking Member's.............................................   3-4
Workforce Investment.............................................    23
Workforce Investment Act (WIA)................................... 21-23
    Adult Carryover Balance for PY 2007 by State................108-110
    Carryover Funds..............................................   111
    Funding...................................................... 20-21
    Rescission................................................... 26-28
Workforce Investment Centers..................................... 24-25
YouthBuild Program............................................... 23-24

                Department of Health and Human Services
                           Secretary Leavitt
                       February 27, 2008 Hearing

Anthrax Vaccine and Strategic National Stockpile.................   455
Autism.........................................................216, 231
Avian Flu........................................................   459
Bone Marrow Donor Program........................................   213
Budget Submission to OMB.........................................   211
CDC:
    Funding......................................................   442
    Sleep Disorders..............................................   444
    Tuberculosis Funding.........................................   444
    Viral Hepatitis Funding......................................   445
Centers of Excellence............................................   206
Children's Hospital GME..........................................   429
Community Health Centers ......................................220, 440
Community Pharmacies ............................................   228
Contracts .......................................................   237
Dental Health.............................................212, 213, 454
FDA Hiring.......................................................   447
Flu Vaccine......................................................   461
Head Start.......................................................   224
Hepatitis........................................................   229
Infant Mortality.................................................   434
LIHEAP ........................................................226, 235
Medicaid..................................................207, 214, 452
Medicare Advantage...............................................   221
Medicare Part D................................................447, 452
Medicare Part D and Dual Eligibles ..............................   430
MEDPAC...........................................................   220
Mental Health....................................................   215
National Health Service Corps....................................   441
NIH..............................................................   234
NIH Open Access..................................................   454
Nursing..........................................................   210
Outcomes Research................................................   233
Pandemic Influenza.............................................456, 458
Rural Health ..................................................218, 440
Secretary's Oral Statement ......................................   194
Secretary's Written Statement....................................   196
Skin Cancer......................................................   230
STOP Act.........................................................   209
Strategic National Stockpile.....................................   461
Title VII Health Professions...................................222, 454
Title VII Health Programs......................................440, 445
Tuberculosis.....................................................   229
Unaccompanied Alien Children.....................................   438
Universal Healthcare.............................................   232

                     National Institutes of Health
               Centers for Disease Control and Prevention
       Substance Abuse and Mental Health Services Administration
               Agency for Healthcare Research and Quality
                             March 5, 2008

Access to Care and Quality ......................................   527
Access to Healthcare.............................................   526
Agency for Healthcare Research and Policy........................   513
American Indian/Alaska Native....................................   592
Anti-Depressants.................................................   544
Behavioral Research in the NIH...................................   572
Budget Cuts......................................................   547
Building and Facilities..........................................   540
Cerebral Cavernous Malformations.................................   591
Clinical Trials..................................................   546
Comparative Effectiveness Research ............................513, 517
Cost Savings and HIV ............................................   534
Diabetes.........................................................   586
Emergency Preparedness...........................................   533
Flu Vaccine......................................................   597
Genes and Environment............................................   524
Health Care......................................................   587
Health Disparities...............................................   552
Health Information Technology..................................514, 518
HIV/AIDS:
     CDC HIV Testing Recommendations ............................   582
    CDC Spending on MSM HIV Prevention Programs..................   581
    CDC's Heightened Response to HIV/AIDS Among African-Americans 
      Initiative.................................................   580
    Coordination with Ryan White HIV/AIDS Programs...............   583
    Prevention Programs..........................................   534
    Status of Testing Initiative.................................   583
Hospital Infections..............................................   525
Improving Quality of Health Care.................................   593
Infant Mortality and Racial Disparities..........................   560
Injury Prevention and Control....................................   565
Improving Quality of Health Care.................................   593
Mental Health Promotion and Prevention...........................   529
Methicillin-Resistant Staphylococcus Aureus (MRSA)...............   525
Minority Fellowship Program....................................559, 589
Mitochondrial Research ..........................................   542
Mortality Data Among Public Mental Health Patients...............   567
National Birth Defects Prevention Study .........................   562
National Child Traumatic Stress Initiative (NCTSI)...............   551
National Strategy on Pandemic Influenza..........................   595
NIH Behavioral Research for HIV Prevention.....................536, 576
NIH Budget.......................................................   524
NIH Priority Process.............................................   539
Opening Statements:
    Dr. Carolyn Clancy, AHRQ.....................................   516
    Dr. Elias A. Zerhouni, NIH ................................466, 469
    Dr. Julie Gerberding, CDC....................................   484
    Dr. Terry Cline, SAMHSA......................................   500
Pancreatic Cancer................................................   569
Pandemic Influenza ..............................................   549
Patient Safety ................................................514, 519
Patient Safety Organizations ....................................   526
Programs: 
    Building and Facilities....................................532, 540
    CDC's Division for Heart Disease and Stroke..................   548
    Diabetes.....................................................   586
    Emerging Preparedness........................................   533
    Health Care..................................................   587
Public Health Approach...........................................   527
Public Health Effects of Climate Change..........................   563
Racial and Ethnic Approaches to Community Health (REACH).........   556
Status of Testing Initiative.....................................   583
Substance Abuse and Mental Health Healthcare Needs...............   528
Underinsured Children............................................   531
Vaccine for Children.............................................   530
Value in Health Care.............................................   520
Viral Hepatitis..................................................   593
WiseWoman........................................................   548
Women and Stroke.................................................   573

                         Secretary of Education

21st Century Community Learning Centers.........608, 618, 638, 639, 682
21st Century Learning Opportunities Program..........608, 632, 683, 684
2-Year Colleges..................................................   620
Academic Competitiveness and SMART Grants Program (ACG/SMART)..626, 627
Achievement Gap (See also NCLB Accountability)..................629-631
Adjunct Teacher Corps............................................   607
Advanced Placement and International Baccalaureate Pr607, 620, 623, 684
After-School Programs (See also 21st Century Lear628, 629, 632, 682-684
America Competes Act...........................................678, 679
American Competitiveness Initiative..............................   607
American Diploma Project.........................................   679
Annual Yearly Progress (See NCLB AYP)
Biography of Secretary of Education, Margaret Spellings..........   610
Budget Request to OMB............................................   623
Building on Results: NCLB Reauthorization Blueprint..............   677
Business-Building Career Opportunities for Individuals with 
  Disabilities...................................................   693
Career and Technical Education..............623, 627-629, 632, 678, 679
Chairman's Opening Remarks.......................................   599
Charter School Program...........................................   681
Children Served by Special Education Programs...................687-689
College Preparedness Programs (See GEAR UP; TRIO)
Common Origination and Disbursement Contract.....................   648
Contract Awards Made Without Full, Open Competition: FYs 2005-
  2007.........................................................671, 672
Contract FTE.....................................................   673
Curriculum: Federal Role and Focus...............................   624
Disability Employment 101: Two Guides on Hiring the Disabled...693, 694
Dropout Problem................................................619, 620
Early Intervention for Children with Disabilities..............685, 686
Education Discretionary Appropriations...........................   640
Education Finance Issues.........................................   613
Education Resources............................................631, 632
English Language Acquisition..............................601, 603, 621
Environmentally Friendly, Energy Efficient Schools...............   633
E-Rate Tax.......................................................   629
Even Start.......................................................   621
Federal Role In Education............................601, 612, 624, 629
Federal Share of Special Education APPE.....611, 616, 643, 644, 687-689
Federal Student Aid..............................................   648
Financial Aid Calculation Formula................................   637
From Neurons to Neighborhoods, National Academy of Sciences 
  Report.........................................................   685
Full-Time Employment (FTE) of the Department (See also Contract 
  FTE)...........................................................   645
FY 2009 Budget Request........602, 605-609, 617, 618, 625, 631, 635-637
FY 2009 Proposed Budget Program Cuts............613, 616, 617, 621, 622
FY 2009 Proposed Budget Program Eliminations.............. 603-605, 618
FY 2009 Proposed Budget Program Increases........................   618
GEAR UP Program......................................630, 634, 639, 640
Global Competitiveness.........................................601, 678
Grants for Infants and Families Program........................686, 689
Grants for Infants and Toddlers Program..........................   686
Grants to States (Special Education)............605, 611, 686, 687, 691
Growth-Based NCLB Accountability Models..........................   614
Higher Education...............................................603, 638
Hispanic Students..............................................621, 622
Hispanic-Serving Institutions..................................618, 621
Historically Black Colleges and Universities.....................   618
IDEA Appropriation...............................................   690
IDEA Programs (See Special Education)
IDEA Reauthorization.............................................   616
Impact Aid.....................................................615, 616
Income Growth....................................................   639
Indian Education and Tribal College Funding..........615, 616, 634, 635
Low-Income Families..............................................   601
Math and Science Education and Teacher Training...........607, 623, 624
Math Now.......................................................607, 684
Mentoring Program................................................   618
Migrant and Seasonal Farmworkers Program.........................   692
Migrant Education................................................   621
National Assessment of Vocational Education......................   679
Native American Students (See Indian Education)
NCLB Accou602, 606, 607, 611, 613-615, 622, 627, 631, 676-678, 680, 684
NCLB AYP: Growth-Model Pilot; Differentiated Accountability606, 677-678
NCLB Funding/Costs..............................600, 614, 615, 641, 676
NCLB Reauthorization..................................606, 677-678, 681
NCLB Waivers.....................................................   614
No Child Left Behind (See NCLB)
Non-Competed Contract Awards in FYs 2000-2007..............648, 651-670
Non-Competed Contracts Awards, by Operating Division, FYs 2000-
  2007..........................................................649-650
OMB PART Review..................................................   616
Outside Contracts, Annual Obligations for FYs 2000-2007.........645-647
Pell Grant Program..............................603, 605, 608, 627, 640
Pell Grants for Kids Program...........603, 608, 625, 626, 679-681, 685
Prepared Statement of Secretary Spellings........................   601
Preschool Grant Program (Special Education)....................686, 688
Private School Accountability.............................608, 680, 685
Projects with Industry...........................................   693
Reading and Math.................................................   602
Reading First..............................602, 607, 616, 619, 641, 642
Rehabilitation Act (See Title I State Vocational Rehabilitation)
Safe and Drug-Free Schools.....................................618, 619
School Choice Programs (See also Voucher Programs)...606, 607, 681, 682
School Counselors................................................   618
School Improvement Grants..................602, 603, 606, 607, 625, 681
School Restructuring.............................................   607
Special Education Per Pupil Expenditures/Costs........611, 616, 687-689
Special Education.......601, 603, 611, 612, 619, 631, 640, 643, 684-690
Student Aid (See also Pell Grant; Financial Aid; ACG/SMART)......   637
Supplemental School Services..............................606, 618, 638
Supported Employment Program...................................691, 692
Teacher and Principal Education/Development.....602, 612, 619, 622, 624
Teacher Incentive Fund...............................603, 607, 619, 625
Teacher Recruitment..............................................   624
Teaching Children with Disabilities (See also Special Educ612, 685, 686
Technical Education (See Career, Technical Education)
Title I State Vocational Rehabilitation Grants............691, 692, 693
Title I, ESEA, Grants t605, 606, 615, 622, 631, 640, 681, 682, 684, 691
Tribal Schools............................................616, 634, 635
TRIO Programs........................................630, 634, 639, 640
Underperforming Schools..........................................   681
Unsolicited Grant Awards in FYs 2005-2007.......................673-675
Upward Bound Evaluation..........................................   617
Vocational Rehabilitation......................................601, 692
Voucher Programs............................631, 635, 679, 682-683, 685
Youth Build Green Programs.......................................   633

                    Social Security Administration 

Administrative Budget..........................................728, 798
Administrative Law Judge:
    Accountability.............................................723, 816
    Application Process..........................................   815
    Attrition Rate for Support Staff.............................   725
    Discipline...................................................   727
    Full-Time Equivalents and Administrative Law Judges..........   805
    Ideal Ratio of Support Staff to Administrative Law Judges....   816
    Independence.................................................   732
    Productivity...............................................723, 804
    Productivity and Accountability..............................   723
    Staffing.....................................................   724
    Support Staff.........................................725, 803, 816
Approval/Denial Rates.....................................726, 730, 802
Biography: Michael J. Astrue, Commissioner.......................   721
California Field Office Closings.................................   728
Chicago Region Wait Times........................................   725
Commissioner's Budget..........................................731, 800
Disability Determination Services Attrition Rate.................   801
Disability Waterfall (Approval/Denial Rates)..............726, 730, 802
Electronic Services Complement Field Offices.....................   814
Eliminating Fraudulent ``Gaming'' of the Disability System.......   817
``Favorable Evidence'' Regulation................................   816
Field Office Consolidation.....................................728, 810
Hearings:
    Backlog......................................................   815
    Backlog Reduction Plan.......................................   722
    Government Counsel...........................................   804
    Optimal Hearings Processing Time.............................   799
    Processing Time............................................731, 799
    Reducing the Hearings Backlog................................   798
    Hearings and Appeals Regulation Criticism....................   731
Introduction of Witness..........................................   695
New Mexico Field Offices, Status of..............................   814
Other Work and Services in Support of the Public.................   800
Replacement of Lost or Stolen Checks.............................   805
Statements:
    Commissioner's Full Statement for the Record.................   700
    Commissioner's Opening Statement.............................   697
    Limitation on Administrative Expenses........................   717
    Office of the Inspector General..............................  720 
    Payments to Social Security Trust Funds......................   710
    Supplemental Security Income.................................   712
Web Site Access for the Visually Impaired........................   807
Witnesses........................................................   695

                     Social Security Administration
                           Inspector General

Attrition Rates in Disability Determination Offices..............   819
Audit: Administrative Law Judge Caseload Performance.............   734
Audit: Hearing Office Best Practices.............................   734
Audit: Hearing Office Staffing...................................   734
Audit: Hearing Office Technology.................................   735
Audit: Initial Claim Processing..................................   734
Audit: Judge and Hearing Office Performance......................   735
Balancing Service and Stewardship................................   734
Biography: Patrick P. O'Carroll, Jr., Inspector General..........   745
Continuing Disability Reviews....................................   735
Disability Waterfall (Approval/Denial Rates).....................   819
Improving e-Dib..................................................   822
Introduction of Witnesses........................................   733
Processing Time Improvements.....................................   819
Quantifying the Disability Backlog...............................   734
Quick Disability Determination Process...........................   820
Regional Disparities among Administrative Law Judge Caseloads....   818
Statements:
    Inspector General's Full Statement for the Record............   736
    Inspector General's Opening Statement........................   734
Support Staff for Administrative Law Judges......................   818