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


 
          IMPACT OF RECESSION ON STATES AND LOCAL COMMUNITIES

_______________________________________________________________________

                                HEARING

                               BEFORE THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                                ________

                                   S

                                ________


         Printed for the use of the Committee on Appropriations
          IMPACT OF RECESSION ON STATES AND LOCAL COMMUNITIES
                                                                      ?

          IMPACT OF RECESSION ON STATES AND LOCAL COMMUNITIES

_______________________________________________________________________

                                HEARING

                               BEFORE THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                                ________

                                   S

                                ________

         Printed for the use of the Committee on Appropriations

                     U.S. GOVERNMENT PRINTING OFFICE
 46-227                     WASHINGTON : 2009

                                  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              
                                                                        

                 Beverly Pheto, Clerk and Staff Director

                                  (ii)


                        APPROPRIATIONS FOR 2009

                              ----------                              


          IMPACT OF RECESSION ON STATES AND LOCAL COMMUNITIES

                              ----------                              

                                       Thursday, December 11, 2008.

                               WITNESSES

HON. JIM DOYLE, GOVERNOR, STATE OF WISCONSIN
HON. JIM DOUGLAS, GOVERNOR, STATE OF VERMONT
HON. JON CORZINE, GOVERNOR, STATE OF NEW JERSEY
JULIE MURRAY, CHIEF EXECUTIVE OFFICER, THREE SQUARE, INC., LAS VEGAS, 
    NV, FOOD BANK
DR. SANDY BAUM, SENIOR POLICY ANALYST, THE COLLEGE BOARD, AND PROFESSOR 
    OF ECONOMICS, SKIDMORE COLLEGE
MARCIA KREUCHER, EXECUTIVE DIRECTOR, COMMUNITY ACTION AGENCY OF 
    JACKSON, LENAWEE, AND HILLSDALE, MI
    Chairman Obey. Good morning.
    Well, as people who work on the Hill know, this is not our 
regular committee room; we had no idea whether we would have 66 
people showing up or six. I am glad we are somewhat above six. 
I appreciate the fact that everyone who is here is here despite 
the fact that we at least hope we adjourned last night 
depending on what the Senate does on the automobile bill.
    Let's get right to it. This country is in what appears to 
be the most dangerous recession since 1932, and I think both 
parties are pushing different explanations for what happened. 
The Democratic Party seems to generally claim that this 
recession started because of nefarious activities on Wall 
Street, and the Republican Party seems to suggest along the 
lines that it started in the housing areas. And I think, 
frankly, that that narrative is wrong on both sides.
    To me, what has happened is that if you go back to 1980, 
from 1980 through today, virtually 80 percent of all of the 
income growth that occurred in this country went to the 
wealthiest 10 percent of American families. And, in fact, in 
this decade, starting in the year 2000, about 95 percent of all 
of the income growth in the country has gone to the top 10 
percent. And so I think average families have tried to respond 
to what was essentially a freeze in their real income over time 
by trying to borrow.
    So they borrowed more for student aid to send their kids to 
college, they borrowed more for housing, they borrowed more for 
health care, they borrowed more for a lot of things they needed 
and probably some things they didn't need. And at the same time 
that that happened, you had all of these new instruments that 
were being developed on Wall Street, accompanied by a 
substantial reduction in regulation of those activities.
    And so I will readily grant that housing and Wall Street 
finance were the triggering events, but I think the basic 
problem is, as I just described, the long-term erosion of the 
ability of average, working people to raise their income over 
time. And so now we are faced with the consequences of that 
problem.
    We were told by an economist from Moody's, for instance, in 
the Democratic Caucus just two days ago that even if we pass 
the $700 billion, so-called stimulus package, that we can still 
expect unemployment--which right now is hovering close to seven 
percent--that we can still expect unemployment in a year and a 
half to be hovering around nine percent. I think that is 
totally unacceptable, and I think that indicates just how 
serious this recession could be.
    We have lost two million jobs in the last year. The growth 
in population and labor force means unemployment has expanded 
by even more, by 3.1 million; one in eight persons in the labor 
force is either unemployed or underemployed, and we are getting 
very, very sad-looking predictions and projections and 
forecasts from economists throughout the country. Even many 
conservative economists who normally advise the Congress to 
leave it to the Federal Reserve to respond to the recession are 
now advising Congress to shore up the economy with more 
temporary--and I emphasize temporary--spending. The Federal 
Government, it seems, is about the only game in town to provide 
a lift to the economy.
    As the economy shrinks, we can anticipate more large 
reductions in the real revenues coming into the States and 
coming into the Federal Government. And falling revenues are 
going to force those States to either cut important services or 
to raise taxes, and that will create a major fiscal drag on the 
economy.
    And we also will be experiencing a human dimension. Losing 
a job and not being able to find a new one undermines the 
dignity of unemployed workers and puts a financial strain on 
the whole family and the whole community.
    And so I think there is generalized agreement, we have to 
make every reasonable effort to prevent things from getting 
much worse. The downward momentum appears to be very strong, 
but it is to be hoped that a well-designed economic recovery 
program could help slow it.
    And so we have two panels that will be appearing before us 
today--one a panel of Governors, a bipartisan panel of 
Governors to walk us through what is happening at the State 
level; and, secondly, a panel of people who are experienced at 
seeing what happens on the ground level to people who are the 
most vulnerable to these downturns. And I am happy that we have 
both of those panels here today.
    Before I call on them, let me call on the distinguished 
gentleman from California, Mr. Lewis, the ranking member, for 
whatever comments he would like to make.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T6227A.001
    
    [GRAPHIC] [TIFF OMITTED] T6227A.002
    
    Mr. Lewis. Thank you very much, Mr. Chairman.
    As we go about welcoming Governor Corzine, Governor Doyle, 
Governor Douglas, I had first thought that my colleague from 
New Jersey was going to be the only one with us today, because 
he wanted to make sure to greet his governor. But the economy 
has been improving in Georgia lately, so Mr. Kingston has 
decided to show up as well. But he has assured us he won't be 
taking much of your time.
    In the meantime, what the Chairman said at the initial 
stages about the severity of our circumstances is felt by all 
of us; and it seems to me that it is really important for us to 
know that with the challenges that are out there across the 
country, it is very obvious that solving these problems has 
little or nothing to do with partisan politics.
    Indeed, we are in an environment in this country today 
where I have serious doubts about our ability to effectively 
encourage our children and grandchildren to become involved in 
public affairs because they look at the way our government is 
working, whether it be at the local or the State level, but 
certainly the Federal level, and they say, My goodness, there 
has got to be something better for us to have our children do. 
But the country's future and, I believe, the world's future is 
very dependent upon our being able to attract the best to our 
staff in a room like this, but also among the members, as 
reflected by many of the people in the audience.
    I was initially hopeful that today's committee meeting was 
to resume our deliberations and mark up the remaining 
unfinished spending bills for the fiscal year 2009. We are now 
into our third month of the new fiscal year, and many critical 
functions of government are operating under a continuing 
resolution that expires on March 6th.
    It is my understanding that our Appropriations Committee 
staff is now negotiating with their Senate counterparts on the 
nine appropriations bills that have yet to be considered by the 
House and the Senate. Those spending negotiations, you should 
know, many involving only subcommittee-passed bills that have 
not been debated in the Full Committee, are occurring without 
any Member or Senate input whatsoever, to my knowledge. I have 
heard from a variety of sources that both minority and majority 
staff in the House and Senate are very uncomfortable making 
these policy and funding decisions that should be addressed at 
a Member and Senator level.
    I am told that it is the intent of the House and the Senate 
leadership to combine these nine spending bills into an omnibus 
package to be presented to President-elect Obama shortly after 
he is sworn into office in January. But why would we put our 
new President, elected on a promise of change in the ways of 
Washington--why would we want to ask him to sign a spending 
package like this? I don't know. I can't think of a single 
reason why he would reward Congress for failing to get its 
works done.
    Perhaps the new team just wants to put 2009 behind us, and 
certainly all of us can understand why that might be the case. 
With our staff working around the clock, including weekends, 
and with the holidays upon us, it would be helpful to have some 
communication between the Committee, the Majority Leadership, 
and the incoming Administration on the end game--the sooner, 
the better.
    If our next President plans to extend the continuing 
resolution for the full year, I don't see any point in asking 
our staff to work right up until Christmas on a package that 
will never see the light of day. Frankly, I would rather see 
the staff enjoy time with their family over the holidays, and 
be rested and ready to go with the Committee's work early this 
coming year.
    With regard to today's hearing, there is no greater 
challenge facing working families than our Nation's struggling 
economy. The ability of consumers to secure loans to buy a car 
or a home, start a small business, or to care for loved ones 
with medical needs is critically important. But in order for 
taxpayers to be confident that Washington can address these 
challenges, Congress must propose real solutions that produce 
real results.
    Like other fast-growing suburban areas across the Nation, 
my district has been severely impacted by the economic downturn 
that the chairman mentioned, that unemployment is currently, 
nationally, pushing 7 percent. In 2007, unemployment in my 
region, in my own district, was 5.9 percent; today, it stands 
at 9.5 percent. New home starts have fallen by 50 percent, and 
nearly 20,000 home construction jobs have been lost.
    Thousands of families in our communities have lost their 
chance for the American dream. Nearly 100,000 homes are in 
foreclosure. And with the value of homes falling as much as 40 
percent, even more mortgage holders are in danger of defaulting 
on their loans.
    The typical Washington solution to every problem is, what? 
You know it better than we: to throw money at it.
    I would argue that we can no longer afford the typical 
Washington solution. My constituents want Congress to deliver 
specific economic solutions rather than spending money on 
programs that sound good with no near-term results.
    My understanding is that the incoming Administration is 
working with Speaker Pelosi and Senator Reid on a $500 billion 
or, as the chairman indicated, or more proposal for stimulus 
spending. While I have not yet seen any details of the 
proposal, members of this committee have an obligation to ask 
two very important questions: Will it work? And, where will the 
money come from? The typical Washington answer to a challenge 
of this magnitude is to write a blank check and hope for the 
best. But that is not good enough. Congress must demand 
results.
    A recent New York Times article made this observation: 
Government agencies usually don't even have to do a rigorous 
analysis for transportation projects on how it would affect 
traffic, for example, before deciding to proceed. In one recent 
survey of local officials, almost 80 percent said they had 
based their decisions largely on politics, while fewer than 20 
percent cited the project's potential benefits. If Congress is 
going to approve billions in new road projects, for example, 
will it also demand that this new spending result in less 
congestion?
    If President-elect Obama is serious about change, he must 
insist that any Federal funding for infrastructure projects be 
linked to tangible results. When it comes to spending bailouts 
using taxpayer dollars, we must insist on measurable results.
    Before turning to our panel, I would like to ask Chairman 
Obey if it is his intention to hold a Full Committee markup of 
this stimulus proposal in January. In other words, will the 
members of our committee have the opportunity to debate and 
amend the stimulus package before going to the House floor for 
consideration?
    Chairman Obey and I have had many an exchange regarding 
last year's fiasco in which we essentially suspended all of our 
work. It is important that we have subcommittee expertise 
applied to these questions and, in turn, to have those lines of 
expertise come to the Full Committee where we can possibly even 
consider amending what has been proposed. That has not been our 
pattern recently. I hope we will see quickly a return to 
regular order.
    I thank the Chairman for his guidance. I yield back the 
balance of my time.
    Chairman Obey. Thank you for those supportive remarks.
    Let me now call our first panel. First, Governor Jim Doyle 
from a place called Wisconsin; secondly, Governor Jim Douglas 
from the State of Vermont; and, thirdly, Governor Jon Corzine, 
Governor of the State of New Jersey, who, before he had the 
unfortunate judgment to leave Washington, also served us with 
great distinction in the United States Senate.
    Gentlemen, we are happy to have all of you with us. If you 
would take about five minutes or so to summarize your 
statement, we will insert your written statements in the 
record. And we appreciate your being here.
    Governor Doyle, why don't you lead off?
    Governor Doyle. Thank you, Mr. Chairman.
    And to Mr. Lewis and members of the committee, to my 
distinguished colleagues from Vermont and New Jersey, thank you 
for having us here today. And to the chairman in particular, I, 
of course, want to state my incredible appreciation for your 
leadership for the State of Wisconsin and your great leadership 
of this committee during very, very tough economic times, and 
your work to help move our State and this country forward.
    The country's economic crisis has created very serious 
challenges for Wisconsin, and I believe that unless they are 
addressed correctly, these challenges to our States will impair 
our country's ability to recover and to move forward.
    First, I want to acknowledge the attention to the State's 
infrastructure, and let you know that Wisconsin has been 
working hard to line up projects that are ready to go and that 
will really add value to our economy. And let me say in 
response to Mr. Lewis, we would be delighted to have 
accountability for the expenditure of that money, to make sure 
it is doing what it is supposed to be doing.
    Let me also say a quick word about State budgets and how we 
handle ordinary economic downturns. Unfortunately, all of us, 
as governors, know how to handle ordinary downturns, and pretty 
severe downturns, but we are dealing with something of a 
different magnitude here today.
    Wisconsin's budget is typical of, I believe, every other 
State in the country except, I think, Governor Douglas' in that 
we have to balance a budget; and I know he does it every year, 
but we, by our State constitution, have to balance our budget, 
so when the economy slows, we have to adjust. And until 
September, we were on course to meet revenue projections even 
in a very slow economy. Last spring, we adjusted to a bad 
economy by making major cuts in State government.
    I have made $270 million in cuts to our State government 
since June of this year. And those cuts, in combination with 
earlier cuts that we have made, total a half billion dollars of 
cuts that we have made to the budget of the State of Wisconsin 
over the last year and a half. These actions were recognized as 
an ability to adapt and manage a challenging fiscal situation; 
and, in fact, as a result of those cuts, prior to September, 
Wisconsin saw an upgrade in its bond rating.
    Unfortunately, this economic crisis is unprecedented in 
recent decades. We had based our budget on very, very modest 
revenue forecasts. And to just give you a sense of the 
dimensions that we now face, we were predicting even on very, 
very minimal budget forecasts from last June that we would have 
about $28 billion in revenues for the next biennial budget. But 
after what happened this fall, we now predict only $25 billion 
in revenues over that 2-year period a significant decline from 
what were already predicted to be very flat revenues.
    The projected drop in revenue, combined with what happens 
with States in these kinds of times of expected increases in 
programs such as Medicaid, leaves us facing our largest budget 
gap ever: $5.4 billion over the next 2 years, or 17 percent of 
our biennial budget.
    Due to the cuts we have made over the last few years, we 
approach this challenge in a situation where, in the State of 
Wisconsin, one out of ten of our State jobs are unfilled. The 
budget deficit we face in this economic crisis stands, at a 
minimum, to double the number of State workers that will be out 
of jobs. And no matter how many workers we let go, the most 
basic fact is that these people only comprise a small 
percentage of our budget. I could cut the workforce of the 
State of Wisconsin in half, and we still wouldn't be dealing 
with the full scope of the deficits that we now face.
    So what we are left with is cutting away our State's 
ability to carry out the most essential expectations that 
people have for our government. We will be forced to cut the 
very tools and services that people depend on to pull them out 
of a recession and move them ahead.
    Specifically, State budgets let our communities hire police 
officers and firefighters. They allow kids to go to good 
schools. They allow students to go to universities and 
technical colleges with affordable higher education. State 
budgets also make sure that a child who breaks his or her arm 
gets the appropriate medical care that he or she needs.
    So that is what is threatened in the current situation: our 
schools, our universities, our technical colleges, our access 
to health care, our local police and firefighters. These are 
the areas that determine State budgets; approximately 80 
percent of our State budget is in those areas. And aid to long-
term capital projects, which is very beneficial to the future 
and which we truly believe will help stimulate this economy, 
will not close our budget shortfalls or ease these devastating 
cuts. And these cuts could undermine years of careful progress.
    As you know so well, Mr. Chairman, and that you have been 
so helpful on, in Wisconsin we have worked hard together to 
make sure that every child in Wisconsin has access to 
affordable health insurance; and we have worked hard to make 
sure that families can get their kids a good education that 
they can afford. We have worked hard to build a great 
university system with affordable tuition and sufficient 
financial aid; and we have worked hard to put more police 
officers on the street to help turn some of our most troubled 
neighborhoods around.
    For example, in Milwaukee, State funding has allowed the 
police department to launch a new, highly strategic data-driven 
neighborhood task force which is credited for reducing total 
crime in the city by 10 percent and homicides by 33 percent. 
This program is saving lives, and it is making the city 
stronger.
    The magnitude of the budget shortfalls will also force 
States to consider tax increases. So we recognize, as States--
and I am sure I speak for every governor--that we are going to 
have to make even more cuts, and we are going to have to make 
even more difficult choices. We don't want to have to make 
those choices, but we are willing and will make those choices. 
There are more cuts coming in Wisconsin, painful cuts that will 
really matter.
    But we cannot allow our States' revenue shortfalls to be an 
obstacle in our efforts to recover from this recession and to 
move our State and this country forward. So I am here to work 
with you to do everything I can to help move our country ahead; 
and it is my deep belief that our approach must allow States to 
meet our citizens' most basic needs.
    It would be terrible if, at the end of this recession, that 
what we would find is that we have moved this country back 25 
years; that our schools are hurting, that our universities have 
become so unaffordable that ordinary people can't go to them.
    We all recognize that, unfortunately, this recession will 
move beyond this fiscal year. So far, the current estimates put 
the total State deficits at $150 billion in this fiscal year 
and the next.
    So, Mr. Chairman, again I thank you very much. And the 
committee, I thank the committee for listening to our concerns. 
We look forward to working with you to make sure that we assure 
that our schools remain good, that higher education remains 
affordable, that we have sufficient numbers of police and fire 
on the streets--safety on the streets, and that we are ensuring 
that people get the basic health care that they need.
    Thank you very much.
    Chairman Obey. Thank you.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T6227A.003
    
    [GRAPHIC] [TIFF OMITTED] T6227A.004
    
    Chairman Obey. Governor Douglas.
    Governor Douglas. Mr. Chairman, thank you very much. 
Congressman Lewis. We appreciate the chance to be here to talk 
about the current fiscal condition of the States and of our 
country, and how we might work together as State and Federal 
officials to speed the economic recovery of our country.
    I am the Governor of Vermont, of course--also vice chairman 
of the National Governors Association. I will offer a few 
thoughts on behalf of the entire association membership and 
some from my perspective as the chief executive of a small 
State.
    The residents of my State and all States, as you know, are 
anxious. They are hurting. In many cases, they are out of 
options and are really looking for help from us and the Federal 
Government. A week or so ago, 48 governors and governors-elect 
met in Philadelphia with the President-Elect and Vice 
President-Elect to talk about ways that we can work together as 
partners to spur economic growth and speed recovery.
    As Governor Doyle noted, the governors of our Nation are 
indeed making difficult choices now, and working with their 
legislatures to implement them. States have already cut $7.6 
billion from budgets during the current fiscal year and could 
be facing shortfalls of nearly $180 billion over the next 2 
fiscal years. As you noted, we don't have the option of not 
balancing our budgets, so we have to find ways to keep them in 
balance in these very difficult and challenging fiscal times.
    Vermont is a small State, but our financial pressures are 
no less acute. We have already reduced our revenue forecast for 
the current fiscal year twice. We have pushed through two 
rounds of very difficult budget cuts. Another rescission is 
being developed now. We have cut our State workforce by about 5 
percent, and for the next fiscal year, 2010, I have directed 
the departments to prepare budgets that reduce general fund 
appropriations by an additional 13 percent.
    So we are working hard to address this downturn. We are 
looking at all options to reduce expenditures. But these 
reductions will undoubtedly impact important State services, 
including those that affect the most vulnerable in our States.
    These actions and those that all States need to take to 
balance budgets can slow recoveries and make downturns worse. 
So one of the most efficient mechanisms that the Federal 
Government can use to speed a recovery, as economists across 
the political spectrum agree, is investing in existing Federal-
State programs.
    NGA urges the Congress to invest in States as part of any 
national recovery strategy, specifically to temporarily enhance 
the Federal Medical Assistance Percentage for at least 2 years; 
to invest in ready-to-go infrastructure projects with no State 
match to spur job growth; to consider changes in the Federal 
Tax Code that can spur economic growth; and to avoid policies 
that preempt State authority, that shift costs to States, or 
that impose new unfunded mandates that work against the goal of 
economic recovery.
    I want the expand on a few of those recommendations very 
briefly.
    An enhanced FMAP is most effective, as a counter-cyclical 
measure, to implement at the onset of an economic downturn in 
order to boost recovery, but we believe it has to be in effect 
for at least 24 months. That allows States to meet anticipated 
increases in Medicaid costs for the duration of this economic 
downturn. To achieve a maximum effect, the funding should be 
between a third and a half of the budget shortfalls that States 
are facing this year and next.
    Another important safety net program is unemployment 
insurance, and Vermont and at least 33 other States are facing 
challenges maintaining adequate balances in our unemployment 
trust funds. I encourage the Congress to reconsider a Reed Act 
distribution to the States for the purposes of bolstering these 
balances. This will help blunt the impact on already 
overburdened and struggling businesses if unemployment trends 
continue as projected. The chairman indicated the likelihood of 
that trend if no action is taken, and we have to do everything 
we can to provide that safety net to the people of our State.
    Chairman Obey. If I could just interrupt. What I indicated 
was what the unemployment levels were expected to be even if we 
did take that action.
    Governor Douglas. Even if we did. Thank you, Mr. Chairman.
    I have read some testimony of an economist before another 
committee of the Congress suggesting that the difference 
between action and inaction could be as much as 2.5 percent. So 
your point is certainly well taken that this is a serious 
situation, and everything possible should be done to keep it 
from being more serious.
    Investments in ready-to-go infrastructure projects are a 
cost-effective creator of high-paying jobs. Estimates are that 
for every billion dollars in transportation infrastructure 
there are about 35,000 jobs created and about $5.7 billion in 
additional economic activity created as well.
    I think we should have a broad definition of infrastructure 
to have the most impact. That may be highways and transit 
systems and airports; it could be clean water and sewer 
projects; perhaps information technology, including broadband; 
environmental projects; higher education infrastructure, as 
well.
    And I want to emphasize, as my colleague Governor Doyle 
did, that we are not asking for a blank check. We want to work 
with the Congress to ensure that investments in infrastructure 
are tied to projects that are truly ready to go, and perhaps 
even include a use-it-or-lose-it provision to ensure that funds 
get into the economy as quickly as possible. These 
restrictions, though, ought to take into account regional 
limitations.
    For example, a 90-day requirement that I have heard 
discussed in some quarters to have shovels in the ground 
wouldn't make sense in northern States where the construction 
season doesn't begin until at least April and ends generally by 
November.
    I urge the Congress to temporarily lift the State matching 
requirements that would otherwise restrict the States' ability 
to begin projects due to fiscal restraints. We support efforts 
that have been initiated by my State's congressional delegation 
to extend a State match waiver to include all SAFETLU projects 
through next September.
    Just a couple other specific thoughts from our small State, 
Mr. Chairman: We practice what we call just-in-time delivery of 
bridge paving and road projects. We don't have a large number 
of ready-to-go projects waiting for funding. So we suggest a 
reasonable time frame to obligate stimulus funds would be no 
less than 180 days. We generally don't have large 
transportation projects in small States, but small projects 
come with large regulatory hurdles and red tape. So I would 
urge the Congress to streamline regulations and relax current 
eligibility criteria to allow stimulus funds to be used for 
maintenance-related activities.
    I might note that the President-elect in his comments to 
the governors last week talked about the need to cut through 
the red tape of the Federal Government to expedite these 
projects.
    A provision allowing or encouraging stimulus projects to be 
bid using Federal agency emergency procedures would allow 
States to use simplified bids and other procedures to expedite 
project delivery. And maintenance of effort or antisupplanting 
language should not be included, I would suggest. Any ready-to-
go project ought to be eligible for stimulus funding, thereby 
allowing any displaced funding to be used for additional 
activities or projects.
    In my written comments, Mr. Chairman, I have included some 
thoughts about the Tax Code that I would urge you to take a 
look at. There is an EB-5 Immigrant Investor Visa program that 
we would hope is extended by the Congress to bring foreign 
equity capital into at-risk investments in our States. There 
are a number of ideas that I hope the committee will consider.
    I think it is quite clear that our Nation is at a 
crossroads at this very difficult time. Folks who are losing 
their jobs, their homes, and even their hope are looking to 
their leaders for help. I believe the timely targeted and 
temporary investments by the Federal Government that we have 
discussed this morning are needed now to get our economy going 
and put us on the road to recovery.
    Again, I thank you for the opportunity to be here this 
morning to offer these thoughts to this committee.
    Chairman Obey. Thank you very much, Governor.
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    Chairman Obey. Governor Corzine.
    Governor Corzine. Thank you, Mr. Chairman, and Ranking 
Member Lewis. I am pleased to be here with my colleagues from 
New Jersey, Congressman Rothman and Congressman Frelinghuysen, 
who work very ably in a bipartisan way to represent the 
interests of our State.
    I think it is testimony to the Chairman's leadership that 
we are focused very precisely on this very significant problem 
we have in the economy that is creating enormous dislocations 
at the State and local level. I have heard that from my 
colleagues already, and I am pleased to join them as well.
    Our story in New Jersey is not a lot different from what 
you heard from Governor Doyle. We face one of the biggest 
challenges we have had in history financially. We are 
constitutionally required, as 49 other States are, to balance 
our budget. The budget that ended last June, we collected $33.5 
billion. In the current year, estimates are that it will be 
$31.5 billion; and if I am wrong, it will be less, with sharply 
declining revenue collections month over month by comparison.
    As we put together our budget for next fiscal year, which I 
have to deliver to the legislature in February, we are looking 
at $29.5 billion as the likely target. That is $4 billion, in 2 
years, in absolute dollar reductions, 12 percent. And as I like 
to emphasize, those are absolute cuts, not baseline numbers, 
which I think budgeteers understand.
    There are automatic increases in health care costs that we 
face, just as everybody else in the economy does, contractual 
wage hikes and automatic safety stabilizers that kick in during 
times of recession. If we were to look at baseline cuts, it is 
over $8 billion, more than 24 percent cut from what would have 
been expected over that 2-year period.
    To compensate for the decline in revenue, we are doing the 
hard things that Governor Doyle talked about. We are cutting 
through the fat, and, frankly, I think we are dangerously into 
the bone. We have cut the State payroll by over 4,000 people. 
That is about a 6 percent decline in the last 2 years. We have 
changed collective bargaining arrangements, increased pension 
contributions, mandated cost sharing. I could go on.
    We have cut aid to our colleges, universities, and 
municipalities already. We will be more challenged on that area 
in the next round of cuts. It will hurt people and the economy. 
And, frankly, a lot of our budget is not open to cutting in a 
civil society.
    We are not going to shut down our prisons. There is only a 
minimum amount of cuts that you can make to public safety. 
Eliminating services to the developmentally disabled and 
mentally ill doesn't seem like a likely or proper direction. I 
could talk about child welfare agencies and others. And we have 
contractual obligations on debt service that go forward.
    So we are left with a very limited set of places where you 
can go cutting--programs like Medicaid, higher education, aid 
to municipalities are the most likely. And coming up with $4 
billion of those kinds of cuts goes at our most vulnerable 
citizens and the most important areas where we would like to be 
investing, our children and our future. These cuts are sapping 
an economy just as we ought to be strengthening the economy.
    And as I say, we are just one state. If you multiply it, 4 
billion times 50, you get an idea of what we are talking about. 
We are medium-sized, and so some of the bigger ones have larger 
and some of the smaller ones a little less.
    My central point: A Federal stimulus package targeted to 
States must include, in my view, help on the operating side. I 
am an enthusiastic advocate for infrastructure spending. As a 
matter of fact, a month ago in the same hearing room I 
testified to the proper use of that if it is properly 
metricized and responsible. But we need help on the operating 
side if we are not to have the kind of cuts that I have 
outlined and Governor Doyle did.
    I must say, we could end up having a $300 billion or $400 
billion--maybe a $500 billion--program to help the States and 
other stimulus activities, but it could all end up being a wash 
if we don't get help on the operating side of the state 
budgets. And we haven't accomplished a lot if that is the case.
    We are not looking about blank checks. The fact is that 
States and the local government already have the delivery 
systems, already have the programs in place, the infrastructure 
to deliver the broad-based stimulus program. The Federal 
Government has access to the resources, and we would love to be 
a partner in that process.
    We have already made significant cuts, but--I would support 
the FMAP kind of investment that has been previously talked 
about, but there are other places, some of them in the mandates 
that the Federal Government lays upon the States. I think 
everybody knows that IDEA, we are only funding 17 percent of a 
mandate that we are required to carry. Everyone knows that No 
Child Left Behind is putting unfunded mandates on the States. 
We need help along those lines.
    And the reality on Medicaid is real. In the last 5 months, 
we have had 40,000 increase in the number of people signed up 
for Medicaid. It is exploding in front of our very eyes. So I 
do hope that we get to FMAP; that we work in some of the other 
programs like ``DISH'' with respect to our hospitals, 
particularly in front of some hoped-for long-term fix for the 
uninsured.
    I do hope also that we don't lose track of the fact that 
creating jobs with our infrastructure program is real. It can 
make a huge difference, and I think it can be delivered in a 
very solid context. We have, for instance, spending ongoing in 
the State of New Jersey, about $2.8 billion of accelerated 
transit projects and another $1.6 to -7 billion in school 
construction that we have moved up 6 months to try to stimulate 
the economy today.
    But there are many things that we are not doing. Case in 
point, the State has already committed $5.7 billion towards one 
of the largest transit projects in the country, a new transit 
tunnel under the Hudson River, would create 6,000 jobs if we 
could get it funded today; 50,000 permanent jobs in the New 
York-New Jersey region is the estimate of the economists once 
it is completed, and it will carry 45 million passengers 
annually. There are real metrics and real positive elements 
associated with that.
    Just as the New Deal put together programs that have short-
run benefit, those projects like the Lincoln Tunnel and Golden 
Gate Bridge, and the electrification of the Northeast Corridor 
that I took today with Vice President Biden, these projects put 
people to work then and they are paying dividends to our 
citizens today.
    There is enormous need on both the operational side and the 
infrastructure side, and I would encourage both the Committee, 
the Congress, and all of us to work as partners to offset what 
is a very, very severe decline in our economy.
    I would just close with: We had an antipoverty network 
hearing in Trenton this week. The use of our food banks is up 
over 30 percent in client usage. Applications for unemployment 
are so large that we had to shift 150 people out of other 
departments to actually deal with the ongoing crisis of 
servicing those who are applying for unemployment.
    It is time for us all to pull together, join hands 
together, and be partners, address this not only to stimulate 
the economy, but to service the basic, core needs of our 
communities.
    I appreciate having the chance to talk.
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    Chairman Obey. Thank you very much, Governor.
    Just one observation, and I will be frank about it. A 
number of my colleagues on both sides of the aisle will say to 
me in private, ``Well, yeah, I know these States have a lot of 
deficits.'' But if the governors are of the opposite party, 
some Members are saying, ``I don't want to help him. I want to 
deal with my problems.'' And others are saying, ``Well, why? 
This is the State's problem. I am a Federalist. Why should the 
Federal Government weigh in to give money to governors?''
    My friends know I like to quote Archy the Cockroach, and 
Archy once said, ``There is always a comforting thought in time 
of trouble, if it is not your trouble.'' What others have said 
to me is: ``We are seeing at the State level, or will see at 
the State level, that because of the actions you have to take 
to balance your budgets, the result will end up being a fiscal 
drag on the economy of somewhere around $200 billion.''
    And I have heard even higher estimates. And if that is the 
case, it means that if the Congress doesn't appropriate $200 
million to at least counter that, we are not only not staying 
neutral, we are making the problem worse. Or, at least, the 
problem is becoming worse.
    And so it seems to me that what we need to do is first, 
provide a reasonable balance between what the Federal 
Government does, what the local governments do, what State 
governments can do, and what the private sector and 
organizations can do in order to create jobs to counter the 
jobs we are going to be losing with what is happening in the 
economy; second, stabilize the budget situations at the State 
and local level; and, third, help the most vulnerable victims 
of this recession.
    And hopefully, at the same time, while we are at it, it 
would be nice if we could do all of those things in a way which 
would modernize and streamline and make more efficient some of 
our delivery systems and services around the country.
    So I appreciate your comments here today. And to give other 
members more time, I will decline to ask any questions at this 
time and turn it over to Mr. Lewis.
    Mr. Lewis. Thank you, Mr. Chairman. It is not my intention 
to ask any questions, but I do have a unanimous consent, if you 
will, to enter into the hearing record the additional 
materials. And it includes an op-ed from Governor Sanford, who 
is the chairman of the Republican Governors Association, and 
Governor Perry of Texas.
    Chairman Obey. Without objection, so ordered.
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    Mr. Lewis. Mr. Chairman, if I could take the balance of my 
time and yield it to my colleague from New Jersey, Mr. 
Frelinghuysen.
    Chairman Obey. Sure.
    Mr. Frelinghuysen. I thank the gentleman for yielding and I 
thank the gentleman for the time.
    And let me share--initially, I share the concern of our 
ranking member, Mr. Lewis, that so many of our appropriations 
bills were not debated and passed on the floor. I think in many 
ways that could have been a stimulus to get those bills through 
and money out on the street.
    I share with Mr. Mollohan oversight of the Department of 
Commerce, Justice, and Science portfolio, and there is a lot in 
those bills that would do a lot to stimulate the American 
economy.
    Having said that, gentlemen, thank you for being here. And 
particularly, it is a pleasure to welcome my own Governor Jon 
Corzine.
    The advertised topic of this hearing is the need for an 
economic stimulus package. I think we can all agree that we 
have an obligation to act to ensure that the current economic 
slowdown is as shallow and as brief as possible. There may be a 
need for targeted infrastructure investments as many of you 
have outlined. I am certainly familiar with those that need to 
be done in the New York-New Jersey area.
    The question that this Congress needs to debate is how we 
structure an assistance package that will be designed to 
stimulate or--will we structure an assistance package that will 
be designed to stimulate our economy or will it be structured 
in some ways to stimulate the growth and the size of our 
government? From my way of thinking, we must spur growth by 
using the traditional resilience of our economy and not relying 
on the sheer size of our U.S. Treasury.
    I understand that all of our States and our cities are 
hurting; as a result of the year-old recession, revenue 
collections are down. As Governor Corzine has stated, in New 
Jersey the revenue shortfall is expected to be at least $400 
million and could reach nearly $1 billion, based on projections 
produced by the nonpartisan Office of Legislative Services. My 
Governor's administration estimates that the revenue shortfall 
for fiscal year 2009 to 2010 could be nearly $4 billion.
    Let me say, some of the problems here are self-inflicted: 
too much spending, too much incurring of debt, and, quite 
honestly, too much borrowing, which has contributed. But I do 
think the Federal Government needs to step up to the plate.
    I have to say for the record, even in the State, in States' 
investments, the State investment portfolio is down $23 
billion. And that may be a nationwide trend. That is a huge 
impact.
    But I served in the State legislature for a number of 
years. One of the reasons that we have this is because things 
have been given away to a lot of the public employee unions, 
and it has been reflected in the municipal budgets--the pension 
benefits, the health benefits for employees. And so the 
question is whether we have the courage to sort of revisit 
those areas and gain some sort of fiscal stability.
    So I thank the gentleman for yielding, and I thank the 
Chairman for the time.
    Chairman Obey. Mr. Murtha.
    Mr. Murtha. Governors, I read through your statements. And 
I just want to say, we had this problem 25 years ago in western 
Pennsylvania. We lost steel and we got a lot of help from the 
government, and it made a hell of a difference.
    I hope you are making suggestions how to streamline, 
because we started sewage and water, where it took 4 or 5 years 
to get through the process, there are so damn many agencies 
involved.
    So I hope to the committee, the Appropriations Committee, 
and to Oberstar's committee to make suggestions about what 
would help streamline, so you can get that stuff out there. I 
know you have got all kinds of sewage and water projects and 
infrastructure projects, but we need to know from you what 
would help you get it out as quickly as possible.
    Chairman Obey. Mr. Kingston.
    Mr. Kingston. Thank you, Mr. Chairman. And I wanted to 
associate my remarks with Mr. Lewis in terms of last year's 
budget.
    Here we are, having the hearing on anticipated legislation; 
yet, we have not finished up the fiscal year appropriation 
process for the year. And one of the reasons why we are unable 
to finish that had to do with offshore drilling. And I believe 
that an abundant supply of domestic oil would actually be a 
long-term solution to some of our economic woes.
    So I think we could revisit some of these issues that we 
came apart on last summer, and it can be and should be part of 
this package.
    But I am also wondering, in terms of some of the unfunded 
mandates--and I had served in the State legislature as well, 
and know that one of the great difficulties of State government 
is that there are so many unfunded Federal mandates on it; and 
yet, in your remarks, they are mentioned, but not specifically.
    It would appear to me that the National Governors 
Association might say, ``Here is a list of very serious 
unfunded mandates that are very costly and well-intended. They 
are all well-intended, but some aren't practical, and many 
could be handled by State and local government discretion 
anyhow.''
    You pointed out in your comments that Vermont, while it 
doesn't have a balanced budget amendment, always balances its 
budget. Just because we don't mandate it doesn't mean that you 
are not going to do it anyhow. So I think on so many of these 
mandates we could get the word ``Federal'' out of there, and 
the States would do it, but the States could probably do it a 
lot more efficiently and inexpensively. And I hope that maybe 
today or in the coming weeks you can enumerate some of those 
mandates and, on a bipartisan basis, we can get rid of some of 
them.
    Governor Corzine. Mr. Chairman, if I might make a comment 
on unfunded mandates, and then I would also like to reemphasize 
that all governors are asking for accelerated processes, as we 
did with President-elect Obama last week with regard to 
streamlining of some of the processes that are associated with 
infrastructure projects.
    But make no mistake, almost every State has already gone 
through this prioritization process. We have in the State of 
New Jersey. We have ready-to-go shovel-ready projects that 
would meet both the Transportation Department standards that 
have to be met for matching funds. We have accelerated a large 
number of those in New Jersey, but we have a much longer list 
than what we have actually been able to fund with the resources 
that we have.
    The same goes with our school construction efforts that we 
have in place in the State. It is a $25 billion project. If we 
were to do what we have already identified as a responsible 
addressing of that issue, we would only cover, on our dime, 
about $5 billion of that.
    So I don't want people to come away saying that States 
haven't been doing their homework in getting prepared for 
shovel-ready, ready-to-go projects. I think we have that. And 
so--and I know that is the case on some of the water and sewer 
issues.
    There are a number of those same things that would be 
associated with energy projects, that conversion of public 
buildings. Most of that has been identified in a lot of the 
States. There is a huge backlog of maintenance and repair 
issues at our public universities that are identified that I 
think could be included in any kind of infrastructure.
    On the unfunded mandates, I think that some of them may be 
very appropriate. IDEA, which most people would strongly 
support in helping our at-risk children, our special needs 
kids, nobody thinks it is a bad program. The problem is that, 
since 1975, we have never gotten to full funding or anywhere 
close to full funding of what the Federal committed share is.
    For us it is about $500 million, we estimate, what we are 
getting in shortfall relative to it. The same thing on Leave No 
Child Behind. Now, you are right, there are some mandates that 
a lot of us would just, you know, there is no funding for at 
all. And mistakes happen, and we can work on that. But a lot of 
the mandates are the Federal Government has not put its 
partnership share into those and the States are picking that 
up. And that gets into that displacement issue that helps us 
funding.
    Chairman Obey. Thank you. Governor?
    Governor Douglas. Mr. Chairman, you did not pose a direct 
question at the outset of this part of the hearing, but I 
wanted to comment on whether this is an appropriate step for 
the Congress to take. And I think part of the answer is that 
this is a shared responsibility to administer most of the 
programs that we are discussing. Transportation programs are 
funded substantially by the Federal Government, administered by 
the States. That is true of Medicaid and other safety net 
programs. So as I have suggested in our meeting with my 
colleagues last week, we are all in this together from a 
Federal and State perspective.
    And secondly, I would not be here asking for the entirety 
of the budget gaps that the States are facing, because I think, 
and economists have weighed in on this, it is important to 
require some streamlining of State administration and programs. 
As we have noted today, we have been doing some heavy lifting 
in terms of cutting back and tightening our belts and doing 
things more efficiently. So we are certainly doing everything 
we can, and would welcome your participation in this effort so 
our mutual constituents can continue to get the service and 
benefits they deserve.
    Chairman Obey. Thank you. Mr. Dicks.
    Mr. Dicks. Well, I want to welcome the Governors here and 
congratulate our Chairman for having this hearing. I think this 
is great, to allow the American people to understand the 
problems that the States are facing. And after all, we are all 
in this together. We all represent the same people. And we have 
to be concerned about those people.
    I happen to be the Chairman of the Interior and Environment 
Appropriations Subcommittee, and we have jurisdiction over the 
EPA, clean water, and safe drinking water revolving funds. It 
has been my impression that loans are good to a certain extent, 
but at some point you got to have grants. We are now reduced to 
about 600 million or 700 million in STAG grants. During the 
Nixon administration, when Bill Ruckelshaus was the 
administrator of EPA, we had $6 billion a year in water and 
sewer construction grant programs. I think it was like 80 
percent or 80-20 or 90-10, some number like that. And to me, 
representing--I have urban areas in my district and rural 
areas. The rural areas simply are unable to do these projects 
because they cannot--the cost of paying back the loans gets to 
be so high that the constituents cannot pay the bill.
    So I think this is one area where we need--you know, 
Christine Todd Whitman, when she was Administrator of EPA, did 
a review of the whole situation; we have a $388 billion backlog 
nationwide in our wastewater treatment facilities. And if we 
are going to clean up the Chesapeake Bay and the Great Lakes 
and the Puget Sound, San Francisco Harbor, all these major 
estuaries in the country, we are going to have to do these 
projects.
    So I just do not know if you have any comment on that, 
about the fact that all we have today seems to be loans, with a 
few very modest grant programs. I think this is one area that 
we could change that would make a dramatic difference, create 
jobs, and also help us deal with some of our fundamental 
environmental problems.
    Governor Doyle. Mr. Chairman, could I----
    Chairman Obey. Governor Doyle. 
    Governor Doyle. I agree wholeheartedly. In fact, we have in 
our list of ready-to-go projects identified a whole section of 
clean water and water treatment projects. The reason they are 
ready to go is they have been sitting, in many instances, just 
sitting there because of a municipality or sewage district not 
being able to finance the project. But in our list of ready-to-
go projects, that is a very major section of them.
    Mr. Dicks. Thank you, Mr. Chairman.
    Chairman Obey. All right. Mr. Mollohan.
    Mr. Mollohan. Thank you, Mr. Chairman. Mr. Chairman, thank 
you for having this important hearing. I would like to join 
other members of the committee in welcoming the Governors here. 
I am chairman of the committee that funds law enforcement--
served with Mr. Frelinghuysen--and the Federal Government has a 
program for State and local law enforcement that I am sure all 
of you are familiar with. Governor Corzine served with 
distinction in the Senate and is familiar with the COPS 
program, which was very robust during his tenure.
    I wonder, moving from the infrastructure side to the 
operations side, if you all would discuss a bit for us the 
impact the economy is having on your ability to fund State and 
local law enforcement and what extraordinary needs the economic 
condition has placed in that area on you and how we might step 
up and help in those areas.
    Governor Corzine. Thank you, Congressman. First of all, at 
the State level we have already pared back State police 
classes. So we are delaying and shrinking the number of people 
that we are offering into the workforce. And you can only go so 
long in that process or you end up having a major undermining 
of broad public safety in the State. This actually is part of 
the trickle-down problem that comes from this issue. This is a 
major problem among local communities. State aid is cut with 
broad general aid, and then the local communities have to look 
for the places to make their cuts. And the first and foremost, 
largest part of their budgets, go to public safety, fire and 
police. And while there can be arguments about whether the 
benefit packages are excessive or too attractive, the fact is 
that we need people in our communities.
    All of us are struggling with a gang problem. When you put 
dedicated police officers and technology into the streets, as 
Governor Doyle talked about, you get results and improvement in 
the quality of life in these communities. And I only hope that 
people understand that it is fine for us to adjust our budgets, 
our adjustments are going to be right out of the local support 
for law enforcement. That is why the COPS program was such an 
important ingredient, certainly would be something that I think 
most Governors, and certainly mayors, would be supportive of.
    Governor Doyle. If I could add, I agree with everything 
that was just said. In Wisconsin at least, the way we are 
structured, large parts of our municipal budgets come through 
local aids that the State provides. And when you are talking 
about the kind of deficits we are looking at right now, you 
know, 80 percent of our budget is made up of K-12 education, of 
higher education costs, of Medicaid, of local aids, and of 
corrections. And of those last two, local aids and corrections, 
obviously that is major public safety and law enforcement 
concern.
    I was the Attorney General of the State of Wisconsin during 
the years of the COPS program. I saw the enormous advantage 
that we saw throughout the 1990s, a steady and significant 
decline of our crime rates throughout that entire decade. There 
were a number of reasons for it, but I believe the COPS program 
was certainly one.
    But now we face these huge cuts to the Byrne grant program 
that have really affected not only our local law enforcement, 
but our juvenile prevention programs and other things in the 
State. And when we look at what our budget is really made up 
of, at these levels it means you have to cut local aids. And I 
gave an example in my remarks that I do not want to repeat, but 
it is exactly that kind of specific program that is at stake 
when the city of Milwaukee comes to the State and says we need 
help on more police overtime pay in order to have a targeted 
program directed specifically at reducing violent crime, and 
homicides in particular, in particular areas of the city, data 
driven, community-based police kind of efforts, we were able to 
do that with very demonstrable results.
    With this kind of deficit in front of us, and just trying 
to make sure kids can go to school, it is going to be very hard 
for us to be able to deal with those kinds of challenges.
    Governor Douglas. Mr. Chairman, could I respond to Mr. 
Mollohan's question as well?
    Chairman Obey. Sure.
    Governor Douglas. It is a little different in our State, 
because we have been through the cycle that Governor Corzine 
described of smaller classes at our police academy and 
underfunding our State police resources. So we are now 
increasing those resources. And despite the fact that we are 
having to make these tough budget cuts, I am actually 
recommending additional funding for our State police in the 
current and next fiscal year. We just have to, because although 
we are a small State, we are one of the safest in America, we 
have seen an increase in some areas of criminal conduct. And 
because we are on an international border we have drug 
smuggling that comes across. And in addition to the great work 
that the Border Patrol does, our State and local law 
enforcement agencies play a key role.
    It has gotten to the point in one small city in the 
northwest part of our State where they are having a very 
difficult public debate about whether to provide adequate 
support for the police department or the fire department. This 
is a serious situation because, as my colleagues have 
suggested, with cutbacks at the State level, it is going to 
have an impact on local agencies. So the Federal support for 
the COPS program and other similar appropriations is certainly 
welcome.
    Mr. Mollohan. Thank you, Mr. Chairman.
    Chairman Obey. Ms. Kaptur.
    Ms. Kaptur. Thank you, Mr. Chairman. Thank you so very much 
for holding these hearings.
    And welcome, Governors. I am really glad to have you here 
this morning. I wanted to say that I believe getting our 
economy growing requires that transfer payments, Federal 
transfer payments to our States, be targeted in a manner that 
achieves as much economic growth as possible, at the same time 
as the Federal Government tries to assist the States.
    And in that regard, if I look at, for example, the area of 
energy, I would guess maybe 10 percent of your State budgets, I 
am not sure, would go into paying energy bills for everything 
from Guard bases to the Governors' offices.
    And one of my questions really is it would seem to me that 
an investment in green energy in your respective States would 
have a long-term payout. If you could save 10 percent for the 
next 25 years, every year, it would get priority maybe over 
investments that would be dead in the ground, even though they 
might be important. And I wanted to get your comments on green 
energy.
    And then Governor Corzine, my question to you, New Jersey's 
economy is more like Ohio's than the other two States that are 
represented on the panel this morning. Do you agree that the 
mortgage foreclosure crisis has really helped to precipitate 
the situation we are facing today? And as a former CEO of 
Goldman Sachs, let me ask you to comment how you view the 
administration of the TARP and what we might do to deal with 
this mortgage foreclosure issue more effectively.
    So, first, on green energy and, secondly, on what you view 
as the precipitating factors that have tripped our economy into 
the downward spiral that we are all experiencing. Thank you.
    Governor Corzine. Thank you, Congresswoman. First of all, I 
think all of us, when we talk about infrastructure--and I 
tried--in my formal remarks that are a part of the record, I 
emphasized that green energy investments, conversion and 
efficiency of buildings, particularly public buildings and 
others, as one of those things that is ready to go. We know how 
to do it, we just do not have the resources to bring people in 
to do it.
    We are actually changing some of the structure, working 
with public utilities to try to get resources to do that on a 
broad basis across the State as a both an economic stimulus, 
but also for the long-run benefits that you suggest. And I 
absolutely believe it should be part of an overall 
comprehensive economic stimulus program. And I think I am 
hearing that talked about, and there should be in any $500- or 
$600-billion program, some allocation that I think actually 
primes the pump with regard to these directions.
    Ms. Kaptur. Governor, may I interrupt you? Do you know what 
percentage of the budget of New Jersey goes to energy costs?
    Governor Corzine. I think it is a little less than 10 
percent. You know, what most of us do in our budgets, and you 
have heard it from us, is we pass through, we either pass 
through to the educational system, our K through 12 or to our 
higher education. So some of those same kinds of questions, 
when you accumulate it, how we are spending the money that goes 
to education, how we are spending the money that goes to our 
municipalities, is going to energy. We just give a flat-out.
    So I think that there is a lot of work in the area that you 
are talking about that can create tremendous stimulus with 
long-run dividends.
    I am going to identify with the Chairman's remarks at the 
open. I think I might arrange them just a little bit different. 
I do think that there is a long-run problem in the country 
about the failure to have income, real income, grow for 
individuals for a very long period of time. And that has led to 
a build-up of debt, consumer debt.
    Same sort of thing has happened in government. It is a 
bigger problem at the State and local level than it is at the 
Federal, although I think we will, long run, have problems 
there. There is this accumulating debt that has grown because 
there has been a concentration of growth of wealth in a very 
narrow segment. That is a big strategic problem that I think 
the country has to address.
    But there is no question that the housing market, in my 
view, which is such a fundamental part of our overall economy, 
that is where savings exist for most people in America. The 
broad majority of folks, 70 percent, roughly 70 percent of 
people have home ownership. They save through their home. And 
when that fell apart, for lots of different reasons, including 
the greed that somewhat exists in various parts of our economy, 
both at local and on Wall Street, I think that was a spark that 
has led to an accumulation of problems. And you have to 
remember you are talking about probably about 20 percent of our 
economy associated with that. It impacts our consumer, which is 
about two-thirds of our economy. And I think unless we get to 
the roots of that problem, actually get into the mortgage 
modification and all those kinds of things--and I think that 
should be done with TARP money--I think we are just going to be 
suffering from those problems that have resulted in the 
weakening of the balance sheet of financial institutions as we 
go forward. I could talk for hours on this. I am sorry.
    Governor Doyle. If I could say something about the green 
energy, we could get to you the percentage, and I am not sure 
exactly what it is. I think it is a little less than 10, but it 
is huge.
    I tell you this, when I look at the University of 
Wisconsin's budget each year, the biggest lift in that budget 
is energy costs. So before you even start dealing with other 
issues that you need to deal with at the University, you have 
to just cover the increased heating bill. And particularly for 
us in cold-weather States, it is enormous. And let me add, 
particularly if you are a major research university. University 
of Wisconsin-Madison is always one of the top two or three NIH 
fund receivers in the country. Huge medical research building. 
And those institutions take up a lot and growing amounts of 
energy.
    On the green energy, I would like to bring up one other 
point to you that you might want to consider. I just recently 
had a discussion with a major utility. We have very significant 
RPS standards in Wisconsin. By 2015 they have to be 10 percent 
renewable. By 2020 they have to be 20 percent renewable. Right 
now they have a project ready to go, a major wind farm ready to 
go, that they cannot because of the restrictions in the credit 
market. The amount of money that they would have to pay in 
order to go forward with that project is so high that the cost 
to our ratepayers in Wisconsin would be enormous. The result of 
this economic crisis in our State is slowing our ability or may 
well slow our ability to hit the legally stated RPS standards 
that we have in place.
    Ms. Kaptur. Mr. Chairman, I want to thank the Governor. And 
I want to say that both Chairman Obey and I spent many years in 
those cold-blooded Wisconsin winters trudging up Bascom Hill. 
So I just have to put that on the record, and it is great to 
have you here, Governor.
    Chairman Obey. Let me ask the cooperation of the members of 
the committee and the witnesses. We are trying to hold the time 
frame for both the question and all of the answers to 5 minutes 
per Member so that every Member gets a chance to ask a question 
who desires to. With that, Mrs. Lowey.
    Mrs. Lowey. Thank you, Mr. Chairman, for holding this 
hearing. And I want to thank the Governors for their excellent 
testimony. You mentioned so many good points. I particularly 
want to thank you for your focus on FMAP. And certainly we saw 
in New York that during the last significant economic downturn, 
a temporary increase in FMAP resulted in an additional $600 
million for New York, generated more than $1 billion in 
additional economic activity.
    So I appreciate your shaking your heads, and I do hope that 
an increase in FMAP will be an important part of our economic 
stimulus, economic recovery package. And I thank you.
    On a related issue, in 2005 for the first time, health care 
exceeded manufacturing as a percentage of all jobs nationally. 
Unfortunately, despite the fact that hospitals are often the 
largest employer in a community, many of them are barely 
surviving, although we are asking them to expand emergency 
rooms and prepare, God forbid, we ever had an incident again 
that needed their involvement. They do not have the capital to 
do what they really have to do.
    So my question, gentlemen, do you agree, number one, that 
helping hospitals access capital to improve their facilities 
and operations will ultimately improve health care, reduce 
costs, and generate jobs? And secondly, would you support a new 
Federal program to provide grants and low-cost loans to 
hospitals to make desperately needed upgrades and improvements? 
And if you could respond, I would appreciate it in the minutes 
that we have left.
    Governor Douglas. Well, as my colleagues and I have 
suggested, Mr. Chairman, I would hope the Congress would be 
flexible in its definition of infrastructure, because the 
priorities differ from State to State. It may be a renewable 
energy project, as Congresswoman Kaptur noted, and we are proud 
of the fact that we have more wood-chip boilers in school 
buildings in Vermont than any other State. And we have three 
buildings heated by geothermal systems that are very cost-
effective. And I hope we can do more.
    And obviously in terms of health care facilities, the 
better the infrastructure, the better the quality of care, 
means that there will be a favorable impact on the rates that 
are charged to customers. And of course the State government is 
a large payer of health care costs. So that certainly would 
indeed be beneficial.
    Mrs. Lowey. Thank you.
    Governor Corzine. I would concur with Governor Douglas' 
comments. But I would also emphasize that aid to the hospitals 
on the operating side, probably through the DISH program, 
disproportionate share issue, is also fundamental.
    Right now, as you all know, when people go through economic 
stress, one of the first things to go is the remaining folks in 
our society that have health insurance. That goes fast. They go 
to the emergency room. We end up picking up charity care. And 
it is just a vicious circle that is undermining the operating 
economic health of our hospitals.
    And so looking for ways to help get across this bridge, 
bridge this recession, I think is an important element with 
regard to the operations of hospitals, as well as their capital 
plans.
    Governor Doyle. If I could just add how important FMAP is 
to economic stimulus. Because if in fact, if you are just 
looking out over the next couple of years, if we have to cut 
our Medicaid budgets by 20 percent, the result of that in 
practical terms is that some fairly low-paid person working in 
a nursing home in the State of Wisconsin will be out of work. 
Somebody at the hospital, somebody, a technician, others, will 
not be working there. Those are jobs that are spread all across 
our States in every community and every place.
    And I love the people who build our roads, and we love the 
operating engineers and the people that do all that, but there 
are people who hold a lot of other kinds of jobs. And as you 
pointed out very, very aptly, many of those jobs are in the 
health care sector, and many are very, very dependent, 
particularly in long-term care, are very dependent on the 
Medicaid program.
    Mrs. Lowey. Thank you very much, and thank you, Mr. 
Chairman.
    Chairman Obey. Mr. Serrano.
    Mr. Serrano. Mr. Chairman, thank you for holding these 
hearings. And I want to call your attention to today's Daily 
News to contrast: The bottom is the Sinking City, Mike 
Bloomberg cutting a million and a half, and the top is the 
Yankees gave CC Sabathia $161 million. If I was not a Yankee 
fan I would be outraged, but since I am a Yankees fan----
    Governor Doyle. You know you are saying that to a Brewers 
fan.
    Mr. Serrano. I just noticed that. I probably should not 
have said that. I apologize.
    But my question speaks somewhat to what I mentioned here. 
And that is I spent 16 years in the New York State legislature, 
so I know how difficult it is to put budgets together during 
difficult times, and these are not just difficult, these are 
devastating in some ways. The people or the groups that suffer 
the most in these times, or suffer a lot, are the ones that do 
not have a constituency to lobby for them: the cultural 
institutions, the arts, beaches, tourism, recreational 
programs.
    Are we in danger of perhaps devastating our cultural 
institutions during this period of time to the point where they 
can never recover? And let me preface my last comment by saying 
that we understand what the priorities have to be. But at the 
same time, in the case, for instance, of New Jersey and New 
York, we worked jointly with our cultural institutions in both 
States, and they not only provide jobs but they provide a 
quality of life. And in many cases during difficult times they 
can make people just feel a little bit better. Are we in 
danger, as we focus on the needs that we have to deal with, of 
just having our institutions die to a point where they cannot 
recover?
    Governor Corzine. Well, I was with you until the last 
comment. I do not think that we will get ourselves into a 
position where we eliminate or pull entirely away from cultural 
and community-based activities. But at least in New Jersey we 
have made a very clear choice that educating our kids is the 
priority that we are going to protect the most significantly. 
Public safety is going to be protected. And that we are going 
to do as much as we can to protect the most vulnerable.
    And these cuts that Governor Doyle and I talked about 
include--I mean I do not know about in Wisconsin--but they 
include serious cuts for a lot of those things that you just 
mentioned, culture and arts. And we are trying to do it in a 
way that we again bridge until we have resources to come back. 
But you have to make incredibly agonizing choices, and making 
sure that our kids get educated, that we protect folks on the 
streets of our cities and communities and do everything we can 
for the most vulnerable. And that is why we are here to say we 
need to be partners in this process or we are going to have a 
very, very serious outcome at a human level, even on those most 
important priorities.
    Mr. Serrano. Thank you so much.
    Chairman Obey. Ms. DeLauro.
    Ms. DeLauro. Thank you, Mr. Chairman. And I want to say 
thank you to the Governors for being here today. Mr. Chairman, 
to you let me say I believe that this is the first hearing 
where we have focused on what is happening to those who are 
unemployed. They are not nameless, they are not faceless, they 
are not statistics. We focused on an industry, we focused on 
financial institutions. This is the first time we have said, 
What is going on in the lives of people who have lost their 
jobs?
    I want to focus in on the infrastructure piece if I can. I 
am supportive of FMAP, of food stamps, but on infrastructure--
and I have three very quick questions, and one specifically 
that has to do with Governor Corzine. We have legislation up 
here that--we are trying to deal with an economic recovery 
program, not just stimulus, jobs that will look toward growth 
in the future.
    The legislation--and I will be self-serving in this sense--
since 1994 something called the National Infrastructure Bank, 
which examines infrastructure projects in an objective way, 
uses proceeds from bond issues to fund the projects. I believe 
it ought to be part of an economic recovery package.
    Governor Corzine, you talked about the New Deal programs, 
Tennessee Valley Authority, which is similar to the entity that 
we have been proposing here. As Governors, I would like to get 
your thoughts on the extent to which your States would take 
advantage of such an entity that would provide loans for a host 
of these infrastructure projects.
    Specifically, Governor Corzine, what would the global 
markets do? Do we have an opportunity to get investors to deal 
with such an entity where they would be attracted to public 
benefit bonds?
    And again to the three of you with regard who is going to 
get these jobs in your State, do you have the capacity and the 
workforce development programs to create the opportunities for 
men, women, and minorities and young people to be able to get 
these jobs?
    Governor Corzine. Congresswoman, I believe that if you have 
the U.S. Government imprimatur on an infrastructure bank, which 
I presume in most models that I have seen, you will get 
significantly lower-cost financing than I think what we are 
doing at the States and authorities that are associated with 
the States, in coming together in raising capital in the 
capital markets. And yes is the short answer. I think it will 
actually improve it.
    I think the infrastructure bank actually will address some 
of the needs or concerns that the Ranking Member talked about. 
We ought to have to scrub to real metrics about the viability 
and the rates of return that are associated with the projects 
that go through that. So I am very supportive of that concept. 
I think it is one whose time has come.
    You know, the other questions, I believe that we work all 
the time in most of our States on our workforce development and 
to broaden access to encourage our labor unions to make sure 
that there is equal access to those jobs. Yes, the construction 
industry is on its back. Housing is down two-thirds in 
construction from where it was. There are plenty of people to 
go to work on infrastructure rebuilding. We just have to make 
sure that we are putting pressure, that it is a diversified 
workforce, that everyone has access to it.
    That is not to criticize organized labor, but we need to 
make sure that the apprentice programs are open to women and 
minorities as well as others. And we need to obviously be 
updating workforce skills for the 21st century. And all of 
those things are in place. We just cannot fund it to the degree 
we would like.
    Governor Doyle. On the first point let me, if I could, just 
tie it back to energy conservation as well, which I think, I 
hope, is part of infrastructure.
    Ms. DeLauro. Absolutely.
    Governor Doyle. And to talk about how such authority would 
be helpful. One of the things we have done in the last month of 
trying to really look at how you jump-start an economy is look 
not only at the public infrastructure needs, but the private 
needs as well. And we identified over $600 million of energy 
conservation projects that Wisconsin companies are prepared to 
do immediately.
    The reason we know this is because we have a fund that 
works through our public utility commission comprised of money 
that the utilities pay in. That goes out to businesses that 
come in and say this is how we want to retrofit our factories, 
this is what we want to do to save energy. And so we have a 
queue of those proposals and we can fund so many of them. But 
there is a list of about 600 million of those that are really 
not able to move forward because of lack of financing right 
now.
    So there are public opportunities, but I just give you this 
as an example of where we could put a lot of people to work for 
private companies in energy conservation on projects that they 
have ready to go.
    On workforce development, a huge issue, but I want to just 
say we recently have completed the biggest public works project 
in the history of the State of Wisconsin, the rebuilding of 
what we call the Marquette Interchange, which is the main 
interchange in the middle of the city of Milwaukee, about a 
billion-dollar project.
    We worked very hard, we figured out ways to get the 
contracts out in smaller lets so that minority- and women-owned 
businesses are able to build. And I am very proud to say that 
23 percent of the contracts that we bid on that project, which 
came in under budget and under time, went to minority, women-
owned businesses, and that 25 percent of the workforce that 
worked on that road was minority as well.
    So we have developed some real efforts at how we let the 
bids and how we get them in a way that we are able to make sure 
that a lot of people are enjoying and having the opportunity to 
go to work.
    And we are now in another huge infrastructure project, 
which is the whole rebuilding of the Interstate between 
Milwaukee and Chicago. It is going to be a $2 billion project 
over the next 6, 7 years. We will do the same kind of work to 
make sure people who are ready to come and work hard have an 
opportunity to work on that road.
    Governor Douglas. Mr. Chairman.
    Chairman Obey. The gentlewoman's time--Governor?
    Governor Douglas. Very briefly----
    Chairman Obey. Briefly, go ahead.
    Governor Douglas. Our contractors believe they have the 
capacity to get the job done. We have energy projects, as 
Governor Doyle does, ready to go. And we launched a program we 
call the Next Generation Initiative a couple of years ago to 
provide more resources for scholarship, for loan forgiveness 
programs, and also workforce training. And I attended the 
launch of one recently to train workers specifically to install 
solar panels, solar installations as a renewable energy 
project. So I think we have got a lot of work to do to get the 
job done.
    Ms. DeLauro. Thank you, Mr. Chairman.
    Chairman Obey. Mr. Moran.
    Mr. Moran. Thank you very much, Mr. Chairman. And I 
appreciate Mr. Lewis and Mr. Frelinghuysen being here, but it 
is particularly encouraging that we have had more than two 
dozen members on our side of the aisle stay all day today, even 
though votes have concluded, showing the importance of this. It 
is encouraging.
    Mr. Chairman, clearly State and local government needs have 
been largely excluded from any of the assistance Congress has 
already adopted. And I note that both Treasury and Federal 
Reserve are pointing the finger at each other now for who is 
responsible for that. But the fact is no serious recovery 
package will work absent our efforts to focus on their short- 
and long-term access to the financial markets.
    While the TARP and Fed have generously backed corporate 
access to short-term debt for the corporate sector, both 
agencies have refused the State and local sector. While the 
legislation we adopted specifically directed the Treasury to 
give consideration to cities and counties, no such 
consideration occurred. I think a key goal of this package 
ought to include language to free up or at least ease and 
reduce the cost of access to the State and local credit 
markets.
    I see Governor Corzine vigorously nodding his head. I know 
he understands the importance of this. It is the single highest 
priority for a number of municipal leagues and Governors. It 
will be a prerequisite to any State and local capital 
investment, not to mention the ability and capacity to meet the 
matching requirements of Federal programs that we will be 
considering funding in this effort.
    With the Chair's permission, I want to submit statements 
for the record from the Government Finance Officers Association 
and the Bond Dealers Association showing the importance of this 
issue to State and local credit markets.
    [The information follows:]

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    Mr. Moran. But if any of our witnesses would like to 
comment on their problems with getting access to State and 
local credit markets, particularly through municipal financing, 
I would like to hear from them. But that is the principal point 
I wanted to put on the record, Mr. Chairman. Thank you.
    Governor Corzine. Congressman, you hit a very sore point. 
Just last week the Port Authority of New York-New Jersey tried 
to issue $300 million worth of taxable bonds and did not have 
any bids. It is with strong double A, very, very secure funding 
source. State of New Jersey, which is not on the upgrade list, 
but not on the downgrade list either at Moody's and S&P, has 
good solid double A credit, is paying about 300, 325 basis 
points over Treasury's at a 10-year yield. There is no benefit 
to the tax exemption. And the market is very narrow. And it is 
not just New Jersey. It is those experiences.
    One of the most effective housing finance agencies are 
State mortgage finance agencies, which are basically shut out 
of the market. They have very low default rates. They could be 
actively involved in mortgage modification and other elements, 
and it is basically without ability to access capital. The 
breakdown of the bond insurance, what previously was mono-line 
and turned into multi-line, has undermined the cost structure 
of, in addition to the general concerns about it, and as you 
suggest, the Treasury and the Fed and others have looked at 
almost every other credit market, but one that is fundamental 
to the kinds of topics we are talking about in infrastructure 
today has been ignored.
    Mr. Moran. Thank you.
    Governor Doyle. If I could just add, at a time of the 
housing crisis, in addition to everything that Governor Corzine 
has said, I mean we have been out, we have been successful, but 
at prices we are going to pay for for years to come. But our 
Housing Authority, a very strong, solid organization, has not 
been able to get financing at all. And we have actually had to, 
at the most critical time that people need it, we have actually 
had to shut down our Housing and Economic Development 
Authority's ability to go out with new loans. And that has been 
entirely because of their inability to get access to the credit 
market.
    Governor Douglas. I might just add to that, student loan 
agencies are having trouble accessing the markets as well, so 
it is really across the board.
    Mr. Moran. Thanks very much, Mr. Chairman. It is 
interesting that Treasury's are paying virtually no interest, 
and yet States and municipalities are having to pay hundreds of 
basis points to get the access that is really not a credit risk 
for the lender, and yet you cannot access it. And it really is 
something that Treasury and Fed are going to have to help us 
with. Otherwise, even stimulus packages like this are not going 
to have the effect that they need. So thank you.
    Chairman Obey. Mr. Olver.
    Mr. Olver. Thank you, Mr. Chairman. And I too thank the 
Governors for your testimony today. I have a two-part question. 
In this recessionary economy, does your State need help to 
preserve and expand affordable rental housing? And if the 
answer to that is yes, what would be the most effective 
mechanisms available for the Federal Government to deliver 
economic recovery dollars for you to expend on affordable 
housing?
    Governor Douglas. Well, we certainly have difficulty, for 
the reason we just cited in response to Congressman Moran's 
question, access to the capital markets by our housing finance 
agencies both for single-family homes and for multifamily 
units. So access to capital I think is the most important 
problem that we are confronting with our housing finance agency 
now.
    Governor Doyle. I agree with that completely. We have very 
good programs in place. And this is a place where with adequate 
access to capital markets, we have strong housing 
rehabilitation programs directed at low or moderate home 
ownership and rental housing, and much of that has just stalled 
out right now because our Housing Authority cannot get to the 
market.
    Governor Corzine. Ditto that. But I would say that there is 
a way that also there could be significant help to tenants and 
renters. The line, the queue for section 8 vouchers, is so 
extended in the current environment, and it is growing. As 
people foreclose and they are unemployed, the application list 
gets to a point where you are talking 4 and 5 years.
    So I would hope that people would look. This is something 
we administer, it is not a State program, but is administered 
through the States, could be very helpful to the human beings 
that are actually struggling with the current market. There is 
rehabilitation work that needs to go on. And public-financed 
housing across the country is also a place where infrastructure 
spending could go.
    Mr. Olver. I think you have answered as concisely as I put 
the question. But I was surprised that the first thing was 
credit, provide credit, which is largely in the private market. 
And Governor Corzine, you got around to what I was wondering, 
what were the more public programs that would be involved. 
Thank you. Thank you very much.
    Chairman Obey. Mr. Price.
    Mr. Price. Thank you, Mr. Chairman. Let me add my thanks to 
our three Governors this morning for your helpful testimony. As 
each of you described the cuts that you are being forced to 
undertake, it seems to me two things are clear. First, that 
these cuts, as Governor Corzine put it, are dangerously cutting 
into the bone. And secondly, that they are likely to have a 
contractionary effect with respect to the overall economy, an 
effect that is precisely the opposite of the stimulus that we 
need. So for both of these reasons, we need to tend to this. 
And your testimony is very helpful.
    One item that was not mentioned as much as I thought it 
might be is your school construction needs. I am aware that 
this is not traditionally an area of primary Federal 
responsibility. On the other hand, if your State is like my 
State, there is a backlog of these school construction needs. 
There often is not the money available needed to initiate these 
projects. And where bond issuances have been approved, there 
are often issues about ratings and the marketing of those 
bonds. In any event, it has been identified by my State as an 
area of great need.
    And Mr. Chairman, if I might, I would like to insert in the 
record a couple of memoranda that I think are quite helpful, 
one from the State of North Carolina's Governor-elect, and the 
other from the Town of Cary, North Carolina.
    [The information follows:]

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    Mr. Price. In any event, it has been identified as a great 
need by my State, and also as an area where many construction 
and renovation projects are ready to go. I mean ready to go as 
quickly as they could be approved.
    So I wonder how one or any of you would evaluate the 
potential of school construction as a component of a package. 
And to pick up on Mr. Olver's approach, what would be the 
mechanism? What would be the best device for rendering some 
assistance in this regard?
    Governor Douglas. We certainly have a backlog in our State. 
I expect that is not uncommon. We commit 30 percent of the 
construction costs of a school project to the municipality that 
undertakes it, and we have not been able to keep up with that 
in our capital budget. What has happened in a number of cases 
is that school districts have undertaken that responsibility 
entirely on their own; and at some point we will pay them, but 
they are carrying that extra debt service in the meantime.
    So I think, as I suggested earlier, a broad definition of 
eligible infrastructure projects would be very welcome so that 
States can establish their own priorities and allocate those 
resources where it is most important.
    Governor Doyle. I really want to echo that comment. We have 
identified, by taking all of the districts that have recently 
passed referendums on school buildings, meaning that they have 
projects ready to go--under Wisconsin law we put these out to 
the voters, they have been approved, and they are not currently 
being built. That is all ready to go.
    In addition, we have identified those where referenda did 
not pass, which probably did not pass because of the costs of 
the building. But those projects are ready to go.
    I will say this, though. I really urge flexibility, because 
in Wisconsin we have had a very, very major school building 
program over the last 5 to 6 years. You should go to Mr. Obey's 
hometown and look at Wausau East High School and see the 
quality of the school. So we have done a lot of really good 
school building in Wisconsin. We have a lot more to do. But I 
believe, you know, if the program were strictly school 
building, States that have made the huge investments in school 
buildings that we have may sort of lag a little bit behind 
other States. So I hope we have that flexibility. But that 
having been said, there clearly are school projects that are 
ready to go here, ready to go here today.
    Governor Corzine. I think I made the remark, Congressman, 
in my testimony that we are in the midst of a very significant 
long-term project of reconstructing schools, particularly in 
our urban communities. We have already executed a $8.5 billion 
program that ended about a year ago, and we are in the midst of 
another $5 billion tranche. And there are $25 billion worth of 
identified needs. And we have prioritized those already. We 
already have the blueprints and the plans on most of those. 
This is a ready-to-go area.
    The same thing could be said for higher education. In every 
one of our State colleges and universities and community 
colleges, deferred maintenance is a huge problem. Every time 
anybody gets in trouble, they just put off maintenance and 
capital expenditures, particularly in our higher educational 
units. And this is a place that I think is fertile for getting 
stimulus into the system quickly.
    Mr. Price. Thank you. Thank you, Mr. Chairman.
    Chairman Obey. Mr. Kennedy.
    Mr. Kennedy. Thank you, Mr. Chairman. Following up on that, 
on higher education, don't you think if there is ever a time 
when our young people could use a chance to go to get a higher 
education, this would be an excellent time? We are finding in 
my State, tuition fees are skyrocketing because of the lower 
reimbursement to our State colleges and universities. As you 
mentioned before, Governor Douglas about the fact that student 
loan assistance is increasingly difficult because of the 
markets out there for student loans. Shouldn't we take this 
opportunity to increase Pell grants and increase other forms of 
student aid and loans as an opportunity for us to increase the 
access for education to those students who want to take this 
time to get an education? You know, we are trying to create 
jobs on the one hand, but this would also be a good time for 
people to be getting an education. While we are in a kind of a 
downturn and a recession, people could also be getting an 
education. Could you comment on that?
    Governor Doyle. I believe this very strongly. We worked 
very hard to build more affordable higher educational access. 
Huge issue all across the country, certainly in our State. We 
have a great university system. The biggest pressure on it now 
is how do people get access to it? And you know, this is an 
area where if we were to impose the kind of across-the-board 
cuts people are advocating, just take the 17 percent, put it 
all across the budget, a 17 percent cut to our university would 
mean about a 30 to 35 percent increase in tuition. It would be 
devastating for higher education.
    I just would make one point about this that is really 
important. You know, we maintained good schools through the 
Great Depression. My parents went--my mother went to high 
school in Wausau, Wisconsin, and my father in Oshkosh, 
Wisconsin. They both went to the University of Wisconsin in the 
middle of the greatest depression our country knew. And thank 
God we made that investment, because those were the people who 
maybe it did not pay off for immediately, but they went out and 
won a world war and they came back and built our country over 
the next 40 years. And that is why it is so essential. And if 
we are forced to make these kinds of cuts--I am all for the 
Pell grants, and please do whatever you can on that, but in 
addition, State budgets, as you cut what you put into a 
university, it is a dollar-for-dollar increase in tuition; you 
either limit access or you increase tuition on the other side 
of that equation.
    Mr. Kennedy. Well, if you could get to us ways--as I said, 
obviously infrastructure and deferred maintenance is always a 
way these universities try to make up their deficits. So I know 
this is one way we could help. But I think a direct pass-
through for students and entitlement support for education 
maybe for State universities and colleges, community colleges, 
you know, that might be the way to do it alone.
    But if you could get us some ideas, because this is the 
time for us to be educating our people for the workforce for 
tomorrow and for today, and also a good time for us to keep 
people, you know, busy when they cannot find work otherwise.
    And finally, I could not agree more, Governor Corzine, 
section 8, forget about it. All I hear is all my constituents 
who are trying to find affordable--the lists are too long. We 
need to increase that number substantially. In terms of public 
housing repair, you know, we have the deferred maintenance has 
been long overdue; and we need to make a major improvement in 
our public housing units; and that we have to put more money in 
as well. So thank you for that.
    Last question on the food stamp eligibility. What would you 
say is the percentage of use in your States of food stamps of 
those who are eligible?
    Governor Corzine. Well, the eligible is exploding. This is 
one of those places where unemployment goes up, or people shift 
jobs to lower paying jobs, then the food stamp usage goes up 
dramatically. And we have better metrics on the number of 
people that are actually using food banks, which are at now 
over 30 percent, and increase year over year. And the lines 
again, not unlike the unemployment lines, are just swelling 
dramatically with regard to applications for food stamps. This 
is a big issue.
    Mr. Kennedy. My big problem in Rhode Island is we do not 
have our people signing up for them. That is the problem, for 
those who are eligible. A lot of it is stigma, obviously. But 
we do have a big turnout at the pantries, but it is a big 
problem getting all those who are eligible to sign up for them. 
And that is a lot of missed Federal dollars being put into our 
economy.
    Governor Douglas. We have that problem, too, Congressman. 
We just expanded eligibility from 130 percent of poverty up to 
185 percent and eliminated the asset test, thanks to the 
flexibility the Federal law allows. So we are trying to get the 
word out. But you are absolutely right, there are a large 
number of eligible families who for one reason or another do 
not participate. And we just want to try to reach them and 
encourage them to do so.
    Chairman Obey. Mr. Hinchey.
    Mr. Hinchey. Thank you, Mr. Chairman. Governors, I want to 
thank you very much for being here, for your testimony, and for 
the very articulate responses to the questions that have been 
raised.
    There is no question that we are facing a very, very 
serious set of circumstances here in this country, one of the 
most difficult that we faced in history. And the examples are 
becoming more and more clear. We will have lost probably more 
than 2 million jobs by the end of this year, and that job loss 
is going to continue on into next year, and probably not just 
continue, but accelerate. The number of job losses is likely to 
continue. The impact that this is having on States all across 
the country is very severe.
    The budget deficits in the States now constitute I think 
more than half of the States. Something in the neighborhood of 
27, close to 30 of the States have now budget deficits, many of 
them very, very severe, including the State of New York. So we 
are dealing with a major problem here.
    And the attention that you have been paying to the basic 
infrastructure I think is very important. Obviously 
transportation, health care, education, and investment in new 
technology, technology that is going to deal with the energy 
issue particularly I think is very important.
    The big question that we are going to have to deal with, 
that this Congress is going to have to deal with coming up 
early next year, is going to be how much of an investment are 
we prepared to make in our own country? And that is a question 
that is very significant, because we have not made any major 
investment in this country internally in a long time, for 
decades, many decades. And we know that the last major 
investment we had was the Interstate highway system back in the 
1950s. And we had some water treatment and sewer treatment 
investment back in the 1960s, when people became aware of the 
environmental issues that we had to deal with.
    So we are overdue. We are facing a country that is falling 
apart physically, internally, at the same time that we are 
losing huge numbers of jobs. And the decline in the gross 
domestic product is going to continue to go down. The 
estimation is now that by the end of next year, the gross 
domestic product will have lost at least 4 percent. And if 
things continue to get worse, that number is likely to be 
higher.
    So the big question that we have to be able to answer here 
and engage in is, what kind of economic development package 
program are we going to be able to put together and how big is 
that going to be? If it is just tiny, it is not going to do 
anything. So it needs to be significant. Some are suggesting 
something in the neighborhood of 600, $700 billion, which is 
going to be probably less than--well, something in the 
neighborhood of 5 percent of the GDP. Others believe that we 
need at least 10 percent of that gross domestic product, 
something at least as high as a trillion dollars, or maybe 
something close to a trillion-and-a-half in order to make the 
difference that is going to have to be made to stop the decline 
of the economy, to stop job loss, and turn that into job 
creation and upgrowth, and to rebuild, maintain and rebuild the 
basic infrastructure, all of the things that you have been 
focusing our attention on very appropriately.
    I am wondering if you will give us any advice as to what we 
should do and to what extent we should do it. I am worried, 
frankly, that doing a little bit is not going to be nearly 
enough. And if we only do a little bit, we are going to be very 
unhappy about that over the course of time. So what do you 
think? What do you think we should do and how much should we do 
it?
    Governor Corzine. Fools rush in. Last week when we were 
with President-elect Obama, I made the statement that whatever 
big is, make it bigger. Because I think that what you are 
hearing from us is that the deterioration of the economy, not 
only as reflected in our budgets but within the reality of what 
we see on the ground in our communities, is really quite 
substantial. And whether it is a 3 or 4 percent decline in GDP 
or something larger--and I see people revising up, at least for 
this quarter and next quarter, numbers fairly substantially and 
looking for a decline through most of 2009, a 3 or 4 percent 
offset, if you would, would back into about a 450-, $500 
billion program just to stay even. And I certainly would argue, 
if making a recommendation on a macroeconomic basis, that it is 
a 2-year program. States, for instance, and a lot of our 
activities, the trouble lags even after the economy turns with 
regard to revenue flows and where we stand.
    And so when I am forced to answer that question, I do talk 
about 7- or 800 billion, but if I made a mistake I think it 
ought to be larger over 2 years; a trillion-dollar program 
would not be unreasonable in my mind, 75- to $100 million in 
operating and support programs for States, 150- to $175 million 
for infrastructure, and 
    225-, $250 billion in tax relief in different programs is 
sort of the kind--certainly those are the buckets I hear.
    And I would argue that a 2-year program, and this is just 
personal, it is not--no NGA or anybody else is associating with 
it--I think makes sense. You need to have this be substantial 
enough that it offsets the decline that is going on in the 
economy, and hopefully sets in place multiplier impacts that 
will end up growing the economy.
    Governor Douglas. I think, Congressman, we do agree.
    Chairman Obey. If you could respond very briefly, because 
the gentleman exceeded his time.
    Governor Douglas. A 2-year program is critical. Mr. Zandi, 
the economist from Moodyseconomy.com suggested a $600 billion 
figure, the number that you cited. But I think the key is, as 
Governor Corzine said, some of these safety-net programs really 
begin to increase their demand toward the end of the 
recessionary period. The people begin to sign up for food 
stamps and other benefits. So 2 years is critical, and at least 
that figure that Mr. Zandi suggested I think is appropriate.
    Chairman Obey. Mr. Boyd.
    Mr. Boyd. Thank you, Mr. Chairman. Mr. Chairman, this is a 
very productive discussion. Thank you, sir, for holding this 
public hearing and welcome. Thank you, Governors.
    I want to shift the discussion just to a different element 
of this whole issue.
    Mr. Boyd. All of your States, maybe with the exception of 
you, have a balanced budget requirement. The Feds do not and 
most of our States do, as I understand it, many of the States 
though in the last 8 or 10 years, including my State of 
Florida, which does have a budget requirement, have followed 
the Federal Government budget management plan of drastically 
cutting taxes, revenue, while significantly increasing spending 
programs and our promise as public officials to provide lots of 
programs and services on one hand, and less cost on the other. 
You guys are chief executives unlike us, we are legislators. So 
you get to sign both sides of the check. We only get to sign 
the back. You sign the front and the back.
    So my question, as we move through this, what is your 
counsel and advice to us about how we deal with that? Do we 
take the States and ask them to remove their balanced budget 
requirements or do we put a balanced budget in place at the 
Federal level? How do we join hands and work together to do 
this very important project that is going to be done?
    Governor Douglas, it actually frightens me when I hear you 
say that you have a community that is making a decision whether 
to cut police services or fire services. Those are very basic 
services that the community, people should willing to pay for.
    Governor Douglas. I don't know if I can offer any counsel 
in terms of Federal budget policy. Frankly as an American, it 
is disconcerting to see the level of debt that the national 
government has incurred, but economists across the political 
spectrum have made it very clear at this point in the economic 
cycle an infusion of resources to the States is essential for 
recovery and will improve the outlook in terms of unemployment, 
as the chairman indicated in his opening comments, and allow 
the States to make fewer of those difficult choices, in terms 
of service cutbacks that we have described. So for the long-
term I hope there will be, with all due respect, more 
discipline in the process into the future. But for the 
immediate term, where we are really facing these crises, I 
think the infusion of these resources is essential.
    Governor Doyle. Let me just say I don't think it is 
practical to say you can take the balanced budget restrictions 
off the States that are in our constitutions and, frankly, are 
probably very good. Nor do I think that deficit spending at the 
State level has any real effect on stimulating the economy. We 
are talking about a national and international economy, so we 
are just dealing with the practical side of it.
    And let me just emphasize I believe we've got to do our 
part in this. I don't think any of us are here saying here is 
our deficit, just pay the bill. We have and we are going to 
continue to make very deep cuts. We have, and a number of 
States are going to have to, looked at revenue increases. We 
are going to have to do our share of this. I guess I would 
really like to emphasize that.
    We we are not here saying, you know, here is how much our 
shortfall is here, please make it up. We are going to do very, 
very difficult things. But at the end of the day, you get to 
this point, are you really going to cut schools? Are you going 
to cut Medicaid so severely that people lose jobs and people 
can't get health care? Are you going to cut higher education 
costs to a point where tuition goes up? Are you going to raise 
State taxes so high that you actually have a negative effect on 
what you are trying to accomplish getting more money? I will 
give you an example in Wisconsin--I don't want to belabor it, 
but we have made some tax cuts in recent times, but they are 
exactly the kind that you would want. We no longer tax Social 
Security income. And I am not going to allow right now for us 
to go back to doing that because these are people that actually 
need the help. We now exempt health insurance premiums. They 
are fully deductible. And that is not one where right now we 
want to go back to the people in Wisconsin. We now allow 
families to deduct child care costs. These are exactly the 
areas that families in Wisconsin are really struggling with, 
health care costs, child care costs, obviously older citizens 
with Social Security.
    So we may, I hope not, have to do something on the revenue 
side. We may well come to that point because in the end I am 
not going to let our schools fall apart and I am not going to 
let our universities become so expensive. But we have to do our 
part to help out in this as well.
    Governor Corzine. I have to concur with everything Governor 
Doyle is saying. It would be a huge mistake to have the States 
take off fiscal governors like mandated balanced budgets. I 
think it would lead to a very sharp deterioration in credit 
quality and undermining elements of it. I think it is a Federal 
Government responsibility. And we do have a responsibility to 
cut our budgets and adjust our priorities accordingly in times 
of stress. I think a lot of us are doing it, and I think a lot 
of us are actually taking this difficult environment and 
actually reforming a number of elements within our operations 
in government at the same time. I think that is good. But we 
still need to make sure that the Federal Government is a 
partner in the process and since you don't have that balanced 
budget amendment I think you need help from it.
    Mr. Boyd. Thank you, Governors. Thank you, Mr. Chairman.
    Mr. Obey. The gentleman's time has expired.
    Mr. Boyd. For 15 seconds think about as we move through 
this, how we finance it and who finances it and who pays it 
back. We could look at history and gain some good ideas. Thank 
you.
    Chairman Obey. Mr. Fattah.
    Mr. Fattah. Thank you, Mr. Chairman. Let me thank you for 
holding this hearing. Let me first ask for unanimous consent to 
enter into the record a statement from the mayor of the City of 
Philadelphia, Michael Nutter, about the economic circumstances 
and how they are impacting our home City of Philadelphia----
    Chairman Obey. So ordered.
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    Mr. Fattah [continuing]. In a broader statement, and, Mr. 
Chairman, a broader statement from the U.S. Conference of 
Mayors around 11,000 infrastructure projects in America's 
cities that are ready to go if funding was available. So I ask 
unanimous consent that they be entered into the record.
    Chairman Obey. Without objection.
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    Mr. Fattah. Thank you, and I would say that it is a 
pleasure to see the Governors here today. I got a chance to sit 
through the entire meeting with President-elect Obama and the 
Governors. They met in my home City of Philadelphia on December 
2nd, and clearly it was very productive dialogue. First things 
first, we do have one President at a time and I wanted to know 
about interaction with the present administration with our 
Nation's Governors on these critical issues. There seems to be 
almost selective amnesia at work. We have difficulties for 
State Governments getting into the credit market and no action 
by the Treasury Department to respond to these needs.
    I used to chair the board of the student financing agency 
in Pennsylvania, PHEAA, student aid entities, locked out of the 
market, housing finance agencies. So I am wondering about the 
absence of President Bush in the middle of this crisis, and 
rather the Governors who have been on the front line, and I 
have seen the action that, you know, your program in Milwaukee, 
which is reducing the crime or Governor Douglas setting aside 
400 positions in Vermont, Governor Corzine really led the way 
in terms of turning this to an economic recovery effort with a 
job creation, tax credit of $3,000. Would you comment about 
whether we are wrong, whether the administration is acting, 
whether the President is not at some undisclosed location, is 
actually interacting with you as you are dealing with these 
challenges.
    Governor Douglas. Well, the National Governors' Association 
has a continued relationship with the administrative agencies 
as well as with the Congress and your staff and we continue to 
do that, but I think at this point everybody is looking 
forward, looking forward to the new Congress, the new 
administration and doing what we can to get through this, and 
so I appreciate the time that the chairman has set aside for 
this conversation today and hope that we can get the job done.
    Governor Doyle. Well, I guess I just speak for me 
personally. There hasn't been any contact, but I do want to say 
the new administration has been incredibly attentive and 
focused on this issue. They have been open to us. They have 
been discussing this with us in great detail. You know, I guess 
we believe hope is on the way, and certainly there has just 
been great attention being paid to this issue by the incoming 
administration, by the President-elect himself and certainly 
the people around him and the transition team, for which we are 
very grateful.
    Mr. Fattah. Governor, you know we just sold Treasury notes 
at auction yesterday at a negative benefit, and we have doubled 
the national debt. We have 10 million Americans without jobs. I 
want to know, I understand we have hope for the new 
administration. They don't have the reins of power right now. 
And so while you are dealing with these very challenging 
circumstance, I am just trying to figure out whether the 
impression that the present Commander in Chief is missing in 
action is accurate or not. Has he been helpful to you, Governor 
Corzine, in New Jersey?
    Governor Corzine. I think that the actions that the 
Congress and the President's administration took at the time of 
the explosion in the financial markets, while not anything 
anyone wanted to embrace, was actually a positive response to 
try to settle credit markets. I think there continues to be a 
philosophical concern about the involvement in broader aspects 
of the economy, and that is probably true with respect to some 
of the things that we have spoken about here, financing in 
municipal and State finance. I would like to see more action 
there. I would like, whoever it is, and I am one of those that 
would like to join my Governors, we are looking forward. But 
the Treasury should be, I think, seriously focused on the 
undermining of our ability to use traditional financing 
mechanisms to support a lot of the things that we have talked 
about today.
    Mr. Fattah. Thank you.
    Chairman Obey. Mr. Rothman.
    Mr. Rothman. Thank you, Mr. Chairman. I want to say good 
morning to all the Governors and thank you for being here, 
particularly my own Governor, Governor Corzine, who is one of 
the hardest working, smartest people I know and doing a great 
job for New Jersey. If I have heard you all correctly, there 
are two sides in relation to our jurisdiction here on the 
Appropriations Committee of the coin for you that need to be 
addressed if the Federal Government is going to help the 
States, and that is, number one, that what everybody has heard 
about, these infrastructure projects, roads, sewers, bridges, 
tunnels, rail, school construction, affordable housing, and 
other things, and people can sort of identify with that. We did 
it in the fifties. It was a real shot in the arm. And it had a 
lasting effect. As the Governor mentioned, the Golden Gate 
Bridge, the Lincoln Tunnel, although they were done not all in 
the fifties, but these major projects have a short-term 
positive effect for the country and long-term.
    But you also mentioned the operating side as well; in other 
words, the States need money to pay for critical services, 
police, fire, public colleges, food for the hungry who are 
lining up more than ever, 30 percent increase at our food 
pantries in New Jersey, 30 percent increase in the food 
pantries. That is just shocking.
    But it is true. And that indicates that there are terrible 
problems that people are suffering with. And if the States 
don't get their money, some help, well, I want to say a couple 
of things. If you get to the money that is talked about, aren't 
you still going to have to cut these services anyway? Or are 
you just going to take this money and just say let's continue 
things as usual and let everybody get extra bonuses and 
vacation time?
    I think I know the answer but I want to hear it from you, 
and I would also like to hear from my own Governor. We have 
this ARC tunnel project which we have invested in from New 
Jersey, billions of dollars in. Could you tell us about this 
ARC tunnel project that crosses the Hudson River from New York 
to New Jersey, a little more about school construction, and why 
you think affordable housing is a critical infrastructure need?
    Governor Corzine. First of all, there really are three 
areas where the Federal Government interacts with the State. 
One----
    Mr. Rothman. We don't have the tax part.
    Governor Corzine. Infrastructure, on the subject that we 
are talking about today, the infrastructure issue, including 
the ARC which is a program or a project of national 
significance that, as I said, would service as much as 45,000 
commuters. That gets at congestion, that gets at freeing up the 
ability of northern New Jersey and New York to get cars off the 
roads, all kinds of green energy kinds of related elements, but 
it puts 6,000 people to work today.
    Mr. Rothman. 45 million passengers.
    Governor Corzine. In a year. Operating budgets, we have 
talked about FMAP and a few other areas where some people would 
have just argued that we should have block grants for some 
piece of operating budgets, not all of them as Governor Doyle 
talked about. But then there are these whole host of State-
administered Federal programs like section 8, like food stamps, 
where we are the tool of the Federal Government to provide 
those services. Those are really different.
    I am not saying we are mixing apples and oranges here, but 
the work on infrastructure and the work on the operating 
budgets is different than State-administered programs where 
there is a huge need, and so the unemployment compensation 
funds and other issues all fall into that category. And so I 
hope that when you sit down and put together a program it is 
taking into account all three of those areas and recognizing 
that they need to be comprehensively fit together.
    Governor Doyle. I agree generally on the categories. One of 
them is economic stimulus and what we can do as states. We 
clearly have delivery systems that are available as Congress 
really is working to get a stimulus going, jobs going, and 
people working. We have an infrastructure built up to----
    Mr. Rothman. But if you get the money you have to continue 
to cut.
    Governor Doyle. Exactly. The stimulus, while very 
important, isn't going to help us with our education costs and 
it isn't going to help us with paying for our universities and 
Medicaid and those sorts of things. So yes, I think in times of 
scarcity you have to really determine what your priorities are 
and, as I tell people in Wisconsin now, you are all going to be 
affected in some way or another. We have to make sure that in 
the areas that really matter they maybe don't take the hit 
quite as hard and don't take cuts in a way that really does 
permanent damage. And I say schools are the number one 
priority. So schools, they are not going to have a rosy 2 years 
no matter what you do. They are going to have a very difficult 
time in these next 2 years. But we have to make sure there are 
at least good schools and that there are teachers in the 
classrooms and classroom sizes don't explode and basic 
education goes on in this country. That is where you and the 
Congress and the States have to work very, very closely 
together.
    So no, this isn't going to be a great time. In fact, to the 
contrary, everybody is going to have to do with less over the 
next couple of years. But for these basic institutions such as 
education, which I think most important, we just can't cut 
funding to a point where the kids going to school right now, 
who have had nothing to do with overspending or too much 
credit, are the ones that pay the price for the predicament 
that this country finds itself in.
    Governor Douglas. Housing specifically, Congressman, I talk 
with a lot of employers in my State who say that because of the 
rural nature the Vermont and the fact that people have to drive 
a long distance to get to work that a lack of an affordable 
place to live is more critical to them than health insurance 
right now because they just can't find a place to live that is 
within their price range anywhere near where the job is and, 
although fuel prices have come down a little bit lately, they 
are still an important part of the family budget. So I think 
facilitating more affordable housing through access to capital 
through the section 8 program is critical, and it has the added 
benefit of stimulating the economy by creating jobs in the 
construction sector.
    I think, as we have suggested earlier, support for a 
Federal-State shared program like Medicaid is critical not only 
because of the increased caseload in that program itself but 
because it allows us to moderate the cuts that will be 
necessary in other programs in our State budgets.
    I also indicated earlier that I don't think it is all bad 
to force some efficiency and economy of administration of these 
programs. We have combined several divisions and departments 
within our administrative structure, and I expect my colleagues 
are finding ways to deliver services more efficiently than 
before. So we do need your assistance in this time of economic 
crisis, but we are certainly willing to do our part.
    Chairman Obey. Mr. Bishop.
    Mr. Bishop. Thank you very much. Let me echo my welcome to 
you Governors and let you know that my State of Georgia 
certainly faces the same challenges that you face. But let me, 
I appreciate all of the comments that I have heard this morning 
with regard to the infrastructure that is needed in the States. 
I am particularly concerned about rural infrastructure and of 
course, Governor Douglas, you are peculiarly sensitive to that. 
And of course all of you of course have rural areas. But I have 
a large rural area and of course the transportation and 
affordable housing is greatly needed. But as we look at bricks 
and mortar versus innovations in the future that--I mean 
obviously bricks and mortar will create immediate jobs, but we 
want to put the bricks and mortar there, but there has got to 
be some other non-brick and mortar infrastructure such as 
broadband that will allow accessibility in rural areas, for 
example. We have got to somehow marry the needs for innovation 
in our educational system not just to school buildings but into 
processes for educating our youngsters, improving the quality 
of teaching for our teachers, particularly the STEM 
disciplines, science, mathematics, technology, engineering, 
where we are falling woefully short, we are falling woefully 
short now. And without some rapid, rapid attention being given 
to that on a national scale with a national will with all 50 
States and the Federal Government, we will quickly lose our 
status as a superpower because we don't have the expertise. We 
don't have the generations coming up that are trained in those 
disciplines.
    Don't you think that as we invest in bricks and mortar for 
immediate infrastructure that we also need to give you the 
flexibility that you were talking about to also invest in these 
kinds of long-range innovations? And so that whatever we do, 
make it flexible enough so that States, and particularly States 
that have poor rural areas, where they don't have that kind of 
tax base, to make every aspect, every area in your States, 
capable of being able to participate now in this global and 
flat world that we are in.
    Governor Douglas. Congressman, I want to thank you for 
reemphasizing that point. I mentioned broadband infrastructure 
in my statement for the reasons you articulated. It is 
important to have that available in rural areas, especially 
where it is difficult for, or not cost effective, for a 
telecommunications company to make that investment. We 
established a telecom authority in Vermont this past year 
empowering it to issue some tax-supported debt to build out 
that infrastructure, but we could even do more with some 
support from the Federal Government. So flexibility is indeed 
the key. And as you noted, it may be more cost effective in 
rural areas not to build that additional school building or 
enhance one that is already there, but to have distance 
learning through interactive learning experiences. So I agree.
    Mr. Bishop. The same thing with telemedicine.
    Governor Douglas. Yes, and NGA has, I should note, a health 
alliance that we have undertaken to work with the public and 
private sectors to build out electronic medical records 
infrastructure that I think would be an important part of our 
health care future.
    Governor Doyle. Green energy is another area of 
technological advance that we can make major investments in 
that has huge advantages in rural areas. Just an example of one 
that we are very interested in building, a wood chip processing 
plant, for use of biofuels in an area of the State that is 
largely forested. It is an area that spreads out not just in 
our urban areas but across rural areas as well.
    Mr. Bishop. It is a job creator?
    Governor Doyle. It has proven to be a very big job creator, 
and so far green energy and particularly ethanol production in 
our State has been one of the great sources of strength in 
rural areas, and as we move into using our forest, much of, 
again, Congressman Obey's district is forest land, and as we 
look into its use to really be part of our energy solution, a 
lot of jobs are involved in that as well.
    Mr. Bishop. A lot of cellulosity.
    Governor Corzine. I just concur with the folks. I don't 
think I have much I can add.
    Mr. Obey. Thank you. Mr. Honda.
    Mr. Honda. Thank you, Mr. Chairman, and let me add my 
thanks to you for your leadership and having this hearing and 
the presence of the ranking member, also. And I would like to 
ask for unanimous consent to enter into the record a document 
that represents the California delegation and also add to the 
document a discussion on the issue of school modernization, 
school bonds and new school construction. I think that has been 
discussed before, but I will ask unanimous consent to have this 
entered into the record.
    [The information follows:]

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    Mr. Honda. Mr. Chairman and Governors, thank you. Thank you 
very much for being here. I think that one of the things that I 
think is a positive outcome with this kind of discussion is 
that not only the folks who are here and the members who are 
present find this hearing instructional, but hopefully it is 
instructional for those viewers out there who are watching this 
and are starting to understand that governments cannot work in 
isolation, and when things don't work at one level, that stuff 
rolls downhill and eventually if you don't pay for it now you 
pay for it later. And I think this is a good example of a 
crisis that has occurred because of different kinds of missteps 
by certain industries, and also governments' misstep on how we 
create or don't create Federal revenues for the kinds of 
projects we are talking about today. We can disagree on the 
size of government, but I think that government has a role in 
people's lives, and I think it has become evidently clear 
though what role we do play because of the kinds of issues that 
the Governors are bringing up and the kinds of issues that we 
concur with.
    So I just want to thank the chairman for allowing us to be 
able to do this and then also prepare for the beginning of the 
next session. I can't think of anything more than this to be 
the very first step of the new administration. Although there 
may be results of the past administration, we still have the 
responsibilities to take care of people.
    These kind of issues are issues that are not evident on a 
daily basis to the public when times are good. It only rears 
its head when times are bad and we have to start talking about 
cutting back on services, and this is when people start to feel 
the pressure of what happens when we don't have a good economy 
or we don't have the necessary revenues to fulfill our 
obligations.
    One of the things I heard by the Governors, and 
particularly by Governor Doyle and Governor Corzine, is the 
comment about States can be efficient and they have delivery 
services that can deliver these kind of funds to the rest of 
the State. But having come from local government also, are 
there suggestions or are there efficiencies that we can realize 
in both time and costs by looking at, from the Federal 
Government's point of view, sending money out, funds out to 
localities, and municipalities and county governments that have 
a large size that can do their own distribution and thereby 
save time and money? And I would like to have some sort of 
response on that.
    Governor Doyle. I can speak for Wisconsin. There are 
certainly, if we were going to go in for sort of a wholesale 
change of our State laws on what is the responsibility of 
municipalities and counties in the State, it may be very worth 
doing that but in terms of if you are looking for a quick 
economic stimulus, we will be locked up in a political battle 
that will tie us up for several years. We have very clear lines 
of responsibility of what municipalities can bond for and what 
their infrastructure needs are and what they do independently 
and then what comes through the States. As State Governments, 
our capital budgets dwarf the municipal and county budgets by a 
large factor. So we can move much more quickly. But I do 
believe there is a significant role here for municipalities, 
sewage districts, and others that have their own bonding 
authority and their own capital budgets to be part of this 
effort and that they can get jobs moving as well.
    Mr. Honda. I understand that there is that large 
responsibility, infrastructure, like transportation and others, 
where it makes sense to award to the States but there are other 
arenas where counties and cities that are large enough, they 
have their own mechanisms. Those duties are passed on to local 
governments anyway, and it seems to me it would save time and 
money if we figure out how to do that more efficiently.
    Perhaps the other Governors have comments.
    Governor Douglas. Congressman, there is, as I understand 
it, a procedure where Federal agencies can proclaim an 
emergency and use emergency procedures that allow a simplified 
bid process, and I would think it would be useful in this 
discussion to allow for that so that the projects can be 
delivered as quickly as possible.
    Chairman Obey. The gentleman's time has expired.
    Mr. Honda. Thank you, Mr. Chairman. I just want to thank 
you for this opportunity, and this is a prerequisite to the 
next session and if we paid attention to this kind of hearing, 
Mr. Chairman, as we pay attention to Super Bowls, World Series, 
Olympics, I think that our country and our citizens will 
understand better the workings of what we try to do on a daily 
basis. Thank you.
    Chairman Obey. Mr. Schiff.
    Mr. Schiff. Thank you, Mr. Chairman. Thank you, Governors, 
for your testimony today. I find myself on the issue of 
infrastructure torn between two competing impulses, the one to 
want to get money into construction jobs as quickly as 
possible. Just look at those projects that are ready to go. 
California, as my colleague I am sure alluded to, is having a 
Herculean task trying to balance a budget that may be up to $40 
billion out of whack in the next year and a half. So we have a 
tremendous challenge. But between wanting to put money into 
construction projects that are ready to go and can immediately 
stimulate the economy on the one hand and on the other hand 
wanting to be strategic looking at what the State's greatest 
needs are, looking at things that we have not been able to 
invest in for decades, building more institutions of higher 
learning, investing in the State and in the country in a way 
that we haven't done in half a century, this is going to be an 
opportunity we won't see again for maybe half a century. How 
can we deal with these competing priorities, to pick things 
that are ready to go on the one hand, stimulate the economy on 
the one hand, but on the other hand to be a little bit more 
strategic about what we invest in so we can look back on this 
period and say, yes, it was an awful recession but look at the 
good that has come out of it, look at the investment in the 
America we were able to make? How do we deal with those 
competing priorities?
    Governor Corzine. First of all, I think that you have a 
responsibility in a legislative and deliberative process to try 
to identify the things that have priority, and I don't think 
one particular bucket actually covers that. We need a 
comprehensive infrastructure program. One of the reasons that a 
lot of folks have expressed support for an infrastructure bank 
is to have the discipline of screening and reviewing those, and 
one of the metrics that might be asked for that infrastructure 
bank to review projects on is how do they fit into an overall 
plan, not just with regard to transportation but also energy, 
maybe even health care, and obviously, help education. So I 
think that some judgment with regard to how you allocate those 
priorities is a perfectly reasonable thing for the Congress to 
do, and then setting down what metrics would be used would be 
the kind of debate that I think would go on with respect to 
what an infrastructure bank would end up accomplishing so that 
we don't end up with lower priority or at least we have made an 
effort to try to do the prioritization of the various elements.
    But it may very well be, and I know there is a debate 
about, you know, if you pave roads that is a bad thing or maybe 
that is not how we spend our money relative to broadband and 
you know there is some element of that is true, but if we don't 
have the paved roads, we are not going to have the ships that 
unload in Long Beach and metropolitan New York be able to get 
to the areas that are going to deliver the services in the 
private sector to our community. We need to make sure that we 
are maintaining our universities in a state of good repair so 
that our students can actually accomplish it.
    So I think there has to be a judgment about how much we 
want to put into so-called innovation versus making sure that 
our infrastructure is actually working to accomplish what we 
want today.
    Governor Doyle. In many of our programs, particularly 
transportation and building in Wisconsin, I am sure I speak for 
the States here and others, we have prioritized those projects. 
I mean you could look out for the next--in transportation in 
Wisconsin--the next 8 to 10 years, and we basically have the 
projects that for various rating systems we have determined to 
be most important, and then we just work down that list as 
money is available. Same is true with building our capital and 
university and other State building projects. So I think you 
can have some faith that in some of those areas that this 
prioritization has been done. But I really agree with you on 
some others.
    I will just give an example. We have under court order and 
I think we all support it, trying to get rid of a coal fired 
heating and cooling plant that sits right in the middle of the 
City of Madison, and it is at the University of Wisconsin's 
heating and cooling plant. So we are under the order and if we 
could get that moving quickly, we know that over the next 5 to 
7 years it is going to be a huge drain, it is going to be a big 
problem, issue that we are going to have to deal with. Now we 
don't have the design work done. We don't have the engineering 
work done. So I really do hope, and I think Governor Douglas 
alluded to this, that while it is important to get us going in 
90 or 120 days, although some of us with snow on the ground 
would have to wait a little longer most economists agree this 
isn't going to be over in the next year, and so if we can have 
a way as well that some of these other big term projects that 
if we can get them done over the next 3 or 4 years instead of 
the next 7 or 8 years, it will greatly benefit the State of 
Wisconsin for years and years to come.
    So I hope we aren't going to see this just strictly as, 
boy, this is a 90-day problem, but that we understand this is a 
multi-year problem we are dealing with.
    Governor Douglas. I agree with my colleagues, Congressman. 
We certainly go through the prioritization process. When a 
capital budget is formulated in our State the agencies' 
requests are always multiples of what is available for the 
coming fiscal year, and so I and ultimately the general 
assembly have to make those decisions on what is most urgent. 
And I might suggest again that one size doesn't fit all, that 
situations do vary quite a lot around the country. 
Infrastructure and transportation is older in the northeastern 
part of the country in many cases. We had a devastating flood 
in 1927 that destroyed huge numbers of bridges and rail tracks 
in our State. So a lot of our bridges are now 80 years old, 
having been built right after that flood and beginning to show 
their wear.
    So I believe, as Governor Doyle suggested, that the States 
can be entrusted with responsibilities of determining their 
priorities.
    Mr. Schiff. Thank you, Mr. Chairman.
    Chairman Obey. Ms. McCollum.
    Ms. McCollum. Thank you, Mr. Chair. And I want to thank you 
all for being here and the fact that you don't just discount, 
kind of paraphrase what you said, the impact of a Federal 
stimulus package. And like you I am ready to invest. I am ready 
to invest in our infrastructure, public works, roads, bridges, 
water systems, sewer systems, and I am ready to invest in 
people and education and in health care. And to a statistic 
that was just handed me today that there are three people 
waiting for every job now in this country, three people for 
every job. So we are ready to go. And I understand fully what 
you have been saying about the States are facing some major, 
major difficulties right now. But I need some reassurance here. 
I need to know that the funds that I am going to vote for for 
reinvestment are going to do just that, they are going to be 
used to reinvest, not to fill all the gaps that the States are 
facing; that is, it is not going to be used to balance the 
budget. And I will tell you, one of the reasons why I am 
concerned, and my Governor is not here, but I am going to quote 
from him from the paper, Governor Pawlenty, the former head of 
the Governors Conference, seems to have a change of heart in 
recent days for what he thought the stimulus could do. And he 
says he is going to, he has doubts about the Democratic plan to 
bolster spending on public works, in fact, and I am going to 
quote him directly, he doesn't see it doing anything for the 
looming budget deficit in Minnesota. So this stimulus plan is 
not supposed to be plugging the holes of the budget deficit. 
And we have kind of skirted around the issue a little bit in 
some of the conversations that we have had.
    What do I need to do to make sure that the stimulus package 
doesn't fail; in fact, it does stimulate the economy, it does 
create jobs, that it is not just used to fill budget holes? 
Gentlemen, I am asking you what can you tell me that you will 
do to reassure me that that won't be the case? And to 
Congressman Honda's point, if it is not going to be the case 
from the States, should I be looking at direct infusion for 
investments at cities, at counties and at school districts? Do 
we need strings?
    Governor Douglas. Well, first of all, I think all three of 
us have said at different times that we are more than committed 
to sharing in the adjustment process that is brought on by a 
national recession. The reality is if we don't offset some of 
the cuts that are going to be imposed in our operating budgets, 
we can end up reducing employment, cutting our support of our 
counties and local communities, and our universities by enough 
to offset everything that we might be doing in an 
infrastructure program. So we are not saying that you have to 
fill our budget gaps, but having some help in that makes sense 
so that we can continue to not have tax increases at a time 
when we are in a recession, that we don't see tuition hikes 
that ration out individuals from taking this time when there 
are fewer jobs to actually enhance their education, and that we 
continue to support as best we can some of the things that are 
actually mandated by the Federal Government, like IDEA, Leave 
No Child Behind. All of those things create budget gaps. They 
create them in regular economic circumstances. They are more 
severe now.
    Ms. McCollum. Governor, not to interrupt you. I understand 
that. I was a State representative. I was a State 
representative during the nineties. I understand it. I get it. 
But this is what is happening with education and I can only use 
my home State as an example. We increase Pell grants, the State 
decreases student aid. Those were before the times of the 
budget deficit. Where is my assurance that that is not going to 
continue to happen? That is my point. If it happened in the 
good times, what is going to happen as we face the bad times 
together?
    Governor Doyle. Well, first let me say, we will take the 
Minnesota part of the stimulus package on the Wisconsin side of 
the river if you don't want it.
    Ms. McCollum. I don't think so.
    Governor Doyle. But I do believe that, and this is what we 
really want to work with you on. I do believe that there are 
ways that if you want to say put strings attached, and I am 
only speaking for myself, not the NGA here, I think there are 
ways that you should seek assurance of what you are getting in 
this package. For example, let's take higher education. The 
fact is unless you do help us with the budget deficits we face 
there will be deep cuts in higher education which will result 
in higher tuition. It is that simple and you understand that.
    So, and again I don't know, I don't mean to say this is 
what, I would have to look at the numbers, but if you were to 
say that in exchange for help to the States you want to make 
sure that tuition increases stay below rate of inflation or 
something like that, I think there are ways that we can work 
together to try to accomplish this. What we are saying is yes, 
we want, we believe the stimulus is really important and that 
does move directly, as you know in Minnesota, I know it is true 
in Wisconsin, that moves to private companies that are doing 
that kind of construction and it moves very, very directly. But 
in terms of education, what we are--I believe that we are all 
facing deep cuts in education, deep and harmful cuts unless 
there is help. And I think we are more, I am more than willing 
to work with you to figure out how you make sure you get that 
value for what the Federal Government may do in education, how 
we set metrics or how we make sure that big cuts in education, 
that you don't give us, you don't help the States with 
education and then find out that we made the big cuts anyway. I 
think there are ways that we want to work with you to make sure 
that you have those assurances.
    Governor Douglas. This is a time of recovery, as the 
terminology of the proposal suggests, and I really believe that 
unless we take these steps we are going to see the kinds of 
cutbacks that we all fear. We are going to have to make some 
decisions. We already made some in our States to adjust 
expenditure levels to live within our means. But unless we get 
the support at a time when revenues are declining so 
precipitously we are going to have to make some decisions that 
affect the people of the State in ways that we don't want to 
do.
    So I think it is essential. And I am a former legislator as 
well, and most of them in my State are of the other party, but 
I trust them to work with me to come to some common 
understanding as to what we need to do to establish priorities 
that are in the best interest of our State.
    Ms. McCollum. Thank you, Mr. Chair. And I like your 
Governor.
    Mr. Obey. I do, too.
    Mr. Ryan. Thank you, Mr. Chairman. I represent Ohio, and 
Governor Strickland is facing about a 25 percent budget cut, 
which is just unfathomable, and those of us who get into public 
service don't get into it to cut mental health coverage and all 
the things that you were trying to deal with. So I just want to 
say thank you for all of your courage in this very difficult 
time.
    One of the things that, I represent Youngstown, Ohio, 
Akron, Ohio, and sometimes a crisis provides opportunity. And 
can you just share with us what do you think the opportunities 
are for us to restructure maybe from an economic development 
perspective, how local communities can approach economic 
development now in a different way, how can local governments--
``consolidation'' is not always a good word--but streamline and 
become more efficient, I know you each kind of touched upon it 
a little earlier, but how can we, when President Obama says we 
want a government now that can be nimble and flexible in the 
21st century reacting to the facts as they change on the ground 
instead of the industrial style government that we are all left 
to try to tinker with here, just try to share with us what do 
you think the opportunities may be to retool our government, 
and through this stimulus package is there anything that we 
could do to incentivize that kind of cooperation, that kind of 
regional economic development, if you have thought about that 
at all, because I think this is a unique opportunities for us 
where we are going to be spending a lot of money and I think 
you have articulated and the Members of Congress have 
articulated quite clearly what the critical problems are facing 
you and I think facing our constituents, but within that can we 
have a piece of this stimulus package that will help us create 
this new 21st century government based on the technology and 
communication capabilities that we have?
    Governor Douglas. I think the answer is certainly yes. I 
mentioned several administrative consolidations within my 
administration. I know my colleagues are doing the same. And at 
the local level a number of our school districts are looking at 
similar consolidations. We have had some communities decide to 
close small schools over the last couple of years actually, and 
some are considering that now, merging with neighboring 
communities to achieve that economy of scale. So I think this 
will facilitate that.
    And I want to come back to a point I made earlier. I would 
not recommend to you that you fill the entirety of a budget gap 
in the State. I think it is appropriate to force that 
efficiency, to insist that we be creative, that we use 
technology more to achieve some economy in our States. One 
example I like to use in Vermont is our tax department, that 
warm and fuzzy agency of State Government that has been doing a 
great job in terms of its responsibilities but has been able to 
reduce its staffing levels by nearly 10 percent because of the 
increase in electronic filing of returns. And so there are 
other ways that we can do that to increase efficiency, lower 
costs, and provide the quality of service to our residents.
    Governor Doyle. I agree with Governor Douglas. The fact is 
we shouldn't plug all these holes that the tight budgets are 
going to drive and are driving in Wisconsin greater 
efficiencies. But on the regional economic development, just an 
ideal place to explore, but in Wisconsin we have developed in 
the last 2 or 3 years regional economic development groups 
largely, they are primarily business driven and they recognize 
that, for example, Milwaukee shouldn't be competing against 
Racine and I am sure you have these same issues but it is 
regional economies. And to the extent that they help select and 
drive and focus on what the infrastructure and other economic 
development needs are as this stimulus package comes out, it 
will be very helpful again to give a specific example, and 
Milwaukee has identified water technology as one of its great 
strengths. We have thousands of people that work in different--
because it is on the Great Lakes and that is where they make 
beer. Water is particularly important in Milwaukee, as it is in 
parts of Ohio, and there has just been a lot of business. They 
actually have identified that now and come together and 
developed an agenda for how to grow that water technology 
business, and to the extent that we can plug that kind of 
regional economic development efforts into the stimulus package 
I think will be very helpful.
    Governor Corzine. There are a number of agencies, I talked 
about this mass transit tunnel which is really a New York-New 
Jersey exercise, it would be executed through the Port 
Authority and--might very well be executed, not necessarily, by 
the Port Authority of New York, New Jersey, seems to be places 
where you can encourage the kind of action you are taking. 
There has been good cooperation on a regional basis, 
particularly with homeland security and a lot of the 
allocations of funds from the Federal Government where we are 
looking at regions and interoperability and some of the 
elements. I think a similar kind of strategy, both on green 
energy investments and certainly with regard to electronic 
medical communication, are all things that I think as the 
Congress and the administration come to setting those 
priorities, making bonus investments where people are actually 
operating in conjunction with that as an objective or part of 
the mission, I think is a very positive step forward.
    Chairman Obey. Mr. Ruppersberger.
    Mr. Ruppersberger. Thank you, Mr. Chairman. I represent the 
State of Maryland. And I have a letter here from our Governor 
O'Malley talking about a lot of the issues that you have talked 
about and I don't want to be repetitive, but I want to address 
the issue of legal authority. This stimulus package will be as 
President-elect Obama has said, the largest since we have built 
our interstate highways. We feel, a lot of us are concerned 
when we passed, people call it the bailout, I like to call it 
the recovery package also, initially, that people are concerned 
that when we gave money to the banks that the banks instead of 
putting money back in and lending the money it went to their 
buying other banks. So we want to make sure that we have the 
right legal authority and also the accountability to make sure 
if in fact we go forward with this stimulus package, which I 
feel that we should and that it will create jobs, because that 
is the key to come out of this recovery is to create jobs. Now, 
the legal authorities when we are writing the bill, we need to 
have some legal authority there, not only to make sure that 
when we give you the money that you are going to have the 
ability to go forward with these projects that are going to 
stimulate the economy right away, call them shovel ready or 
whatever you want to call them.
    Now what would you like to see in the bill to make sure 
that you have the ability to go forward with these 
infrastructure projects that will create jobs?
    Governor Douglas. A couple of thoughts, a reasonable 
deadline for obligating the funds, I suggested 180 days to 
accommodate the needs of northern States; secondly, a 
flexibility as to what type of infrastructure is eligible for 
the support; thirdly, some provision, as I suggested earlier, 
to allow emergency procedures to be activated so that the 
bidding process can be expedited to get the project delivered 
as quickly as possible; fourthly, not including a maintenance 
of effort provision or to make sure that any ready to go 
project is eligible for stimulus funding so that other 
displaced funding can be used for additional projects. I think 
those are the key elements of what we need to have in place so 
we can move forward.
    Governor Corzine. I would add that you probably do need a 
use-it-or-lose-it provision in this so that this needs to be 
put with, you know, reasonable debate about how long that 
should be. But I think actually a fairly short horizon to make 
sure that we are getting the stimulus that we are expecting 
from this process, and you are going to have chances to talk 
about refunding the Transportation Trust Fund and other things, 
in the next Congress. So some of the other projects I think 
actually fall to that category, but I wouldn't have any 
argument with the flexibility emergency procedure issues or 
maintenance of effort. I would say that I know our State would 
be more than happy to have to come review after the fact of how 
we used the money as well.
    Mr. Ruppersberger. Accountability is extremely important.
    Governor Corzine. And I think it is a perfectly reasonable 
thing to be asking since we are accelerating all this process, 
having an after-the-fact review would be useful.
    Mr. Ruppersberger. You are going to have issues on your 
side, too. When you are going ahead with contracts, do you put 
it out for competitive bid or do we have these projects ready 
to go and the obligation for you to be ready because if one 
State doesn't have the sophistication to be ready and the other 
does, we need to stimulate jobs. So it is extremely important, 
I think I mentioned to the Governors and the mayors, the county 
executives, and commissioners, that they are ready when this 
goes forward.
    Governor Doyle. If I could just add from my point of view, 
use-it-or-lose-it in a very tight decline is very helpful 
because we are going to have to clear away a lot of sort of 
regulatory measures on our part that slow things down. And if 
Congress is telling us very directly you have to move quickly 
and you are going to lose it if you don't it will help me to 
get done in our State what needs to get done to get our process 
as streamlined as possible to get the money out the door.
    Mr. Ruppersberger. I suggest you communicate with your 
attorney generals or your solicitors or whatever because you 
are going to have your own internal issues, legal issues on 
contract. And we have got to make sure that the whole purpose 
for a longer period of time was properly the issue of 
corruption. So we have got to really make sure that we don't 
cross over that line either.
    Ms. Wasserman Schultz. Mr. Chairman, I would like to ask 
unanimous consent to enter into the record the testimony of the 
Governor of my home State of Florida, Charlie Crist.
    Chairman Obey. Without objection.
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    Ms. Wasserman Schultz. Who by the way after tomorrow will 
be crossed off the list of eligible bachelors when he marries 
his bride to be. So we can congratulate him on their 
celebration.
    I want to return to education, and I know we covered the 
infrastructure needs in terms of education but my State, and my 
county, I represent the Sixth and I think the third largest 
school district in the country, Miami-Dade and Broward 
Counties, and just in the last year Miami-Dade County, for 
example, had to cut $89 million out of their budget, their 
school budget.
    Ms. Wasserman Schultz. My own county, the county that I 
live in, Broward, had to cut in the last 2 years 128 million. 
They are facing hiring freezes, potential layoffs of teachers. 
And for me being a mom of three school-aged children, it is a 
very present day-to-day issue that I think is incredibly 
important. Children only go around once. Once they go through 
the 13 years of their education, if they aren't in a well-
funded, high-quality educational environment, they don't get a 
second chance at it.
    So what I wanted to ask you is, obviously I am sure your 
States are facing a similar situation on the operations side of 
education. How are you compensating for those cuts? What are 
you doing? And how do you think we can include the operations 
side of educational challenges in an economic stimulus?
    Governor Douglas. Well, the specific request of the 
National Governors Association is sort of two parts of the 
stimulus recovery package: one, the infrastructure support; 
and, secondly, some support for Medicaid, which is a State-
Federal, shared responsibility, and one whose caseload 
continues to rise. And speaking from my perspective, without 
the additional support for that safety net program, support for 
K-12 education is more vulnerable in the budgetary process than 
it otherwise would be.
    Basically I look at the budget of Vermont this way. About a 
quarter of it is Medicaid, about a quarter is K-12 education, 
and everything else. And since it is such a significant part of 
what we do, it is going to be very vulnerable at a time of 
fiscal stress. So I think that is why the support for the 
budget and our FMAP participation rate is critical in order to 
minimize the impact on public education.
    Governor Doyle. In Wisconsin, far more than 25 percent is 
K-12 education. We at the State level fund two-thirds of the 
cost of public education in the State. And so when you look at 
a 17 percent budget deficit, you just can't stay away from our 
biggest item. We have provided so far--in fact, our schools 
have gotten a slight 2 percent to 3 percent increase in the 
fiscal biennium that we are in right now, and we did it, 
frankly, by making huge cuts to other places, because this has 
just been my priority. But I believe we are at a point in 
Wisconsin that, given this deficit, without help that comes in 
some ways, that education will suffer.
    And I would suggest that this is probably our Federal-State 
most important investment that we are making right now, and 
that, again, in Wisconsin, the way you would do that is if our 
budgets--if our budget we can deal with it, then education is 
going to be my number one priority, and we are going to protect 
it. And that is really why we need help badly on the operating 
budget side.
    I have told our educators, look, you are going to have to 
be part of this. It is not like it is going to be wonderful 
times for school districts. There aren't going to be big 
increases and big new programs and all of these things. But 
what we are going to try to do is get through this recession 
that we are in and will be in in a way that does not do harm 
and long-term harm.
    And I agree with you completely on these kids; this is 
their chance, and if they are not well educated--and I made the 
comment earlier, and I don't want to repeat it. But just 
remember, this country was built, the world war was won, and 
the country was built by people who got educated in the middle 
of the Great Depression. So our grandparents and great-
grandparents were willing to make this investment in terrible 
times, and we have to make it, and we need Federal help in 
order to make that investment.
    Governor Corzine. I think that education is the number one 
priority, along with public safety, that we have to address. 
And while we can't ask you all to fill all the gaps that any 
individual State has, some basic support--some of that comes 
through FMAP, through displacement. If we help out on the 
Medicaid side, then the money that you didn't spend there is 
available for education, and some people would argue that is 
where it is.
    I would rather be direct about some kind of block grant 
that, even if it was limited for education purposes, that would 
sustain these budgets through these difficult times. That is 
one person's view, not speaking for anybody but myself. I know 
that there are a number of Governors that would prefer no 
attachments.
    As far as I am concerned, FMAP and then some kind of help 
within the education arena is the direction I would recommend 
with regard to the operating side, acknowledging that we are 
going to have to take up some of this problem on our own 
actions at our State levels.
    Ms. Wasserman Schultz. Governor, count two people for that 
plan. I couldn't agree with you more.
    And thank you, Mr. Chairman. I yield back.
    Chairman Obey. Mr. Rodriguez.
    Mr. Rodriguez. Thank you, Mr. Chairman. And thank you very 
much for allowing us this opportunity to talk to the Governors. 
And I want to thank the three Governors. And welcome back, 
Governor Corzine. Good seeing you.
    Let me just indicate, I served in the Texas House also 
about 11 years, and I know that there are a lot of mandates 
including, the special education one, where we fund less than 
17 or 18 percent, and I think we should have been funded at 
about 40 percent. That means, even if we double that amount 
right now just with special education, it won't even cover what 
we supposedly should be covering. And I was glad to hear some 
of your recommendations about a lump sum that might be helpful 
in some of those specific areas where it may be necessary.
    I wanted you to respond to two issues. One, from a 
congressional perspective; where we have been working on the 
Middle-Class Working Group on a basis very similar to what 
Chairman Obey talked about. In fact, one of the major problems 
is the debt of American families. How do we reach out from a 
Federal and State perspective in terms of meeting some of the 
needs of those middle-class families that are having 
difficulties?
    Another point you raised is the tuition for middle-class 
families that have kids in college, and the possibility of a 
tax cut or tax incentives for those families. But if there are 
any other proposals you care to comment on, please do, because 
I really believe the middle class is the anchor of the economy, 
and that is where we need to make an economic thrust.
    Secondly, another important issue is in Texas that a 
tornado hit my community and killed seven people. There have 
also been floods and droughts. Yet, from the Federal 
perspective, we are not responding appropriately from the State 
perspective. And so I just wanted to get your feedback on those 
two areas in terms of natural disasters as well as meeting the 
needs of middle-class Americans.
    Governor Corzine. Thank you, Congressman.
    I think that we have at different points in the hearing 
talked about ways that you can help the middle class. Section 
8. Maybe some people would say that is more moderate, but 
affordable housing is actually a very serious issue across the 
country. Certainly if we were moving as President-elect Obama 
has talked about with regard to tax cuts focused on the middle 
class in conjunction with some of the things that we have been 
talking about today with regard to stimulus and recovery, I 
think it is very sensible; some tax relief, different proposals 
out there that I think would be very important. Aid in higher 
education obviously is one of those places.
    I think that it has to be comprehensive. Whatever is going 
to be put together has to try to do as much as you can within 
the context of however the total amount that you in the 
Congress and the new President decide is going to have a 
meaningful impact on GDP. If we have, instead of 3 or 4 percent 
growth in GDP we have a 3 or 4 percent decline in it, we are 
losing $800 billion. It is not like doing nothing is without 
cost. One is an explicit cost in the budget, and the other is a 
real cost to the public.
    And so I think you are asking a question that I want to be 
supportive of, and the middle class, is how you drive the 
economy. If you want to stimulate it, you need to actually be 
working very strongly with the demand side that occurs there. 
And so I hope you have a very forceful, significant program 
that includes tax relief for the middle class, but also in some 
of these basic educational issues, some of the basic housing 
issues.
    Governor Doyle. I agree with all of that. One other area 
that we really struggle with as a State is the programs that 
are designed to get people to the middle class. Obviously, the 
stimulus package, to me, is the most important part. There has 
never been a social program created better than a decent-paying 
job. So we want to cooperate in every way to get people to 
work.
    An area of Federal-State responsibility has been TANF and 
subsidized child care. The TANF grants that come to our State 
have not increased since 1996. The result is that a large 
segment of cost that used to be picked up by TANF dollars now 
are picked up by State governments. We have a State earned 
income tax credit. We have work training programs and others 
that were originally funded out of Federal TANF funds, but 
since that money has never been expanded, more and more of it 
is now picked up by the State taxpayers.
    The same is true with child care grants, which are directed 
to help people get to the middle class by being able to go to 
work and have subsidized child care. Those grants, as I 
understand it, have not been expanded since 2001. So Wisconsin 
now puts hundreds of millions of dollars of our State tax money 
into subsidized child care that was originally funded primarily 
through the Federal child care subsidy programs.
    These are big areas that are directed not at welfare, but 
actually directed at trying to have people get into the 
workforce. So somebody working at a moderate--low-, moderate-
wage job in Wisconsin--across the country, Wisconsin may be a 
little higher than other States--we subsidize that child care 
as we were directed to do under the Federal subsidized child 
care provisions. But as that money has just been flat-lined 
over many, many years, we now pick this cost up.
    It is an example of something that started as a major 
Federal-State initiative that the States have taken up more and 
more and more of the burden on that does really affect working 
people. These are programs that are the people who are going 
out into the workplace and who are getting jobs and are doing 
what they want to do and everybody wants them to do, but the 
cost of that is falling heavier and heavier on Wisconsin 
taxpayers.
    Chairman Obey. On that note, I know that a number of 
Members have statements that they wish to enter into the 
record. Without objection, they will be entered.
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    Chairman Obey. Let me simply thank our three witnesses. I 
think this has been an excellent hearing. You have really been 
very helpful, and I wish you luck with the problems ahead. 
Thanks again.
    Chairman Obey. If I could now ask the second panel to come 
forward.
    Mr. Lewis. And I thank the Governors very much for being 
here.
    Chairman Obey. You bet. And let me explain, the first panel 
consisted of Governors because we wanted to hear from 
government officials about the impact of this recession on 
their jobs. And now we want to hear from a number of private 
individuals who can explain what the human impact of this 
recession is on a wide variety of people.
    We have with us today Dr. Sandy Baum, who is one of the 
Nation's premier experts on issues relating to college access, 
college pricing, and student aid policy; Julie Murray, Chief 
Executive Officer of Three Square, Inc., Las Vegas, Food Bank. 
I must say, I have never seen a more spectacular effort in the 
food bank area than that. And Marsha Kreucher, Executive 
Director of Community Action Agency of Jackson, Lenawee, and 
Hillsdale, Michigan.
    Dr. Baum, why don't we begin with you.
    Dr. Baum. Thank you, Chairman Obey, Ranking Member Lewis, 
members of the committee, I am very pleased to have an 
opportunity to be here and talk with you today, and I commend 
you for your efforts in crafting a stimulus package that is 
focused on revitalizing our infrastructure.
    I am an economist. I do work, as you said, on college 
access and affordability, student aid, and college prices. I am 
a professor of economics at Skidmore College. I also do a lot 
of consulting work for the College Board and publish reports 
for them. I am here today as an individual, as an economist 
speaking about my own views on what I think the Federal 
Government's role in financing higher education in this 
economic emergency is.
    As we have been talking about infrastructure, there has 
been a lot of reference to higher education. I am pleased to 
hear that. I want to reiterate the importance of this. We are 
talking about physical capital and revitalizing physical 
capital, but we know that a major driver in the economic growth 
in the United States has been the increase in human capital, in 
the education, the skills, the training of our workforce. And 
we have already been concerned even before this crisis about 
the United States falling behind in educational attainment. We 
can't allow this crisis to exacerbate that problem.
    Historically we know that, in economic downturns, more 
people turn to higher education. They seek additional training 
to improve their opportunities in the labor force that they 
find particularly limited. At the same time that the demand for 
higher education increases, as we have just heard from the 
Governors, State budgets are, of course, severely constrained, 
and it becomes more and more difficult for States to fund their 
higher-education institutions appropriately. So we have this 
collision, where we have more people who need higher education, 
people have less and less money with which to pay for it, and 
the States aren't able to provide for it adequately.
    So what I believe the Federal Government really needs to do 
now is to increase funding for Pell grants so that students 
have more money to permit them to pay for higher education; and 
it also needs to assist the States in maintaining and 
increasing the capacity to educate these students. We have 
heard from the State of California, as well as from other 
States, that they may be forced to diminish the number of 
students that they can educate because they simply don't have 
the funds to do this. So I would like to address both of these 
sides of the question briefly.
    First is the increased need for Pell grant funding, which 
is urgent. We already know that there is a shortfall in the 
Pell grant program. The Pell grant is the best way for the 
Federal Government to assure that students will have the funds 
that they need to enroll and persist in college in these 
difficult times. Two-thirds of the student aid on which 
students depend comes from the Federal Government, and that 
includes about $18 billion in Federal grants, about 80 percent 
of which are in the Pell grant program.
    About 5.5 million students depend on Pell grants to help 
them finance college, and these funds are incredibly well 
targeted on students who really need help. Among the dependent 
students who receive Pell grants, about two-thirds of them come 
from families with incomes of $30,000 or less. About 60 percent 
of the Pell grant recipients are independent students. And 
almost 60 percent of these students had incomes in the previous 
year of under $15,000. There will, of course, be more and more 
students who fall into these income categories as the economy 
continues to sour.
    The Pell grant has created a lot of wonderful educational 
opportunities for people, but it has lost much of its power. 
Recent increases in the Pell grant maximum have been most 
welcome, but the current maximum of $4,731 is lower in 2007 
dollars than the maximum was 30 years earlier.
    So what we have is a situation where, Congress has 
continued to pour more money into Pell grants, although we now 
spend about $14.5 billion a year--the reality is that this has 
only allowed us to cover more and more students. The number of 
Pell grant recipients tracks closely the increased funding on 
Pell grants. So what that means is that the maximum Pell grant 
and the average Pell grant per student have not been able to 
increase in inflation-adjusted dollars.
    In fact, while we talk about the maximum Pell grant all the 
time, what really is important to individual students is, on 
average, how much they get. And in 2007-2008, that was $2,649, 
just about $100 more in constant dollars than was the case 30 
years earlier. So, on average, students are not getting nearly 
enough money from this program. That is even without taking 
into consideration the increase in college prices. That is just 
taking into consideration increase in the Consumer Price Index.
    In 1987-1988, the maximum Pell grant covered 50 percent of 
the published tuition fees, room, and board at the average 4-
year college. That 50 percent has now declined to just under a 
third. At private colleges there has been a decline from about 
20 percent in 1987-1988 to about 13 percent of total published 
tuition fees, room, and board now.
    The Pell grant helps many independent students and many 
dependent students. There will be many more adults who are 
looking for assistance, looking to go back to school as their 
labor market opportunities are diminished. We have to make sure 
that we give them adequate funding.
    I had a conversation recently with a 31-year-old single 
woman who makes $16,000 a year working full time. She wants to 
go to her community college to increase her skills; and the 
Pell grant for which she is eligible is under $700. So she 
wanted to know how she is supposed to go back to school. That 
is her full income, if she can keep her job, $16,000. The child 
of a single parent making $40,000 a year would be eligible for 
a Pell grant of less than $1,500.
    So we have to think about the number of dollars we are 
giving to students, in addition to the aggregate amount of 
money, the maximum Pell grant, and the number of students we 
can serve. Raising the Pell grant is the most important thing 
that the Federal Government can do for students now in the 
short run to help them pay for college.
    Many students are going to continue to borrow, and Congress 
has done a good job of making sure that Federal loans remain 
available, but we have to do a better job of protecting those 
students who, through no fault of their own, get into trouble 
when it comes time to repay their loans. Of course, many more 
students will find themselves in that circumstance now because 
of the high rate of unemployment.
    In addition, if we want the Federal aid system to be more 
effective, and we want our taxpayer dollars to be used more 
efficiently, we have to simplify the system and make sure that 
students can access it with a simple application process and 
that we don't keep adding more programs.
    It would be wonderful if we can increase the Pell grant and 
make sure there is enough money in every student's hands, every 
potential student's hands, to make sure they have the 
opportunity to pay for college. But even if they have the 
money, but States are unable to fund institutions to have the 
capacity to educate those students, we won't accomplish our 
goals.
    There is an urgent need on the part of the States for help 
from the Federal government to provide these educational 
opportunities. In particular, community colleges and broad-
access, public 4-year colleges are going to find many more 
people knocking on their doors looking for improvement in their 
skills, looking to be more successful in the labor market. 
Obviously, we want to get these people off of the unemployment 
roles and into environments where they can constructively be 
improving themselves for the jobs that we hope will be awaiting 
them when they finish.
    Assuring access to higher education is important from an 
equity perspective, but it is also important in terms of the 
efficiency of our economy. It is good economic policy. It will 
help us to reduce the excess supply of labor. It will help us 
to increase over the long term our human capital. And our 
economy will reap the benefits far into the future. If we don't 
do this, if we don't strengthen the Federal aid system, the 
Federal Pell grant program, if we don't assist educational 
institutions to provide opportunities, make sure they have 
capacity to educate our students, we will feel that pain far 
beyond the time that the economy begins to recover. So I urge 
you to make higher education a clear focus in your stimulus 
package designed to revitalize the infrastructure. Thank you.
    Chairman Obey. Thank you very much.
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    Chairman Obey. Ms. Murray.
    Ms. Murray. Good afternoon, Mr. Chairman and members of the 
House Appropriations Committee. As Chairman Obey mentioned, my 
name is Julie Murray, and I am the chief executive officer of 
the Three Square Food Bank in Las Vegas, and I am honored to 
have been invited to come and speak before you today. I always 
like to speak during the noon hour before the meal has been 
served, because then all of us can feel hunger and just have a 
really great understanding of how challenging it is. If I would 
have estimated my speaking time better, I would have brought 
food boxes for you from Las Vegas. But let me tell you first 
thank you for being here and for staying for our testimony. I 
appreciate it.
    So the Three Square Food Bank started over a year ago at 
the inspiration of Eric Hilton--he is the youngest son of 
Conrad N. Hilton--along with numerous other think-outside-the-
box kind of community leaders in Las Vegas who declared that it 
was not acceptable in our community for people to go hungry.
    I am proud to say that we are the newest member of Feeding 
America, and are proud to be distributing food in southern 
Nevada. We are the 206th member in this network of food banks.
    If I would have testified a year ago, I would have said 
that thousands of families in my home State are living paycheck 
to paycheck and are just one disaster away from being in total 
ruin. However, I am sad to tell you that, as I testify before 
you today, those families have had that one crisis occur, and 
that crisis is the recession. And due to the recession, they 
are now living their biggest fear, which is living without a 
paycheck.
    Nevada's unemployment rate is no different than any of the 
others who have testified before me today. We have risen to 7.6 
percent, which is a full point higher than the national 
average, when traditionally we are about 1 percent or more 
lower than the national average. One out of every 91 homes in 
Nevada is in foreclosure, and nearly half of our State 
homeowners owe more on their mortgages than their homes are 
worth. New construction has screeched to a halt, causing job 
losses not only in construction, but in related industries. At 
our Three Square Food Bank, we see the people affected by these 
statistics every day, and I have four points that I want to 
share with you in my 5 minutes of testimony.
    Number one, the children who are facing hunger. In Clark 
County School District, nearly half of our children, which is 
132,000, qualify for free or reduced lunch. Picture that: 5 out 
of 10 children who are crossing the crosswalk on our way to 
school are struggling with hunger. When half of our children 
are struggling, we are living in a crisis mode.
    At the beginning of this school year, my Three Square Food 
Bank launched a weekend feeding program called the BackPack for 
Kids program that provides bags of nutritious, kid-friendly 
food to approximately 3,000 children weekly. I recently visited 
one of our BackPack partner schools where every one of the 733 
students qualifies for a free or reduced lunch. I asked one 
second-grade student, Isabel, what she thought about the bag 
and the food. She had a huge smile on her face and said how 
proud she was to be able to take food home for her family. Her 
mother had just been laid off, and this 8-year-old girl carried 
the 5-pound bag of food home on her back in the backpack every 
Friday and shared the food with her mother, her younger 
brother, and her dog.
    The next example: middle-class families who are living in 
crisis. So for every child in need, there are family members 
struggling to make ends meet. The ongoing layoffs in our 
normally recession-proof gaming industry are bringing more 
people to our food pantries. Representative Serrano asked if 
tourism and the arts are being impacted. Our gaming industry 
and other related industries are being impacted in ways we 
never could have imagined. There are people who have never 
before sought food assistance that are doing so. And let me 
illustrate a story of what Congressman Obey mentioned in his 
opening remarks when he said that it is so amazing what the 
loss of a job does to someone's dignity when they go through 
that experience.
    So while filling my gas tank recently on a Sunday 
afternoon, a white car pulled in next to me with a middle-aged 
man and two little girls in the back seat. The man approached 
me with a very ashamed look on his face and said he had never 
been out of work before, was recently laid off, and could not 
afford gas or food for his family. My heart broke for him, but 
my heart broke for the little girls who were in the back seat 
having to watch their dejected father beg for money. I gave him 
cash, and told him how to find a local food bank agency where 
he could receive some free groceries.
    As Nevada's unemployment rate grows, such stories will only 
become more common. Indeed, as the unemployment rate grows 
nationwide, you will hear such stories in every congressional 
district across the Nation.
    Number three, I would like to address the growing demand at 
charitable agencies. At our 1-year anniversary next week, which 
you are all invited to come to our food bank for, our food bank 
will announce that we have distributed 10 million tons of food, 
which represents 8.5 million meals that we have distributed. 
That food reaches hungry people----
    Chairman Obey. Did you say 8.5 million?
    Ms. Murray. Yes, 8.5 million meals per year--this year, in 
our first year of operation. That food reaches hungry people 
through our 211 agency partners. These community partners 
include food pantries, homeless shelters, rehabilitation homes, 
and programs for at-risk youth and seniors. Forty agencies who 
joined us this year never had been engaged in food relief 
before, but are doing so in response to the economic crisis. 
And our existing food pantries are hit particularly hard, many 
of them seeing a doubling of clients--a doubling of clients--
over the course of this year.
    And, number four, my recommendations. My food bank will 
continue to work diligently, as will food banks across the 
country, to assist the people in their States. However, there 
is only so much that we can do to meet the overwhelming need; 
but there is so much that Congress can do to address hunger in 
America with the upcoming economic recovery package. 
Specifically, three points.
    Number one, an increase in the SNAP/food stamp benefits 
along with administrative funds for cash-strapped States.
    Number two, a boost to TEFAP and CSFP, the two commodity 
programs that provide nutritious food through food banks and 
other charitable organizations.
    Ms. Murray. Number three, increase funds to meet the 
growing demand in the WIC program.
    These crucial measures to strengthen our Nation's Federal 
nutrition programs will go a long way towards meeting the needs 
of millions of Americans devastated by the recession. Moreover, 
the inclusion of additional funding for SNAP food stamps and 
emergency food assistance will support economic recovery and 
help stimulate local economies. I can tell you, with food 
prices having risen so much, when cash-strapped families 
receive the higher food stamp benefit they will immediately 
spend it in their grocery stores.
    So in conclusion, I wanted to share with you that when my 
three children, who are all in college, come home for the 
holidays and are gathered around my kitchen table, we talk 
about you as if we know you. They have worked for you as 
congressional pages and as interns. We look at the decisions 
that you are making and the things you are doing. Please know 
that to my family and to millions of Americans, you are heroes; 
you are the ones who can and will pull this country out of the 
crisis we are in. We have faith in you and we are cheering for 
you.
    I would be happy to respond to any questions at the end of 
our time allotment. Thank you.
    Chairman Obey Thank you very much.
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    Chairman Obey. And now Ms. Kreucher.
    Ms. Kreucher. Thank you. My name is Marsha Kreucher, and I 
am the CEO of a community action agency in the southern central 
part of Michigan. And I am honored to be here today. I was 
asked by our new Congressman-elect Mark Schauer to talk a 
little bit about the face of poverty in Michigan and some 
community development-type projects that community action 
agencies get involved in that he thinks have potential for good 
economic development policy.
    I know that you have all heard that Michigan is facing some 
huge challenges. We may be leading the way of the downward 
momentum that has been discussed today. Our unemployment rate 
is well above the national average, over 9 percent; and median 
income, which in Michigan has always been high, has plummeted 
12.5 percent last year to put us below the national average for 
possibly the first time. We have record numbers of homes in 
foreclosure, housing values are falling, and we have one of the 
highest child poverty rates in our county right now at 40 
percent. It is just a stunningly dismal picture. In the 20 
years that I have been a community action director, I have 
never really seen things quite so bad.
    In the counties that our agency serves, we are mostly 
rural, we have three cities. The largest city has a population 
of 37,000; 13.5 percent of those residents are now unemployed, 
and 15 percent fall below the poverty level. We are heavily 
reliant on the automobile industry, mainly in our area of the 
State on the smaller parts suppliers and light manufacturing. 
We have lost thousands of jobs in the last 5 years and almost 
2,000 jobs just in this year alone. And these are working-class 
jobs. We have talked about the middle class and working-class 
jobs, and this has been a middle-class community. The erosion 
in income and the quality of life has just been stunning. 
People are frightened, I think, and that is one thing that we 
all feel.
    One of the things that I think can really help, and I would 
ask for your support, is the request to increase the 
eligibility for CSBG, which is the base funding for community 
action agencies, to help people that are at 200 percent of 
poverty as opposed to 125 percent. And that is because when you 
are looking at, like we are, legions of Michigan people who are 
unemployed and living on unemployment insurance, or who are 
working at low-wage jobs that are kind of piecemealed together, 
200 percent of poverty is barely enough to make ends meet. And 
it would, I think, really help to be able to reach a lot of 
these people.
    When people are laid off, they come to us for any variety 
of reasons. They may come to us because they have missed a 
house payment or they have had a utility shut off. It is 
generally not a population that is used to coming in to ask for 
help. They are people who, more often than not, now are looking 
at foreclosure. In our small city, we have about 400 homes that 
are owned by banks, that are vacant and are for sale.
    The banking industry is worried, the housing industry is 
worried. It drops--housing values. Crime is on the rise. There 
is an uptick in homelessness. And we have many, many families 
who, although we are a HUD-certified counseling agency, we are 
getting maybe 30 calls a week to help renegotiate loans with 
banks, and we have really no resources to help people who have 
gotten caught in the subprime loan mess. Sometimes we see 
grandparents losing homes that maybe it would be $3,500 or 
$5,000 to fix, and there really isn't very much help available 
to help these people. I think that we would all think that 
stabilizing neighborhoods is probably one of the key things 
that we can do.
    One of the projects we have been involved in, which I think 
is probably a good example of a community action agency in 
general, is that we got involved in a community revitalization 
project in the city of Jackson, which targeted 23 blocks 
immediately adjacent to the downtown; and we have mobilized 
about $12 million in investment in that area through private 
investors, Federal dollars, State dollars, local community 
dollars. We have been working with five churches and have built 
new homes, demolished blighted property, rehabbed many homes, 
both homeowner and rental property homes.
    And because we are a community action agency we also work 
with the Neighborhood Association, which has now become 
incorporated and has received some funding of their own, is 
hiring staff, running an after-school program for kids. And 
because we run the IDA program, we are helping people to 
increase home ownership in that area.
    We are working with Youth Build to add job skills and 
construction, and Habitat for Humanity to provide more housing 
there too.
    So what we have seen, just in that little project over 5 
years, is it has created a lot of jobs, and I think has 
probably shown one of the things community action is good at, 
which is, we are good multi-taskers and we are able to leverage 
funds from the private sector as well as the public sector and 
bring together the community to make things work.
    I won't talk too much about energy and home weatherization. 
I mean, that has been discussed today. I know it is on the 
radar screen of everybody. Clearly, there is great potential. 
We have been weatherizing homes since the 1980s. There are a 
lot of creative projects going on across the country with 
renewable energy and community action agencies with private 
investors.
    I will tell you that we have waiting lists for every one of 
our programs. Unprecedented. I would estimate that we have 
probably increased our waiting lists and people coming in for 
help 35 or 40 percent just over the last year alone. Children 
don't have food; they are on waiting lists to get--adults are 
on waiting lists to be able to get money or be able to afford 
to go to college. Children don't have winter coats; they are 
coming to school with sweaters on. It is just a terrible 
picture.
    So we encourage you. Congress has been very supportive of 
community action agencies over the years, and we appreciate 
that. We have always been on the front lines. This year it 
seems very dramatic; the front lines are much more complex; our 
problems are more complicated. And we appreciate your support 
and are enthusiastic about all that you are doing with the 
economic stimulus. Thank you.
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    Chairman Obey. Well, thank you all. Let me just ask one 
question of all of you, a little differently to each of you, 
but it is the same basic question.
    Dr. Baum, some Members of Congress might say to me, ``You 
know, Obey, student aid is fine and Pell grants are fine, but 
you guys are just using the recession in order to bump up 
spending for these student aid programs.'' I would ask you, Why 
should we be looking at student aid in a recession? Is there 
really a significant impact on American families with respect 
to their ability to send their kids to college during the 
recession?
    Ms. Murray, with you I would simply ask, Why should we add 
more money to food and nutrition programs? If this is a serious 
problem, why can't we expect the private sector and charities 
to pick up the slack in your area?
    And Ms. Kreucher, with you, the same question I asked Dr. 
Baum. Some people will say, ``Well, you just like this 
Community Service Block Grant and so you are using this 
recession as an excuse to pump money in.'' Why is there a 
qualitative or quantitative difference in terms of the job that 
you have to do in your locality? What kinds of things are you 
having to do today that county boards, city councils, are 
sloughing off on you because they just don't have the money in 
these times? Why don't we begin with you, Dr. Baum?
    Dr. Baum. It is certainly a reasonable question because 
everyone has been saying all along that we need more money for 
student aid.
    That said, there are several aspects to this. One is that 
if we do nothing, then the demand for Pell grants is going to 
increase because as more people are in these serious economic 
circumstances that have been described, they will simply 
qualify for Pell grants. So even without changing any of the 
provisions, clearly more money will have to be appropriated, or 
the amount of money that we provide to individual students will 
have to be diminished.
    But more than that, it is the issues that I touched on 
which involve the repercussions of an economic downturn. There 
will be more and more people who will not find labor market 
opportunities. And we can either have them be unemployed, we 
can try to provide unemployment compensation for them, or we 
can help them to go to school. And it is obviously in both the 
short-term and the long-term interests of the economy to make 
sure that we can have these people using their time 
constructively and developing their human capital. And that is 
true for higher education institutions as well. There have been 
struggles all along, problems of State funding pressures. But 
the reality is that right now there is much increased demand, 
as there always is in economic downturns. And to turn these 
students away would be a serious mistake. This is the result of 
the recession, that there is this kind of increased demand and 
this increased need.
    Chairman Obey. Thank you.
    Ms. Murray. Thank you, Mr. Chairman. Your question is, Why 
should you add to the food and nutrition programs currently in 
place?
    Chairman Obey. My question is simply, If this is an 
economic stimulus package, why should programs for nutrition be 
included? Why can't we simply rely more on private sector 
churches, charity, et cetera?
    Ms. Murray. Thank you for the clarification. I will give 
one example. I mentioned the children in the schools. In order 
for us to go communitywide with our BacPack program and be in 
every one of our schools, we had to collaborate with a lot of 
people. We had to collaborate and find a donor to fund the 
food; we had to collaborate and find someone to deliver it; we 
had to find community groups who would come out and load 
thousands of bags of food every week. And as food bank, we are 
doing everything we can to leverage what we have in the 
communities to provide as much food as possible. And you saw 
our food bank. We are very creative. We think outside the box, 
and we collaborate with lots of people.
    We are doing just as much as we possibly can to keep up 
with the demand. And just when we think we have met it, then we 
will go through a round of thousands and thousands of more 
layoffs. And our agency partners report that they are seeing 
increases of 66 percent in the numbers of families that they 
are feeding.
    So even though we are calling on our corporate leaders and 
our community and individuals and foundations, they can only 
give so much. And they are reeling from the tough economic 
times and giving as much as they possibly can.
    So just know that in States like all over the country and 
like mine, my food bank is doing everything we can to 
collaborate and think outside the box, but we just can't keep 
up with the demand because the numbers are so huge. So we do 
need help with what you have offered. Thank you.
    Chairman Obey. Ms. Kreucher.
    Ms. Kreucher. I would say that community action with 
Community Service's Block Grant just has a long history of 
mobilizing resources and working in collaboration with many, 
many sectors. There is no sector that has the ability to handle 
all of these problems alone. City dollars aren't going to do 
it, county commissions can't do it. Revenue sharing has been 
lost. Private sector, in places like Michigan, is a problem for 
investment. We have to be able to work with people who have had 
a history of working with us before and are willing to kind of 
step forward and help out during difficult times. I think we 
have a track record.
    One thing that I think is really important is the 
psychological and kind of morale-boosting piece. As we go in 
and start working in neighborhoods within the city of Jackson 
and in our communities, we are finding people who are saying 
that they are afraid. They feel like they have been forgotten. 
They don't know what is going to happen next. What are the next 
jobs that are going to happen?
    And there is something to be said about moving forward and 
creating jobs and working to renovate neighborhoods to show 
that they are still safe, to show that people are still 
involved; that there is going to be an infrastructure that 
makes people think that it is going to be okay in the end; that 
things still are happening as normal, and we will be 
continuing. And I think that is really an important piece.
    Chairman Obey. Thank you. Mr. Lewis.
    Mr. Lewis. Thank you very much, Mr. Chairman. And thank you 
all for not only being here but for the work that you are 
about. I was going to approach this a little differently when I 
began this meeting, but please forgive me.
    Dr. Baum, I will begin with you because I think you should 
know that two of my twin sons are both college professors, and 
so I am very empathetic to the challenges of a college 
professor, a professor at Skidmore. But in the meantime, I am 
curious to know what exactly the College Board is. You 
indicated that you were testifying as an individual not 
representing Skidmore or the College Board, but I would like to 
know exactly what the College Board is and what role you play 
there; is it a paid position or is it just additional 
compensation beyond being professor, et cetera.
    Dr. Baum. The College Board is a nonprofit membership 
organization with members being colleges, universities, high 
schools, and other kinds of educational organizations. And the 
College Board works on issues relating to college access, 
college success, the transition from high school to college. 
Everyone knows they have the SAT and the AP. They run some high 
schools in New York City. They have a lot of college 
preparation and curricular programs, a lot of college 
counseling programs and so on.
    I am not employed by the College Board; I am a consultant 
to the College Board. I do their publications on trends in 
student aid and trends in college pricing, and I spend a lot of 
time consulting for them. I also consult for other 
organizations, and I am employed by Skidmore College.
    Mr. Lewis. I appreciate that. That helps clarify some of 
the questions I had relative to that, because I noted when you 
testified before the Senate and also, in the presentation you 
gave on NPR in 2007, the testimony was very similar to that 
which you have presented today which would be very much a 
reflection of what you just described as the College Board's 
work, the work that you do for them.
    Dr. Baum. I would say that one of the wonderful things 
about my relationship to the College Board is that they 
subsidize me to do my research and to express my views, and not 
to be just a voice for the views of others. And so that is one 
of the contributions that they make.
    Mr. Lewis. One of the areas of concern I have that leads to 
just a very brief line of questioning, is the fact that we 
operate here under our rules in the House with a truth-in-
testimony process. And sometimes when people describe 
themselves as speaking as an individual, that causes them not 
to feel like they need to respond to some very specific 
requirements.
    So let me ask this. Can you provide for the record a list 
of all grants, sub-grants, contracts, subcontracts received by 
the College Board in fiscal years 2008-2009, prospectively 
2009?
    Dr. Baum. The College Board obviously has such a list. I am 
here presenting my own views. No one told me what to say. I am 
not----
    Mr. Lewis. Can you provide such a report?
    Dr. Baum. I am just here expressing my own views, and I 
have no--I am sure that the College Board as an organization 
could do that, but they have not--I am not testifying----
    Mr. Lewis. Let me say this. In our records you are listed 
as----
    Dr. Baum. I am a consultant to the College Board and I am 
employed by Skidmore College.
    Mr. Lewis. So the second question is we would appreciate a 
list also, if you could consult with the College Board and 
provide a list of all grants, sub-grants received by the 
College Board in fiscal years 2007 and 2008.
    Chairman Obey. Let the Chair simply interject at this point 
to say that I am certainly interested in obtaining all of the 
legitimate information that we can obtain. But I think it is an 
open question as to whether someone who is a consultant to an 
organization has the authority or the ability, in fact, to 
provide the kind of information that has just been requested of 
the organization. I would think the organization itself would 
have to make that decision, and I would think they would make 
it at a time when someone was testifying on their behalf.
    Mr. Lewis. I appreciate the Chairman making that 
clarification for me. The listing we have for Dr. Baum is as a 
senior policy advisor for the College Board, and it seems to me 
that she might be able to provide that.
    But in the meantime, moving on, if I could. I wanted to 
mention to Ms. Murray that beautiful downtown Las Vegas is 
important to us, because in North Las Vegas there lives one of 
our daughters and two of our grandchildren and a very, very 
attractive donkey as well as a pig, two cats, and two dogs as 
well. It is a very prolific family.
    But in the meantime, just a few minutes away from here, is 
an organization in Mr. Moran's district, the Arlington Food 
Assistance Center just about 3 miles away. And it just occurred 
to me that--I am sure you experience this but all of us should 
think about--the work that you are about, which I think is 
fabulous work, can be accomplished and needs to be expanded by 
a lot more than just some stimulus package on the part of the 
Federal Government. Citizens being involved, volunteering, 
helping with the programs that you are about are a fundamental 
force as well. Some of my own staff participates in this 
Arlington organization, and they too are involved in providing 
and delivering food to thousands and thousands of people. And 
that work is not just commendable, it is very stimulating and 
exciting work. So thank you.
    I am interested in having at least the Chairman bear with 
me a moment. He doesn't really know this, but from about the 
time I went to college I thought I might want to be in public 
affairs one day, and I knew absolutely that if I was going to 
be, I would run as a Democrat. And between my junior and senior 
year in college, I had the privilege to participate in one of 
the early People to People programs that preceded the Peace 
Corps, known as Project India. And 12 of us, together with 
advisers, went to India and spent 3\1/2\ months. I will never 
forget walking down a mud pathway and turning, just as we were 
going to a village, and watching a mother with her baby lying 
in the mud brushing the flies away, and literally we watched 
that child starve to death. It was that and many another 
experience in the world's newest and largest democracy at the 
time that caused me to know I would be involved in public 
affairs one day.
    And indeed when I came back to school, knowing that, I knew 
I would be a Republican and not a Democrat. And I will let my 
Chairman guesstimate what that is all about. But in the 
meantime, we very much appreciate your work and thank you all.
    Chairman Obey. I would simply say that when I was growing 
up, I was a Republican and I converted to a Democrat. I guess 
what that demonstrates is the old rule of physics: To every 
action, there is an equal and opposite reaction. I am sorry the 
gentleman moved in the wrong direction, however. Mr. Dicks.
    Mr. Dicks. That was very interesting. First of all, I want 
to congratulate each of you for your testimony, but also for 
your careers, what you are doing to help other people. I can 
remember in the State of Washington in 1969, 1970, 1971, we had 
a huge downturn. We lost the SST. And I was at the time working 
for Senator Magnuson and we had 16\1/2\ percent unemployment in 
King County, and people who had been engineers, who had always 
had a job were unemployed. So we went through this. And it was 
interesting; kind of the way we worked through this was we did 
a number of congressional--I worked for Senator Magnuson in the 
State of Washington, and we had emergency extensions of 
unemployment compensation. I think you got three of them. But 
this was only for States with high rates of unemployment.
    Now, I am not sure you could do that in this era, Mr. 
Chairman.
    We also then, we had direct funding for the food banks. And 
I was interested in your emergency food assistance program. 
Does that program allow for direct funding of the food banks 
right from the Health and Human Services?
    Ms. Murray. Thank you, Congressman Dicks. Yes, there are 
food banks throughout the country. And not 100 percent of them 
have that direct, but most of them do. That is correct.
    Mr. Dicks. So they get some money from the Federal 
Government to operate the food banks.
    Ms. Murray. Correct.
    Mr. Dicks. Then you add surplus commodities and food 
stamps. Now, most States, you only could have one or the other 
program, you couldn't have both. Is that still the rule?
    Ms. Murray. Do you know, Congressman Obey knows this 
because he has visited our food bank. Our food bank is 11 
months old, so we do not currently have any of those items that 
you just outlined. So the 10 million pounds of food that we 
have achieved this year just have been through sheer donations; 
and so we are looking forward to our strategic plan in 2009 to 
be able to add those items that you just mentioned.
    Mr. Dicks. But can a State now have both a food stamp 
program--I think in those days, this is a long time ago, you 
either had a food stamp program or you had a surplus commodity 
program, and, in other words, to deal with the problem. But now 
I think you can have both?
    Ms. Murray. Yes. That is correct. Yes, you can.
    Mr. Dicks. So what else? Now, the WIC program--and I know 
these are all programs that the Chairman's committee is 
responsible for--does a fantastic job of making sure they are 
adequately funded in terms of what we can do with the reality 
of the situation.
    Ms. Murray. Let me just tell you that we are grateful for 
the funds that we have through programs like WIC and TEFAF and 
CSFP. But what has happened, though, even though the funding is 
good, with the huge growing numbers of people who need help, we 
just can't keep up. So when you look at food stamp--and I was 
sorry that Congressman Ryan isn't here because I know he did 
the Food Stamp Challenge--is that with the new Farm Bill people 
now on food stamps will get $1.33 per meal. And so even though 
we are grateful for that, it just needs to be more, because the 
suffering that is going on is just so great.
    Mr. Dicks. Let me ask you this. You talked about the school 
lunch program and it is at 50 percent. I have many schools in 
my district--and you mentioned one that was 100 percent--that 
are 70 percent. So I am very sensitive to what you are talking 
about. But, again, there is some limit to the funding for these 
school lunch programs.
    And you talk about the weekends, and I love your pack 
program where you can take these packs home and they can help 
their family help themselves. What would you recommend there? I 
mean, what should we do in terms of the meals that are provided 
at the school, through the school system; and what do you do 
about the summers? That is another part of the situation.
    Ms. Murray. Thank you so much for asking. As food banks, 
what we do is we work to understand where the children are who 
are food insecure, and then we look at tackling it in a very 
strategic way. So with the weekend program, we know how to get 
BackPacks in their hands so that they can have the bags of food 
for the weekend. Those same children often struggle with food 
in the summertime, and there is a program, the Summer Food 
Service Program, (for which we as food banks do get 
reimbursement from the Federal Government, which comes to the 
State which comes to us. However, with most of my colleagues in 
the food banking world, it is not nearly enough. The money that 
we get reimbursed isn't enough to cover it. So what we do is we 
raise money from donors so that it is a partnership; that if 
the Federal Government is helping to give some funds to the 
State, of which we get some at the food bank and it is not 
enough, we believe that we just all need to do it together. And 
if we are raising funds and you are helping and the States are 
helping, that is the only way we are going to get through these 
tough economic times is if we are all in it together, which I 
believe we are.
    Mr. Dicks. So it isn't just infrastructure alone. You have 
got to deal with the human element of this crisis, besides--and 
we all want to do infrastructure. I don't like the idea of just 
sending checks back to people and saying, You go spend the 
money. To me, I would rather see us do infrastructure, but have 
a response to these very legitimate social needs of the people 
that are going hungry.
    I mean, I think we made a pledge to ourselves during the 
Johnson era that we were not going to let people be hungry in 
this country. And yet what you are telling us is that that in 
fact is happening today. So I just congratulate you on your 
work.
    Andre Agassi, by the way, is a friend of mine, and he has 
come here to Washington to help us with the Washington Tennis 
and Education Foundation. You couldn't have a better person to 
work with.
    Ms. Murray. We are so happy to have him in our State. Thank 
you, Congressman.
    Chairman Obey. Does he give you free lessons?
    Mr. Dicks. It is beyond me. I am beyond hope.
    Chairman Obey. Ms. Kaptur.
    Ms. Kaptur. Thank you, Mr. Chairman, for bringing this 
excellent panel of really outstanding American women to testify 
and become a part of our record.
    I have two sets of questions, one for Dr. Baum, if you 
could just think about this while the other witnesses are 
testifying. I understand that the dropout rate across our 
country in colleges is at least half, and in many community 
colleges where the economy is not good, upwards of 75 percent. 
And my question is really, as we look at increasing Pell Grants 
and doing what we must in this arena, are there private 
companies that are targeting these dollars at the expense of 
students who then drop out? And what can we do about it?
    I have heard figures as high as 75 percent dropout rates, 
where companies benefit and churn the Pell Grants, and with 
open enrollment, then students go to another school perhaps. So 
I have a question about the efficiency, the quality, and what 
happens to the student, as well as the existence of the program 
itself.
    But in the food arena, I serve on the Agriculture 
Committee. I am passionate about agriculture. I know several 
things about our government. Number one, Federal programs do 
not integrate well at the community level. That is number one.
    Number two, we do not often use Federal subsidy dollars to 
spur opportunity, certainly in the food area.
    And thirdly, we do not use Federal dollars to create 
sustainable food systems and improve nutrition. It is not just 
food, it is nutrition that is so important, with just 
unbelievable rates of diabetes now and obesity among our 
population.
    And I also believe that there is no neighborhood in America 
that is poor. I know that there is income poverty many times 
and personal poverty, but it is a question of how we use those 
subsidy dollars. Are those dollars going in a given 
neighborhood for income--whether it is a veteran's check, a 
Social Security check, are they going to a payday loan company, 
or are they going into a community development credit union 
that could augment what you are doing?
    So these are views that I hold. And in the food arena, we 
are particularly bad at turning food subsidy dollars into 
opportunity. Several members of our subcommittee, including 
Congressman Jackson of Illinois, Congressman Farr of 
California, I, Congresswoman DeLauro, are very interested in 
how to use Federal dollars, to use food subsidy to spur 
opportunity. And let me just mention this and see how you 
react.
    First of all, how can we use Federal dollars in this 
program to deploy food technologies that are advanced? For 
example, 12-month-out-of-the-year Hoop Houses to engage some of 
the residents in producing their own food, including in inner-
city areas.
    Number two, the expanded use of community gardens in 
communities across this country which can be picked to the 
ground for free. How do we work with our botanical gardens and 
others to do that, including in urban areas, where technology 
with drip irrigation and with aquaculture can now produce 
protein and excellent vegetables at a very reasonable price.
    How do we use gleaning across this country in Michigan, in 
Ohio at a much expanded rate with processing in order to 
provide canned goods and year-round food that we are now 
plowing under? A third of the production in this country is 
plowed under. How do we use these Federal dollars more 
creatively?
    And finally, how do we use the EBT transfer mechanism for 
our food stamps, the electronic benefits transfer machines, to 
empower local people setting up farmers markets and food 
production sites even in the heart of our cities where we have 
food deserts now.
    I am interested in the dollars. With rising prices in the 
food stores, my greatest fear is that, yeah, we can increase 
the amount of money in food stamps, but that does not mean you 
create empowerment or you use dollars going into communities 
wisely so that people are not perpetually poor, but we, rather, 
use food production as an economic opportunity in some of the 
poorest communities in our country that are absent 
supermarkets, that are absent community development credit 
unions, that are absent ways of helping themselves improve 
their lives.
    And let me just say in one neighborhood in my community of 
Toledo, Ohio, very close to Michigan, just one building of 146 
people that are mentally ill, elderly, fragile people, in one 
year $1.4 million comes into that building in the form of 
income from Federal subsidy alone. Where do those dollars go? 
They go up the street to a beer distributing place because 
there is no place for them to cash that check. That particular 
site could have a Hoop House, it could have an electronic 
benefits transfer machine working with other high-rise 
buildings in the area. We could produce food in the heart of 
the inner city and employ local people raising their own food.
    I would like you to react to that as you think about how we 
can make the food system help create opportunity and not just 
be a permanent subsidy trying to beg product from others. I 
know there is a transition that has to occur. But that is the 
part of the food system that excites members like myself.
    I will let Dr. Baum comment and then the two 
representatives of community action.
    Chairman Obey. I would ask them to be very brief, because 
the gentlewoman has almost reached the end of her time.
    Dr. Baum. Thank you. I am glad that you raised the question 
of graduation rates, because we as a society have done much 
better at providing access to higher education, despite all the 
gaps in access, than we have in helping, supporting students 
through to graduation.
    There are a variety of explanations, and the data are, 
first of all, quite poor, because it is very difficult; some 
people go to college and take a class, and that is all they 
wanted to do, and then they are counted as dropouts. But part 
of this has to do with people's academic preparation, part of 
it has to do with not having enough money.
    You are asking questions about certain types of 
institutions. And we know that in all sectors of higher 
education there are some institutions that do a great job, and 
then there are, unfortunately, a few institutions that do not. 
And certainly there have been institutions in the for-profit 
sector that have been found to be abusing Federal funds, but 
many of them also provide very high-quality educational 
opportunities to students.
    In terms of a solution, my proposed solution for that, 
which actually was articulated by a study group that I recently 
headed with foundation funding as well as help from The College 
Board, a group of scholars and public policy experts, we 
proposed that institutions should actually get a subsidy, a 
campus-based subsidy based upon the number of low- and 
moderate-income students that they not just enrolled, but that 
they helped to progress and graduate so that they would have 
funds that would help them to provide mentoring services, 
emergency funding, and so on. And they need to be pushed to see 
students through, not just to enroll those students.
    Ms. Murray. Thank you.
    The first thing that came to my mind is, I would love to be 
able to have much longer to talk to you because these ideas are 
brilliant. But just to answer in a very brief period of time, I 
will share with you the idea of wrap-around services, what you 
described of having the EBT and other services, food produced 
all in one hub. I love it.
    What we are doing in Las Vegas, our university is the 
University of Nevada-Las Vegas, UNLV. They are studying our ZIP 
codes to understand where are the hungry people and where are 
there pockets where they have no grocery store, no nonprofit 
agency, and no church. And what we are working to do then is 
strategically put hubs into those neighborhoods to get our 
fresh produce there.
    So, as an example, we have 55 grocery stores in our valley 
that have food that in 48 hours will expire. We have trucks on 
the road Monday through Friday picking that food up, and the 
grocery stores get the tax write-off, and we get fresh food and 
we deliver it. We are going to be delivering that fresh, 
perishable food, which is meats and cheeses and produce, for 
free to these hubs because of a donor who has said, I want to 
do this.
    So I love your idea about the wraparound services, about 
the EBT, about having all of those things in different pockets 
to effect change, and I would love to be able to have more than 
this time limit to further discuss it with you, Congresswoman.
    Ms. Kaptur. I would welcome that opportunity, and a number 
of my colleagues would as well.
    Ms. Murray. Thank you.
    Ms. Kreucher. I think those are great ideas as well. And 
sometimes I wonder if part of the issue is not what is being 
reported, because we may be reporting kind of in a siloed way 
for funding that we get from the Federal Government about a 
project.
    For example, in the revitalization project we are working 
in, we are looking at putting a supermarket in a neighborhood 
that does not have one. And we would probably use a small 
amount of CDBG or CSBG money as we are working to pull that 
together. But much of it would be private investors, and so we 
might not be reporting up in a way so that you are gathering 
the full impact.
    Ms. Kaptur. I hope you become a partial owner in that, and 
then you can fund your organization. You will not need Federal 
subsidy anymore over the years, really, when you look at the 
amount of food dollars that go into these neighborhoods.
    Ms. Kreucher. Actually, that is true. We run the WIC 
program in one of our counties. And so we have instituted a 
farmers market as a piece of it, just as a little kind of 
economic development project for them. I mean, we have it in 
our parking lot and open it to the community, as well as the 
WIC participants, to be able to get vegetables and food.
    We have community gardens at a neighborhood resource 
center, but I am not sure how they are all being reported up, 
because there may be a very small percentage of Federal dollars 
that are involved, even though it may be a Federal project to 
start with.
    So we may need to take a better look at that to make sure 
that you are very well informed of what we are all doing.
    Ms. Kaptur. Thank you.
    Chairman Obey. Thank you.
    Mr. Olver.
    Mr. Olver. Thank you, Mr. Chairman. And I want to thank the 
panel for your truly fine testimony today. And as one of my 
fellow colleagues previously, I think, has suggested, it would 
be wonderful if this kind of testimony would be available to 
every person, this kind of interaction that we have been able 
to have would be available and used by every Member of the 
Congress.
    Each of us, as Members, has a multiplicity of community 
action agencies and food banks. And, for instance, I myself 
have five community action agencies covering the territory of 
my district, and two food banks that cover central and western 
Massachusetts, a small State in area, and dozens of farmers 
markets. And the work you do in those areas is really and truly 
very important.
    You have reminded me that the programs that you are 
describing grew out of the war on poverty, basically, which may 
be forgotten by younger members. I am at an age where it is 
possible to remember quite back into that range.
    And we are in danger of a really severe and long recession 
here, and that will inevitably produce, if it comes to pass in 
its full form, a great increase in poverty, a huge increase in 
poverty, in the number of poverty families in this country. And 
it is heartbreaking to see that happen--after such real 
progress was made in the last third of the 20th century at 
reduction of poverty, to see that happen before our eyes. So 
what you are doing is very important indeed.
    And I just want to say that I, who follow the trajectory 
much more like the chairman of the committee, as he described 
it earlier--I would just like to say that I am a very strong 
supporter of all of the programs that you have been talking 
about this morning, this afternoon.
    I did want to just make an observation and a brief 
question. I am not really going to go through--I am having a 
good time listening to what your answers are to other people 
here and learning more and more by it. But I do want to just 
mention for Dr. Baum that Pell Grants, just a little bit of the 
statistics which--I bothered my staff here; I have gotten up a 
couple of times, you may have noticed.
    We will have--in this 2009 fiscal year, we will have issued 
something like 17 billion of Pell Grants. And, yes, we do need 
more and we should do more. No question. You stressed the Pell 
Grants, but the student loan capacities that are out there, the 
student loan values, the sum total of student loans that are 
extant now are something like $500 billion worth of student 
loans outstanding. And the yearly volume of student loans is 
roughly four, or a little bit more than four times, four to 
five times what the Pell Grant value is.
    And I just want to ask you, are we now yet seeing any 
statistics at all about what the student loan market is or is 
not? Just really for the fall loans, we were pretty much before 
the crash in credit, but when there are renewals of student 
loans for a second semester or subsequent semesters, there must 
be quite a problem with the credit crunch.
    Do you have any insights as to what is happening there and 
what we should be watching for?
    Dr. Baum. Well, all of the evidence is that the efforts 
that Congress and the administration have made to assure the 
availability of Federal student loans have been successful. A 
few lenders have gone out of business, it is true, but there 
are other lenders making these student loans. Many schools have 
joined the direct lending program because of concerns about the 
availability of student loans from banks.
    The credit crunch is having a significant impact on the 
private student loan market. These are loans that maybe about 
10 percent of undergraduate students take. Those who borrow do 
borrow a lot of money from these programs, and many of them are 
finding that those funds are not available.
    But this is a very separate issue, and my personal belief 
is that we would be much better off if students had all the 
funding they needed through their own income, savings, and 
assistance from Federal and State governments and they borrowed 
through the Federal Government and not through private loans, 
because these loans can get people into significant trouble. 
They do not have as favorable terms, they do not have good 
protection.
    So the Federal loans appear to be--I mean, I am sure we 
will find some individual students who run into some problem, 
but Federal loans are available. And I think that Congress has 
done a good job of making sure that is the case.
    Mr. Olver. Thank you very much.
    Chairman Obey. Mr. Hinchey.
    Mr. Hinchey. Thank you very much, Mr. Chairman. And thank 
you very much for this hearing. I think it has been very, very 
interesting.
    And all three statements that you delivered to us were 
fascinating and very, very important; and I am deeply grateful 
to you for taking the time to be here. What you are focusing 
on, among other things, of course, is the need to improve human 
capital, and through three essential elements: education, 
nutrition, and income. These are the most fundamental things 
that we have to deal with.
    And we have been dealing with some very adverse 
circumstances here over the course of the last number of years. 
What we have to do here in this Congress now with this upcoming 
new administration is, stop the damage that has been done and 
reverse it, go back, start making progress, start moving this 
country in the right direction.
    Oddly enough, there are such a number of people who for 
some mysterious reason are opposed to internal investment in 
our own country. They are in favor of spending money in a lot 
of reckless ways, but they do not want to spend it here to 
improve the circumstances in our own Nation--a real mystery to 
me, but nevertheless it seems to be the case.
    I would just ask you, if you could, all three of you, just 
tell us individually what you think should be the main focus of 
our attention and what you think we should do in the context of 
these next 2 years.
    Ms. Murray. Congressman, lives are being impacted and 
people are hurting; and I do not know any other way to describe 
it other than through what I see with the children and with the 
seniors and the families. And people who have never been 
unemployed before have been laid off and are suffering.
    And so when you go to meet in January and you look at what 
to pass with the economic stimulus package, we just really 
humbly ask you to be swift, to be aggressive, and to provide 
all the help you can. We realize that we have a responsibility 
on our end; if we as food banks and we in our State are not 
doing everything we can do to trim and to be creative and to 
fund programs, then we are not doing our job.
    But we are. We are being creative. And we ask you to be as 
generous as you can be. Because it is human beings, it is 
children and seniors who are suffering. And we will only do 
this if we all do this together.
    Dr. Baum. I think it is very important that we provide 
short-term relief and also that we think about our recovery in 
terms of the long-term implications of it.
    So, clearly, people have to be healthy and nourished in 
order to survive and to get through and to be productive 
citizens; and that is of primary importance. But, fortunately, 
if we give money for short-term relief to people who really 
need it, that from an economic perspective is money that people 
will spend immediately, and that has the biggest impact. It has 
to be given to people who will spend it.
    But we also have to be thinking about--I think the 
infrastructure direction is terrifically important. It will 
provide jobs. It will have an impact in the long run. And 
again, I would reiterate that that includes both physical and 
human infrastructure, and making sure that people have the 
opportunity both for quality elementary, secondary education, 
and for access to higher education; and training is a critical 
part of this effort.
    Ms. Kreucher. It is really hard to choose in times like 
this, but, you know, we talk about being investors in people 
and being investors in our neighborhoods. Clearly, that is what 
Congress is doing, making those investments.
    When I look at poverty, I do not think there is any 
question that education is the number one pathway out of 
poverty. We are a Head Start grantee, we are very deeply 
engaged in and believe in early childhood education as the way 
to start. And I think the quality of our school systems is 
tremendous. I think every child should be able to go to 
college. I think that is going to solve many of our long-term 
problems.
    But at the point where we are at right now in this country, 
I also think there has to be a hardy investment in economic 
development. I am looking at it through the lens of Michigan. 
We have many people who have been working people their entire 
lives, but there needs to be the creation of work for them as 
we move forward, providing education and some other long-term 
supports so that we can choose our new technologies and our new 
path for the future. That is going to be very, very important 
for us.
    Mr. Hinchey. I just thank all three of you for the insight 
you provided and the help you are giving us. Thank you very 
much.
    Chairman Obey. Mr. Honda.
    Mr. Honda. Thank you, Mr. Chair.
    And to the three of you, thank you very much for your work. 
I guess I was listening to the kind of work that you do and how 
you respond to our questions, and it just struck me that you 
are partly exemplifying the kinds of teachings that are found 
in the Book of Ruth, where you go out and you use your talents 
gleaning the fields. But what you are gleaning are the 
different kinds of philanthropic programs that are out there, 
government programs, and bringing them together for the purpose 
of helping those who need the help.
    And when times get bad, it seems like there is even less 
help out there. And so I was wondering whether, over these 
years that you have been doing this work, have you ever thought 
of the question, are there other ways that we can sustain this 
kind of effort, the kind of efforts that you are involved in on 
a daily basis when times do get tough?
    Because when times get tough, resources become more scarce, 
as you have described. But it is at that time when resources 
have to at least maintain themselves or increase a little bit. 
In the past, I guess we used to pool our wealth for the common 
good of others so that they could make it through.
    But as a government, as a society, what are some of your 
thoughts that if I only--if we only could persuade people to 
change the way we do things, this is what I would like to see 
so that we could sustain this kind of effort? Because a recent 
study just indicated that--a study that we had led--that among 
developed countries, the United States is the one that leads in 
poverty and in the gap between the wealthy and the poor. And 
you are the ones that are helping people make it.
    But I am just wondering about my question, whether you have 
any thoughts about that or some vision of how it can be done 
better.
    Ms. Kreucher. I would like to say that there are many 
community action agencies that are really leaders throughout 
the country that have done much work in developing for profit 
subsidiary corporations that have subsidized the work. I think 
it is important. Things have been changing dramatically in our 
universe in the last 5 years. I think there is much more fee-
for-service-type work. There is much more entrepreneurial kinds 
of activity.
    I will give you an example. One of the programs we run is 
home weatherization and energy. There is a lot of time and 
energy being spent right now in talking about how we can move 
forward with renewable energies, how we can make low- and 
moderate-income neighborhoods more sustainable with renewable 
energies. There is an amazing amount of entrepreneurial 
activity out there right now in working with families that are 
upper-income families that may be able to pay for some of these 
services that will help subsidize the work that we do for the 
lower-income families, which I think makes a lot of sense.
    There are also private investors out there, and I know 
California has a great project that is getting ready to start 
with Morgan Stanley, with solar roof panels, that is a 
wonderful example of really entrepreneurial work that is going 
to boost the property value of homes, make energy sustainable 
for low-income families and be doing it with private investment 
dollars that are recouping their investment basically from 
carbon tax credits and incentives from State and Federal 
Governments.
    So I think there are plenty of examples out there, and I 
think it is the wave of the future.
    Mr. Honda. Taking it perhaps another step, if there are 
ways that moneys can be saved, perhaps through the technology, 
some of that money can be an income stream for public access 
funds for groups like yourself, so that when this technology 
works 24-7, is part of creating revenue 24-7, a portion of that 
should probably go into a particular fund.
    I was just wondering if that is something else that might 
work.
    Ms. Murray. Congressman, that is an excellent question. Two 
things to your point and your question is that an endowment 
fund--we are working so hard right now to raise the operational 
funds to keep our food bank going and to raise funds for our 
new kitchen, but the best process is to have an endowment fund 
so that when times get tough the endowment fund is producing 
revenue.
    Additionally, for non-profits, it is just so smart for any 
of us to try to find something that can provide recurring 
revenue. Paul Newman was one of the greatest examples I can 
think of, in that, for his foundation, he sold salad dressing. 
And there is something--I know in my arena of food banks there 
is something we can do to have recurring revenue coming in.
    So with the combination of endowments, a secure set of 
funds that produce revenue whether times are good or bad, and 
recurring revenue projects is what we are looking at doing. 
Thank you.
    Mr. Honda. Thank you.
    Chairman Obey. Thank you.
    Ms. McCollum.
    Ms. McCollum. Thank you, Mr. Chair. Mr. Chair, I think 
there has been a lot of statistical information that was given 
in the introductory remarks by our three panelists, but quite 
often we refer to percent of poverty. Percentage of poverty, 
even to most Members of Congress, they could not translate that 
into what is an actual salary, income level for a family of 
one, two, three, or four.
    So, Mr. Chair, I think especially with the advantage that 
we have at times of having America view and listen in on these 
important conversations that we are having, I would ask the 
Chair if we could maybe look at using numbers and dollars 
rather than percentages in the future to make the hearing more 
relevant in the information that is presented to people who 
might be listening. Just a suggestion.
    I have kind of three things, and I am going to be really 
brief:
    Pell Grants. Pell Grants, wonderful, fully support them. 
What we found in doing some research, though, quite often the 
Federal Government would increase Pell Grants and States would 
turn around and decrease their support of financial aid by the 
exact amount, because then it was a win-win for them. So if we 
were to increase Pell Grants, I would ask you if you think that 
there need to be strings attached; or if the States decrease 
their amount of financial aid by that amount, should they not 
be eligible for a Pell Grant increase in the future? Because if 
that is really to be an investment and increase from the 
Federal Government, an investment, then in my opinion it needs 
to truly be that, an investment.
    And then I would ask the other two panelists--and thank you 
so much for your testimony--when a child comes to school 
hungry, goes home hungry, is worried about the next meal, 
whether there is going to be a roof over their head, or whether 
they are going to see a doctor, or a sibling sees a doctor if 
someone at home is really, really sick, how successful should 
we expect that child to be at school? How accountable should we 
hold that school? How accountable should we hold ourselves as a 
community?
    I have heard, you know, the testimony about all the 
wonderful volunteers and needing to have more volunteers. But 
maybe if the two of you--and Doctor, you might have some 
personal stories to even share with us, because I am going to 
wrap up here so I can listen.
    I have been out visiting some food shelves and food banks, 
seen a lot of empty shelves, talked with a lot of staff, staff 
that has looked at maybe having to be laid off because of 
shortage of dollars coming in, volunteers who for years either 
helped with Christmas funds for the Toys for Tots-type of 
examples, drove for Meals for Wheels, stocked food shelves; 
they are now on the receiving end.
    Could you share with me a little more about what you are 
hearing and seeing out there--and without asking you to, 
personally, maybe have someone feel uncomfortable if they are 
listening to this testimony--some personal anecdotes you could 
share with the committee?
    Ms. Murray. Thank you, Congresswoman. First to your first 
item, I agree with using the dollar figures instead of the 
percentages. So to start with the BackPack program, the 
children that were in that school, their families have an 
income level of $20,000 or less for a family of four. And that 
school has 100 percent of the children. But I agree that it is 
a better descriptive term.
    In terms of children and test scores and ability to learn, 
let me share with you one chickenpox story. So one of the 
children also that was at this school that I visited, the 
teacher said that when the child had chickenpox for 2 days and 
had to stay home from school there was no food at the home, and 
so the child reached out to the teacher and said, ``Can I come 
back? I have no food. I need to come to school to get the 
meals.''
    And so how accountable should we be holding people? It is 
tough. When parents are laid off, it is not a reason for it, 
but for some reason children get the brunt of what is going on 
in the economy. When a parent is suffering, the child is the 
innocent one that does not have the ability to get the food.
    So I think it is inherent on all of us, whether it is us 
representing our organizations or you in Congress or folks in 
our States to work on this together. It is that important.
    And what we have are some tests that are being done now by 
our university partner to show the results of what is happening 
when children have a consistent supply of food. And what we 
think will happen is, we think that it will show that test 
scores will go up, that attendance will be better, that there 
will be less violence in the schools, and that all the bad 
factors will go down.
    Just one quick example to keep my story short is, we 
recently had a volunteer session with some executives from MGM 
Mirage, and we always invite some of our clients to come in and 
just join in together because we are all in this together. Two 
of the clients that came in were from homeless teen shelters, 
and they spoke about what they are seeing. So one beautiful 17-
year-old girl said, ``Well, my mother was laid off. There were 
five kids, I was the oldest, so she asked me to leave.''
    The other girl that was with her to provide testimony, just 
because I like to have our volunteers and our community leaders 
understand who is getting the food we provide; the other young 
woman said--I asked her what her biggest challenge was, and she 
said it is the anger. She said, ``My father also just left me 
and abandoned me. We are angry, and we go to school or we go 
into our lives and we have so much anger that we have to 
control.''
    So what I am looking at is just a single focus of food. If 
I can make sure that we are providing that one basic element of 
food and we can eliminate that from what people are worrying 
about, then social services and education will be so much 
better if kids have food.
    So it is a huge challenge. And, again, the only way I know 
that we are going to come through this is if all of us are in 
it together at a local level, at a State level and a Federal 
level. The problem is so severe that if all three entities are 
not in it together, I worry what will happen to the kids if we 
do not get this under control.
    Thank you.
    Dr. Baum. I will address that Pell Grant question.
    First of all, there are 50 States with 50 different State 
grant policies. And in most of them, certainly getting a higher 
Pell Grant does not diminish the State grant that you will get.
    We have seen State grant funds for students rising very 
rapidly over time. There is a problem that an increasing 
portion of those dollars are going to students who do not have 
financial need. And I think that is a very big issue, because 
right now there are--you know, everybody is struggling, but 
there are some people who really cannot afford to pay and 
others who use that money, extra money, for other purposes and 
would go to college anyway.
    In States that have need-based State grant aid, the focus 
is the people who cannot afford to pay.
    I do think that the Federal Government has a role in 
providing incentives for States. I would not attach strings to 
Pell Grants; that would complicate the program and make it 
problematic. The Pell Grants have to be for students.
    However, there is a small, federally funded LEAP program 
that provides matching funds to States for need-based grants. 
That has over time deteriorated because there is hardly any 
funding. I think it is totally appropriate for the Federal 
Government to provide matching funds to States for need-based 
aid where they provide the incentive for the States to give the 
money to students who really need it, and there is, of course, 
considerable overlap between the Pell Grant recipients and 
recipients of other need-based grants.
    Many States do provide aid farther-up-the-income-scale than 
Pell Grants. And we all know that there are families with 
incomes above $45- or $50,000 a year who do need some 
assistance. So I think it is not clear that the State grants 
have to match the Pell Grants, but certainly it is appropriate 
for the Federal Government to provide incentives for States to 
both maintain and increase their State grant funds to students 
and to make sure that there is an incentive for those funds to 
be appropriately targeted to the students who need them.
    Ms. McCollum. Thank you.
    Ms. Kreucher. I will also mention numbers. When we look at 
a family of three, when we look at the Federal poverty level, 
that is $17,600. So, frequently, when we are enrolling children 
in our Head Start program, which would often be a single mom 
with two children, that is their income cap, $17,600.
    We talked earlier about encouraging changing eligibility 
requirements for many of the programs to what we call 200 
percent of poverty level, in the business, that is really 
$35,200. And a family making $35,000 a year is generally still 
making some compromises in just getting through paying their 
basic needs. So what we call poverty really does not have a lot 
to do anymore with what it really takes to live in the 
community.
    I wanted to mention, kind of starting at your last 
question, which was about layoffs of people that were working 
in organizations; and I think when I mentioned that education 
is the primary pathway out of poverty, that certainly counts 
with the staff that we have as well. There was a time in the 
early days of Community Action and Head Start that probably 60 
percent of our employees were former Head Start parents. The 
idea was, you brought people in from the neighborhood, taught 
them how to teach children, and then they were hired and became 
child educators.
    Well, now things are really different. Now the majority of 
our Head Start teachers have college degrees, many of them have 
ZA endorsements for teaching certificates. And sadly, but true, 
the first people when we have to cut back that get laid off, 
just as with any other organization, I think, are those who are 
the least skilled and have the least education, because 
requirements are changing everywhere. And I think that is a 
problem.
    We, as an organization, do a lot with providing tuition 
reimbursement and everything we can to support families in 
doing that, but it is a changing world with education as well.
    As far as children--we run the Head Start program--it is 
devastating. We see so many families in tremendous need.
    We have been involved in research projects with the 
University of Michigan and Michigan State University about 
nutrition, weight gain, obesity, all kinds of things using Head 
Start children. And it has been very interesting that those are 
all very positive. And the structure of a Head Start classroom 
and the meal structure does seem to decrease, demonstrate a 
decrease in weight gain and obesity problems. A full-day 
classroom seems to have even more gains than a part-day 
classroom, because we know children for a longer period of time 
in the day are getting better nutrition.
    I am an advocate. I think, when I look at schools, I know 
that teachers and others are struggling with trying to reach 
academic requirements and dealing with tremendous needs in the 
family. I am a supporter of school-based health clinics, 
because I do think that that does help.
    When I was a kid, we had nurses and we had social workers, 
and the schools really had a lot of support.
    And I am not quite sure how we can help children. I do not 
want to tag the, you know, responsibility onto the school 
district. But at the same token, we do know that if children 
are not healthy and are not eating well and do not have 
appropriate brain development when they are really little, 
their odds of success are going to be much slimmer.
    Chairman Obey. Thank you.
    Mr. Lewis, you wanted to comment?
    Mr. Lewis. Thank you, Mr. Chairman. We are about to wrap 
this up, but I want all of you to know that we are very 
appreciative of the work that you are about.
    Ms. Kreucher, fabulous responsibility and job.
    Dr. Baum, we appreciate very much your efforts as well.
    And, Julie Murray, you will hear more from me somewhere out 
there.
    In the meantime, Mr. Chairman, I want them to know that we 
may have some questions for the record. And if the witness 
could try to be responsive and come forward in a timely fashion 
We would appreciate it.
    Mr. Lewis. And further, just by way of our work here, 
because we are going to be receiving some kind of a stimulus 
package at some point, it may be that we will need additional 
witnesses and testimony.
    And so, Mr. Chairman, pursuant to section 5 of the 
committee rules and clause 2 of Rule XI of the Rules of the 
House, I am invoking the minority's right to call witnesses 
selected by the minority with respect to the matter being 
discussed at this hearing. I have a letter signed by 25 of our 
29 members invoking that right.
    [The information follows:]

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    Chairman Obey. I thank the gentleman.
    Let me simply thank all three of you. You have provided 
spectacular testimony today as far as I am concerned, and I 
think you made quite clear that when we consider the kind of 
actions that should be taken to deal with the economic downturn 
that we are experiencing that it is not enough just to try to 
pump dollars into the economy for the purpose of raising 
consumer purchasing power; it is also necessary to deal with 
some of the human fallout that occurs. And I think you painted 
a very clear picture today of what some of that is.
    So thank you all very much. I appreciate it.
    The meeting is adjourned.

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                               I N D E X

                              ----------                              
                                                                   Page
Chairman Obey's written statement................................     3
Dr. Baum's written statement.....................................   137
Government Finance Officers Association's statement..............    51
Governor Crist's statement.......................................   109
Governor Corzine's written statement.............................    26
Governor Douglas' written statement..............................    15
Governor Doyle's written statement...............................    10
Governor Patrick's statement.....................................   122
Governor Perry's statement.......................................    37
Governor Rell's statement........................................   118
Governor Sanford's statement.....................................   128
Governor-elect Perdue's statement................................    65
Letter from Minority.............................................   118
Mayor Nutter's statement.........................................    78
Mr. Farr's statement.............................................   116
Ms. Murray's written statement...................................   151
Ms. Kreucher's written statement.................................   160
Op-ed by Governors Perry and Sanford.............................    35
Questions for the Record submitted by Mr. Lewis..................   194
Questions for the Record submitted by Mr. Moran..................   185
Regional Bond Dealers Association's statement....................    52
State of California delegation statement.........................    95
Town Manager of Cary, NC's statement.............................    69
U.S. Conference of Mayors' statement.............................    85

                                  
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