[Senate Hearing 110-799]
[From the U.S. Government Publishing Office]
S. Hrg. 110-799
PATH TO OPPORTUNITY:
JOBS AND THE ECONOMY IN APPALACHIA
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FIELD HEARING
before the
COMMITTEE ON AGRICULTURE,
NUTRITION, AND FORESTRY
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
OCTOBER 22, 2008
__________
Printed for the use of the
Committee on Agriculture, Nutrition, and Forestry
Available via the World Wide Web: http://www.agriculture.senate.gov
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COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY
TOM HARKIN, Iowa, Chairman
PATRICK J. LEAHY, Vermont SAXBY CHAMBLISS, Georgia
KENT CONRAD, North Dakota RICHARD G. LUGAR, Indiana
MAX BAUCUS, Montana THAD COCHRAN, Mississippi
BLANCHE L. LINCOLN, Arkansas MITCH McCONNELL, Kentucky
DEBBIE A. STABENOW, Michigan PAT ROBERTS, Kansas
E. BENJAMIN NELSON, Nebraska LINDSEY GRAHAM, South Carolina
KEN SALAZAR, Colorado NORM COLEMAN, Minnesota
SHERROD BROWN, Ohio MICHEAL D. CRAPO, Idaho
ROBERT P. CASEY, Jr., Pennsylvania JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota CHARLES E. GRASSLEY, Iowa
Mark Halverson, Majority Staff Director
Jessica L. Williams, Chief Clerk
Martha Scott Poindexter, Minority Staff Director
Vernie Hubert, Minority Chief Counsel
(ii)
C O N T E N T S
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Page
Field Hearing(s):
Path to Opportunity: Jobs and the Economy in Appalachia.......... 1
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Wednesday, October 22, 2008
STATEMENTS PRESENTED BY SENATORS
Brown, Hon. Sherrod, a U.S. Senator from the State of Ohio....... 1
Panel I
DiPietro, John, Severstal Employee, Steubenville, Ohio........... 4
Eadon, Harry A., Jr., President and Executive Director,
Tuscarawas County Port Authority, Dover, Ohio.................. 5
Shaffer, Franklin C., Jr., Township Trustee, Bellaire, Ohio...... 7
Panel II
Fluharty, Charles W., Vice President for Policy Programs, Rural
Policy Research Institute, Truman School of Public Affairs,
University of Missouri-Columbia................................ 16
Martin, Debra, Director, Great Lakes Rural Community Assistance
Program, Fremont, Ohio......................................... 19
Ricer, Gary W., Chief Executive Officer, Guernsey, Monroe, and
Noble Tri-County Community Action Corporation, Caldwell, Ohio.. 18
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APPENDIX
Prepared Statements:
DiPietro, John............................................... 30
Eadon, Harry A., Jr.......................................... 33
Fluharty, Charles W.......................................... 37
Martin, Debra................................................ 45
Ricer, Gary W................................................ 54
Shaffer, Franklin C., Jr..................................... 57
Document(s) Submitted for the Record:
Written letter from U.S. Department of Agriculture, Office of
the Secretary to Hon. Tom Harkin with attached fact sheet
on rural development....................................... 60
``How rural is Ohio?'', rural policy research institute...... 69
RUPRI state demographic & economic profiles.................. 75
PATH TO OPPORTUNITY:
JOBS AND THE ECONOMY IN APPALACHIA
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Wednesday, October 22, 2008
U.S. Senate,
Committee on Agriculture,
Nutrition, and Forestry
Steubenville, Ohio
The committee met, pursuant to notice, at 10:30 a.m., at
Jefferson County Community College, Lecture Hall 2102, 4000
Sunset Boulevard, Steubenville, Ohio, Hon. Sherrod Brown,
presiding.
Present or submitting a statement: Senator Brown.
STATEMENT OF HON. SHERROD BROWN, A U.S. SENATOR FROM THE STATE
OF OHIO
Senator Brown. I appreciate the panel. There will be two
panels. I will get to them in a moment and introduce them.
I would also like to thank Senator Tom Harkin, who is the
Chairman of the Senate Agriculture Committee on which I sit,
for his support of these hearings and for his leadership during
the writing of the farm bill.
This is an official Senate hearing, the Senate Agriculture
Committee, and it comes to order. Everything said today,
including questions, if we have time at the end, and I think we
will, from the audience will be part of the hearing record, and
anything that any of the three witnesses on panel one and panel
two would like to submit to us within 2 weeks of adjourning
this committee today, official adjournment, so you have time if
you wish to send any other written testimony, including answers
to questions that you might want to expand on that you didn't
give us during that time.
We will hear, as I said, from two panels. We will hear from
the first panel, the three gentlemen sitting here, and then
have a brief question and answer session before moving on to
the second panel. If committee witnesses can keep their
statements to about 5 minutes, in case you didn't see that
clock there, then that would be helpful. If you go over a
little, that is not a bit deal.
Small-town Ohio, and I grew up in a city not much--a little
bit larger than Steubenville, in Mansfield--small-town Ohio and
medium-sized cities in rural Ohio clearly are hurting. When a
plant closes, when young people leave Steubenville or Bellaire
or St. Clairsville or Catons or Lisbon or East Liverpool and
these communities, we know what happens to these communities as
young people leave and as plants close down and they are
obviously very related.
Ohio's unemployment rate reached 7.4 percent this summer,
the highest it has been in 15 years. Even prior to this steep
economic downturn, Ohio still had hundreds of thousands fewer
jobs than it did prior to the last recession. With aging
infrastructure, with high unemployment, with underfunded
schools, and with chronic gaps in access to affordable health
care, rural areas in Ohio and throughout the Nation already
face daunting economic challenges.
For rural areas in small-town Ohio, an economic downturn
like the one we find ourselves in now has the impact of a
kidney punch after 12 rounds in a ring. Over one-half of Ohio's
counties are rural, and there is no doubt these counties face
economic obstacles.
Of the ten counties in Ohio with the highest unemployment,
every one of them is rural. Of the ten counties in Ohio with
the highest poverty level, nine of the ten are rural. Of the
ten counties in Ohio with the highest percentage of people
eligible for Medicaid, nine of them are rural.
Federal policymakers simply haven't devoted enough
attention to rural America. We squander opportunity and dismiss
unacceptable gaps in the kind of support that allows families
to lift themselves out of poverty. It is time to change
direction and invest in the tremendous potential that rural
America holds, and you can see that in the young people, both
high school and college, sitting in the audience today.
Investment in rural communities is an investment in the
American economic engine and the American dream.
I am proud of what we have done collectively for rural
communities and small towns in this State during the passage of
2008 farm bill. USDA Rural Development Programs encourage rural
business expansion and job creation and grants to expand
broadband access across rural Ohio, something particularly
young people here today understand how important broadband is
to their future and to our economic future.
These projects--we have invested more than $500 million in
over 120 different projects in Ohio over the last 2 years.
These projects range from a $6 million hospital expansion for
Barnesville and Belmont County, the county next door to the
south; a $20 million water treatment facility for Wellsville
and Columbina County, the county directly to the north; $7
million was provided last year for a new water distribution
system in Tuscarawas County, two counties to the west; and in
Jefferson County, Smithville received USDA funds that allowed
for the purchase of a dump truck for road maintenance; and
Dillonvale was able to purchase a new garbage truck. These
projects wouldn't have occurred without a farm bill and without
funding for Rural Development Programs.
USDA Rural Development funding can help communities in many
different ways. Some comes in the form of grants to communities
for water and sewer projects and public safety projects. Others
provide loans and loan guarantees for small businesses and
rural housing programs. These loan guarantees in particular
have seen a dramatic increase in usage during the recent
overall credit crunch. Some lenders simply won't provide funds
to small businesses and rural housing without the additional
security provided by farm bill Rural Development Programs.
The farm bill also funds so many programs that matter to
Ohio, and we have made important strides toward providing
additional investments in rural Ohio. As Ohio's first Senator
to serve on the Agriculture Committee in over 40 years, I
continue to work to fund these vital programs and ensure
Ohioans receive the kind of support that will help them thrive.
The farm bill provided a needed boost, but the people of small
towns and rural communities deserve much more. That is why we
are holding this hearing today.
Since I have been in the Senate, the last 20 months or so,
21 months or so, I have spent much of my time conducting
roundtables, about 120 roundtables. About 15, 20 people have
been to them, just in cross-sections of communities. Most of
those roundtables have been in rural Ohio, and I have heard
lots of questions. I have heard questions like, how can the
Federal Government play a role to help rebuild small towns in
Appalachia and across Ohio? What investments in infrastructure
are needed to revitalize our rural communities and make them
competitive in a global economy? How do we support small
businesses who are struggling in the face of this credit crunch
and the uncertainty of the financial crisis?
These are the questions our witnesses are helping us answer
today. I look forward to these remarks, to the remarks from
them.
And last, I should note that Randy Hunt, Director of the
USDA Rural Development Programs here in Ohio, was invited to
testify. However, the Bush administration did not allow him to
attend. Mr. Hunt is a dedicated and well-respected public
servant in this State, and as USDA Rural Development Programs
play a significant role in addressing the challenges rural
communities face, I know everyone here would appreciate hearing
his perspective on these issues.
I regret the decision of Secretary Schafer and the Bush
administration because I don't think it is in the best
interests of the people I serve, but today's hearing is too
important to get mired in politics. It is not about the Bush
administration or Republicans or Democrats. It is about people
and communities facing the challenges and fighting to overcome
these challenges. It is in the nation's best interest to
support their success, and the Congress and the administration
alike have an obligation to promote the nation's best interest.
That is nonpartisan. That is simply a fact.
We will move forward on the witnesses. Let me introduce the
first panel. Our first panel will be John DiPietro to my left,
your right, of Steubenville. Mr. DiPietro works at the
Severstal plant here in Steubenville. Welcome.
Next, we have Harry Eadon, Executive Director of the
Tuscarawas County Port Authority--very nice to see you again--
located in Dover.
And finally, we will hear from Frank Shaffer, a Township
Trustee from, I say Bellaire, but you say ``Blair,'' right, in
Belmont County. An aide in my first year in politics was from
Bellaire, as you know, and always said ``Blair,'' so I guess
that is how I say it.
Mr. Shaffer. That is how we say it.
Senator Brown. Take about 5 minutes. Mr. DiPietro, I will
begin with you, then each of you will speak, and then I will
ask each of the three of you questions.
STATEMENT OF JOHN DIPIETRO, SEVERSTAL EMPLOYEE, STEUBENVILLE,
OHIO
Mr. DiPietro. Good morning. My name is John DiPietro. I am
59 years old and have worked for Severstal Wheeling, formerly
known as Wheeling-Pittsburgh Steel, for 37-and-a-half years. I
am married, and my wife and I have raised three children.
What has happened at my company over this decade has
affected my family, my job, my pension, my retirement savings,
and my community. The elimination of steel jobs has depressed
the local economy and caused a steady drop in employment, which
in turn has affected our population and our tax base. My
children have moved from the Ohio Valley due to better
opportunities elsewhere.
With the most recent shutdown of the Steubenville Cold
Strip Department, my job as a wastewater treatment plant
operator servicing the pickling line has been eliminated. I no
longer have a specific work area. The company is calling it a
temporary shutdown, but no one believes the pickler will be
restarted. After 37-and-a-half years, I am a weekly assignee.
This leads to frustration, anxiety, and loss of personal wages.
The shutdown of the Cold Strip Department is the result of a
lack of orders, reflective of the poor national economy and the
fact that the mill is outdated.
We are told that Severstal Wheeling needs to inject $11
million in repairs to make the pickling line viable. Severstal
is a global company that owns other facilities that can fill
their orders. This leaves me and my coworkers in limbo,
wondering if money will be invested in the Steubenville North
Plant so that we can return to our jobs and a stable production
schedule.
Prior to the cold strip shutdown, I worked as a blast
furnace recycle operator servicing the No. 1 blast furnace in
Steubenville. The blast furnace operation was permanently
closed in 2004. Many jobs were eliminated, hurting not only our
workers, but our local economy, as well. Those of us affected
had to acquire new skills in new work areas.
Another aspect that has affected me is the lack of
stability within the mill. Despite the increase in production
at our mill, our employment is down. Currently, different areas
of the mill are working 1 week, shut down the next week, and
then return to operations the following week. Some areas of the
mill are training workers for new assignments, while other area
managers have chosen not to train dedicated employees who may
have transferred into their areas. The instability in the
production units and the uncertainty in the job assignments
have led to turmoil and anxiety, and this is where I find
myself today.
My pension is another problem area. I am two-and-a-half
years away from eligibility for retirement. Recent downward
trends in the stock market have eroded my 401(k) plan. Greed
and deregulation have touched us all.
Unfortunately for me, this is the second hit to my
retirement plan. The first hit was in 2003, when the Pension
Benefit Guaranty Corporation froze my pension plan and my
pension plan was eventually terminated. Under the former PBGC
plan, as it was known, I was guaranteed $40 per year for every
year of service. With this multiplier, at age 62, my monthly
pension would have been $1,600 per month for 40 years of
service. Because of the termination of my pension plan, the
value of my pension plummeted to $780 per month, less than half
of the previous contractual benefit. What I thought was a fact
became a myth. How do you plan for something like that?
Because of the decline in the steel industry, our
educational systems have experienced a negative impact.
Severstal Wheeling pays property taxes to two area school
districts, and with the loss of wages and declining tax base,
our schools receive less funding. The school districts, the
administrations, faculty, and students suffer. As we all know,
the children are the future of any community. If they aren't
afforded a solid education along with job opportunities after
graduation, the community will surely erode.
On a personal note, I find myself wondering if our plant
will ever return to normal operations. I wonder if our plant
has a limited future due to the perils of our economic
policies, the global economy, and consolidation within the
steel industry. We at Severstal Wheeling are fighting for our
very survival. Thanks.
[The prepared statement of Mr. DiPietro can be found on
page 30 in the appendix.]
Senator Brown. Thank you, Mr. DiPietro.
Mr. Eadon.
STATEMENT OF HARRY A. EADON, JR., PRESIDENT AND EXECUTIVE
DIRECTOR, TUSCARAWAS COUNTY PORT AUTHORITY, DOVER, OHIO
Mr. Eadon. Thank you, Mr. Brown. Thank you for this
opportunity to present testimony regarding the USDA Rural
Development Programs and how they may be utilized in the
current economic crisis. My focus today will be on the USDA's
Rural Development Intermediary Relending Program. However, each
of the economic development financing tools available through
Rural Development are important.
The Tuscarawas Valley region may be considered a typical
rural area. However, it is quite diverse, with each county
facing unique challenges. Consequently, the counties, are they
are able, create economic development strategies that address
their particular needs. These strategies should encompass these
basic focuses: Infrastructure improvement, business assistance,
education and training, amenity-based development, and
community development.
The execution of these strategies usually depends on
funding assistance from Federal and State governments. An
example of the importance of such Federal support can be found
in testimony given on April 1, 2008, by Mr. Thomas Dorr, USDA
Under Secretary for Rural Development, before the Subcommittee
on Agriculture, Rural Development, Food and Drug
Administration, and Related Agencies.
Mr. Dorr stated, ``The fiscal year 2009 budget request
seeks a $49 million budget authority to support $738 million in
direct and guaranteed loans and grants for rural business and
cooperative programs. The budget proposes to fund the Business
and Industry Guaranteed Loan Program, the Intermediary
Relending Program, and the Rural Cooperative Development Grant
Program. We anticipate that in fiscal year 2009, these programs
will assist approximately 700 small businesses and create or
save more than 34,000 jobs in rural communities.'' The reported
effect of these programs is to leverage every Federal dollar
with $15 of private capital.
The diversity of the Tuscarawas Valley region can be
characterized by the population and business density of each
county. Examples of the diversity are Harrison and Tuscarawas
Counties. Harrison County hosts 360 businesses and has a
population just under 16,000, compared to Tuscarawas County
with 2,315 businesses and a population of over 91,000. A
further distinction is the types and diversities of businesses
in each of these counties. But for all of the differences, one
thing is the same, not only in this rural area but across the
country. The current economic crisis has exacerbated the
ability of businesses, large and small, to borrow money to fund
current and future needs. The credit crunch is not a phenomenon
only of Wall Street. It has come to Main Street.
Pat Comanitz, the Kent State University Tuscarawas Small
Business Development Center's Director from 1998 to 2008,
estimates that only one of ten small businesses seeking funding
find it through conventional bank financing, and that has been
confirmed by the president of a regional bank. A case in point
is ED Payment Systems, a small business which started in the
Business Factory, a small business incubator in Dover, Ohio.
Bill Treciak, the founder and president of the four-year-
old technology service company, has applied for both
conventional and SBA advanced financing and been turned down
more than a dozen times. To finance his business, Mr. Treciak
has leveraged the equity in his family's home and obtained
unsecured financing through high-interest credit card debt. ED
Payment Systems is a service company and therefore is fueled by
working capital. Even though the company has had positive net
income for more than a year, and even though it has exhibited
reasonable and sustainable growth, not only bank has lent him
the money even to fuel that growth. Businesses like ED Payment
Systems will benefit from reasonably costed alternatives to
conventional financing.
To help drive the implementation of business development
strategies in each of these counties and to create a local
response to a small business funding need, the TCPA has applied
for a $500,000 IRP loan to seed a $585,000 revolving loan fund.
The proposed service area for the revolving loan fund includes
the following rural Ohio counties: Belmont, Carroll, Guernsey,
Harrison, Holmes, and Tuscarawas.
The purpose of a strong RLF is to provide funding
alternatives to the region's existing businesses and to provide
a tool to help create new business opportunities. This equates
to both the retention and creation of jobs. The RLF will not
replace or compete with conventional financing. Rather, it will
enhance the ability of banks to participate in financing
structures that previously were not possible through only
conventional financing.
Based upon the USDA's 15-times multiplier, the economic
development impact of the TCPA's RLF to the region will be to
induce the investment of more than $8 million of private
capital. This is a regional solution to a regional challenge.
The TCPA encourages Congress to act with due deliberation
and speed to authorize the USDA's Rural Development budget
request for funding these important economic development tools.
This concludes my testimony and I will be happy to respond
to your questions. Thank you.
[The prepared statement of Mr. Eadon can be found on page
33 in the appendix.]
Senator Brown. Thank you, Mr. Eadon.
Mr. Shaffer.
STATEMENT OF FRANKLIN C. SHAFFER, JR., TOWNSHIP TRUSTEE,
BELLAIRE, OHIO
Mr. Shaffer. Thank you very much for having me here. It is
my first time, so I am probably a little green at this. My
testimony is from Mount Victory Road Water Project, and I lived
this for 18 years of my life and these people are still living
it and spending 10 years doing this.
Mount Victory Road is located in the State of Ohio, Belmont
County, Village of Powhatan Point, which is situated in the
southeastern portion of Ohio just a few miles from a great
water source, the Ohio River. More than 152 families live along
the 28-mile stretch of rural road.
A multitude of problems arises within their water sources,
one of which includes wells that have to be drilled at no less
than 50 feet or no deeper than 100 feet to tap a good water
source. If drilled any further, they could be lost into a mine
or sulfur from a mine could make the water unbearable to drink.
Most of the wells will not sustain a family of three or more
adequately. The families have to use the local laundromat
several miles down the road, cut down daily on toilet flushing,
being unable to take daily showers, have to choose from bathing
your children or watering your animals, being unable to water
gardens or lawns, using the local car wash to wash your car,
limiting the amount of water usage within the home, doing
dishes, running dishwashers, just to name a few. These also
cause additional expenses to the families.
There has been E. coli bacteria found in some wells,
exposing people to illness and hospitalization, thus creating
loss of jobs in families. This is a major health risk.
The second source of water for the homes is a cistern, an
artificial reservoir, tank, or container for storing or holding
water, especially for catching and storing rainwater. These
cisterns are mostly used for bathing, washing clothes, and
flushing toilets. Due to a lack of water sources in a low
economic area, some families have to resort to using the water
for drinking, which is definitely a health hazard. These people
cannot afford to purchase bottled water and have no choice but
to drink cistern water that is unsafe. Must families must own a
utility trailer or a truck with a water tank in order to haul
water that is miles from their homes. Some farms have to haul
multiple loads daily in order to water livestock. This is also
an additional cost to the families, due to the fact that the
local village and county charge for this water.
There are also major fire and safety issues. If a house
catches on fire, usually this leads to a complete loss of the
home, animals, and sometimes lives. The water to extinguish the
fire has to be hauled miles in a tanker truck or use of water
buffaloes must be set up.
The cost of this project is in the millions of dollars. Our
local officials are willing to take on the project, but simply
do not have near the funding needed to do the project without
Federal assistance.
If any person would like to get a slight feeling of what it
is like to have to live without water, just take a shower,
lather up, and shut off the water. Think about how to get the
lather off of your body without water. Or just imagine what it
is like to turn on the faucet and nothing come out at all, or
what comes out of the faucet is not healthy to drink or use for
cooking, or water that is black, yellow, and smells bad, that
is, if there is water at all. Or just imagine loading the
washing machine with clothes and the machine is stopped in mid-
cycle. All the clothes have to be removed and hauled, heavy and
wet, to the laundromat to finish.
This is not a temporary water loss. This is every day of
life in this area. People who are fortunate enough to have
municipal water do not have a clear understanding of what it
feels like to live this way every day. Remember when your water
may be shut down temporarily for a few hours or a day how
inconvenient it is. Well, these people live this way every
single day.
In summary, this area is in desperate need of a municipal
water source and it cannot be accomplished without the help of
Federal assistance.
One thing I would like to add, back to the part of flushing
the toilets, a lot of times you have to keep Clorox next to
your water, next to your commode, in order to dump Clorox in to
cut down on the smell when you can't flush it each time. It is
a definite problem.
Thank you very much.
[The prepared statement of Mr. Shaffer can be found on page
57 in the appendix.]
Senator Brown. Thank you, Mr. Shaffer. Thanks very much,
all three of you.
Mr. DiPietro, you mentioned your children have gone
elsewhere. Where do they live?
Mr. DiPietro. My oldest, Natalie, lives in Ada, Ohio.
Senator Brown. Northwest of Columbus?
Mr. DiPietro. Yes. She accepted a teaching position at Ohio
Northern University last year. My daughter, Melissa, lives in
Philadelphia. She works for Johnson and Johnson in financing.
And my son, Anthony, is a senior at the Ohio State University.
[Laughter.]
Senator Brown. Is he coming home?
Mr. DiPietro. I doubt it.
Senator Brown. What jobs do we need to keep people in our
communities? What kind of jobs would make your three children
want to come back and live in--where do you actually personally
live?
Mr. DiPietro. Here. I live in Steubenville.
Senator Brown. What would make people come back here, young
people?
Mr. DiPietro. I would say high-paying manufacturing jobs
would be the key. Most of our jobs are minimum-wage jobs. At
the local mills, it is all down hill. At Severstal, they've cut
way back and just shut down the Cold Strip Department, as I
said. So we are losing the good-paying jobs with the good
benefits and people have no reason to stay here.
Senator Brown. How many generations have you been here,
your family?
Mr. DiPietro. Well, my dad came here in 1920 from Italy.
Senator Brown. 1920, did he work at the mill?
Mr. DiPietro. Yes, he did. He worked at Weirton Steel for
39 years.
Senator Brown. What has happened to your friends and
coworkers who have lost their jobs? Are they still here or did
they--are they getting a job at $8 or $9 an hour now instead of
having a good-paying, middle-class job?
Mr. DiPietro. Most of them have left the area, the young
ones. The older ones hold on and try to find a job locally. A
lot of them are like me. They're in transition in the mill and
move from department to department because of the work
schedule, working a week, shutting down for a week. How long
this is going to last, no one knows. They put a lot of money
into the blast furnace in Mingo and the BOF, but it hasn't all
started back up since the repairs were made, so we are kind of
wondering what is going to happen.
Senator Brown. Do people who have lost a $15 or $17 an hour
job and now have a $9 or $10 or $11 an hour job, do they call
themselves middle class still?
Mr. DiPietro. I don't think so. I would strongly--working
at Severstal, it would be tough with one income [inaudible]
even making minimum wage or thereabout, trying--both working
very hard, working 40 hours a week, doing everything they are
supposed to do, playing by the rules, and yet they can't
support their family or have health care.
Senator Brown. What is your hourly wage, if I could ask?
Mr. DiPietro. Right now, it is $18 an hour.
Senator Brown. And your retirement has been adjusted down,
I guess is a nice way of saying it, has been cut to $780 a
month, you said?
Mr. DiPietro. Yes. Under the--PBGC froze our plan and then
said it wasn't a viable pension plan----
Senator Brown. It wasn't because the company didn't pay in
adequately.
Mr. DiPietro. Right, and so we were locked in. At the time,
I had 32 years of service. So I no longer gain any retirement
earnings from that plan, so luckily, we had the Steelworkers
Union who got us into a new pension plan, the Steelworkers
Pension Trust, and so now we are accumulating money into that.
Senator Brown. So you will have the $780 a month plus you
will have some smaller amount----
Mr. DiPietro. Yes.
Senator Brown [continuing]. That you are earning now?
Mr. DiPietro. Yes. Recently, we were allowed--given the
option of taking our money that was contributed to the PBGC and
rolling it over to an IRA or leaving it there. So since I was
going to take this big hit, from $1,600 to less than $780,
really, I decided to take that money in a lump sum and roll it
over into an IRA. So now I am just basically earning a pension
with Steelworkers Pension Trust.
Senator Brown. Laid-off workers, if you know, they have got
the information they need for assistance for job retraining,
maybe through Jefferson Community College or pension health
care. Are they able to get the information they need on how to
move on with their lives when they get laid off?
Mr. DiPietro. I think so. I think so. I think the community
does a good job of getting the information out there where they
can turn to, come here to Jefferson Community College and learn
a new skill.
Senator Brown. Are they getting it from the union? Are they
getting it from the company? Are they getting it from jobs and
community services----
Mr. DiPietro. I don't think they are getting it from the
company, but they are getting it from the community, the union,
just advertisements.
Senator Brown. So even if it is a non-union facility, they
are able to find the information either from Jefferson
Community College or other ways?
Mr. DiPietro. Yes.
Senator Brown. Thank you for your testimony and your
comments.
Mr. Eadon, one of the things that I am hopeful we do after
the election with either President-Elect McCain or President-
Elect Obama is get serious about infrastructure investment.
Talk through what--I obviously don't know an amount of money or
we don't know for sure what direction it is going to go. That
is going to be in part dependent on what the President-Elect
wants to do and the new President wants to do come January, but
what is the best way to spend infrastructure monies?
Part of it is the stimulus package, because it puts people
to work directly. I talked to the Governor at some length about
this and there are projects in Ohio ready to go that just don't
have financing now. It won't take a long time to inject money
into the system, into these projects, so it puts operating
engineers and laborers and sheet metal workers and engineers to
work immediately. What is the best short-term and long-term
kind of infrastructure stimulus for Tuscarawas County, or
speaking more generally, larger than that?
Mr. Eadon. For the region? I think there is--I think the
answer is almost the same for both, both short-term and long-
term, because I think the solutions--we didn't find ourselves
or drive ourselves into this position overnight. We drove
ourselves into this position over a long period of time, so
that coming out of this and stimulating our economy and
changing our economy is going to take more than a year, even 2
years or 3 years.
I think in some ways we are already starting on that.
Technology, I think, is certainly a method or a way of trying
to dig ourselves of where we are at. When we are talking about
high-paying manufacturing jobs, clearly, those are very
important. High-paying jobs of any sort are important.
Manufacturing jobs, though, now aren't manufacturing jobs that
are less skill-based than what they were before. In fact, the
skill base of many manufacturing jobs now requires advanced
training, training beyond high school, and those are the kind
of jobs that will bring kids back if they go off to school.
Those are the kind of jobs that will bring kids back here to
Steubenville or to our region.
Technology jobs, advanced energy and fuel cell, biomass,
wind energy, those kinds of jobs, both on the manufacturing
side as well as the implementation side, are critical to our
area and we certainly have the expertise in the area to do
that. We have a tremendous history in this entire region for
manufacturing expertise.
You mentioned Mansfield. Mansfield has the same thing in
brass and other kinds of industries. [Inaudible] Lake right
next to Cleveland, exactly--it is the same thing again, small
manufacturers as well as large manufacturers. So Ohio has a
tremendous tradition and history of manufacturing expertise,
and I would say advanced manufacturing expertise.
Some of the other kinds of technology jobs that we train
our young people for, and essentially we train them to leave--
gaming, advanced computer animation. We train people at OU, at
Shawnee State, which is not too far from here, Tuscarawas
County, at Kent State University-Tuscarawas. We graduate 150
kids a year probably from those three institutions in advanced
gaming, computer animation, and we have maybe ten or 15 jobs in
this region for those 150 that we graduate. Consequently, they
go someplace else.
That is one of the reasons for the RLF and building in
Central Ohio is a major one that we have been able to create is
to provide capital for those students who have graduated to not
come back, but to stay here and be entrepreneurs, start
businesses here, because we believe that entrepreneurial
business startups are more likely to stay in the region than to
go someplace else. So if you are raised here, grew up here, and
are educated here, and if you start a business here, then you
start a family here, it is more likely that you are going to
continue to grow that business and create jobs, retain jobs and
create jobs, than if we educate you and send you someplace
else.
The other--as I mentioned, advanced manufacturing, I think,
is critical to all of those as well as to information
technology jobs. We have tremendous capabilities in this area
because we are a rural area to house information technology
jobs, and those, frankly, are very high-paying, very clean jobs
that many of our young students that are graduating from
institutions like Jefferson Community College would be,
frankly, that would be perfect for them.
Senator Brown. Talk a little more directly on
infrastructure spending, on broadband and other ways. If the
Federal Government is going to spend X-number of dollars on a
stimulus package and part of it was infrastructure, that would
mean X-number of dollars for Eastern Ohio. Where would that
best be spent to create jobs immediately and create jobs longer
term?
Mr. Eadon. Well, certainly broadband is critical. The area
of the State that you come from, you have got enormous
resources for broadband compared to many rural areas. We are
fortunate in Tuscarawas County to be close enough to the super-
computer network that we have broadband [inaudible] in
Philadelphia and in Dover that is not just broadband, it is
tremendous broadband. It is, in fact, the fastest, broadest
connection that exists currently.
But there are many others. As I drove from Tuscarawas
County to Jefferson County today, most of the areas that I
passed don't have that same capability. So to put rural Ohio on
the same basis as the other more urban areas of Ohio, broadband
is critical to be able to support businesses like advanced
energy businesses, advanced manufacturing businesses,
information technology businesses, computer animation, advanced
gaming businesses. All of those are going to need significant
resources of broadband.
So you are exactly right, and I understand the farm bill
addresses some of those issues for the rural U.S., and
hopefully we will grab some of those dollars for rural Ohio.
Senator Brown. Thank you. Thank you very much.
Mr. Shaffer, do you live on Mount Victory yourself?
Mr. Shaffer. I do not live there any longer. I lived there
18 years and I moved from there to another----
Senator Brown. Most people who live there have been there
for generations?
Mr. Shaffer. Yes, family farms. Their kids want to build
houses on their farms.
Senator Brown. Are most of the 152 families farmers? Or do
they produce some of their----
Mr. Shaffer. Probably half that or somewhere in that----
Senator Brown. Full-time farmers?
Mr. Shaffer. Not full time. Most of our farmers in our area
are farmers and they have other jobs.
Senator Brown. That pays for their health care and----
Mr. Shaffer. Right. They have to go elsewhere to get it,
and it is mostly part-time.
Senator Brown. Do most of the 152 families have some
farming operation, either a few beef cattle or some chickens--
--
Mr. Shaffer. Right----
Senator Brown [continuing]. Or big gardens----
Mr. Shaffer. Or some form of livestock, if you understand
what I am saying.
Senator Brown. I assume it has been figured what this would
cost to bring water to these 152 families.
Mr. Shaffer. This figure is down to somewhere around $2.5
million, I believe, at this point. I could be--give me a little
bit of leeway there, but it is close to $2.5 million, I think.
They have done some downsizing on some of the project and tried
to adjust it a little more.
Senator Brown. What are local residents doing to try to
change this? I want them to have a very aggressive Township
Trustee, but what else are they doing?
Mr. Shaffer. As far as----
Senator Brown. Just in organizing and----
Mr. Shaffer. We have organized committee. I spent 10 years
with commission meetings, attending every meeting. We have a
group down there that goes out into the community and talks to
the people and tries to communicate with them, you know, what
is happening. Is that the direction you are going?
Senator Brown. Yes.
Mr. Shaffer. Yes. We have just the group of individuals.
That is how we started this. Two of us started this. We got a
petition together, and we go out and talk to our political
officials. I have knocked on doors to help people get elected
to try to----
Senator Brown. And you have been doing this for 10 years?
Mr. Shaffer. Ten years, yes, so I am still working on it,
and I have had to work on it--I promised--I had two older
ladies come to me. We were promised water. This is what they
told me. They said, ``We were promised water 40 years ago.''
Well, funding ran out in the 1980's, I believe it was. They
looked at me and said, ``Frank, you can get us water. I know
you can.'' How you think I can get you water, I have no clue.
That is what I told them. But I looked at it. I felt bad. I
said, fine, I will take it on and we will see. I got another
person. We went through the petition, drove people over. I have
done everything. I have sent letters to different political
officials, didn't get the good response I needed. I helped
campaign for others. Whatever it takes to get this job done, I
promised these people I would do it, and if it takes me the
rest of my life, I am going to get these people water and that
is it.
Senator Brown. Are there other places in Belmont County
that don't have access to water?
Mr. Shaffer. There are very few. This is probably the last
major section. There is one in the western end. They are
looking at putting a tri-county deal together on that, up in
the Piedmont Lake area. There are actually two big sections in
Belmont County.
Senator Brown. When you talk to the county commissioners,
what do they say about--well, first of all, what do they say
generally when you----
Mr. Shaffer. They are willing to do this project. They were
willing--we were fine. We have an infrastructure fund that is
based--and they were willing to go forth with the whole
project. Then the floods came and devastated and we needed up-
front cash for FEMA and other projects to get these--to
recuperate from the flood, basically. Now, there is no money.
It has depleted our infrastructure fund. They are willing to
come up with their share, and up until this point, we have paid
for all this, all the water projects. Now, we are finally
having to come to the Federal Government and ask, or the State,
whoever would be glad to help us, is where we are at.
Senator Brown. Do you have an estimate on, when you cost
this out to this point, you cost this $2.5 million project out,
have you figured an estimate on what people would pay for their
water and sewer if they had this system built?
Mr. Shaffer. This would be water. There would be no sewage
coming through there.
Senator Brown. Just water, okay; so----
Mr. Shaffer. This would just be water, and we are probably
looking at somewhere around the $40 to $50----
Senator Brown. A month.
Mr. Shaffer [continuing]. A month, which is probably in the
neighborhood of--they are probably paying more for this when
they have to haul their water.
Senator Brown. That is not an additional cost growing for
them----
Mr. Shaffer. Right. It is not an additional cost for them.
They may be paying--some people are probably paying more for
your water. Once you have to purchase bottled water, haul
water, you have got to pay for that water and you have got to
haul it in your truck. You have got wear and tear on your
vehicle, because these are all dirt roads, back country roads.
Senator Brown. Are these 150 families mostly pretty elderly
or not?
Mr. Shaffer. Some are, some aren't. Some have inherited
their family farms.
Senator Brown. What is the size of these family farms, 50
acres? A hundred acres?
Mr. Shaffer. Ranging probably from 50 to 100 acres,
depending on the farm.
Senator Brown. Thank you. One other question. You mentioned
fire. Have there been major problems with fire there?
Mr. Shaffer. There have been fires, and it is a total loss
to the house.
Senator Brown. So if a house catches on fire, there is no
way the township fire department gets out there fast enough----
Mr. Shaffer. They can get there. There is no place to pump
the water from. Unless you can get possibly there are a couple
ponds there, if they go to pumping ponds, or you bring in
buffaloes where you have those tanker trucks that drive all the
miles to get there.
Senator Brown. There is no fire department tanker truck
near enough to help in time?
Mr. Shaffer. Not in time. There is no way that you can get
a house without--some people have put in and use their cisterns
and they have actually pumped the water from their cisterns to
put the fire out, if they are capable. If you are lucky and it
has been a rainy season and you have got some water in your
cistern, you might be able to get some water from your cistern,
but that is 1,500 gallons. How long will that last in the fire?
At the most, it isn't a large house.
Senator Brown. Let me ask you a question, the last
question, and I will ask the same question to each of you. I
will start with you, Mr. Eadon, and then Mr. DiPietro and
Shaffer, you have time to think about it, too. If out of this
hearing came one thing that the Federal Government could do to
improve the lives of people in Eastern Ohio, what should it be?
It is a hard question. Sorry.
Mr. Eadon. I can't pass for another question?
[Laughter.]
Senator Brown. That is the only question.
Mr. Eadon. I think probably the key thing would be to put
dollars or make dollars available to regional efforts and let
the folks that are living there every day figure out exactly
how those dollars should be put to use to the best effect to
create jobs and opportunities for our regions. Just an example
would be infrastructure that the Columbus District Court order,
which just recently opened up another section, which is a good
thing for the State of Ohio for their foresight there, that
when this order would open up a tremendous area that was not
currently open to economic development because there is no
infrastructure there. We need the dollars, and put those
dollars in the region and we will figure out how to spend them
correctly.
Senator Brown. Mr. Shaffer? I know what your answer might
be.
Mr. Shaffer. It is going to be simply a two-part answer. I
think there needs to be some money set aside and readily
available for families that are in desperate need of water,
sewage, that you can come up front. But you also need to set up
a separate fund in order to bring in infrastructure, in order
to bring in jobs into the area, because some of our, in my
opinion, as far as jobs go in Belmont County and this local
area, is the fact that there is no infrastructure available.
Whether that means water, sewage, roads, bridges, you know,
broad band, or whatever, there needs to be a separate fund set
up for that. And you need to get that money here first.
Right now, I believe that the money for infrastructure is
set up if you have got the business to come in. We need to set
the environment up in order to attract that business into this
area.
Senator Brown. Those are good answers.
Mr. DiPietro.
Mr. DiPietro. They have touched on the areas, jobs,
education, and the infrastructure. If the government could help
to entice companies to come into our area, it would be a big
boon. Naturally, you need the infrastructure to bring the
companies here, which we currently don't have. Jefferson County
is lacking. There is talk of improvements, but there are two
bridges that connect with West Virginia that are going to come
down and be closed and that is going to hurt the area.
Naturally, you need to put money into education. That is the
key to the future.
Senator Brown. Thank you, all three of you. You did very
well. Thank you all, and thanks for being here. Certainly feel
free to stay if you would like for the second panel. We will
have a short break between the two panels, and if you have
anything else you want to add, submit it. Call Joe Schultz in
our office or Jean Wilson in the back here.
Joe told me, because they need the audio transcript, to
make sure you speak directly into the microphones. I probably
should have said that at the beginning here. I am sorry. But I
think you all spoke clearly enough that it is recorded well and
we are counting on you to make sure that it was recorded well,
right? So thank you.
[Applause.]
Senator Brown. On our second panel, we have Charles
Fluharty, Director of the Rural Policy Research Institute in
Columbia, Missouri. He is based out of the Harry Truman School
of Public Affairs at the University of Missouri-Columbia. He
was born right here in Steubenville, still has family here, so
thank you for coming back.
Gary Ricer is CEO of Guernsey, Monroe, and Noble Tri-County
Community Action Corporation. It is located in--is your office
located in Caldwell?
Mr. Ricer. Based in Caldwell.
Senator Brown. It is based in Caldwell in Noble County. It
is nonprofit committee to reducing poverty in the Tri-county
area.
And Debra Martin is Director of the Great Lakes Rural
Community Assistance Program located in Fremont. You had to
leave early today, didn't you? I know that drive. Ms. Martin's
organization assists low-income individuals in rural and other
under-served areas.
Mr. Fluharty, why don't you start? Thank you.
STATEMENT OF CHARLES W. FLUHARTY, VICE PRESIDENT FOR POLICY
PROGRAMS, RURAL POLICY RESEARCH INSTITUTE, TRUMAN SCHOOL OF
PUBLIC AFFAIRS, UNIVERSITY OF MISSOURI-COLUMBIA
Mr. Fluharty. Thank you, Senator. First of all, welcome to
my home county. It is great to be back.
Senator Brown. Welcome back to my home State.
Mr. Fluharty. Thank you. I will be here soon for good.
I would like to start by commending Chairman Harkin and you
for doing this hearing here in Steubenville. You honor us with
this hearing and we thank you for that.
Just an aside, relating to our prior panel, I just came
back from Cyprus, got off the 767, flew into Columbus, got to
the farm late last night, and do you know what the first thing
I did was? I went on the back porch and checked the cistern to
see if there was enough water to have a bath to come and be
with you today, and that is indeed a true story. Since the
strip mining came through our area, we have been without water
on our farm ever since then, and so it is a rather ubiquitous
problem.
Senator Brown. Where is your farm?
Mr. Fluharty. In Smithfield.
Senator Brown. Pretty country.
Mr. Fluharty. It is. Our farm has been in the family 150
years. We came to the valley over West Virginia in about 1780,
and when my ancestors left Ireland, something bad had to have
happened because you didn't leave Ireland in 1780, but we have
been in this valley forever and we appreciate you being here.
I would like to also thank Dr. Meeks. In RUPRI, we work
closely with the Rural Community College Alliance and I do
believe our community colleges really are building an extension
service for the knowledge age and I just think it is great that
we are here.
I would like to just say that it is 40 years since I
graduated from the College of Steubenville, and in that 40
years, the indicators in our valley vis-a-vis the rest of Ohio
have deteriorated, as you know. It is a challenge.
As I said in my testimony, I would just like to say that I
think we are entering into a public discussion about the
relationship between the public and private sector in America,
and I just hope, Senator, that your witness for the rural
differential challenge in that will be carried forward.
We are in a valley where extraction industries have been as
the ``company store'', be it mining, manufacturing, steel, and
it is transitioning. Our rural conservative community banks
have great assets. They have not gone the way of our major
investment banks, hedge funds, and large banks because of their
conservative nature and that is fantastic. But that same
conservative dynamic is now going to mean boards and leaders in
banks with capital that have been patient are going to be less
willing to lend in the current crisis. It is going to really
point to a need for leveraging and public sector investment to
scale those and also to look at community foundations and
equity capital. I think there are opportunities under your
committee to do some of that.
I would just like to say three or four things. First of
all, in my testimony, I talk about some ideas. I want to share
those quickly with you and then close with some thoughts about
the valley.
First of all, we really are going to rethink regional
scale. I think our valley now is uniquely positioned. We are
going to build regional, distributed energy systems. We are
going to build regional sewage systems. We are going to build
regional transportation systems. Ohio is uniquely positioned
between rural and urban, and we have a settlement pattern which
advantages all of this.
Second, if you look at CDBG and CSBG, it is very
interesting. We have the potential to really think about
changing that $500 per capita rural disadvantage, which I talk
to your committee about all the time-Federal investments for
urban versus rural. If we would think about a renewable Rural
Development Community Block Grant--to look at distributed
energy, distributed food systems, linking institutional buying
programs with local farmers through distributed transportation,
we could create a very interesting dynamic to advantage the
micropolitan regional centers in Ohio.
We have a chance in RCIP, the Rural Collaborative
Investment Program, in the committee. Our chairman brought that
forward with a billion dollar commitment, which unfortunately
did not get funded. Every program we are going to talk about
here today could be funded under that kind of an investment
from the Federal Government.
The other important thing is, there is a Community
Development Revolving Loan Fund in there that is now
authorized. We have huge equity in rural America. We are
sitting on ninety percent of free capital in rural America. It
has just not been able to be channeled into entrepreneurship
and innovation. I would hope that in the future, we could think
about this when we look at how we change institutional
investments as we move forward.
In my testimony, I talked about the EU advantages that
currently our rural competitors in the European Union have that
we don't. It is not that they are better than we are. It is
just that their Federal system positions them better than we,
and there are two types of rural development. There is the
broad rural development in the sectors, and in everything from
health care to equity capital, we have to think about the rural
differential disadvantage. But the key issue is the Rural
Development Programs that you have statutory authority over.
Hopefully, we can talk about what the EU does that we don't do
right now to really target those and prioritize them.
I was honored this summer to take 25 of our nation's CEOs
from agricultural organizations to Europe for a two-week tour
to look at what is going on in Europe that we aren't doing to
lift agriculture in rural America. At the end of that trip, Don
Villwock, who is President of the Indiana Farm Bureau, in our
final session asked an interesting question. He said, why is
every rural town we have looked at in Europe so much better
than my rural town? The reason is public sector-private sector
linkage in ways that we aren't currently doing in the United
States. I think there are huge opportunities there in the
future. I think a Senator that can champion this from an urban-
rural State, such as Ohio, has a unique opportunity to advance
this understanding.
I just commend you for coming here for this hearing and I
look forward to the Q and A session.
[The prepared statement of Mr. Fluharty can be found on
page 37 in the appendix.]
Senator Brown. Thank you very much for your testimony.
Mr. Ricer.
STATEMENT OF GARY W. RICER, CHIEF EXECUTIVE OFFICER, GUERNSEY,
MONROE, AND NOBLE TRI-COUNTY COMMUNITY ACTION CORPORATION,
CALDWELL, OHIO
Mr. Ricer. Thank you for this opportunity to address the
panel. My name is Gary Ricer, CEO for Guernsey, Monroe, and
Noble Tri-County Community Action Corporation.
We currently implement close to 40 public service programs
encompassing a 1,500 square mile radius. Our mission is to
serve the impoverished, less fortunate of Appalachia Ohio and
offer a hand up as opposed to a handout. Our services include
but are not limited to workforce development and retraining,
housing and weatherization, teen prevention services, operation
of three senior citizens' centers, seven Head Start schools,
the Healthy Smiles dental clinic, home energy assistance
programs, two broadband connectivity centers, and a myriad of
other initiatives.
In 2003, GMN Tri-County became the first and only Community
Action in the Nation to receive a Federal High Speed
Connectivity Grant. In 2007, we received our second Federal
Broadband Grant. Funds provided by the USDA Rural Development
were $383,284 in 2003 for Woodsfield, the Monroe County seat,
and $316,840 in 2007 for Graysville, southern Monroe County.
Funds provide for a two-phase broadband initiative, first being
the establishment of a broadband connectivity center, whereas
higher learning is offered in a library-type setting.
For the first time in the history of Monroe, students can
receive a college accredited degree from an institution of
higher learning without having to travel long distances. We
further are pursuing collaboration with local government,
whereas a common pleas court judge can arraign prisoners,
alleviating exorbitant transportation costs and eliminating
security threats to the general public. The possibilities of
utilization of our federally funded broadband connectivity
centers are endless. It has been a win-win situation met with
overwhelming success by local government and the general public
alike.
The second piece of our Federal funds allow for the
providing of high-speed internet to our subscribers through the
strategic placement of a tower grid and repeater with back haul
stations. The average cost is $29.95 per month, making
broadband not only affordable, but leveling the playing field
globally for conducting business from these rural remote
locations. Due to the geographically rough, rugged, hilly
terrain of Appalachia, most subscribers have no other
opportunity to receive high-speed broadband. Critical end
users, or CEUs, police, fire, EMS, et cetera, receive our
service at no charge.
From helping a student electronically research homework, to
a grandmother swiftly receiving anticipated family pictures, to
the rural business entrepreneur downloading critically
important large files in record time, to an emergency squad
paramedic researching medical information when seconds count,
rural America desperately needs broadband connectivity.
Needless to say, our waiting list is long and impatient.
In closing, in representing those we serve, I am
respectfully requesting future funding be constant, far-
reaching, and if at all possible, increased. One means this
might be accomplished is shifting a mere 10 percent from the
hundreds of millions in broadband loan programs, which in my
opinion are underutilized, to broadband grant programs. This
approach would serve tens of thousands more of your rural
constituents in record time reaching measurable objectives
without the time-consuming fight for increased appropriations.
Our Federal Field Monitor, Ron Mellon, has referred to GMN
Broadband as the poster child for rural broadband in America.
We are successfully operating a broadband program that would
normally cost several millions of dollars to build and maintain
on a shoestring budget of a fraction of that. I have a full-
time staff of only two who climb the towers, answer the phones,
complete the billing, conduct free seminars, public
presentations, install the radios, and so on.
We have close to 400 square miles coverage area currently,
have grown in subscribership by over 500 percent in 2 years,
and have literally dozens on a waiting list, not to mention our
constant battle with the peaks and valleys of Appalachia
limiting our wireless penetration. We have repeaters in
farmers' fields on grain silos, water system storage tanks, and
everything in between.
To our Federal representatives, agencies, and its members,
thanks so much for the vision to grasp the importance of
broadband for rural America. Please continue to fight to
provide Appalachians an on ramp to the information superhighway
of the 21st century. Thank you.
[The prepared statement of Mr. Ricer can be found on page
54 in the appendix.]
Senator Brown. Thank you.
Ms. Martin.
STATEMENT OF DEBRA MARTIN, DIRECTOR, GREAT LAKES RURAL
COMMUNITY ASSISTANCE PROGRAM, FREMONT, OHIO
Ms. Martin. Well, thank you, Senator Brown, for the
opportunity to be here today, and I would just like to say that
we applaud the committee's efforts to look at the current
economic crisis in the context of how it affects rural America
and to ensure that our small communities aren't overlooked as
you look for solutions to stimulate the economy. As you had
mentioned, small communities frequently are overlooked and I
think that in the current climate, that it would be very easy
for that to happen.
I work with the Great Lakes--I am the Director of the Great
Lakes RCAP. RCAP is a program that nationwide provides
assistance to small communities to help them deal with their
water, wastewater, and other community development needs. In
Ohio, we serve over 100 communities a year, including the
project Mr. Shaffer was here to talk about, and most of the
projects that you mentioned in your opening statement. So we do
work all over the State. Unfortunately, the issues that Mr.
Shaffer talked about are not unique to his area but are a
common thing that we see all over the State.
You know, I know that we are facing a severe
infrastructure, if not crisis, we are close to that in this
country, and I think that as our cities' infrastructure
crumbles and as State and local revenues and budgets continue
to shrink and revenues shrink and credit gets tighter, it gets
very difficult for small communities to compete in that kind of
environment. So one of the things I wanted to point out is that
USDA Rural Development is one of the only programs that exist
that is available exclusively to small rural communities.
Unfortunately, if you look at what has happened with Rural
Development's funding over the last, well, since 2003, funding,
whether it is for housing or the water and sewer programs,
their business lending, community facilities, all that funding
has decreased somewhere between 25 and 35 percent during that
time period. And if you look at the administration's proposed
government 2009 budget, it is slashed from those already
decreased levels.
Another thing that has happened in that same time period is
in 2003, the grant funds as a percentage of the overall Rural
Development allocation were at about 39 percent, speaking about
the water and the sewer program now. The grant funds now are
allocated at a percentage that is under 25 percent.
Unfortunately, in the smaller communities, without the grant
funds, it becomes very, very difficult to develop projects that
are affordable.
Most of the sewer systems that we are working with
communities to develop today in rural areas, those are usually
paying somewhere around $60 to $65 for sewer service. They are
already paying usually in the neighborhood of $40 to $45 for
water. If you look at EPA statistics, they estimate that users
in rural areas are paying three to four times what their urban
counterparts are paying for those same services.
So I think it is really critical as we move forward that
Rural Development's funding be restored to a level that will
allow them to help small communities. I mean, infrastructure
forms the basis of any future development in terms of job
creation and those kinds of things. I would hope that as an
economic stimulus package is considered, that there will be
some consideration given to setting aside part of those funds
for infrastructure and specifically for infrastructure in rural
areas.
Statistics show that for every million dollars that is
invested in infrastructure, 30,000 jobs are created. So not
only do we have the opportunity to create jobs and stimulate
the economy, but we have the opportunity to also make an
investment in our future and to do so in a way that fixes
another serious problem that our country is facing.
So I just urge you that as you consider ways to stimulate
the economy that infrastructure be a part of that equation, and
I know it may seem counterintuitive to say we need to spend
more money at a time when it appears that we are already
spending a lot of money, but in fact, a number of leading
economists in the last couple of weeks have come out and said
exactly that, that this is not the time to worry about deficits
or those kinds of things but this is the time that the Federal
Government really needs to step up and get the economy moving.
So I hope that you will consider infrastructure and
particularly infrastructure for small communities as one way of
doing that.
We thank you for the opportunity to talk about what is
important to small communities.
[The prepared statement of Ms. Martin can be found on page
45 in the appendix.]
Senator Brown. Thank you, Ms. Martin, and I think that most
economists are saying that now about spending, including some
conservative economists and conservative elected officials know
that this is a time you don't focus on balanced budgets. You
focus on putting people to work.
Mr. Fluharty, again, thank you for being here. I know it
was not directly, so thank you.
Mr. Fluharty. I wouldn't have missed it for the world,
Senator.
Senator Brown. Thanks.
Mr. Fluharty. Thank you for being here.
Senator Brown. Talk to me about the Farm Bureau guy from
Indiana and his comments. Give us some more details about
European rural areas. Is it partly transportation, their train
system? Is it partly just more focus? What do they do?
Mr. Fluharty. Much more than that, and I am honored to
currently serve as a German Marshall Fund Transatlantic Fellow,
so I realized after my fifth farm bill that we would never
secure sufficient funding for Rural Development unless American
agriculture believed it was in their best interest. I spent 10
years as an Ag association executive. My family has been in
farming for 125 years. After this farm bill, it became clear to
me that we are already rewriting the 2013 bill as Europe is
rethinking their common Ag policy and moving forward to do one
in 2013.
I just want to commend you for being on the Ag Committee.
It is absolutely critical that states like Ohio begin to weigh
in on the urban impact of a dynamic rural economy. Ag producers
in the United States secure 90 percent of their household
income off the farm--90 percent. Both the EU and the US are
moving away from farm maintenance. This is our last farm bill
like the last one. But it is going to be critical that we
retain these investments in this rural geography.
I wish we had time to talk about the EU, because they have
essentially been much smarter with public sector investments,
and I took these 20 CEOs and presidents to Europe to show them
how agriculture is supported in Europe at the same time rural
economies are. And what you learn is three things. There is an
integrated strategic planning and evaluative framework. You
know, your work on the committee, there is no evaluation of
your Rural Development Programs. We have a lot of programs. It
is the vision we lack. Therefore, we don't integrate Governor
Strickland's investment with the county's investments, with the
CDBG and CSBG grants, and with your R&D monies. In Europe, they
do all that.
Second, they target monies to prioritizations coming out of
that. And as we think about what we will do in the future, we
really do need to think about where agriculture moves. Those
ladies and gentlemen came away from that realizing there is a
different model that they need to consider. Those folks are
going to stay together. We are building a coalition of
agriculture for rural development and these are the leading
CEOs of all of our Ag groups.
The real question is, why did we add a billion dollars in
mandatory funding in the 2002 bill for the RSIP we worked on
and that is all gone today? RUPRI has a cooperative agreement
with USDA RD to help them. There is no doubt leveraging federal
money helps. In B&I, we put $340 million in outlays out in the
most recent year and we got $6 billion in return, and 137,000
jobs.
The problem with moving fully to a market approach is there
are market anomalies and there are market failures and there
are areas that will never compete for that because they start
out research and resource poor. In Europe, they divide that
much better. Now, neither side of the coin has it right, but I
would definitely argue we are going to have to think about
greater grants commitments from the Federal Government, and it
may come in a stimulus rather than in the R&D jurisdiction. If
we simply go with leveraging, we will fully continue the
suburban homogeny that is grabbing that and areas like rural
Appalachia in Ohio will be disadvantaged.
The RCIP program that was passed would allow everything you
talked about today to be built regionally, to be locally
flexible, to be leveraged, and it creates a community
foundation IRP to create endowments to let rural wealth come
in. There are models we could use. My concern very much is we
are at 3 percent of our Ag bill in this country for rural
America. It is at 17 in Europe and growing. Our competitors are
not Columbus and Detroit, it is the rural regions of Europe
that are competing with us and they are doing a much wiser job
of investing public sector funds in disadvantaged areas.
And I would love to visit further about that because there
are things this committee has to do because you have the
statutory jurisdiction, and I think a leader from Ohio who sees
the urban-rural link in regional systems, I would like to ask
you to be our champion for----
Senator Brown. How is a rural area in Ohio competing with a
rural area in Germany?
Mr. Fluharty. We are a global economy.
Senator Brown. Is it vis-a-vis manufacturing or----
Mr. Fluharty. It is absolutely everything, and if you ask
any of the businesses that these ladies and gentlemen are
working with, they are thinking about global customers right
now. You know, it is interesting and it is instructive. My
father came back here. He was a reporter for AP in Columbus in
the 1940's. He came back to the valley in 1946 to help start
the College of Steubenville, now Franciscan University. I think
he spent his whole life there. It was really a community
college then.
These two institutions have meant a huge, a huge deal to
this valley and I watched dad all through high school. He would
come home every night and the mills are going, the mines are
going, everything is fine. One of God's graces is as we grow
older, he exchanges our experience for a little wisdom. I said
1 day, Dad, why are you doing this for? And he said, ``Someday,
the mills and the mines will be gone.'' The history of our
valley is we extract what is richest and take it somewhere else
and we don't invest in our people. I learned later that is
because his father had three or four newspapers in West
Virginia that he lost in the boon of the oil in the 1930's and
1940's.
We need to realize 90 percent of the new jobs in our valley
are going to come from entrepreneurship and innovation. I loved
the earlier comment about cellulosic ethanol and natural
resources. Here we sit with Columbus, Akron, Charleston,
Pittsburgh in this wonderful area right here in the middle of
it. We need to be thinking about human capital and social
capital, like what JCC does, and building small businesses.
Now, those small businesses don't compete with Cleveland.
They compete globally. And so thinking about how we link
regional assets wherever they are so that an advanced
manufacturing firm can sell in Japan, that is really our future
and we are not doing it nearly as well. We lack integration in
our rural development services for regions and we lack focus.
Europe invests 6 percent of their money on community capacity
technical assistance so that if someone wants to start
something here, it is part of their program.
As you asked, what is going on for that man who is going
through a pension situation, a community college has to find
him. There really are ways to think rethink how organizations
like these that are doing really strong regional work can be
given flexible dollars to do it more smartly. I am absolutely
convinced we can do that.
Senator Brown. Thank you. Thanks again.
Mr. Ricer, you mentioned that to move 10 percent--a 10
percent shift from loans to grants for broadband. Give me, if
you would, sort of the three steps that we should follow that
we can do together to extend broadband to this part of the
State and to rural areas. What should the Federal Government be
doing with Community Action Agencies and others to progress as
fast as we should?
Mr. Ricer. Well, I think the beginning would be to increase
funding, heighten education and awareness, two of the success
stories and how rural communities, in particular Appalachia,
have struggled, and then perhaps third being to leverage State
and local dollars in any way, shape, or form. I know in order
for our small agency to make this happen, we had--for instance,
we needed a small match for some State project monies we were
going for. We had the county commissioners come up with $2,500
in an impoverished, double-digit unemployment county and the
present commissioner said, ``If I have to sell cookies on the
steps of the courthouse, we want broadband.''
So I think the more that you look, I feel that
infrastructure is the key. It is something that sometimes you
don't see immediate results. People, the general public,
taxpayers are a little hesitant sometimes. They would rather
see--and not that they are not important, but new affordable
housing or new colleges or new schools or new industry. But the
beginning starts with infrastructure. You don't see it, but I
agree with Mr. Shaffer, what he said earlier when they were
talking about what businesses are you going to serve if we get
water. What business do you have? Well, infrastructure, in his
case water, would bring increased stimulus for businesses to
come in.
But I think broadband is not only the new wave, it is here
to stay. It is a necessity. It is a shock that some of the
third-world countries--I was blown away by some of the other
countries that are actually ahead of America, especially the
rural pockets in some of these other areas as opposed to
America and the rural areas.
I think with anything, it starts with funding, and then
leveraging that funding and squeezing. Get a dollar out of a
dime. Squeeze it as far as you can and then show the measurable
objectives to show that it is successful and then you will
become more supportive.
In our area, we are the only game in town, for the most
part. The so-called big brother doesn't want to come in, and
when talking to some of these larger investors in AT&T or
whatever, the lady told me, we have shareholders. Our
shareholders won't let us invest. Now, would you rather go to
an area where you can serve 1,000 in a month or 50 in a month
in hookups? But with Community Action, we have boards of
directors that are willing to take that risk of whatever
corporate money we need to leverage with that. That is our
mission. That is our purpose.
Senator Brown. You got $2,500 from Monroe. What did you get
other places? How did you do?
Mr. Ricer. It depends. A lot of it is from in kind, for
instance, we went on a lady's property that was roughly--she
probably had a $50,000-an-acre piece of ground in a really
beautiful area, prime, ripe for development, and----
Senator Brown. This was where?
Mr. Ricer. Graysville. This is our second Federal project.
And we were able to secure this entire knob, one of the highest
elevations in Monroe County, erect a 180-foot tower, which in a
population that has 118 people in it--and, of course, we have
got a 25-mile radius, range, with the Motorola canopies that we
are using. But Mrs. Harman said, we put this 200-foot tower
right in the middle of town on my property, on the highest
point, I want my grandson to have this Internet. He loves these
games and stuff. You give me--so the tradeoff was, we gave her
free service forever, as long as GMN is there, she will never
pay for high-speed wireless. She gave us a premium spot. We are
going to have hundreds of customers. We have got 69 on the
waiting list right now.
Senator Brown. Is broadband the most important single thing
to keep young people in communities like that?
Mr. Ricer. Senator, I am not sure it is the most important,
but I would think, especially today, it is in the top three. It
is really critical. It is what keeps--you level the playing
field. I mean, if you can operate a business and get an
education in a rural area like this, in the old days, years
ago, you had to go to the cities if you wanted certain things,
certain types of education, certain types of incomes, and
certain types of malls and so forth, where electronically and
wirelessly now it may not be--they may not have a mall next to
them if you are in Monroe County or Noble County, but you have
the opportunity to create a business that can be very lucrative
and very successful and stimulate the local economy and hire
people from--like the saying says, if you want to sit at your
roll-top desk in your pajamas, you can operate a very
profitable business. Thank you.
Senator Brown. Ms. Martin, how many [inaudible] roads are
there around the State?
Ms. Martin. Oh, you know, I can't say what the exact number
is, but I can tell you that they are everywhere. I mean,
certainly the Southern Ohio area, anywhere you move away from
the river, water becomes difficult to find, so all of the
Southern Ohio, at least in areas that aren't currently served
by public water systems, you are going to find that same
problem.
On the sewer side, the problem literally is everywhere
around the State. I mean, there are just countless areas that
are being mandated by EPA to install sewers. We are working on
a project right now right here in Jefferson County that there
are issues, there have been issues for a number of years. The
septic systems are failing, there is no question about that,
because they overflow into the streets where kids are riding
their bikes. But there just isn't enough money.
I mean, Rural Development has already offered $7.5 million
to sewer the area and it still isn't enough. You know, I mean,
the choice for residents that live in that area is to either
pay a $25,000 assessment so that they can make their bill only
$50 a month or to pay $145 or so a month in their monthly rate.
So those types of projects are--you know, that is one. I could
probably off the top of my head tell you ten more just like it.
I know we work with about 100 communities or so every year,
and I can tell you that we still have not, even though we have
got ten people in the field working around the State, we
actually have more people in Ohio working on the RCAP program
than any State in the country because we have been very
aggressive in trying to get funding to help small communities,
and despite that, we still are not able to address the demand.
We still have communities that are on a waiting list right now
that need water or sewer that we just are not able to get to.
So I don't know exactly how many there are, but I know that it
is too many for us to be able to address.
Senator Brown. Tell me a success story. Tell me one of the
best success stories you can come up with to deal with what Mr.
Shaffer is working so hard on.
Ms. Martin. OK. Well, I will tell you one that I worked on
personally, because I used to work in the field. There was a
project very much like the one that he described, except that
it was in Noble County, but same thing. People were hauling
their water in the wintertime, having to go into the
laundromats to get water. There just wasn't any water
available. All the things that he mentioned have brought back
memories of that project, as he said, trying to ration water
between the livestock and your kids and trying to figure out
how you do that.
So this was a project that they had been working on for
about 10 years, trying to get it done, just had not had any
success. I think part of the problem was, you know, in small
systems, the only way to really get a project done today,
because of the expense, is to put together multiple sources of
funding. So Rural Development alone, there just isn't enough
money there, so we have to look at Rural Development and CDBG
and come to legislators for STAG grants [ph.] and look at just
a number of funding sources to try to make this thing feasible,
and so that is what we were doing in that project, is trying to
figure out how we put all these sources together.
The biggest problem that a lot of communities run into is
you get into this chicken or egg thing where nobody wants to be
the first to commit their funds because they are not sure if
the other funds will be there, and so they had sort of gone
around in circles for about 10 years. And so we were able to
step in and put together a package that we thought would be
reasonable and then work with all the different agencies to
say, you know, we need to try to make this come together at the
same time.
Ultimately, it did, and you don't realize how much you take
water for granted when you live in a city. But I remember as we
had the ceremony to celebrate the fact that the water lines
were going in, I remember one woman coming up and just hugging
me. I had never seen her in my life and she came up and just
hugged me and said, ``You have no idea what this means to us.''
Until you haul water--she said, ``I have six kids, and until
you haul laundry down the ridge in the middle of winter to try
to get it to a laundromat or figure out how you are going to
get enough water for your kids and your livestock at the same
time in the summer,'' she said, ``you couldn't possibly know
what this means,'' so----
Senator Brown. The burden is greater on women than men, is
that right?
Ms. Martin. It probably is.
Senator Brown. There was a wonderful passage in a Robert
Caro book many years ago. He had done a three-part biography of
Lyndon Johnson, and in the first part for about ten pages early
in the book he explained what life in the hill country was like
in Texas before electrification, and it was especially
difficult for women. It is hard on everybody, but especially
difficult for women.
But just to close, the last question I asked the first
panel, give me--try to keep it to 2 minutes--if we could do one
thing. I will start and just go left to right. If we could do
one thing, the Federal Government could do one thing in the
next year to answer the concerns that you have and your
commitments to communities around this country and around this
State, what would it be? Two minutes.
Mr. Fluharty. First of all, understand it is not a rural
problem, it is not an Appalachian problem, it is an American
problem. Fifty-three percent of the rural people in Ohio live
in metropolitan areas. So funding for Rural Development is
important to them, but they are not able to access that right
now.
The rural-urban dependency is a great opportunity to assure
that urban decisionmakers begin to commit to rural America. We
know what to do. It is a matter of political will, Senator, and
you know that. It made great sense to pass RCIP. We could not
secure the funds.
So I think the most critical thing you and your colleagues
could do in this crisis is to continue to make the case that
thinking about the small rural impacts of large sector programs
must be part of our elected officials' thinking. It scares me
greatly that the rural differential that is going to be a huge
challenge in every sector will be missed, and I just urge you
as a champion for disadvantaged folks everywhere to think about
your role on the Ag Committee and begin to say rural and urban
America are linked and need to think about one another. Thank
you.
Senator Brown. Thank you.
Mr. Ricer.
Mr. Ricer. I would say, again, to continue efforts in
funding in rural America for infrastructure would be my wish or
hope. When I feel you see the trend now and in the future,
there are a lot of times we are seeing from the urban areas,
they are coming into the rural areas for the cost of living. It
is cheaper. The crime rate is lower. Areas are more sparsely
populated. And I know if you look all the way up along the Ohio
River, all the 29 counties of Appalachia, I feel that you see a
lot of absentee landowners and you see, whereas years ago it
may have been fourth and fifth generation agriculture, farming,
mining, factories, you have got a lot of people coming in that
perhaps have made their money somewhere else and are wanting to
invest where they can leverage it and that is in rural America,
or in our case, rural Appalachia in Southeastern Ohio and
Eastern Ohio.
So I think if the Federal Government will continue to
invest in the rural areas, they will see tenfold the economic
stimulus and growth in a short timeframe. I think it is the
best bang for the buck. It is a wise use of the money.
Senator Brown. Thank you.
Ms. Martin.
Ms. Martin. Well, I would just echo what has already been
said in terms of making an investment in infrastructure and
particularly making an investment in rural areas. I think the
need for a comprehensive rural policy, as you mentioned, is
great, something we haven't really had and something that
definitely is needed. And I think that, as I said, I don't
think we are going to see any future development in rural
areas, not just in water and sewer infrastructure but in all of
our infrastructure. It is really something that is reaching
crisis proportions in this country and not just in rural areas
but in urban areas, as well. And so I would like to see
increased infrastructure investment and just urge that we don't
leave out the smaller rural communities out of that equation as
we move forward looking at that.
Senator Brown. Thank you. Thanks to all three of you. As I
said to the first panel, if you have additional comments or
written statements you would like to submit to the committee,
you work through Joe Schultz or Jean Wilson, and I thank you
all. Mr. Eadon, thank you for being here, and thank you very
much, Mr. Shaffer, and Mr. DiPietro. I thank the three of you
very much.
The committee is adjourned, and I thank Jefferson Community
College again and the mayor for joining us. The committee is
adjourned. Thank you.
[Applause.]
[Whereupon, at 12 p.m., the committee was Adjourned]
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A P P E N D I X
October 22, 2008
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