    [House Hearing, 111 Congress]
    [From the U.S. Government Publishing Office]

                     DEPARTMENTS OF LABOR, HEALTH AND HUMAN
                   SERVICES, EDUCATION, AND RELATED AGENCIES
                            APPROPRIATIONS FOR 2011

    _______________________________________________________________________

                                    HEARINGS

                                    BEFORE A

                               SUBCOMMITTEE OF THE

                           COMMITTEE ON APPROPRIATIONS

                             HOUSE OF REPRESENTATIVES

                          ONE HUNDRED ELEVENTH CONGRESS
                                 SECOND SESSION
                                    ________
      SUBCOMMITTEE ON THE DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES,
                        EDUCATION, AND RELATED AGENCIES
                       DAVID R. OBEY, Wisconsin, Chairman
     NITA M. LOWEY, New York            TODD TIAHRT, Kansas
     ROSA L. DeLAURO, Connecticut       DENNIS R. REHBERG, Montana
     JESSE L. JACKSON, Jr., Illinois    RODNEY ALEXANDER, Louisiana
     PATRICK J. KENNEDY, Rhode Island   JO BONNER, Alabama
     LUCILLE ROYBAL-ALLARD, California  TOM COLE, Oklahoma
     BARBARA LEE, California
     MICHAEL HONDA, California
     BETTY McCOLLUM, Minnesota
     TIM RYAN, Ohio
     JOSE E. SERRANO, New York

     NOTE: Under Committee Rules, Mr. Obey, as Chairman of the Full
    Committee, and Mr. Lewis, as Ranking Minority Member of the Full
    Committee, are authorized to sit as Members of all Subcommittees.
          David Reich, Nicole Kunko, Stephen Steigleder, Donna Shahbaz,
                John Bartrum, Lisa Molyneux, and Mike Friedberg,
                               Subcommittee Staff
                                    ________

                                     PART 5
                                                                       Page
     Department of Labor FY 2011 Budget Overview......................    1
     Department of Education FY 2011 Budget Overview..................   59
     Department of Health and Human Services FY 2011 Budget Overview..  145
     National Institutes of Health FY 2011 Budget Overview............  279

                                    ________
             Printed for the use of the Committee on Appropriations
                                     Part 5

          DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION,

                  AND RELATED AGENCIES APPROPRIATIONS FOR 2011
                                                                          ?
    ?
                                                                          ?

                     DEPARTMENTS OF LABOR, HEALTH AND HUMAN

                   SERVICES, EDUCATION, AND RELATED AGENCIES

                            APPROPRIATIONS FOR 2011

    _______________________________________________________________________

                                    HEARINGS

                                    BEFORE A

                               SUBCOMMITTEE OF THE

                           COMMITTEE ON APPROPRIATIONS

                             HOUSE OF REPRESENTATIVES

                          ONE HUNDRED ELEVENTH CONGRESS
                                 SECOND SESSION
                                    ________
      SUBCOMMITTEE ON THE DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES,
                        EDUCATION, AND RELATED AGENCIES
                       DAVID R. OBEY, Wisconsin, Chairman
     NITA M. LOWEY, New York            TODD TIAHRT, Kansas
     ROSA L. DeLAURO, Connecticut       DENNIS R. REHBERG, Montana
     JESSE L. JACKSON, Jr., Illinois    RODNEY ALEXANDER, Louisiana
     PATRICK J. KENNEDY, Rhode Island   JO BONNER, Alabama
     LUCILLE ROYBAL-ALLARD, California  TOM COLE, Oklahoma
     BARBARA LEE, California
     MICHAEL HONDA, California
     BETTY McCOLLUM, Minnesota
     TIM RYAN, Ohio
     JOSE E. SERRANO, New York

     NOTE: Under Committee Rules, Mr. Obey, as Chairman of the Full
    Committee, and Mr. Lewis, as Ranking Minority Member of the Full
    Committee, are authorized to sit as Members of all Subcommittees.
          David Reich, Nicole Kunko, Stephen Steigleder, Donna Shahbaz,
                John Bartrum, Lisa Molyneux, and Mike Friedberg,
                               Subcommittee Staff
                                    ________

                                     PART 5
                                                                       Page
     Department of Labor FY 2011 Budget Overview......................    1
     Department of Education FY 2011 Budget Overview..................   59
     Department of Health and Human Services FY 2011 Budget Overview..  145
     National Institutes of Health FY 2011 Budget Overview............  279

                                    ________
             Printed for the use of the Committee on Appropriations
                                    ________
                         U.S. GOVERNMENT PRINTING OFFICE
     58-233                     WASHINGTON : 2010

                                      COMMITTEE ON APPROPRIATIONS

                       DAVID R. OBEY, Wisconsin, Chairman

     NORMAN D. DICKS, Washington        JERRY LEWIS, California
     ALAN B. MOLLOHAN, West Virginia    C. W. BILL YOUNG, Florida
     MARCY KAPTUR, Ohio                 HAROLD ROGERS, Kentucky
     PETER J. VISCLOSKY, Indiana        FRANK R. WOLF, Virginia
     NITA M. LOWEY, New York            JACK KINGSTON, Georgia
     JOSE E. SERRANO, New York          RODNEY P. FRELINGHUYSEN, New
     ROSA L. DeLAURO, Connecticut       Jersey
     JAMES P. MORAN, Virginia           TODD TIAHRT, Kansas
     JOHN W. OLVER, Massachusetts       ZACH WAMP, Tennessee
     ED PASTOR, Arizona                 TOM LATHAM, Iowa
     DAVID E. PRICE, North Carolina     ROBERT B. ADERHOLT, Alabama
     CHET EDWARDS, Texas                JO ANN EMERSON, Missouri
     PATRICK J. KENNEDY, Rhode Island   KAY GRANGER, Texas
     MAURICE D. HINCHEY, New York       MICHAEL K. SIMPSON, Idaho
     LUCILLE ROYBAL-ALLARD, California  JOHN ABNEY CULBERSON, Texas
     SAM FARR, California               MARK STEVEN KIRK, Illinois
     JESSE L. JACKSON, Jr., Illinois    ANDER CRENSHAW, Florida
     CAROLYN C. KILPATRICK, Michigan    DENNIS R. REHBERG, Montana
     ALLEN BOYD, Florida                JOHN R. CARTER, Texas
     CHAKA FATTAH, Pennsylvania         RODNEY ALEXANDER, Louisiana
     STEVEN R. ROTHMAN, New Jersey      KEN CALVERT, California
     SANFORD D. BISHOP, Jr., Georgia    JO BONNER, Alabama
     MARION BERRY, Arkansas             STEVEN C. LaTOURETTE, Ohio
     BARBARA LEE, California            TOM COLE, Oklahoma
     ADAM SCHIFF, California
     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
     LINCOLN DAVIS, Tennessee
     JOHN T. SALAZAR, Colorado
     PATRICK J. MURPHY, Pennsylvania

                     Beverly Pheto, Clerk and Staff Director

                                      (ii)

    DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION, AND RELATED
                        AGENCIES APPROPRIATIONS FOR 2011

                                  ----------

                                             Wednesday, March 10, 2010.

                  DEPARTMENT OF LABOR, FY2011 BUDGET OVERVIEW

                                    WITNESS

    HON. HILDA SOLIS, SECRETARY OF LABOR

                                  Introduction

        Mr. Obey. Welcome, Madam Secretary. I am sorry we had to
    delay this hearing for an hour because of the special meeting I
    was called to today. So, to try to put us somewhat back on
    schedule, I am going to forego an opening statement and simply
    welcome you here. I know you probably have the toughest job
    that any Secretary of Labor has had since the Great Depression.
    I wish you luck and anything else that you need to get the job
    done.
        Mr. Tiahrt.
        Mr. Tiahrt. Thank you, Mr. Chairman.
        Secretary Solis, welcome back to the Committee. It is
    always a privilege to receive testimony from a former
    colleague.
        During these tough times, it is an extremely important
    Cabinet position to hold. Madam Secretary, when I look back
    over this past year, I become quite anxious about where we are
    today, and even more concerned about where we are headed.
    Unemployment continues to hover around 10 percent, twice the
    level of structural unemployment. We are seeing record budget
    deficits and historic levels of debt, many State budgets are
    also deep in red, and households continue to tighten their
    belts. They are making very difficult decisions, but necessary,
    decisions on spending cuts, which is what they expect their
    Government to do.
        We have to work our way through this together and do so
    responsibly, and that does not mean that we spend our way out
    of this recession, as the distinguished Majority Whip said last
    month. I fundamentally disagree with that approach. In order to
    work towards a vibrant American economy in the 21st century,
    Congress needs to take a comprehensive look at policies and
    incentives which build solid economic foundation. This will not
    be accomplished by Federal funds, but by private capital which
    spurs innovation and leads to job growth. Lasting economic
    growth comes from the bottom up, and not the top down.
        Government does not create wealth. I think that is a
    misnomer in Washington today, that Government does create
    wealth. It does not. Government does not create wealth; the
    private sector does. And jobs are a byproduct of creating
    wealth. Our fellow Americans have been the victims of a top-
    down approach this past year. The Recovery Act was supposed to
    create 3.5 million jobs; yet 3.3 million jobs have been lost
    since its passage, including over 25,000 manufacturing jobs in
    Kansas. Kansas wants to get back to work. Kansas employers want
    to hire them. It is our duty to give them the tools and the
    opportunity to do so, not enacting policies that will only lead
    to a jobless recovery.

                                FISCAL RESTRAINT

        Yet, these are macro issues, Madam Secretary, and it will
    take so much more than the Department of Labor alone to
    positively affect them. But it can start here, with this
    Committee, and it has to because it has not started with the
    Administration. President Obama promised a three-year freeze on
    non-defense, non-security domestic spending; yet, his request
    for programs under the jurisdiction of this Subcommittee have
    increased by $27,000,000,000.
        We need to do exactly what the President promised, but has
    so far failed to do: apply the scalpel to this budget request
    and make the tough, perhaps politically unpopular, decisions.
        There was an excellent article in the Wall Street Journal
    today about Ireland and how they are going to survive their red
    ink. The title of it is Irish Take Bitter Medicine to Survive
    the Age of Red Ink.

                                 ETA CARRYOVER

        I strongly support many of the programs funded through this
    bill; they are important for sustainable economic growth. But
    in these difficult times they call for fiscal restraint
    responsibility. Case in point--and I know the mere mention of
    this term, carryover, will cause many to sit upright, but
    consider the Employment and Training Administration. The entity
    was responsible for providing employment and training
    assistance programs and the administration of unemployment
    benefits; $2,500,000,000 of unspent funds was carried into
    fiscal year 2010, $700,000,000 more than you had estimated;
    $2,500,000,000 appropriated in fiscal year 2009 that was simply
    not needed.
        We all know the trillion is the new billion, but these are
    huge, huge numbers. Just because the practice is permissible by
    statute does not make it an appropriate use of taxpayer
    dollars. Again, tough but responsible decisions must be made
    this year, and we have to own up to them.

                             CREATION OF GREEN JOBS

        Lastly, your budget request is premised on the notion of
    creating good jobs, a simple enough concept that we all
    support. And as these good jobs are created, I certainly hope
    that we do not fall into the same nebulous void as green jobs.
    Not only does the definition of a green job seem to be ever-
    evolving, but even the process by which we now calculate green
    jobs growth is flawed.
        Take Vice President Biden's December memo to the President
    entitled The Transformation of Clean Energy Economy. In it he
    cites that renewable energy investments would create 253,000
    jobs and would ``support''--I presume he means save--up to
    469,000 more jobs. But he footnotes these numbers saying, ``A
    project that employs one person for two years would count as
    creating two jobs.'' One person working for two years is two
    jobs.
        I do not buy this. We could say that one job per month for
    two years would be 104 jobs. I think it is just one job and we
    need to keep our calculations correct and have an accurate
    representation of job growth, because the American people
    deserve and need to know the real facts.
        So, Madam Secretary, I welcome you back once again, and I
    look forward to your testimony today.
        Mr. Chairman, thank you for your time.

                               Opening Statement

        Mr. Obey. Madam Secretary, why do you not proceed?
    Summarize your statement and proceed to the questions.
        Secretary Solis. Thank you, Mr. Chairman, Chairman Obey and
    Ranking Member Tiahrt and members of the Subcommittee. It is a
    pleasure to be here again this year. Thank you for inviting me
    to discuss our fiscal year 2011 budget request, and I ask that
    my prepared testimony be entered into the record, as I will
    review the highlights with you.
        First, it is not possible to discuss next year's budget
    without acknowledging the immediate need to put Americans back
    to work. I am proud of the work we have done with the Recovery
    Act resources, which include providing nearly $50,000,000,000
    in UI benefits to unemployed workers and assisting over 190,000
    of them to maintain their health care coverage under COBRA;
    creating summer job opportunities for nearly 318,000 low-income
    youth and over 18,000 wage-paying community service jobs for
    low-income seniors; and providing training opportunities for
    demand health care jobs and emerging jobs in the new green
    economy, renewable energy.
        While these efforts are helping, they are clearly not
    enough, and at 9.7 percent, unemployment remains persistently
    and unacceptably high, and especially for those particular
    groups most affected. African Americans are suffering at 15.8
    percent, Latinos at 12.4 percent. The situation is dire. And in
    the Native American communities it is even higher.
        I remain hopeful, however, that Congress will reach
    agreement on measures that will allow us to continue to assist
    Americans until the labor market fully recovers.
        Mr. Chairman, you recognized this need when you added funds
    last year for the Senior Community Service Employment Program.
    We moved quickly as a result and many low-income seniors did
    not need to wait for a jobs package to secure employment. But
    there is so much more that needs to be done, and some examples
    are:
        To further extend the safety net for those displaced and
    dislocated workers by extension of the UI and COBRA assistance,
    which I believe the House and the Senate are working on; to
    commit to $1,200,000,000 to ensure that a robust summer jobs
    program can be implemented to put the high number of unemployed
    youth to work to receive job training and education exposure;
        To jump-start our employment through a $500,000,000
    investment through on-the-job training programs that can help
    small businesses and hopefully be incentivized to hire and add
    on more workers; and
        To add $300,000,000 to further support the oversubscribed
    Pathways out of Poverty and Energy Training Partnership
    programs that include employers in all of those partnerships.
        Our budget request will sustain those investments through
    programs that give workers the tools they needed to succeed in
    this new economy. I want to highlight some of the measures that
    will allow us to increase the skills of all segments of our
    workforce.
        For the first time in over a decade, the budget proposes a
    significant increase in funding for the Workforce Investment
    Act programs. However, the additional resources are also
    closely linked to reform. In keeping with the Administration's
    WIA reauthorization goals, a percentage of the funds
    appropriated for adults, dislocated workers, and youth will be
    reserved for two new WIA Innovation Funds to provide
    competitive grants to encourage the workforce system to test or
    replicate models that we know work to expand and improve
    services and results for their customers, namely, employment in
    the private sector.
        The budget also requests an increase of $45,000,000 for the
    Green Jobs Innovation Fund. And I can tell you from my
    experience with the Recovery Act competitions that the demand
    for green job training has been enormous, and it has come from
    the private sector. We have simply not been able to keep pace
    with the record number of applications, submissions that came
    into my office; and I believe this unprecedented level of
    interest calls for further investment, more resources.
        We are committed to linking this training with job creation
    efforts in green industries and expect our grantees to work
    with employers and other participants to gain those valuable
    skills and industry-recognized credentials that will help them
    move into better and higher paying jobs.
        In addition to the Youth Innovation Fund, the budget
    request includes an increase in other services for youth, such
    as $17,500,000 in the YouthBuild program that will allow us to
    extend this program and serve an estimated 230 competitive
    grants to local organizations to serve disadvantaged youth.
        We also expect to see benefits from fully integrating the
    Job Corps program with other youth programs and returning it
    into the ETA program. We are also undertaking a rigorous and
    comprehensive review of the Job Corps operations to identify
    any needed reforms that we might need to take.
        Good jobs for everyone means that other vulnerable
    populations must not also be left behind. That is why we are
    doing more to target resources to areas of greatest poverty,
    and that is why the budget request includes increases in the
    Indian and Native American and Migrant and Seasonal Farm Worker
    Programs. Two DOL agencies, ETA and the Office of Disability
    Employment and Policy, known as ODEP, will also receive
    $12,000,000 each to continue their job disability initiative to
    increase the capacity at our one-stop system to provide
    accessible services to individuals with disability.
        We know returning veterans, including those who are
    disabled, can contribute greatly to the expansion of our
    economy. They are the most under-utilized population. For the
    Veterans Employment and Training Service, the budget requests
    $262,000,000 and includes increases for homeless veterans
    grants and transition assistance programs which are vitally
    important for those individuals that are coming back and want
    to be reintegrated into our society.
        Our Assistant Secretary, Ray Jefferson, will be with you
    tomorrow to fill in any items or activities that you require
    more information regarding our Vets program. The ETA Assistant
    Secretary, Jane Oates, will also be here tomorrow to discuss
    any further plans and details you might have regarding
    partnerships that include the nursing shortage and also efforts
    to help provide assistance to States to pay for a paid leave
    program that we are now initiating.
        I know you understand that it can be too easy to exploit
    workers when jobs are scarce. We need to remain vigilant in
    protecting the rights and safety of all of our workers. In
    fiscal year 2011 the budget continues that vigilance by hiring
    additional enforcement personnel and strengthening our
    regulatory efforts. We build upon the resources that you
    provided last year to return our worker protection programs to
    the 2001 staffing levels or greater, after years of decline.
        To do so, the request includes $1,700,000,000 in
    discretionary funds for 10,957 FTE for our worker protection
    activities. This funding level is $67,000,000, 4 percent, and
    177 FTE above last year's level, and the agency-by-agency
    details are in my prepared testimony.
        In discussing worker protection, I want to point out that
    the request also includes increases to support the development
    of regulations in areas such as pensions, worker health and
    safety. These resources will help reinvigorate the Department's
    regulatory program and are critical to the success of our
    worker protection agenda.
        The budget also includes an important interagency effort to
    address the issue of employee misclassification. Workers
    wrongly classified as independent contractors are denied access
    to critical benefits and protections in the workplace to which
    they are entitled, for example, overtime, health care coverage,
    worker's compensation, family and medical leave, and
    unemployment insurance.
        In addition to denying workers these protections and
    benefits, misclassification results in billions, billions of
    dollars of losses to Government through unpaid taxes. Our
    budget includes $25,000,000 to hire additional enforcement
    personnel targeted at misclassification to fund competitive
    grants to boost States' incentives and capacity to address this
    problem.
        Restoring our economy requires ensuring the world economy
    is also sound and balances. I firmly believe that our
    responsibility to promote acceptable conditions of work abroad
    is closely linked to our worker protection agenda here at home.
    It is with this goal in mind that we are requesting an increase
    of $22,000,000 in the ILAB program to increase the monitoring
    of labor provisions in trade agreements and to support programs
    that use innovative and successful models to improve the labor
    rights of workers in our trading partner countries.
        Mr. Chairman, it is thanks to your leadership that we have
    been able to pursue these approaches, which is based on highly
    successful garment industry projects that we have been working
    on in Cambodia. By increasing funding, we will be able to
    expand our reach of worker rights protections in additional
    countries. So I thank you for your previous support.
        Before I conclude, I want to say just a few words about our
    commitment to ensuring accountability for the resources that
    you entrust us with. This is why my testimony links investments
    to performance outcomes and why we have new commitment to
    program evaluation.
        Members of the Subcommittee, I think we all know that too
    many Americans are ready and willing to work. But we know that
    they cannot find a job. There are six applicants for each job
    that is available now. We know the urgency. The budget before
    you will help spur new and better job opportunities while
    fostering safe workplaces that respect workers' rights. That is
    what my goal of Good Jobs For Everyone is, and I look forward
    to working with you on making this vision a reality.
        I am happy to respond to any questions that the members of
    the Subcommittee might have.
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        Mr. Obey. Thank you very much.
        Mr. Tiahrt.

                                   GREEN JOBS

        Mr. Tiahrt. Thank you, Mr. Chairman.
        I want to talk just a little bit, ask you some questions
    about the green jobs. In the fiscal year 2011 request for
    increased funding for green jobs training, the request is for
    $45,000,000 over fiscal year 2010, for a total of $85,000,000,
    more than doubling its funding in one year. This would be in
    addition to the $500,000,000 provided in the Recovery Act.
        However, your latest Recovery Act execution report states
    that only $520,000 of the $500,000,000 provided for green jobs
    has been spent. These funds were provided 13 months ago. I am
    aware the obligation rate is higher, but I think it is
    important to focus on what has actually been injected into the
    economy.
        Money that is merely obligated does not provide the
    economic stimulus intended by the Recovery Act, and it
    certainly does not help the American worker. Furthermore, I am
    concerned about the push to create green jobs, whether they
    will actually have a counter effect. There is a Washington Post
    article about the smart grid, and that is considered to be one
    of the clean energy sector jobs growth. The author, who is the
    Director of GE Smart Grid Initiative, suggests that because the
    smart grid is premised on automation, more than 28,000 jobs of
    meter readers are likely to disappear.
        Now, maybe that is just the normal course of technology; we
    should accept that. But green jobs is kind of a novel concept.
    In the article he says that there are really four categories,
    based on what has happened in Europe, for green jobs when it
    comes to this smart grid: it is research and development, it is
    manufacturing, installation, and then information technology.
        Now, we are excited about the manufacturing side of it
    because we have to make things in this Country. If we do not
    make things, our economy is going to be stagnant. We cannot
    exist as a service economy only; we have to make things. So the
    manufacturing side of it is very good. In fact, we have a wind
    generating manufacturing facility owned by Siemens, a German
    company, in Hutchinson, Kansas, not far from my home. But when
    you look at the actual jobs that are residual or long-term for
    these green jobs, it is a minimal number. So I am concerned
    that we are overestimating the impact on our economy by green
    jobs.
        If you take into consideration the study done by King Juan
    Carlos University in Spain, they decided that for every green
    job that was created, the resources were taken from the private
    sector and actually cost 2.2 jobs in the private sector. So we
    had a net loss of 1.2 jobs, according to their estimate, in
    Spain for having a single green job. So taking resources out of
    the private sector to create these and subsidize these jobs may
    not be the best plan to get the economy rolling again.
        I am going to go back to this $500,000,000. So if you have
    not spent any of the $500,000,000 of the stimulus fund, how can
    we assess whether or not unemployed individuals have been able
    to obtain work through the so-called green jobs sector?

                             DECREASE IN JOB LOSSES

        Secretary Solis. Thank you, Congressman Tiahrt, for your
    question. You bring up a lot of good questions here, and what I
    would like to begin with is, frankly, if we can all look back
    where we were in January and February of last year. We were
    losing well over 700,000 jobs a month at that time.
        This last month, one of the roles that I play in the
    Department of Labor is to have to issue what that job report
    is. I am happy to say that we have seen a very, very dramatic
    decrease in job loss; it went down to 32,000 jobs a month.
    However, I do want to say that we have a high, high number of
    people who continue to be unemployed and have been out of work
    for longer than six months.

                                   GREEN JOBS

        The green job programs that we have rolled out--and much of
    that money was actually released through a competitive process
    where we had--in each case, entrepreneurs, partnerships with
    different providers that were a compilation of community
    colleges, apprenticeship programs, but, more importantly, we
    had business involved. These efforts are to help create job
    training slots, and the idea is that the results of those
    partnerships come about because of the design of the grants'
    writers from the local area.
        Much of what is coming to us is by way of what the
    community sees as a need. So, for example, in a community that
    I visited in Tennessee, their interest was in looking at solar
    panels, looking at trying to change how work was done in the
    Sharp Corporation. They were doing televisions before; now they
    are doing solar panels. The owner of that property was telling
    me that they would like to see more help so that they can have
    a trained workforce to make that kind of transition. This is
    where I believe our partnerships will work in a better way to
    help focus in terms of what regional sectors are looking for.
        I know that there has been much debate about how many jobs
    we created, but I know that because of the Recovery Act we have
    seen more than 1.5 to at least 2.5 million jobs that have been
    created. That also represents people in law enforcement,
    teachers, people who are also working in construction and
    hopefully now beginning to get involved in those construction
    projects that are going to be rolled out through the
    infrastructure monies that were made available by the Congress.
        Mr. Obey. The gentleman's time has expired.
        Mrs. Lowey.
        And let me explain. I am going to try to hold each
    questioner to five minutes, so if members want long answers
    from the witness, they need to ask short questions.

                                  G-20 SUMMIT

        Mrs. Lowey. Well, I am delighted, Madam Secretary, to have
    you with us, and once again I want to congratulate you on your
    effective administration. We really are delighted to see you in
    this position.
        I know that you were very enthusiastic at the last year's
    summit in Pittsburgh when the G-20 leaders called upon you to
    host a meeting of employment and labor ministers in early 2010.
    The economic crisis that our Country is recovering from has
    been felt worldwide. So if you can tell us about this G-20
    meeting, how it will help us solve the jobs crisis we face, I
    think it would be very helpful.
        Secretary Solis. Thank you, Congresswoman Lowey, and it is
    a delight and pleasure to be here with you as well. I know how
    deeply concerned you are with respect to foreign relations, and
    have watched you in action on the floor and always with the
    mind-set of how can we build our relationships with our trading
    partners; and under that premise the G-20 summit that is going
    to be held here in Washington for the first time, I think, is a
    very historic moment. To have our Administration actually
    present this idea in Pittsburgh and have, then, the buy-in from
    the G-20 labor ministers and all those parties to say yes, we
    want to come together.
        This is a global crisis. The economic crisis of job loss is
    hitting everyone, and more severely than our own Country; and I
    think this is an opportunity for us to be able to position
    ourselves once again to talk about some of the innovative
    things that we are doing and listen clearly to what some of the
    other countries are doing that may work better.
        But, more importantly, making sure that the U.S. can play a
    significant role in this effort. And I am very, very
    appreciative that we are able to get the support that we did in
    the last year's budget to help provide the foundation for the
    ILAB division under the auspices of Sandra Polaski. She is
    doing a tremendous job to help build upon those relationships
    that we saw that may have been very fragile in the last few
    years.
        And I am very excited about the opportunity, as I travel to
    other meetings representing our Country at the G-8 Summit,
    talking to other labor ministers there. They are very, very
    much engaged to see where our investments are; where that
    safety net, where those monies are going to help provide
    security for those dislocated workers and what kinds of new
    programs are being implemented to keep people on the job.
        Germany and other countries have very, very different types
    of approaches in how they address keeping workers on the job;
    they help to subsidize that salary and they actually give an
    incentive to businesses to keep those industries in place,
    unlike what we have been doing here. And I say that because
    they have had a tremendous manufacturing industry going there
    for many years, but they know that that investment cannot be
    lost easily, so they make sure that they try to attempt to keep
    dollars there. Those are things that we can learn from.
        So I am very excited to be able to pull together the labor
    ministers here, along with the Administration, to hear about
    some good innovative programs, but also bring together business
    leaders. So we are also bringing together the different chamber
    representatives, the manufacturing representatives, as well as
    labor, to talk about the kinds of ideas and what is needed most
    now in the world.
        So I take this very seriously and I am very pleased that
    the Department of Labor can finally play a role here.

                     BUREAU OF INTERNATIONAL LABOR AFFAIRS

        Mrs. Lowey. Thank you. In the couple of minutes I have
    left, I know you have been proud of the work that the
    International Labor Affairs Bureau has done. Well, we have
    given you, I believe, the budget request--I do not know that
    the Chair has appropriated it yet--$22,000,000 and an increase
    which would be focusing on labor conditions in foreign
    countries, reducing child labor, protecting women's rights,
    maintaining our education, HIV/AIDS initiatives. Could you
    comment on the importance of that increase to accomplish these
    goals?
        Secretary Solis. I think these are very, very important
    investments that we are making. As I said earlier in my
    statement, we have been working with other international
    partners, including the International Labor Organization, the
    ILO, to look at what best practices we can offer to other
    countries that are perhaps having some trouble, with trade
    enforcement or labor relation protections.
        But, more importantly, how to try to bring up the quality
    of life for some of our trading partners. I think about the
    example in Cambodia, where an effort was made there to look at
    the garment industry and to try to bring all those industries
    in that part of the world together to set a better standard to
    protect their workers, provide better wages for them, and then
    allow for our markets and other international markets through
    the ILO to also become partners with them. This expands their
    economic base, which creates more jobs, and creates
    opportunities for the U.S. to import and export those goods
    from countries like Cambodia.
        We are trying to use that model in other parts of Central
    America. In particular, we are exploring discussions with El
    Salvador and Nicaragua.
        Mr. Obey. Mr. Rehberg.

                           OSHA ERGONOMICS REGULATION

        Mr. Rehberg. Thank you, Mr. Chairman. I was going to ask a
    meaningful question, but our staff left to have his picture
    taken with Herschel Walker, and I had to decide whether to go
    with him. He is out in the hall.
        Welcome. Nice to have you back.
        Secretary Solis. Thank you.
        Mr. Rehberg. The majority put language in the bill last
    year to add a column in the 300 log for musculoskeletal
    injuries, and some of us kind of think that that is the first
    sign towards a movement towards doing something that we
    successfully stopped in 2001, and that was the creation of an
    ergonomics regulation. Does your Administration intend to
    reestablish an ergonomics regulation in the three years that
    you have left?
        Secretary Solis. Congressman, I do want to tell you that
    there is a lot of confusion surrounding this issue, and we have
    decided that we want to put this back in terms of gathering
    information, because we think it is going to be useful. Many
    businesses are required to report any injury anyway, and all we
    are saying is that we are going back to the 2001 practice. It
    does not mean that we are going to roll out an ergonomics
    standard----
        Mr. Rehberg. So there is no intent at this time for the
    Administration?
        Secretary Solis. At this time that is not----
        Mr. Rehberg. And you do not anticipate in the future a
    movement towards----
        Secretary Solis. At this time I can tell you that that is
    not the direction that the Department is going in. It is more
    of a means and mechanism to help provide information to
    businesses so we can prevent injuries. We know worker's
    compensation premiums and what have you have gone way up. We
    think this is a way to help provide provision information.

                               WORKER PROTECTION

        Mr. Rehberg. Over the course of 2001 forward, Secretary
    Chao was very aggressive in, one, enforcement; two, working on
    the things she promised to do, and that was create industry-
    specific guidelines; and, three, to continue ergonomic
    research. Could you report what the Department has done in all
    three of those areas? Are you still going to aggressively work
    on industry-specific regulations like the nursing home
    industry?
        Secretary Solis. I think that we are obviously trying to
    put the OSHA division back where it was in 2001, so one of our
    efforts is to try to make sure that we staff up, that we are
    not having to do things that really bog down the system; and we
    would like to try to streamline the system and get information
    out to businesses, as well as workers, so that we can prevent
    injuries. I think we will be taking a look at different
    regulations in more detail, and I would be happy to provide you
    and your staff that information.
        But at this time, we are trying to respond to what Congress
    has also made clear to us, that in the past, OSHA and the Wage
    and Hour Division have not been as aggressive in terms of going
    and seeking and investigating some of these problems that have
    been occurring. The GAO is very clear on that; the Congress,
    this Congress, has been very clear. So we are attempting to
    address those issues that have kind of landed on my lap now as
    the Secretary of Labor.
        [The information follows:]

        There are no specific plans involving ergonomics rulemaking
    at this time. OSHA is carefully assessing its best course for
    preventing work-related musculoskeletal injuries, which
    includes a review of the guidelines that have been published
    and the effectiveness of guidelines as a strategy to address
    work-related musculoskeletal injuries.
        The agency plans to continue to use the general duty
    clause, when appropriate, for enforcement when work-related
    musculoskeletal injuries occur. OSHA has also launched a
    recordkeeping National Emphasis Program (NEP), which will help
    ensure that musculoskeletal injuries are being recorded
    accurately by employers filling out the OSHA recordkeeping
    logs.
        A final rule will be issued in FY 2010 to revise the
    Occupational Safety and Health Administration's (OSHA)
    recordkeeping form to restore a separate column on
    musculoskeletal disorders (MSD) that was removed from the form
    in the last administration. Restoring this column will improve
    the workplace injury and illness data collected by OSHA and the
    Bureau of Labor Statistics (BLS). Having more complete and
    accurate data will further our understanding of work-related
    MSDs, which is certainly beneficial to any ergonomics research,
    and also better inform employers about ergonomic hazards in
    their workplaces.

                                 OSHA STAFFING

        Mr. Rehberg. Well, that is an interesting comment, putting
    the agency back. What was done to the agency, was the budget
    cut? Are there less employees?
        Secretary Solis. I would say to you that the priorities
    were much different. And in terms of, again, trying to address
    the issues that the Congress has put before us, we thought it
    was well worth our efforts to focus in on looking at how we can
    reduce the injuries in the workplace; minimize fatalities and
    injuries that cost business and our economy an even greater
    amount of money.
        Mr. Rehberg. Okay, I would like to see the research that
    has been done. It was promised that it was being done, and I am
    not sure I have ever seen that. Again, was the budget cut or
    are there less employees in OSHA that there were at the start
    of 2001?
        Secretary Solis. Over the course of the last decade, we did
    not see the same--how could I put it?--equivalent number of
    staffing that should have been kept up to pace. So again, what
    I am saying is that we are trying to go back to 2001 levels.
    There may have been priorities placed on other divisions and
    did not focus in on enforcement and protection, where the
    Congress has been stating very clearly for the past few years
    that they wanted to see more enforcement occurring. And because
    there were a lot of complaints that were made, that is where
    our focus has now been directed.
        Mr. Rehberg. So if we go back and compare enforcement pre-
    2001, we will find there was more enforcement on an individual
    basis than there was from 2001 forward?
        Secretary Solis. I would say that there was more of a
    compliance approach to enforcement, which did not always result
    in changes in behavior in terms of prevention on the part of
    businesses and industry to make those corrections, to provide
    training, and to access new tools so that we could reduce the
    number of injuries in the workplace.
        Mr. Rehberg. Thank you, Mr. Chairman.
        Mr. Obey. The Chair would simply point out that the Chart
    shows that there was a decrease of 252 people in OSHA between
    2001 and 2008, and within Federal enforcement there was a
    decrease of 146 people, or 8.7 percent. The percentage
    reduction in the entire agency was 10.2 percent. And for safety
    and health standards the reduction was 22 percent.
        Ms. Lee.

                       RACIAL DISPARITIES IN UNEMPLOYMENT

        Ms. Lee. Thank you very much, Mr. Chairman.
        Good morning again, Madam Secretary. Good to see you. You
    are doing a great job. I want to thank you and your staff for
    being so accessible and for really tackling the tough issues of
    the economy and unemployment. It is very desperate out there,
    as you know.
        A couple of things. In the committee report in 2009, we had
    report language that addressed looking at what the issues were
    as it relates to racial disparities in unemployment as it
    relates to the structural issues and why this unemployment gap
    is so great between the national average and the African
    American and Latino communities. So that is one question I
    would just like to get an update for the record. And I want to
    thank your Assistant Secretary for Policy for working on this
    and for keeping me informed on this.

                               EX-OFFENDER GRANTS

        Also, secondly, there was report language, I believe it was
    $20,000,000 for ex-offender funding that should have been put
    out for competitive grants for communities of color, for
    dropout, for ex-offenders, for making sure that these young
    people have the requisite skills to become employed; and I do
    not believe any of that has been spent yet. So have you issued
    guidance on that or what is the status of that $20,000,000? And
    that, I believe, was report language in 2009 also.
        Secretary Solis. Thank you, Congresswoman Lee. To begin
    with, I am also pleased that we now have my Assistant Secretary
    for Policy, Mr. Bill Spriggs, who is here behind me. He has
    been the individual that has been working on the request for
    that report that you issued some time ago. And I apologize that
    we have been so late in getting it fully together, but, upon
    his arrival, we found that we needed more data sets, more
    information so that we could have a more accurate picture of
    what is really taking place.
        That report had now left my office and has been sent over
    to OMB for review. We hope that in a few weeks or perhaps next
    month we will be able to issue that report to you. So I am
    pleased. And a part of it is, as you know, a staffing issue
    because we just were able to get the appropriate staff onboard.
    But, believe me, this is an issue that I am greatly concerned
    about as well.
        With respect to the ex-offender program, I want to go to
    that because I know that is of great concern to many members of
    this Committee as well.
        Ms. Lee. I believe it was the 2009 committee report that
    issued the report language for the $20,000,000 that would be
    allocated for ex-offenders and dropouts.
        Secretary Solis. Well, what we have done for the 2011
    request is, to bring together these programs in a more
    meaningful way so that we can actually attack the issue of
    employment, because the hardest, I think, factor here is while
    we are trying to reintegrate folks back into society, the
    problem is really the barrier of employment.
        Once they are able to achieve employment and get the
    services they appropriately need, I think then we are on our
    way to recovery; and that is something that really has not been
    focused on as heavily in the past, it was actually more of a
    focus for younger offenders, which was more in terms of
    education, which I do not want to take away from, because we
    are going to keep that component, but when we talk about adult
    ex-offenders, it is really more about providing assistance so
    that they can help stabilize their immediate families that they
    return to in many cases, and part of it is making sure that we
    can find them jobs or help to subsidize a portion of that.
        So we are combining our efforts here and we are really
    trying to make it more strategic because we know dollars are
    limited.
        Ms. Lee. But have you issued the guidance for that
    $20,000,000?
        Secretary Solis. I think later this month, my staff tells
    me, it will be issued.
        Ms. Lee. Later this month.
        Secretary Solis. So we will work with you to give you that
    information, and then if there is any input that you want to--
    --
        Ms. Lee. Okay. Yes, because that is very important. I mean,
    we have it already and all, it is my understanding, we need is
    to hear from your office in terms of how to get that out, in
    terms of the competitive grants. Okay.
        Secretary Solis. Thank you.
        Ms. Lee. Thank you very much.
        Thank you, Mr. Chairman.
        Mr. Obey. Mr. Alexander.

                          RATIO OF JOB SEEKERS TO JOBS

        Mr. Alexander. Thank you, Mr. Chairman.
        Madam Secretary, in your opening statement you said
    something about six applicants per job opening. How can we
    determine that?
        Secretary Solis. Congressman, that is the information that
    economists have reported, the ratio of job seekers to jobs is
    about six to one. I just saw a report earlier this morning on
    the news that said it actually went down a bit, to 5.5 to one.
    I cannot break that down for you, I am not an economist, but I
    can tell you that people out there are very much looking for
    jobs.
        And as I go across the Country visiting some of our
    programs and hear about the kinds of efforts that are being
    made for people to try to get into training programs that can
    upgrade skills so that they can be ready when the full-blown
    economy is back to speed, that is the urgency that I hear, and
    from employers. Employers want to know that that gap, the
    education gap for training, is slowly closing, because they
    cannot find, enough trained personnel ready for some of these
    jobs that they would like to hire out for.

                          NUMBER OF FEDERAL EMPLOYEES

        Mr. Alexander. Can you tell us how many new Federal
    employees have been hired in the last year?
        Secretary Solis. I cannot tell you how many Federal
    employees, but I can tell you that through the Recovery Act
    monies, through the CBO, we know that there were anywhere from
    1.5 to over 2 million jobs that were created; and not all of
    them were Federal Government, a lot of them were also in the
    State with respect to teachers, police officers, and also other
    various industries. And we are trying to do a better job in
    terms of the Recovery Act money and how to actually account for
    those jobs that are created.

                    FOREIGN GOVERNMENT SUBSIDIZED EMPLOYMENT

        Mr. Alexander. When you were responding to Mrs. Lowey's
    question a while ago, you said something about the fact that
    you had been to some other nations and in some countries they
    actually subsidize employees, unlike we do here. Can you tell
    us what that means?
        Secretary Solis. Well, just as an example, in Germany I am
    aware that they provide substantial subsidies for workers that
    are in areas or industries that are going through economic
    crisis, the automobile industry as an example.
        And what they do is they make a concerted effort then to
    allow for that salary to be paid for by the Government. A
    portion of that is paid for, maybe two days as opposed to three
    days, so they do not lose that talented, skilled, crafted
    person. Those are ideas. And it is not just in Germany; there
    are other parts in Europe where that model has been used.
        Mr. Alexander. Thank you.
        Mr. Obey. Mr. Jackson.

                               DOL BUDGET REQUEST

        Mr. Jackson. Thank you, Mr. Chairman. Thank you for the
    time.
        I want to thank my former Rayburn neighbor, Secretary
    Solis, and welcome her back to our Committee, and thank her for
    her testimony.
        Madam Secretary, during this tough economic period, and
    with unemployment hovering just around and under 10 percent,
    you have one of the toughest jobs in the Administration:
    putting people back to work. I read with great interest your
    testimony and I understand that we are under budget constraints
    as we write these appropriations bills. However, I find it
    incomprehensible that we are quibbling over about
    $14,000,000,000 in your discretionary budget. We spend close to
    $1,000,000,000,000 bailing out banks that do not lend to us and
    got us into our current financial crisis.
        My problem with your discretionary budget, at least from my
    perspective, is that it is not bold enough. I read the part of
    your testimony that provides and seeks to put significant
    resources back into employment and training to prepare workers
    for the 21st century. However, last week the House voted on a
    ``jobs bill'' which would provide tax incentives to businesses
    to hire more workers. I voted against that bill because I do
    not believe that tax incentives are the best way to create
    jobs.

                       ADDRESSING CHRONICALLY UNEMPLOYED

        In my district--and I have been here for 15 years--I am
    deeply concerned about the chronically unemployed. In my
    district, there are three people for every one job, while in
    the northwest suburbs, around O'Hare Airport, there are three
    jobs for every one person. Just under $1,000,000,000,000 to
    bail out the banks, but for a fraction of that number, let us
    say $300,000,000,000, my math says that $300,000,000,000 could
    employ 7.5 million Americans at about $40,000 a year. 7.5
    million Americans put to work at $40,000 a year is about
    $300,000,000,000, a fraction of the $1,000,000,000,000 that we
    spent to bail out the banks.
        Are not sometimes the simplest ideas the best ideas? What
    does your budget do to address the chronically unemployed? And
    my colleague who asked the question about how many Federal
    employees have been hired over the last year, if I had my say,
    it would be 7.5 million more Federal employees, doing
    everything from painting bridges to cleaning up highways, to
    cleaning up vacant lots across this Country. And I
    fundamentally believe that the Federal Government has a
    responsibility during these tough economic times to shore up
    unemployment and put the American people back to work.
        Madam Secretary, your budget, what does it do to address
    the chronically unemployed?
        Secretary Solis. One of the things I would like to respond
    to, Congressman Jackson, is that through the Recovery Act
    money, we were able to help, set a good foundation to begin
    this holistic approach to really trying to assist people that
    were out of the workforce, the dislocated workers, the folks
    who lost their jobs recently in the automobile industry, the
    financial institutions, people who were also highly qualified.
    We are talking about people that had different skills sets.
        Through our Workforce Investment Act monies, we made grants
    available just through the green job approach, the partnerships
    that we established, about $500,000,000 went there. And we are
    asking for a bump-up there because we think it works and we
    know that there is a big interest.
        We know that there are people out there that may have lost
    their job because the assembly plant or manufacturer is no
    longer here, and we are trying to get people identified to get
    the appropriate type of counseling and assessment that they
    need. We plan to make sure that our one-stops are more
    accessible and that these grants that we provide through the
    Workforce Investment Act--and that is something that I believe
    you will want to be involved in by helping us with the
    reauthorization--to really reach down and touch those
    neighborhoods and communities like yours that may not have
    benefitted in the past from these types of efforts and targeted
    funding.
        We also make a special attempt through our Pathways Out of
    Poverty program to identify high unemployment areas; of 15
    percent and higher, that require people to come together,
    partners, business, community colleges, apprenticeship
    programs, CBOs, and stakeholders that have a better sense of
    where these individuals are that could obtain this job skill.
        Keep in mind our effort is to make sure that we connect the
    business with the job training. I do not actually create the
    job. What I do is bring partners together that then say, at the
    end of the program, we expect to hire so many people. We fund
    those slots. That is really what the Workforce Investment funds
    and the partnerships that we have been able to put together are
    focused on.
        But we try to make the best assessment to make sure that we
    are getting the people in, and it is taking a long time because
    we have had to change guidelines, we have had to change the way
    that we even bring people on to read proposals. Much of that
    had not changed in the past 10 years. And I do not have to tell
    you communities like yours and others have been left out, quite
    frankly, from many of these job training programs.
        So our attempt is to, look at green jobs, health care jobs,
    as well as careers where we think there will be continual
    growth. We have actually seen that is the one spot where we see
    that there will be job growth, where we can integrate our local
    communities to get into those entry level health careers.
        Mr. Obey. The gentleman's time has expired.
        Mr. Cole.

                         JOB SECTORS FACING CONTRACTION

        Mr. Cole. Thank you very much.
        Madam Secretary, great to see you again. You and your folks
    in your Department probably see more data on what is happening
    in the labor force than anybody else in the Government. I am
    very curious. We know we have lost about 8 million jobs over
    the course of the recession, and there are a lot of articles
    now beginning to appear to suggest a lot of these jobs ``are
    not coming back.'' What are the areas that you think, frankly,
    we will not be able to recover in, the particular sectors or
    kinds of work that, looking forward, you suspect there will be
    considerably less of in the future than we had in the past?
        Secretary Solis. Well, thank you, Congressman Cole. That is
    a good question. One figure that I continue to see that is not
    recovering as quickly is obviously in construction, and a lot
    of it has to do with the housing industry and the fact that we
    are just not building more houses. We have inventory, in fact,
    an overwhelming number of houses that now are in foreclosure.
    So that is creating a strain in terms of that workforce.

                             REBOUNDING JOB SECTORS

        I would say also that in manufacturing overall we are just
    finally seeing an up-tick. The most recent report, issued in
    February, saw about 1,000 jobs added in manufacturing.
        What I do see happening, the positive sign, is that
    businesses are bringing on temporary workers. But, when you
    talk about temporary workers, it is not the clerk; these are
    engineers, architects, very highly skilled individuals that are
    helping that business come back and hopefully, with the
    Recovery Act and all the funds that you all have made
    available, and with the credit and capital market changing its
    direction, that businesses will feel more confident in bringing
    people on.
        The health care industry, as I said earlier, helped to
    create about, I would say, close to 500,000 or 600,000 jobs
    this last cycle. I also see growth in IT technology energy
    efficiency, and the renewable energies. That is why I think
    other countries are taking full advantage of that and we should
    also be heading in that direction.
        And I know that there has been a tremendous amount of
    investments made by different Cabinet secretaries, Department
    of Energy, in our railway system, as well, high speed rail. If
    we can get those projects on the ground ready to go--and much
    of that money has already now been given to different States--
    that is going to create jobs not just for the two-year period
    of the Recovery Act, it will go on for ten years because of all
    the other jobs that will be created around that rail system.

                            JOB SECTOR CONTRACTIONS

        Mr. Cole. If you could just have somebody from your
    Department give me a list of where you really expect the
    contractions. We clearly are going to have a lot of very
    skilled people that do not have a future that you are going to
    want to redirect.
        [The information follows:]
        [GRAPHIC] [TIFF OMITTED] T8233A.018

        [GRAPHIC] [TIFF OMITTED] T8233A.019

                    SHORTAGES IN TRADITIONAL ENERGY INDUSTRY

        Let me ask you. You mentioned energy and I had a particular
    question about that. I am not one who is critical of the money
    going to training on green jobs; I see a lot of wind power
    sprouting up in my State. I think there is no question there is
    going to be a market there.
        But there are also pretty critical shortages now in what I
    call the traditional energy industry as well. We are now doing
    a lot more natural gas in a lot more places; it is a much
    cleaner fossil fuel. I can tell you it is hard to find people
    that know how to drill in Western Pennsylvania or New York now,
    or that have a lot of knowledge of that particular business.
    Plus, we have some shortages in our own industry.
        So while you are incentivizing the movement--and I think
    appropriately--of people into the so-called green sector, what
    are we doing to help the industries that have critical
    shortages that produce traditional forms of domestic energy?
        Secretary Solis. Congressman Cole, that is an excellent
    question. I have actually seen many of our programs training up
    again in the area of hard manufacturing, and I am talking about
    jobs that you just mentioned, welding as an example.
        I have been to some of our programs that we have funded and
    find very regularly that the business components out there in
    the industry are saying I cannot find a qualified welder. And
    the salary levels that they offer are anywhere from $60,000 to
    $100,000. If the public were made more fully aware of what the
    potential is, I am sure people would not mind relocating to
    where those jobs are, because they do pay very good salaries.
        And because we are going into, say, renewable energies, I
    think there are going to be more opportunities. I know that the
    folks that we have been working with in partnership in public
    and private entities know that this is where we need to move
    our training programs, and I am acutely aware of that and know
    that that is an important factor in our recovery.
        We have to bring back, also, some steady skill sets, but
    also that manufacturing base, and we have to have that
    workforce staying here because there are a lot of people that
    are retiring from those industries. Same thing in the coal mine
    industry; you see a lot of retirees. We are still going to need
    people to be trained to go into those mines.
        Mr. Cole. I know my time has expired. I would just urge you
    to look at these traditional areas too. Green energy is the new
    buzz word, but there are going to be a lot of jobs in natural
    gas going forward and it is going to be national in scope; we
    are going to be way outside of traditional areas where people
    will have some new opportunities that have not had them in the
    past.
        Thank you, Mr. Chairman.
        Mr. Obey. Mr. Honda.
        Mr. Honda. Thank you, Mr. Chairman.

                              CONTINUING EDUCATION

        Again, welcome, Madam Secretary. It is good to see you. A
    couple of things just real quick off the top of my head. I
    really appreciated the allocation of $5,000,000 to San Jose
    State University, where we will be able to look at health care
    and biotechnology training programs, and the vision I think
    that you are providing the Department is we are doing a lot of
    innovation and a lot of emphasis on green employment and green
    careers, but in order to have the workforce there that support
    that also, we need to have higher education. Some of these
    other institutions are prepared to do that.
        One of the things that we did in Santa Clara County was
    have an AA program, a pilot program to have folks who were in
    the labor industry, laborers, who want to pursue a AA degree in
    contract managing. Where, before, those folks were always the
    ones who were managed, now they have that background experience
    and can take a traditional job that Congressman Cole had talked
    about and upgrade them and convert them into other jobs that
    are going to be in high demand, especially when we have more
    activities in the green industries.
        So looking at the AA, hopefully somebody in your Department
    might work with the education department to look at how we can
    link the AA to a BA into the four-year college, where they can
    continue their education and their life skills into something
    more productive.

                                   GREEN JOBS

        In terms of the green jobs issues, I think that if people
    visited Santa Clara County and Silicon Valley, that although we
    have companies like Applied Materials that make machines that
    allow us to have photovoltaic gadgets or panels or flat
    screens, the instruments that are being sold and made by this
    company have a ripple need that goes upwards towards folks who
    do work like design and do work like creating the machine
    parts. There are skilled laborers and skilled artisans out
    there that are necessary. So those are traditional jobs that
    still exist that need to be continued and supported. So a green
    job could support more than five other jobs that are necessary
    for them to do that.
        I just wanted to have some of our colleagues understand
    that there are supportive groups that are out there. Even
    Caterpillar. When you have heavy machinery, you just do not
    have one kind of worker. So I think that in the green area we
    are expanding our vision and making this a better place.
        And the term greener and green, I think that that is
    probably a good term to use because we have to have every
    individual in this Country, and globally, understand that we
    all have individual impacts on our carbon footprint, and
    collectively we need to be constantly aware of it. So in your
    Department I really do appreciate that constant attention to
    that, because otherwise, as a Nation, we are not going to be
    able to effect any changes in our attitudes.
        I have no questions, Madam Secretary, but I just wanted to
    feed back some of the things and observations I have had over
    the past few months.
        Mr. Chairman, closing comments. Folks asked me in my
    internet town hall meeting I had last night one of the
    interesting questions was that if these things are happening
    and we are creating more jobs, why is unemployment looking like
    it is getting more.
        And I think that those who understand the statistics is
    that people who are not in the job market are not coming back
    in the job market, so that is going to create a blip in that
    unemployment, and then it goes down as they secure jobs. So
    folks who would be negative, we need to just respond in kind to
    let people know the information, what it really means in real
    life and people's jobs and the situation in this Country.
        Thank you very much for your work, Madam Secretary.
        Mr. Obey. Mr. Moran.

                     EMPLOYEE READINESS TO ENTER JOB MARKET

        Mr. Moran. Thank you very, Mr. Chairman.
        Let me just say ditto for all the nice comments that have
    been addressed to you, Madam Secretary. We are delighted you
    are in this position and we appreciate all your diligent
    efforts.
        I represent an area that has a preponderance of technology
    firms, a lot of jobs. We are in pretty decent shape relative to
    the rest of the Country. But we are trying to make the most of
    the employment training opportunities that are available for
    those who are underemployed or unemployed because we have a lot
    of jobs. So we want to bring them in to this knowledge-based
    economy.
        But the employers tell me that there is a very serious
    deficiency in terms of employment training programs that the
    Federal and State government operates; that, in fact, they
    cannot use the skills that are taught through these training
    programs. At best, if they find that somebody shows up every
    day, is reliable, that is one of the best indicators that they
    can hire them, but they have to hire them at pretty low entry
    level skill levels and, thus, compensation levels.
        And they tell me the problem in an area like computer
    skills, where the jobs are available, is that the trainers are
    really not up to speed on the computer skills that are needed;
    that in many cases the trainer is teaching what they knew when
    they last left the private sector and came in to be a trainer.
    And because the computer skills advance at such a rapid pace,
    what they know is kind of outdated, and they either do not have
    the inclination or do not have the time, really, to bring
    themselves up to speed on the latest technology.
        Can you address this? Do you think this is an unfair
    criticism or is it something that you have observed and are
    addressing?
        Secretary Solis. Thank you, Congressman Moran. You hit the
    nail on the head. In my travels across the Country visiting
    different workforces and workplaces, I often hear from the
    employer that it is very tough to find someone who is really
    prepared that they can hire right way with the set of skills
    that they need.
        Therefore, the need to have reform with respect to some of
    the programs that we operate in the Department of Labor and, we
    are proposing in our budget to provide some new and better
    methods of trying to make our systemic approach more targeted
    so that we really do get at what the business owner needs, and
    make sure that those skill sets are really going to lead to a
    good job, and are marketable and timely.
        So it is going to require, I think, a lot of support on the
    part of the Congress, as well, as we look at revamping the
    Workforce Investment Act, because we do have some traditional
    partners who have been used to doing things for the last decade
    a certain way, and many times those folks are not going out as
    they were intended to to really talk to the business community,
    the entrepreneurs, the new inventors of this new technology
    that is coming out not just in the green industry, but just IT
    overall.
        I think that one of the incentives that we want to use is
    reward those programs that can demonstrate that there are some
    good methods being used. We want to be able to replicate them
    and we want to support innovation. So I am very much interested
    in your ideas and would like to learn more about how we can
    work together to help craft these kinds of activities so we
    make this a more effective program.

                          EXTENSION OF RETIREMENT AGE

        Mr. Moran. Thank you, Madam Secretary. I was not supposed
    to ask questions that elicited long answers, but that was a
    superb response. I have one other question.
        The President is putting together a group of people to
    address structural deficit problems and, invariably, they will
    look at entitlement programs, Social Security especially, and I
    am sure one of the recommendations is going to be that they
    extend the retirement age.
        Now, in my district, a significant portion of the workforce
    is not going to be bothered by that. In fact, I think they
    would welcome it, to be able to keep working until 70. The
    problem is that we have a cookie-cutter approach in entitlement
    programs, and people who work with their back and their legs
    and their arms all their life, they cannot keep working until
    70. So what are you going to do for those 15 years or so when
    the body wears out?
        I mean, I really am serious about this. It is not fair to
    manual workers to extend that retirement age. But if we could
    come up with a more sophisticated retirement system that was
    more correlated to the physical, as well as the mental demands
    of various workforce classifications, then it would be fairer
    to extend the retirement age; people would be more comfortable.
    We would have a more productive economy and probably save
    substantial sums in our entitlement programs for retirees.
        Is there any research, any thought that is being given to
    that within the Department of Labor, Madam Secretary, that
    might help us in this difficult decision-making arena?
        Mr. Obey. The gentleman's time has expired.
        Secretary Solis. I would like to get back to you in more
    detail about what we are looking at in terms of approaches now
    in EBSA and also the PBGC, because we are really talking about
    retirement security too, so people do not have to stay longer
    in the workforce for those folks that work in very hard
    assembly line and very labor-intensive jobs. We are looking at
    some creative mechanisms there and I would love to work with
    you on that.
        [The information follows:]
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        Mr. Moran. Thank you, Madam Secretary.
        And thank you for your indulgence, Mr. Chairman.
        Mr. Obey. Ms. Roybal-Allard.

                    PROTECTING MIGRANT FARM WORKER CHILDREN

        Ms. Roybal-Allard. As always, welcome, Madam Secretary. Let
    me begin by thanking you for hosting a briefing last September
    at the Department of Labor on the serious issues confronting
    migrant farm worker children.
        Last year, as you know, I introduced the CARE Act to give
    the estimated 400,000 youth working in agriculture the same
    child labor workplace protections that safeguard children in
    all other industries; and I know that you have been a champion
    for a very long time of child labor rights, and I look forward
    to continuing to work with you and your staff on this
    legislation as it moves forward.
        But in the meantime, children in agriculture are not
    equally protected by our child labor laws. They work in the
    fields at younger ages for longer hours and under very
    dangerous conditions that would not be permitted in any other
    industry. For example, a Human Rights Watch study found that
    while there are only 8 percent of children in agriculture,
    approximately 40 percent of all workplace deaths and nearly
    half of all workplace injuries suffered by children occur in
    agriculture.
        Until the CARE Act is passed into law, these findings
    highlight the critical need for oversight and enforcement of
    our current laws, which at least provide some protections to
    our children. Yet, in 2005, the average civil penalty assessed
    by the Department of Labor was only $1,011, or just 9 percent
    of the maximum penalty for child labor infractions; and in
    2006, of the 1,344 child labor investigations by the
    Department, only 28 were in agriculture. This lack of
    enforcement obviously gives employers little incentive to
    follow the laws that do exist to protect these children.
        Now that the Wage and Hour Division staffing has been
    restored to the 2001 levels, can we look forward to increased
    investigations and meaningful penalties for child labor
    violations in agriculture?
        Secretary Solis. Thank you, Congresswoman Roybal-Allard,
    and I also want to commend you for introducing your
    legislation, the CARE Act, and I want to applaud your work and
    the work of those that helped to work behind the scenes to
    bring this issue before the Congress. It is something that all
    of us deeply care about, and I certainly am putting forth as
    much effort as possible to see that our Wage and Hour Division,
    working in conjunction with the Migrant Seasonal Agricultural
    Worker Protection Act, or Field Sanitary Standards in OSHA, are
    all working together in a strong effort to focus in on
    combating child labor.
        The Wage and Hour Division is conducting training right now
    with our investigators; they are out in the fields so that we
    can detect and get those parties involved in this egregious
    behavior to understand that this is not the direction that we
    need to be going in.
        It is also working with stakeholders, with parents, and
    also with the community, and even religious groups and
    organizations that can help to provide more information. We are
    rolling out a campaign to provide assistance to those most
    vulnerable populations, which will include, by and large some
    of the farm worker and farm worker children.
        It is egregious that this goes on. I was very upset when I
    heard about the violations that were occurring in the blueberry
    fields up in the northeastern part of our Country, where young
    children of ages 5 to 8 were out picking blueberries, and
    parents were allowing their children not to attend school
    because they needed the money; and they were out there through
    contractors who would bring these folks in and kind of move
    them around different farms.
        Well, when I heard that news, I ask that there would be
    immediate action taken by our staff, and I am happy to say that
    we have been able to now begin a more robust process, because
    we have more field investigators and the staff, and even people
    who speak their languages, so we can ascertain actually what is
    going on on the ground without intimidating people and them not
    being fearful of sharing information, because you know that is
    a big barrier that we face also with this population.
        But I would tell you that civil penalties, I have a list
    and I can give you the details of where we have gone after some
    of these egregious cases just in this past year that I think
    would be noteworthy for you. And we know we want to work with
    you to continue this effort.

                  EXPOSURE OF CHILDREN TO HAZARDOUS MATERIALS

        Ms. Roybal-Allard. Thank you. In May of 2002, the National
    Institute for Occupational Safety and Health issued a report
    recommending that more than half of the existing regulations
    pertaining to children working in hazardous jobs, such as those
    exposing them to pesticides and lead, be revised and 17 new
    regulations be added; and although the Department of Labor has
    taken some steps to amend non-agricultural hazardous odors,
    those pertaining to agriculture have yet to be put on the
    Department's regulatory agenda for updating.
        Given the dangerous conditions, again, that these children
    face working in agriculture, what is the Department of Labor's
    time line for reviewing and acting on the recommendations for
    this specific industry?
        Mr. Obey. Very short answer, please.
        Secretary Solis. I would love to get back to you on what
    our activity and our plan is, because it is something you know
    I care very deeply about with respect to pesticide use and
    hazards that find their way to our children who are forced to
    work in the fields.
        Ms. Roybal-Allard. Thank you.
        Mr. Obey. Mr. Ryan.
        Mr. Ryan. Thank you, Mr. Chairman.
        Thank you, Madam Secretary. Let me first thank you and your
    staff. We had a visit recently from Assistant Secretary Oates
    and just had a tremendous visit. We had some steelworkers who
    were having issues with unemployment and she was just terrific,
    and it looks like we have fixed some of the issues; and you and
    your staff were ahead of the curve, as always. So thank you for
    being so great.
        I wanted to just mention, one, what Mr. Cole talked about,
    natural gas. We sit in Ohio under the Marcellus Shale, which is
    a huge natural gas opportunity for all of us, so talking about
    the Pickens plan, as far as retrofitting diesel engines and
    buses and trucks, I think it is an opportunity for all of us to
    say this is a clean fuel, and areas like Northeast Ohio and
    Western Pennsylvania have an opportunity to really, I think,
    resuscitate some long-term chronic problems that we have had.

                          LEVERAGING STIMULUS FUNDING

        I want to make a comment about the stimulus package, too,
    because there has just been so much said about it. You are
    someone, and this Administration, I think, believes that we
    need to make investments into our communities, and we were able
    to take some stimulus money, not just stabilizing police and
    fire and a lot of school teachers did not get laid off in my
    district because of money that came, but we were able to take
    $20,000,000 from the State to do some site prep work, move a
    rail line, and it leveraged a $650,000,000 investment from a
    French tubing company that does a lot of natural gas tubing.
        And I bring this up because I want you to bring back to the
    Administration and to your colleagues that you work with in the
    Cabinet that there are communities in our Country, as you know,
    that just do not have money to make deals go down. So whether
    it is training money or community development block grant
    money, we need more opportunities to make things happen when
    you do not have that local tax base to make deals work for
    businesses.
        So I just wanted to put a bug in your ear to bring that
    back. I know you believe in it, and we need to continue to
    recognize that community development block grants and those
    kinds of things are very, very important.
        I want to thank you for all that you have done for Ohio
    with green collar jobs and the training money that you have
    sent. We also are benefitting from some high speed rail lines
    that are going from Cleveland to Columbus to Cincinnati, and
    your money will come in handy to make sure that we have the
    workforce available to do that. So the stimulus package has
    been good to us. We need more, there is no question, but it has
    been good to us.

                    REEMPLOYMENT OF HIGHLY-SKILLED WORKFORCE

        I have one question that hopefully you can touch upon. We
    have in our area a distressed auto community. We have lost a
    lot of very high-skilled work. A lot of high-skilled workers
    are unemployed now. What are we doing within the Department of
    Labor or in conjunction with the Department of Labor-Department
    of Commerce to take these very high-skilled people, engineers,
    people who have made companies like Delphi and General Motors a
    lot of money over the years? How do we take these people and
    help them start their own business?
        And I know that may not be directly related to the
    Department of Labor, but they are unemployed workers. I think
    there is an enormous amount of opportunity for them to get
    creative, especially with the green economy. They have a
    history in manufacturing and, as we heard today, five spinoffs
    for every one manufacturing job. We have to get back to making
    things in this Country. So how do we take these brilliant
    engineers from General Motors or Delphi and corporations like
    that and help them with business plans and opportunities to
    create their own businesses?
        Secretary Solis. Well, thank you, Congressman Ryan. It was
    very kind of you to mention some of the things that we have
    done out in Ohio. I have to give you credit also for having a
    great leadership delegation there; everyone working together,
    and also your governor. I was down there when we actually
    issued the $400,000,000 for that high speed rail, and I can
    tell you there were a lot of delighted people there in the room
    to see that there is going to be an investment made on the part
    of the Federal Government to jump-start a project that will
    last into the next decade. Job creation is what we definitely
    want to see.
        But to your point about how we can try to deal with the
    highly qualified workforce that is out there looking for jobs,
    you now have the privilege of also working with Dr. Ed
    Montgomery on our Department of Labor staff, who is addressing
    the whole automobile industry displacement, and what he has
    done is brought together the different Cabinet offices--
    Department of Energy, Commerce, EPA--to try to put together
    plans regionally so that we can start structurally looking at
    how we get these dollars out to those most distressed areas;
    and yours is one that is on target for us to bring those
    resources.
        We know that capital still remains a big obstacle, making
    sure that there is more credit available. I think the President
    is moving in that direction to see that we can provide
    incentives for businesses, tax cuts, research and development,
    more assistance targeted in a fashion that will help to spur
    that innovation so that businesses will not think that they can
    just have maybe support for two years, but be able to make a
    plan for 15 years.
        So I understand clearly where your thought process is and
    would want to work with you more to see how we can maybe learn
    from some of the things that are happening in your State and
    share with other industries. We also have some issues in
    California with some of our auto plants that are closing there.
    If we can use those best known practices and share them, I
    think we can all win in the long run. We have other industries,
    for instance aerospace is affected and we would be at a
    disadvantage if we do not also do something for these highly
    skilled individuals.
        Mr. Ryan. Thank you.

                      TRAINING FOR HIGH-GROWTH INDUSTRIES

        Mr. Obey. The gentleman's time has expired.
        Let me just ask two questions before we end the hearing.
        First of all, as you know, in the Jobs for Main Street Act,
    which we passed in the House in October, we provided
    $500,000,000 for Workforce Investment Act Youth Activities; we
    provided $750,000,000 for job training grants; and I am happy
    to see that the Administration has picked up both of those
    items in your statement that you made today.
        I do have one question about your choice of priorities,
    however. Can you explain the Administration's request to fund
    additional green jobs or green jobs training grants, when there
    is a more immediate need for additional health care
    professionals?
        And in that context, in the Recovery Act, Congress provided
    $250,000,000 for training in high-growth industries with an
    emphasis on the health care sector; and my understanding is
    that DOL received an overwhelming number of applications for
    those grants. Can you tell the Subcommittee what percentage of
    the grant proposals you were able to fund for those items and
    whether there are additional high-quality applications that
    were denied due to a shortage of funding?
        Secretary Solis. First of all, Chairman Obey, I do want to
    give you credit for your outstanding work in helping us look to
    where the high need areas are, and you did that for us last
    year in our budget. With respect to the over-subscription of
    grants that we received in health care, we received 800
    applications, and I would say that a good portion of them, a
    large portion, were eligible for funding.
        But we did not receive the amount of funding to be able to
    go beyond 8 percent of that fully-eligible population of
    applicants that came in. We were only able to fund 55 awards.
    And I know that this is a very sensitive issue for you, as it
    is one for me. I recently visited one of our nursing programs
    that we provide assistance to in Sacramento, a community
    college program, and to hear the testimony that I heard from
    some of the students there that had to wait years just to get
    into an entry level position was mind-boggling.
        But these were the students that persisted and some, by
    accident, were actually able to get enrolled into the program.
    Many were already well above 21 years of age; one was even 50
    years of age, but felt so compelled because of the need to get
    into these careers that pay well that we know we have a
    shortage of.
        I know that the Department of Health and Human Services has
    a more robust budget than I do in nursing, and we want to
    collaborate with them to see how we can work on improving and
    expanding this effort, because there is a shortage and I think
    this is something you and I can talk about and figure out a way
    to work together.
        Mr. Obey. We are really missing an opportunity if we do not
    recognize that possibility.

                           IMPROVING JOB LOSS PICTURE

        Just one other point. With respect to the stimulus package,
    I frankly find it quite tiresome to be in an argument about
    whether or not the stimulus package ``worked or not.'' This is
    a pretty badly hand-drawn chart, but what it shows is that,
    beginning in March of 2008, this downward line represents the
    average monthly job loss that we were experiencing in the
    economy. This line represents zero job loss and, as you can
    see, by December of 2008 we were losing 750,000 jobs per month
    the last three months of that decline.
        Since then, we have had a steadily improving picture in
    terms of job loss, so that today, over the last three months,
    we have averaged 35,000 job losses each month. That is a 95
    percent improvement.
        Now, it certainly is not good enough because we still have
    not reached positive growth in the economy, but before a ball
    can bounce, it has to stop falling, and that is pretty much
    what I think we were able to do with the Recovery Act. The bill
    was never large enough to plug the entire $3,000,000,000,000
    hole in the economy that we were facing, but what it did do is
    soften the blow, lessen the pain, reduce the number of people
    who were losing jobs. And let us hope that we have enough
    imagination, enough luck, and enough help and cooperation
    between the public and private sectors to actually turn that
    into a positive job growth area in the months ahead.

                                   Conclusion

        But I thank you for your testimony here today. Sorry we had
    to delay you by an hour, but it is good to see you.
        Secretary Solis. It is good to see you. Thank you very
    much, Mr. Chairman and members of the Committee.
        Mr. Obey. You bet.

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                                              Thursday, March 18, 2010.

                FY2011 BUDGET OVERVIEW: DEPARTMENT OF EDUCATION

                                    WITNESS

    HON. ARNE DUNCAN, SECRETARY OF EDUCATION

                           Chairman's Opening Remarks

        Mr. Obey. Good morning, everybody.
        Today we are pleased to have the Secretary of Education,
    Arne Duncan, to testify.
        Mr. Secretary, don't interpret the lack of Democratic
    members here as a lack of interest. We are having a Democratic
    Caucus on a new-fangled idea that we have been rushing at
    breakneck speed through Congress over the past year, so people
    are still having some last-minute thoughts on that, and that is
    where they are this morning. I assume they will be by shortly.
        But we are here today, of course, to discuss the fiscal
    2011 budget. Let me say, Mr. Secretary, that I know you and I
    share the same goal of seeing every kid in this country having
    access to a school that can provide them with a top-notch
    education and produce a good strong skill set. In addition, I
    know that we both agree that the funds we provided for
    education last year in the Recovery Act were absolutely
    imperative and have been essential in keeping our schools from
    drowning.
        I am not so sure we are on the same page when it comes to
    immediate needs and priorities about how to proceed from here.
    The work of the Education Department is more critical than
    ever. Today we face record high unemployment nationwide, while
    State school districts and colleges are in economic crisis.
    Educational opportunity, at all levels, is our most powerful
    tool in helping the poor and the middle-class climb up the
    economic ladder.

                 AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009

        The underutilization of our human potential in the United
    States imposes heavy consequences on our society: lower
    productivity, lower earnings, poorer health, higher rates of
    incarceration and less civic involvement. That is why I was
    pleased to participate in the efforts to provide an
    unprecedented $98 billion investment in education in the
    Recovery Act which, among other things, was responsible for
    creating more than 300,000 education jobs. But we need to do
    more, in my judgment.
        According to the Center on Budget and Policy Priorities,
    State budget gaps will total $180 billion in fiscal 2011 and
    $120 billion in 2012. The consequences of that for our
    education system are staggering, and the numbers are daunting.
    Twenty-nine States and the District of Columbia have cut K-12
    services, even with the Recovery Act funds. In California,
    though I am always reluctant to cite that State because of
    their wacky budget process, aid to local school districts has
    been reduced by billions of dollars. Cuts to early childhood
    funding in Illinois will leave 10,000 children ineligible for
    services. Mississippi cut its fiscal 2010 K-12 funding by
    nearly 5 percent. In New Jersey, more than 11,000 students will
    likely lose access to after-school programs. And the list can
    go on and on.
        In light of all of this, in my judgment, we need to do more
    to help States and school districts weather this financial
    crisis, and I hope that the Administration will put the full
    weight of its efforts behind efforts to do so. We also should
    make sure that any emergency financial assistance is broadly
    distributed and available for purposes like avoiding teacher
    layoffs and keeping the lights on.

                                 SCHOOL REFORM

        I know you and the President are very focused on using
    Federal aid to promote certain types of school reform. I am
    certainly in favor of improving our schools. I voted for No
    Child Left Behind, though I had huge misgivings about the
    details, because I felt, as I said yesterday, that it was the
    President's first initiative out of the box and he deserved the
    benefit of the doubt and because I wanted to see reform. I get
    just as tired as anybody else of seeing non-performing schools
    and dull teachers.
        But, nonetheless, we can be for improving schools, but it
    seems to me that right now our most immediate problem is that
    school districts are drowning in red ink. As I said yesterday,
    I like to sail, but when the sailboat is sinking, my top
    priority would not be to put a new coat of varnish on the deck.
    I would want to protect the hull first.

                      FY 2011 BUDGET REQUEST FOR EDUCATION

        Secondly, in the interest of brevity, let me skip that and
    simply say, on your 2011 Budget, that request includes over
    $3.5 billion for new and untested initiatives, for which you
    will control how the funding is allocated to State school
    districts and other providers. In times like this, we need to
    worry about our core foundational programs, which go out by
    formula and are widely shared across the Nation. A school
    district's ability to attract funds should not depend upon its
    capacity to write a grant application.

                    ELEMENTARY AND SECONDARY BUDGET REQUEST

        I want to support this Administration in your education
    priorities, but not at the expense of reliable and predictable
    Federal support that thousands of districts across the country
    rely upon.
        Perhaps most troubling is the lack of any increase at all
    in Title I funds, which are broadly distributed by formula to
    all school districts in need. At the same time, the budget
    includes an extra $500 million to expand the Innovation Fund,
    which makes grants through competitions run by your Department.
    Similarly, it seeks to more than double the appropriation for
    Teacher Incentive Funds, even though your Department has yet to
    complete any rigorous evaluation of this 5-year-old program.
        Overall, in the Administration's budget, funding for ESEA,
    funding for formula grants go down by almost $700 million,
    while narrowly targeted competitive grant programs increase by
    $3 billion. It seems to me that is not the correct balance,
    particularly during these hard economic times when most school
    districts need immediate help.

                            HIGHER EDUCATION BUDGET

        I also want to express reservations about your higher
    education budget. I believe that a more educated citizenry is
    vitally important to our economy, especially in our changing
    economy. But we need to make sure that a student's brain, not
    their bank account, is the only determinant on whether they can
    get a college degree.
        Would you put that chart up, please?
        We put this chart up earlier this week, and I want to
    emphasize it again. What the chart demonstrates is that a
    student who in the 8th grade was in the top 20 percent of
    performers in mathematics had a 29 percent chance of graduating
    from college if they come from a poor family and a 75 percent
    chance of graduating from college if they come from a rich one.
    That, in my view, is an indictment of our indifference to the
    needs of children who are stuck in low-income families and
    stuck in poverty-related schools. And it seems to me our number
    one priority needs to be to redress that imbalance.

                                  PELL GRANTS

        I would also say that a key tool to increasing access to
    higher education for students of modest means is the Pell
    Grant. These grants currently help over 8 million students get
    the college or technical education they need to qualify for a
    decent job. Over the past 5 years, this Congress has worked to
    increase the maximum Pell Grant award by $1,500. We are facing
    a real challenge in continuing that policy.
        The cost of maintaining Pell Grants at that level is
    rising. You have large numbers of students going back to school
    because they recognize the tightness of the job market, and
    they are trying to upgrade their skills. Unfortunately, as we
    look for a solution to Pell funding, the administration's
    budget leaves me somewhat confused. It proposes to somehow move
    Pell Grants over to the entitlement side of the budget. I have
    no idea how well that is going to be received by the Congress.
    But we understand that if enacted, the Higher Education
    Reconciliation Act would provide a portion of the shortfall
    that we are facing today.
        But even counting that funding, it still leaves a
    substantial shortfall, and we need the Administration's help in
    finding a solution. It is not just good enough to ask us for
    the money, without suggesting how it is going to be paid for.
    So, I hope you can explore those issues over the next couple of
    hours, Mr. Secretary.

                        Ranking Members Opening Remarks

        Mr. Tiahrt, I would invite you to make whatever comments
    you think are appropriate.
        Mr. Tiahrt. Thank you, Mr. Chairman.
        I want to begin by thanking Secretary Duncan and Mr. Skelly
    for showing up today before the committee.
        Welcome to the committee.

                     EDUCATION SPENDING AND BUDGET DEFICIT

        We all know that education is critical, and I think we can
    all agree it is very important that we give the tools to every
    child to achieve their view of the American dream as well as
    equipping our economy for the skilled workforce needed to keep
    us competitive in a global economy.
        To do this, we need a world-class education system that
    puts the needs of students, parents and teachers first, while
    partnering with our local schools. I know there are differences
    on how we intend to accomplish this, particularly when the
    Federal Government would continue hemorrhaging red ink under
    the President's budget as far as the eye can see.
        The deficit this year under the President's budget will
    reach $1.5 trillion and never dips below $700 billion over the
    next decade, while our national debt would nearly double,
    despite an economy that is projected to have recovered and the
    war in Iraq ended. Beyond the next 10 years, the current path
    is unsustainable, as spending on the big three entitlement
    programs will continue to consume all of the available
    resources under current law.
        So as we look at the Department's budget request, tough
    choices will have to be made. We are putting the burden of
    today's spending on the kids who will be working tomorrow. So
    we have a trade-off: a good education system with frills that
    the students have to pay off in the future, or a system that
    meets the needs to give them the tools so they can achieve
    their dreams without the frills.
        While I have questions and concerns about many of the
    specifics in the Department's budget proposal, I look forward
    to the opportunity to continue discussing with the Secretary
    and the members of this subcommittee how we can responsibly
    invest in educational excellence, both today and going forward.
        Thank you, Mr. Chairman.
        Mr. Obey. Thank you.
        Mr. Secretary, please proceed. Why don't you take 5 or 10
    minutes to summarize your statement. And we will put the full
    statement in the record.

                   Secretary Arne Duncan's Opening Statement

        Secretary Duncan. I will be brief. Thank you so much,
    Chairman Obey and Ranking Member Tiahrt, for the opportunity to
    appear before the entire committee today.
        I want to begin by thanking you for what you have done to
    keep America's teachers in the classroom and to keep America's
    children learning. The Recovery Act saved nearly 325,000
    education-related jobs and another 75,000 non-education jobs at
    the State level, and that is just through our Department. This
    funding not only helped stabilize the economy and avoid a
    depression, but it absolutely averted an educational
    catastrophe.
        And, Chairman Obey, I want to personally thank you for all
    your leadership in making that happen.
        All told, we have obligated over $70 billion from the
    Recovery Act. We have $25 billion left, most of which will be
    out the door over the next few months. That money will help
    States balance budgets, help young people pay for college, and
    help drive the change we need in our classrooms to prepare our
    children for the jobs of the future.

                 DEPARTMENT OF EDUCATION FY 2011 BUDGET REQUEST

        Let me turn to our proposed 2011 education budget. As you
    know, while most Federal spending is frozen, President Obama is
    proposing an historic increase in education funding. He
    understands that education is the key to our economic security,
    and even in these challenging times, he remains deeply
    committed to this issue.

                         DISCRETIONARY FUNDING REQUEST

        The President is requesting a 7.5 percent increase in
    discretionary spending, from $46.2 billion to $49.7 billion. It
    supports our cradle-to-career agenda, from preschool through
    college. Our K-12 budget is focused on six areas, all of them
    about supporting students and teachers.

                          COLLEGE AND CAREER READINESS

        ``College and Career Ready Students'' is our new proposed
    name for the Title I formula grant program, which we continue
    to fund at historic levels. The Title I program will also
    receive substantial Recovery Act dollars next year.
        We also propose more funding for School Turnarounds, from
    $546 million to $900 million, so we can continue to focus on
    the lowest-performing 5 percent of each State's schools.

                        PROMOTING WELL-ROUNDED EDUCATION

        Second, because students need a well-rounded education, we
    propose a $100 million increase for learning programs beyond
    tested subjects like reading, writing, math and science, that
    is, for programs such as technology, the arts, foreign
    languages, history and other subjects. All told, we will
    request more than $1 billion next year to promote a well-
    rounded education.

                     ENSURING PROPER LEARNING ENVIRONMENTS

        Third, student supports are needed to ensure a proper
    learning environment. Our budget proposes a $245 million
    increase over 2010 for a total of $1.8 billion to improve
    school climate, student health, student safety, parental
    engagement and community involvement. This includes continued
    support for the 21st Century Community Learning Centers
    program. We also want to work with the Congress to refine this
    program so that it lifts student outcomes and incorporates
    enrichment activities through community partnerships.

                             PROMISE NEIGHBORHOODS

        We are also proposing a major investment in a new program
    modeled on the Harlem Children's Zone. It is called Promise
    Neighborhoods, and it seeks to transform whole communities with
    schools as neighborhood anchors. It provides wrap-around social
    services from birth through college for students and families
    at risk.

                         RESOURCES FOR DIVERSE LEARNERS

        The fourth area of reform we are calling Diverse Learners.
    This includes students with disabilities who will benefit from
    a requested $250 million boost to the IDEA formula grant
    program. Like Title I, substantial IDEA Recovery Act dollars
    will continue to be available this year.
        Other diverse learning populations include English-language
    learners, which will get a $50 million boost under our
    proposal, and we are maintaining dedicated funding for migrant
    students, homeless students, rural students and Native American
    students.

                     EFFECTIVE TEACHERS AND SCHOOL LEADERS

        The fifth area of reform is called Teachers and Leaders. No
    one is more essential to educational success than the person in
    front of the class and the person who is running that school
    building. This proposed budget seeks $3.9 billion, a $350
    million increase, to elevate the teaching profession and get
    effective teachers and leaders into the schools that need them
    the most.
        We are also requesting a large investment in teacher and
    principal leadership programs so States and districts can
    recruit and train the very best people possible.
        We further support both traditional and nontraditional
    pathways into teaching so people from all walks of life can
    bring their experience and knowledge into the classroom. And
    our budget invests in programs to reward educators for raising
    achievement and working in hard-to-staff schools and subjects.

                          COMPREHENSIVE CHANGE NEEDED

        The final area falls under the category of innovation. We
    are proposing almost $2.5 billion to increase high-quality
    charter and magnet schools and other autonomous public schools
    and to continue the Race to the Top and the Investing in
    Innovation programs. With so many children at risk of failure,
    America cannot accept the status quo. We have to be bold.
        The facts are both startling and disturbing. Today, 27
    percent of America's young people drop out of high school. That
    means 1.5 million teenagers are leaving our schools for the
    streets. And this is a national problem, urban, suburban and
    rural. Our 15-year-olds rank 24th out of 29 countries in math.
    In science, 15-year-olds rank 17th. And just 40 percent of
    young people earn a 2-year or 4-year college degree, and the
    U.S. now ranks 10th in the world in the rate of college
    completion. We used to lead the world. We have flatlined. Many
    other countries have passed us by.
        We must embrace new approaches to learning and expand upon
    proven models of success. We must hold everyone accountable for
    results, and we must aim higher.
        Our States recognize the problem, and that is why 48 of
    them are working together to raise standards, and 40 of them,
    along with Washington, D.C., have developed bold reform plans
    in their bid for Race to the Top funding. And everyone who
    applied is a winner. Those good, courageous, tough
    conversations are happening around the country, and we are
    seeing huge progress.

                    FY 2011 BUDGET AND ESEA REAUTHORIZATION

        We are also seeing considerable bipartisan interest--both
    in the States and here in Congress--in our reauthorization
    proposal.
        I would like to briefly touch on some of the key elements
    which are organized around three main goals: first, raising
    standards so the students truly graduate from high school ready
    for college or the world of work; second, rewarding excellence
    and growth; and, third, increasing local control and
    flexibility while maintaining the focus on equity and closing
    those stubborn achievement gaps.
        We believe that States do not need a prescription for
    success. States and districts need a common definition of
    success. And we need a better system of accountability.
        As you know, No Child Left Behind greatly expanded the
    Federal role in holding schools accountable. It required
    States, districts and schools to report test scores
    disaggregated by student subgroups, bringing much-needed
    transparency around achievement gaps. NCLB was right to create
    a system based on results for students, not just on inputs.
        But there are far too many perverse incentives, and we must
    fix that. NCLB's accountability system actually encouraged
    States to lower standards. It doesn't measure growth or reward
    excellence. It prescribes the same one-size-fits-all
    interventions for schools with very different needs.
        It also led to a narrowing of the curriculum and excessive
    focus on test preparation. And it labels too many schools as
    failing, regardless of the progress they are making.
        Our proposal will use student academic growth and gain as
    the measure of whether schools, districts and States are making
    progress. It is a fairer, more honest and much more useful
    indicator. Most educators say they want to be evaluated on
    growth, not proficiency.
        As I said before, our proposal supports a well-rounded
    education, not only by requesting more than $1 billion for the
    arts, science, history, languages and other subjects, but by
    allowing, not mandating, States to use these subjects in their
    accountability systems.
        Under our plan, we will reward schools that are making the
    most progress, and we will be tough-minded with our lowest
    performing schools and schools with large achievement gaps that
    aren't closing. All other schools will be given flexibility to
    meet performance targets working under their State and local
    accountability systems.

                SUPPORT FOR RURAL DISTRICTS COMPETING FOR FUNDS

        Now, we understand there are concerns that small rural
    districts cannot compete with large urban districts for grants,
    so here is what we will do: First, we will continue funding the
    Rural Education Achievement Program, also known as REAP. In our
    budget, it has not been consolidated with any other programs or
    funding streams.
        Second, we will look at competitive priorities for rural
    districts where it makes sense and is needed, and we welcome
    that discussion with you. We recently did exactly that with the
    Investing in Innovation Fund, the $650 million I-3 fund.
        Finally, we are also identifying foundations and nonprofit
    organizations to partner with rural districts. I have traveled
    to many rural areas in the past year and seen firsthand both
    the challenges they face as well as their capacity to address
    them. And I am confident that our Department can support rural
    school districts as they work to improve--and compete.
        So those are some of the highlights. I encourage you and
    your staff to review the blueprint for reauthorization which is
    now available online.

                       PROGRAM CONSOLIDATIONS AND SAVINGS

        I want to make one additional point about efficiency and
    our obligation to taxpayers. In our proposed 2011 budget, we
    list $340 million in savings by cutting ineffective programs
    and eliminating earmarks. We also consolidated 38 programs down
    to 11 funding streams to reduce red tape and paperwork for
    local educators, and they have been very appreciative of that.
        The bottom line is that, between our budget and our
    blueprint, we have a coherent and comprehensive vision for
    education in the 21st century that builds on core values shared
    by Congress and by the Administration: high standards and
    better assessments, rewarding excellence with real incentives
    based on student growth, and a smarter, more limited Federal
    role that supports rather than directs State and local
    educators.

                     STATE OF EDUCATION BUDGETS NATIONWIDE

        Let me just close by voicing my concern for education
    budgets around the country. Even with the remaining Recovery
    Act dollars, States are facing teacher layoffs, cutting school
    days and furloughing teachers to balance their budgets. For
    many States, that funding cliff arrives this July.
        I want to thank the House for supporting an education jobs
    bill. I appreciate that there is growing concern that the
    Federal Government cannot continue funding States indefinitely.
    But America cannot neglect its obligation to children now.
    Somehow, we must find a way to continue to support our teachers
    and principals, parents and students, so that we emerge from
    this difficult economic period stronger and better prepared for
    tomorrow.
        Thank you so much. I am happy to take your questions.

                     PREPARED STATEMENT OF SECRETARY DUNCAN

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        Mr. Obey. Thank you.
        Mr. Tiahrt.
        Mr. Tiahrt. Thank you, Mr. Chairman.

                            PELL GRANT PROGRAM COSTS

        Mr. Secretary, there is a huge rise in cost in Pell Grants
    since fiscal year 2007. The maximum Pell Grant award under the
    House-reported Labor-HHS bill was $4,150 per student at a total
    cost to taxpayers of about $13 billion. That represented an
    increase of $100 in the maximum award over the previous year.
    Since then, Congress has increased the maximum award to $5,550,
    the bulk of which is this committee's responsibility. Your
    request for that amount is an increase to $5,710, for a total
    cost of $36 billion. When you consider the increase for the
    amount coupled with the number of students, which in the last 4
    years has gone up by about 50 percent, it is a lot of money
    that we are setting aside.
        How has the cost of this important program skyrocketed so
    much in just 4 years?
        Secretary Duncan. What we are trying to do is make sure--
    and I think Chairman Obey's slide is very compelling. There are
    so many students around this country who want to go to college
    who, due to difficult financial circumstances, simply can't
    afford it. And we want to make sure that those dreams don't die
    young.
        I don't worry just about our seniors and juniors. I worry
    about those 9- and 10-year-olds around the country whose mom or
    dad loses their job or takes a huge pay cut, and they start to
    think that college isn't for them. We have to continue to
    invest. We have to educate our way to a better economy.
        If we simply stop subsidizing banks and put those savings
    behind Pell Grants, we can close that shortfall in the Higher
    Education Act. And the bill, I appreciate Chairman Obey and
    Chairman Miller for their leadership on that. If we choose to
    invest in education and stop subsidizing banks, we can do the
    right thing by the country.
        Mr. Tiahrt. And we are very proud of our institutions in
    Kansas, and especially around March Madness, I have seen some
    brackets where the finals is KU versus K-State.
        Secretary Duncan. I am picking Kansas.
        Mr. Obey. What are they playing, badminton?

                      RISING TUITIONS AND COST TO STUDENTS

        Mr. Tiahrt. My concern is that, as we put more money and
    dollars in the system, it seems like the universities just bump
    up their tuition costs, and we end up with the kids in the same
    problem. By putting more money in the system, doesn't
    necessarily open the doors for them; as a matter of fact, it
    may be more difficult for them, because they don't get enough,
    they start borrowing money, and by the time they get through
    their 4-year program, they owe $100,000.
        Secretary Duncan. It is a great question. I share that
    concern. And it is really interesting. If you look across a
    couple thousand higher education institutions, you see folks
    doing different things. You see some with absolutely runaway
    costs, way above the rate of inflation. You see other
    universities going to 3-year programs, going to no-frills
    campuses, doing some very creative things.
        And I think our students and families are very, very smart,
    and they are going to vote with their feet. They are going to
    do their homework, and where the costs are out of control and
    the value is not there, folks are going to stop going. You have
    seen a number of universities start to go in the other
    direction, reducing costs even in tough times, going to 3-year
    programs, no-frills campuses.
        So I think our students and parents through the marketplace
    are going to help drive more universities to go where they need
    to. But where schools have runaway costs, I think you are going
    to see students and parents choose to go in a different
    direction.

               FINANCING PELL GRANTS AND DIRECT LENDING PROPOSAL

        Mr. Tiahrt. Well, we are going from $13 billion in fiscal
    year 2007 to now a total cost of more than $36 billion. That is
    almost three times the increase. My concern is, these kids are
    going to end up paying for this because it is borrowed money.
    It is money we don't have.
        Secretary Duncan. Again, this is money we can invest in
    students without going back to taxpayers for another dime. We
    simply stop subsidizing banks. So this is a real chance for
    America, I think, to get its priorities right. I think we have
    to stop subsidizing banks. If we can do that, we can invest
    unprecedented resources to make college more accessible and
    affordable for our Nation's young people.

             DIRECT LENDING PROPOSAL--TERMINATING LENDER SUBSIDIES

        The President has drawn a line in the sand. He says, by
    2020, we want to again lead the world in college graduation
    rates. We have to educate our way to a better economy. Again,
    we used to lead the world. We have flatlined. Many other
    countries have passed us by. And making college more accessible
    and affordable is very important.
        There is a piece of that legislation that is something else
    called income-based repayment, IBR. Again, simply by stopping
    those subsidies to banks, we could reduce those loans and repay
    them at the back end.
        Mr. Tiahrt. Mr. Secretary, we just had Secretary Geithner
    here a couple days ago, and he is very proud of subsidizing the
    banks. And I don't think he is going to stop.
        It doesn't prevent our kids from having to pay back this
    borrowed money. I think you are absolutely right; we have to
    quit bailing out the buddies on Wall Street.
        It is tragic that our kids that are in school today, the
    kids that are going to qualify for these Pell Grants, are
    saddled with the burden of paying back not only the money that
    is being allocated for education now, higher education Pell
    Grants, but also what we paid to bail out the banks.
        We are overdrawn by $655 billion this year alone. We are
    going to have to start making some tough choices, and it seems
    like this is a dramatic increase.
        Secretary Duncan. Again, I think we are trying to make some
    tough choices. I agree with you. We are trying to make a tough
    choice to stop subsidizing banks and put that money behind
    young people.
        Mr. Obey. The gentleman's time has expired.
        Ms. Lowey.
        Mrs. Lowey. Thank you, Mr. Chairman.

                    21ST CENTURY COMMUNITY LEARNING CENTERS

        And thank you, Mr. Secretary, for your leadership and
    creativity. However, I want to ask you a couple of questions
    about the after-school programs. This has been very important
    to me and to many of our communities.
        The budget request includes $1.6 billion for the 21st
    Century Community Learning Centers program. So this appears to
    be the same as fiscal year 2010, but after I look closely, I
    realize that $10 million of the request would fund full-service
    community schools, and $3 million would stay at the Department
    to run a national competition. So it is actually a $13 million
    cut.
        Now, we know that after-school programs serve more children
    than 5 years ago. There are more children, however,
    unsupervised each afternoon. The demand for programs is higher
    than ever. In fact, parents of 18.5 million children not
    currently participating in after-school programs say they would
    enroll their children if one were available.
        Now, my constituents say that reducing funds for after-
    school programs is like pulling the rug out from under working
    families who are struggling right now. So I am not opposed to
    extending the school day, but it is important to delineate
    between extended day and after-school programs.
        The vast majority of after-school programs last until 5 to
    7 p.m., whereas extended-day programs often run only until 4
    p.m. After-school programs just keep children safe longer,
    giving them enrichment and education activities until their
    working parents get home.

                   IMPACT OF ECONOMY ON AFTER-SCHOOL PROGRAMS

        There was a survey conducted by the Afterschool Alliance
    that looked at how the economy is affecting after-school
    programs. It found that 95 percent of after-school programs
    report that the recession is affecting their community.
    Approximately 6 in 10 programs report a loss in funding due to
    the recession; 86 percent say more kids in their community need
    after-school programs; and 83 percent report that funding for
    their program is less than secure for the next 3 to 5 years.
        So the gap between the proposed funding level and the
    authorized level of $2.5 billion leaves as many as 1.5 million
    children behind and many States unable to make new grants, and
    that prevents new programs from getting off the ground and
    turning away established programs looking to renew grants.

                             AFTER-SCHOOL PROGRAMS

        So I would like to ask you three questions: One, why is the
    Department proposing to effectively reduce after-school funding
    by using these funds for other purposes, as good as they may
    be, besides funding 21st Century Community Learning Centers?
        How does extending the school day fill the gap between what
    would otherwise be accomplished through after-school programs?
        And given the obvious need for more after-school programs,
    did the Department consider increasing funding for the program?
    You have asked for an overall increase in the budget. So I
    would say, why didn't you increase these programs when the need
    is so obvious?
        I want to make it clear, I am not against extended-day, but
    I don't think it takes the place of the after-school programs.
        Could you respond?
        Secretary Duncan. Sure. Those are really powerful
    questions. Let me just say I got my start in education in my
    mother's after-school program. I was raised as part of that and
    ran my own after-school program for 6 years before I went to
    join the Chicago public schools. So, throughout my life, I have
    seen the extraordinary benefits.
        Our streets often aren't as safe as we want them to be. As
    you know, we have more and more children on their own after
    school, and whether it is two-parent working families or a
    single-mom working two or three jobs, those hours, I would say,
    not just 3 o'clock to 5 o'clock, but 3 o'clock to 7 o'clock, 8
    o'clock, are times of high anxiety for parents. And we have to
    find ways to address that. Let me start talking in bold strokes
    and then answer your question specifically.
        We talk about what our priorities are. One of the six
    buckets is student supports, and the total pot there is $1.8
    billion. That is a 16 percent increase. That is for after-
    school and extended-day. It is trying to create safe and
    healthy students, and it is this idea of creating more--
    replicating the ideas behind Jeffrey Canada's Harlem Children's
    Zone to make sure we have entire communities that are
    supporting students, enabling them to----
        Mrs. Lowey. Kid's Day does a great job, too. We have that
    in New York as well.
        Secretary Duncan. It does a great job. I will also tell you
    the President has requested an additional $1 billion if the
    reauthorization passes, and we want to put a large chunk of
    that money into after-school programs. So if that passes with
    Congress's support this year, there is another huge funding
    source.
        We are not looking to cut funding. We are challenging
    grantees to tackle both of those two things.
        Mrs. Lowey. Wait. You are not looking to cut it, but you
    are, for something else that is good.
        Secretary Duncan. Again, we are going to challenge grantees
    to do these things. I don't see these two ideas as in conflict.
    I think folks can work on these things together.
        Mrs. Lowey. How?
        Secretary Duncan. Community schools can integrate after-
    school programs.
        Mrs. Lowey. Where are they going to get the money?
        Secretary Duncan. Again, these are through the grants we
    are going to put out. So there is a chance here for folks who
    are being creative to add time. We couldn't agree with you
    more; we want to add more time after school.
        Mrs. Lowey. Okay, let me just say this: I think your
    extended-day, your other programs are all great and all
    wonderful, but in the meantime, there are over 1 million kids
    who will not be able to get services of after school.
        So what I would just say, and I am hoping we can work
    together on the budget, is, I might adjust those figures,
    because I think it is important to address the after-school
    program. And we are certainly willing to support your
    creativity and extended-day, and I am familiar with CIPS and
    all the others. So I hope we can work together on that.
        Secretary Duncan. Thank you so much for your
    thoughtfulness.
        Mr. Obey. Mr. Rehberg.
        Mr. Rehberg. Thank you.
        I want to thank minority staff for sticking around for my
    questioning this time.

                 COMPETITIVE GRANT PROGRAMS AND RURAL DISTRICTS

        Welcome. Nice to have you. And if you haven't checked my
    biography, I am from Montana. I represent 147,000 square miles.
    And we wish we would be rural education, but we are not; 85
    percent of my kids are either rural or frontier.
        I had lots of problems with the No Child Left Behind as
    well, but I always found the Administration and the Secretary
    of Education to be fairly amenable to changes, flexibility.
        So if I could make some suggestions: Moving to the grant
    program does not necessarily work for a State like Montana,
    because we just don't have the economy of scale. There aren't
    grant writers in these schools. They are so small, that we
    especially see it in other areas like fire grants. There are
    other grant programs within the Federal Government, and we have
    struggled. We have tried to do education programs to help them
    learn how to write grants. We even offered in my office to help
    them write grants.
        And to expect us to try to make up $12 million for our
    schools in Montana through grant writing is practically
    impossible. And I plead with you, don't move so quickly in that
    direction.

                     TURNING AROUND LOW-PERFORMANCE SCHOOLS

        The second area is the Race to the Top. Once again, the
    four model categories you have created are nice, but the
    difficulty is they don't really reflect our kind of schools. It
    is not that easy for us to get rid of a principal, fire half
    our teachers, restructure the way you have done it.
        I guess if you could give me some assurances of your desire
    or willingness to be flexible, and can you work with the Rural
    Education Caucus that we have here in Congress to address some
    of the lack of flexibility in the creation of the models in the
    first place?
        Secretary Duncan. Absolutely. I had a wonderful visit to
    Montana and learned a tremendous amount.
        Mr. Rehberg. Did you fly, or drive around?
        Secretary Duncan. We flew in, and we drove around. So we
    got a good sense of the issues. We traveled with the Governor
    and spent some time with the State school superintendent. I
    went to Northern Cheyenne country as well. It was a fascinating
    day, and I got a lot from it.
        Mr. Rehberg. As you know, we did not, our Office of the
    Public Instruction did not compete for the grants.
        Secretary Duncan. They can come in, in the second round. To
    be clear, we are not looking for fancy grant proposals. We want
    to go where the need is, and we have been very, very clear
    about that. We are looking for folks who have a heart, who want
    to get dramatically better, who want to raise the bar for all
    children, close achievement gaps. Again, we are not interested
    in fancy grant proposals or consultants or anything like that.
    We just encourage everyone to put their best ideas forward. And
    please rest assured, we want to go where the greatest need is.

                     SCHOOL IMPROVEMENT INTERVENTION MODELS

        In our proposals, I think you are talking about the school
    Turnaround model, the Transformational Model doesn't require
    you to move staff out. We can continue to have the conversation
    and be flexible with that model put in place. We thought about
    it to make sure in those rural communities where you----
        Mr. Rehberg. Can those other models be added? You are not
    dead set on those four?
        Secretary Duncan. We can have that conversation. We had
    lots of conversations with rural superintendents about that
    model. We didn't just sort of come up with these models--which
    also include the Restart and School Closure Models--in a
    vacuum. There were a number of conversations there. Frankly,
    there was pretty good support. But if we missed something, we
    are happy to continue those conversations.
        Mr. Rehberg. That is probably the thing I hear most from
    the school administrators: It is not practical or does not
    work. Maybe you are hearing from other areas of the country
    that it does, but my rural administrators----
        Secretary Duncan. Okay. We will continue to vet it. I will
    absolutely commit to you to continue those conversations. I
    have tried to travel throughout the country, so whether it is
    Montana, whether it is West Virginia, whether it is Wyoming----

                         HELPING STRUGGLING POPULATIONS

        Mr. Rehberg. Let me switch gears rather quickly because the
    one thing I liked about No Child Left Behind was the testing,
    but the problem was we didn't do anything once we had the test
    done. We know it is our Native American schools in Montana.
    Clearly, we knew it before we went in that is what it was going
    to show. But the money didn't follow the tribes, didn't go into
    the reservations. Now we are seeing the consolidation of those
    accounts within your budget proposal as well.
        How do you hope to address them specifically when you slip
    them in with the African American districts and all the other
    districts that are identified as some of the trouble spots?
        Secretary Duncan. Again, our budget proposes the largest
    increase in spending for education ever. And so we want to put
    resources everywhere. At the time when the President is level-
    funding most other domestic spending, this is a major
    investment. And that is how we see it, as an investment. There
    is huge unmet need around the country in every community,
    urban, rural, suburban, frontier, and we want to work as hard
    as we can to meet that need.
        Mr. Rehberg. Thank you, Mr. Chairman.
        Mr. Obey. Mr. Kennedy.
        Mr. Kennedy. Thank you, Mr. Chairman.
        Welcome, Mr. Secretary.

                        CHARTER SCHOOLS IN RHODE ISLAND

        I wanted to just reiterate, my State being a small State,
    we have about the same size school district, if you will, as a
    major city like Dallas, about 160,000 kids. We have full
    implementation of charter school laws in our State. It has
    really been a partnership with the Speaker, leadership, and our
    superintendent, both in our biggest city and also our smallest
    community. All of the partners are signed on.
        We have an approach where we fully fund and hold
    accountable both our public schools and our charter schools,
    and we are prepared to defund both charters and public if they
    don't perform. We actually have criteria-based hiring for
    teachers, and we are putting teacher quality and evaluation
    into the system already.
        For that reason, we get a ``green'' just among the National
    Council for Teacher Quality, green for those that should be
    proceeding forward with the Race to the Top measurement. I just
    wanted to highlight that, just in case you are deciding who to
    give the money to.

                                 ADULT LITERACY

        I want to bring to your attention the notion that the
    collaboration, if you can just elaborate for us, the
    collaboration with the Department of Labor on literacy.
        We have in this country a growing challenge in terms of
    adult literacy. And you can't divorce a parent's literacy and
    the fact that that impacts their child's challenges in terms of
    learning. So I would like to ask you, in terms of your
    Innovation Fund whether you couldn't explain--I mean, a lot of
    these families, the parent can't get into college if they don't
    first have the basic skills.

                        PELL GRANTS AND COLLEGE TUITION

        I want to echo what Mr. Tiahrt said in terms of the
    increase in Pell Grants. Frankly, I know this is politically
    not even good politics, but we ought to be spending this money
    on public universities and community colleges to make it go the
    furthest. The notion that we are spending it on Ivy League
    colleges that have no cap on expenditures and do not make the
    most of their dollars in terms of access to the average middle-
    class family to me is another challenge I think for the
    Administration to make the most of those educational dollars.
    If they really want to take on the status quo, that would be
    the way to do it. Because I have kids waiting for classes to
    get into the Community College of Rhode Island, and they can't
    do it because there is not enough money. And yet we are
    spending Pell Grants to go to the Ivy Leagues like Brown and
    other places, albeit they are great universities. But frankly,
    I want to see more kids go to higher education, get access to
    basic skills and higher education than spend this money on a
    bunch of Ivy League universities that don't need it.

                          ADULT LITERACY AND TRAINING

        So if you could talk about the adult literacy challenges
    that we have and how you are going to work with the Department
    of Labor and Secretary Solis on literacy issues.
        Secretary Duncan. Thank you. It is a huge issue for us as a
    nation, and we think we have about 90 million American adults
    who need to go back to school to get basic training, to be able
    to take that next step. So we have had a very, very good
    collaboration so far with the Department of Labor. Secretary
    Solis has been a wonderful partner.
        I have as my Under Secretary a former community college
    president, a visionary, Martha Kanter, the first time in the
    history of the Department that a community college president
    has been in that position. We want to make a significant
    increase in community colleges.
        We think they are this unrecognized gem along the education
    continuum. And whether it is 18-year-olds or 38-year-olds or
    58-year-olds going back to school to retrain and retool, in
    green jobs, community jobs, tech jobs, health care jobs, we
    think as families get back on their feet, the country is going
    to get back on its feet, and we think community colleges can
    drive a lot of that.
        We also recruited, who happens to be from your State, just
    an absolute superstar who works with Martha, Brenda Dann-
    Messier, who is a phenomenal leader, passionate, has devoted
    her life to this issue of getting adults the skills they need
    and the basic skills to be retrained.
        So a lot of hard work is ahead of us. But I want you to
    know we are absolutely committed. We have a laser-like focus on
    community colleges, and Brenda is just an absolute champion for
    adult literacy.
        Mr. Kennedy. Well, what are you doing to partner with the
    technology sector to provide these technology boards, if you
    will, so there is no stigma to people who may have literacy
    issues, they can learn both literacy for their job, but also
    basic literacy skills without people having a sense of maybe
    what the challenges are?
        Secretary Duncan. We have had great relationships with the
    community. Then we have conversations. Folks want to be part of
    the solution, so we are not seeing resistance. We are not
    seeing silos. We are not seeing egos, and I think we have a
    chance to get dramatically better.
        Mr. Kennedy. If I could suggest, if we could bring all of
    the technology CEOs to the White House, tell them let's get a
    cut rate and just get a bunch of these technology boards access
    to people so they can learn at their own pace and be able to
    get both the skills and literacy without people having a sense
    as to where they are, because there is huge stigma to literacy,
    I just encourage that. I also encourage Rhode Island in the
    Race to the Top.
        Thank you very much.
        Mr. Obey. Mr. Alexander.
        Mr. Alexander. Thank you, Mr. Chairman.
        Good morning, Mr. Secretary.

                          STUDENT LOAN INTEREST RATES

        So it doesn't look like we just hate banks more than we
    love children, let's talk about the student loan program a
    little bit. What is the average interest rate today that banks
    would charge?
        Secretary Duncan. That banks can charge?
        Mr. Alexander. Yes.
        Mr. Skelly. For students, for subsidized loans, this year
    the interest rate students will get charged is 6 percent this
    year. It will be 5.4 percent as of July. It goes down for a
    couple more years. For unsubsidized loans, the rate is 6.8
    percent.
        Mr. Alexander. So if we take it away from the banks and
    handle it in your Department, what will the interest rates be?
        Mr. Skelly. Under current law, the rates would be the same.
    The interest rates are the same for the Direct Loan Program and
    for the Guaranteed Student Loan Program.
        Mr. Alexander. So the students will be paying the same
    thing. So what we are doing is just taking it away from the
    banks because we dislike banks and we are going to put it in
    you, is that right?
        Secretary Duncan. It is a little more complicated than
    that. We have basically been subsidizing banks, and we bear all
    the risk. And the banks have had a very, very good deal for a
    long time. And they have, because they have had a good deal,
    right now, and this is a matter of public record, they are
    spending millions of dollars on lobbyists who are running
    around town. They are running ads in a variety of places. And
    we think, again, when there is so much unmet need out there,
    when middle-class, working-class families are struggling to go
    to college, for us to continue to put money into banks when we
    can put money into students----
        Mr. Alexander. But if we are not going to let them have the
    loan at a cheaper rate, how are we benefiting the student?
        Secretary Duncan. Because of those savings by not
    subsidizing banks, we can put billions of dollars in
    increased----
        Mr. Alexander. Is that what we are going to do?
        Secretary Duncan. Yes, sir.
        Mr. Skelly. In the SAFRA legislation, the legislation will
    be incorporated into the Reconciliation Act . . .
        Mr. Alexander. And we know that that money won't be spent
    in other places?
        Mr. Skelly. I was just going to say that the rates will
    revert to a variable rate under a lot of the proposals under
    consideration. There would be a drop in the student loan
    interest rate under current laws.

                 EVEN START PROGRAM--FAMILY AND ADULT LITERACY

        Mr. Alexander. Okay. Let's go back and talk about something
    Mr. Kennedy was talking about. I, too, am concerned about adult
    literacy.
        I have been a proponent of Even Start, Head Start, those
    programs, and it is very moving to go into a setting and see an
    adult learn to read and write along with their children. I am
    afraid if you mix all of those programs in and put them under
    competitive bidding, that that program, Even Start, is going to
    get lost in the mix.
        Can you ease my concerns?
        Secretary Duncan. I will try to. I appreciate your
    leadership there so much. I am a huge fan of family literacy.
    Again, if we are trying to change children's lives, you have to
    change parents' lives. Again, this is something I learned
    growing up as part of my mother's program, that she makes
    parents come in and read with their kids, and helps them if
    they don't know how to read to their kids. And if you are
    really trying to change that child's life trajectory, you have
    to change what is going on inside that home.
        So I am a huge, huge proponent of family literacy. We
    increased the funding for literacy by about 9 percent, so we
    are putting more money there. Even Start programs, family
    literacy programs generally can absolutely have a chance not to
    just maintain funding, but potentially increase their funding.
        Mr. Alexander. Good. Thank you.
        Mr. Obey. Ms. Lee.
        Ms. Lee. Thank you, Mr. Chairman.
        Good morning, Mr. Secretary.

               TEACHER SUPPORT AND CHRONIC LOW-ACHIEVING SCHOOLS

        Let me first say I recognize change is hard, and this is an
    entirely new approach to our educational system, which is
    sorely needed, but I have a lot of questions about this new
    direction.
        First, I may as well say, probably one of the votes that I
    regret most is voting for No Child Left Behind, and I don't say
    that about many of my votes. Of course, I wanted to see it
    repealed, but it looks like you all are trying to fix it. But
    let me ask you a couple of things, because I am not so sure
    that the issue of teacher support--and I cite the example in
    Rhode Island where all teachers were fired. Historically,
    teachers have not had the resources. They have not had the
    support. And I look at your budget for counselors, you know; I
    look at all of the supports that need to be in the school,
    especially in low-achieving schools, schools in urban and rural
    areas where you have low-income students, the supports have not
    been there historically for teachers.
        So for schools now to have to race to try to help teachers
    teach and then have the punitive measures that you all have
    decided upon, such as what happened in Rhode Island, if they
    hadn't been able to teach the way we want them to teach, to me
    just seems wrong.
        Teachers should be the highest-paid profession in the
    world. Really. They are securing our future. We have
    historically had a problem with low teacher salaries, and that
    is an issue that needs addressing.
        We haven't had the type of counseling at our public schools
    that teachers need, nor the curriculum, nor the supplies, nor
    the computers, the technology.
        In my area, in Oakland, an entry level teacher is paid
    $37,000, but yet in a higher-income area, a teacher gets
    $45,000. Both salaries are much, much too low. It doesn't make
    any sense to put the onus on teachers, I don't believe.
    Teachers have families. They have children.
        So to say we are going to lay off or fire teachers if they
    don't perform is a bit shortsighted, rather than do what we
    need to do to support teachers in terms of classes. You know
    what all we need to do.
        Had your budget been in place before the firing of teachers
    in Rhode Island, what do you think would have happened?
        Secretary Duncan. Let us be just very clear on that
    situation. We have actually worked very hard, and the union and
    the district are going through mediation and working together.
    So this story isn't finished yet, and we have been very
    encouraged by that.
        You never want teachers to get fired. That is not what
    anyone wants. And these guys are going to continue to talk and
    work through this. It is a tough situation. It is a tough
    conversation. But we are very happy they are back bargaining,
    and we are hopeful for a good resolution there. These
    conversations are never easy at a school like that.
        Reading rates have gone up, but in math I think 7 percent
    of students are at math proficiency levels. So 93 of students
    aren't. A dropout rate of 52 percent----
        Ms. Lee. Sure. In my district, we have schools that are
    very similar.

               HOLDING SCHOOLS, DISTRICTS AND STATES ACCOUNTABLE

        Secretary Duncan. So we need to work together.
        I think your point is very well taken. The partnership with
    teachers is hugely important. One of the many things I thought
    was broken about NCLB is to put all the onus onto teachers, and
    we are trying to say this is a shared responsibility. So for
    the first time we are going to hold not just schools but
    districts and States accountable. We are going to have a laser-
    like focus on equity.
        To your point, often--and Congressman Jackson knows this--
    often, the poorest communities get the least resources. There
    are huge funding inequities----
        Ms. Lee. That is all the time.

                       FUNDING FOR LOW-ACHIEVING SCHOOLS

        Secretary Duncan. I lived on the poor side of the tracks
    for a long time. In Chicago public schools that were 90 percent
    minority, 85 percent living below the poverty line, we received
    less than half the money of wealthier districts, less than half
    of districts 5 miles north of us. And think about the
    compounded difference that makes over 12, 13 years of
    education. It makes no sense whatsoever.
        What we want to do is we want to be very, very creative.
    The School Improvement Grants, which haven't gotten much
    discussion, you know, Race to the Top is $4 billion and, School
    Improvement Grants is $3.5 billion. We have put all that
    funding on the table just for that bottom 5 percent of schools.

                              SUPPORT FOR TEACHERS

        So teachers need more time to collaborate. They need more
    support. We want to fund that. I think we should be paying--
    this is controversial--math and science teachers more. We have
    got a shortage of math and science teachers; and I think we
    need to reward them to work in disadvantaged communities, rural
    or inner-city, urban.

                   INCREASED RESOURCES, SHARED RESPONSIBILITY

        So we are going to put unprecedented resources out there,
    and what we are going to do is say, with these resources, we
    have to challenge the status quo. Where we have dropout
    factories where 50, 60, 70 percent of students aren't
    graduating, we have to collectively do something better.
        So we are trying to make a huge investment there, but it
    has to be a shared responsibility. I absolutely agree. Teachers
    can't begin to do this alone. I always say, if children aren't
    fed, they can't learn. If children aren't safe, they can't
    learn. If children can't see the blackboard, they can't learn.
        So this idea of the student supports emphasis, trying to
    create the climate in school and in the communities, the
    Geoffrey Canada work around schools to give students a chance
    to concentrate and think about algebra, trig, and biology. We
    have to do all those things, and I promise you we are committed
    to doing that.
        Mr. Obey. Mr. Cole.
        Mr. Cole. Thank you, Mr. Chairman.

                     PROGRAMS FLAT-LINED IN FY 2011 BUDGET

        Mr. Secretary, thank you for being here; and thank you for
    what you are trying to do. I think you have got really one of
    the toughest jobs in government, and you do it well.
        But, like everybody else, I have concerns; and I think I
    share the chairman's concern about not funding programs that we
    think work or flat-lining them and moving toward the
    competitive grant system. Because I think it is very difficult.
    You need certainty in education, and you need to have some sort
    of timeframe, and if every year you are sort of up for a grant
    you have got a lot of problems and a lot of concerns.
        But I want to ask you about some specific areas where you
    flat-lined programs that, frankly, are of great interest to me.
        There is no increase in TRIO funding, and one of the major
    aims appropriately is to try to help disadvantaged kids get
    through school. There is no increase in GEAR UP funding, which
    helps kids get to college in the first place, again, usually
    disadvantaged. These are programs I see in my district and in
    my State and I think work exceptionally well.
        I am concerned frankly--I remember your testimony vividly
    last year, and you talked about going to reservation schools
    and seeing the real needs and the real challenges there. But we
    are flat-funding tribally controlled, postsecondary career and
    tech institutions, and we are flat-funding Indian student
    education programs again. So if these are areas of real need--
    and they are, and I know you recognize that--why are we flat-
    funding in all these areas and moving toward grants--which
    again I share some of the concerns voiced by several of the
    members on the panel. Quite often, these are institutions or
    student groups that are going to find it very difficult in
    competing at that sort of thing.
        Secretary Duncan. Again, just to be very, very clear, in
    the big picture, almost three-fourths of our budget is
    continuing to be formula based. So the overwhelming majority of
    our money will be formula based. We are moving some money in
    the competitive direction, and we want that money to go where
    the greatest need is. So part of what we wanted in the higher
    education bill was a college Access and Completion Fund so GEAR
    UP and TRIO and other programs like that would have a chance to
    grow and expand where they are doing a good job.
        We think we want to continue to go where the need is.
    Again, we are not looking at fancy presentations, not looking
    at fancy Powerpoints but where there is significant need and a
    real desire to get better. Those are the kinds of places where
    we want to invest. And we think we have to get dramatically
    better and address those dropout rates. If we just keep doing
    the same thing, I don't know if we are going to get the better
    results we need. That is the balance we are trying to strike.
        Mr. Cole. That is a fair point, Mr. Secretary. Although you
    could make an argument--particularly in the four cases I have
    mentioned--we are not doing better because those programs
    aren't anywhere near completely funded. It is not like every
    kid eligible for TRIO is in TRIO or every Indian kid who could
    be educated is getting that.
        So maybe we actually--sometimes we do need to do more of
    the same thing. We just haven't done enough. And it is very
    difficult, I think, when you show up and everybody wants to do
    something new and exciting and everybody wants to do something
    innovative and there are lots of good ideas, but there tends--
    particularly in tough economic times----
        And you are better off than most. As you say, the President
    has clearly made a decision here to try to give additional
    resources. I would have thought maybe in some areas at least
    this was an opportunity to catch up and to fund places that
    haven't been funded. These programs really do work extremely
    well, and they didn't get any increases last year. I guess $20
    million for TRIO, which the chairman made available, that
    wouldn't happen. That wasn't in the President's Budget.

                                INDIAN EDUCATION

        And, again, there is nothing here to reward or build on a
    program that is pretty good; and there is nothing directed
    again toward Indian kids, which are the most disadvantaged,
    lowest completion rate in high school, fewest--lowest
    percentage in college, lowest number of college grads of any
    ethnic group or racial group.
        I think those programs really need a whole lot more in them
    before we sort of start trying something new.

                      INCREASED FUNDING IN CONSOLIDATIONS

        Secretary Duncan. And those programs that, you know, have a
    demonstrated track record of effectiveness, that are doing a
    great job, will absolutely have an opportunity to receive more
    funding. So that chance is still there.
        And in all of these areas often, you know, when agencies
    consolidate budgets, they use it as an excuse to cut. We
    actually increased funding in every single one of our buckets.
    So that opportunity is there for them.
        Mr. Cole. Well, I am somewhat skeptical, but we will talk
    about this more.
        Thank you, Mr. Chairman.
        Secretary Duncan. I appreciate your thoughts.
        Mr. Obey. Mr. Moran.
        Mr. Moran. Thank you, Mr. Chairman.

                       GRADUATION RATES OF NCAA ATHLETES

        I am just reading an article here relevant to March
    Madness, which starts today. And I want to applaud the
    Secretary for pushing a proposal that if the NCAA teams are
    going to participate in post-season play, they ought to
    graduate at least 40 percent of their athletes. It doesn't seem
    to be a particularly high bar, and I am disappointed to see
    that Kentucky would fail, the number one seed, but it is
    disgraceful to only graduate less than a third of their
    players. And, likewise, Maryland at 8 percent; California at 20
    percent; Washington, 29; Tennessee, 30.
        And the most disturbing thing is that only 20 teams
    graduated at least 70 percent of their African American
    players.
        I appreciate the fact that you are addressing this. We turn
    our back on these issues because we enjoy the entertainment of
    competitive basketball, but we are not doing any favors to
    these athletes.
        I don't know that you need to comment on it. You can if you
    want.

                  REAL ESTATE MARKET IMPACT ON SCHOOL FUNDING

        The other thing, though, that I am very much concerned
    about, Mr. Secretary, is that we have a disfunctionality in the
    way in which we fund elementary and secondary education in this
    country. It really relegates the Federal Government to little
    more than gap filling or capacity building, as you know. It is
    going to be particularly exacerbated, given the real estate
    market.
        We were told by our three principal economists this week
    real estate values are going to continue to decline. The
    principal way we fund elementary and secondary education is
    through property values, and the people who pay the most in
    property taxes are the least likely to send their children to
    public schools. They are the least likely to have school-age
    children, and if they do, they send them to private schools.
        Here you are with all of these initiatives, but you are
    bringing them out at a time when real estate values are not
    going to recover, where, despite what you are tying to do, the
    likelihood is that schools are going to have to continue to
    eliminate teacher positions, administrators, and the like
    because we don't fund public education in a manner that would
    give us a national workforce that is capable of competing
    globally. And you may want to discuss that.
        Unfortunately, the decline in real estate values is going
    to be particularly exacerbated next year because the stimulus
    bill runs out. So do you want to comment on that, Mr.
    Secretary?

                   EDUCATION FUNDING AS INVESTMENT IN NATION

        Secretary Duncan. I will comment on both of your points,
    and I couldn't agree more and just appreciate your moral
    leadership on this.
        As a country, we dramatically underinvest in education; and
    we do it at our own peril. And, again, I don't see this as an
    expense, I see this as an investment. You could take the
    poorest child from the toughest community with the toughest
    home situation and you put that child in a great early
    childhood program and send him to a great elementary school and
    put him in a serious high school, and that child is going to be
    very, very successful.
        There is a school that we started in the heart of the
    toughest community in Southside. Inglewood High School used to
    have a 60 percent dropout rate. It just made the national news.
    Started a new school, all young men, 141 graduates--I think 107
    graduates all going to 4-year universities.
        You give students from tough communities great opportunity,
    and they can do well. Other countries simply invest more than
    we do, and we are paying the price for that.
        So what we want to do is continue to push as hard as we can
    to make sure that scarce resources are going to education; and
    the more we can demonstrate success and that we are getting
    better, the more I hope people will see this is the right
    investment to make. But we have to educate our way to a better
    economy.

                      DISPARITIES IN NCAA GRADUATION RATES

        Quickly, on the NCAA, it is not just the graduation rates
    but, to your point, the huge disparities between white ball
    players and African American ballplayers. I grew up with too
    many players who got used by the universities, made millions of
    dollars off of them. No one cared about their education; and
    when the ball stopped bouncing for them, they had very, very
    tough lives. So that is something that scarred me from the time
    I was a little guy, and to be in a position now to try to speak
    out against that----
        What is interesting is so many universities do the right
    thing. There was an article in the New York Times on Xavier
    University that has a phenomenal 77-year-old nun who is in
    charge of academic affairs, and they graduate 100 percent of
    their players and have for decades.
        This is all about effort. It is all about culture. And you
    have other places that simply want players to entertain and to
    make them money, and they care nothing about their lives beyond
    that. And that is what we have to challenge.
        Mr. Moran. Good for you. Good point.
        Thank you, Mr. Chairman.
        Mr. Obey. Mr. Bonner.
        Mr. Bonner. Thank you, Mr. Chairman.
        Mr. Secretary, I agree with really all of my colleagues and
    especially Mr. Cole. You have got one of the toughest jobs in
    government, and we wish you success.

                     NATIONAL EDUCATION POLICY DISCUSSIONS

        This is not the right place to make this request, but, Mr.
    Chairman, I would really like for us to think about one day if
    we could impose on the Secretary's demanding schedule allowing
    us to have a conversation where we could talk about local
    issues. Because we are all mentioning--or most of us are
    mentioning--things that we know from our congressional district
    that are important to us, and I am going to do that in just a
    second, but also where we could talk about national policy.
    Because it would make for an interesting debate if we could
    just focus on national policy versus things that are near and
    dear to our hearts.
        But, again, I won't make that request at this point. I
    would just throw it out for your consideration.
        But let me bring a local matter to my State to your
    attention and just ask for your input.
        I did not vote for the stimulus bill, although I have
    admitted multiple times that one of the good things that it did
    was it helped save thousands of jobs, tens of thousands of
    teachers' jobs throughout the country, including in my
    district; and I have told teachers in my district that that was
    one of the things--I don't know that it has created any new
    jobs in any district, but it certainly has saved some jobs.

                       FORMULA-DRIVEN STIMULUS BILL FUNDS

        But one of the areas of concern in Alabama is we have three
    schools, a school for deaf and blind citizens, we have a school
    for math and science, and we have a school for the fine arts.
    The fine arts school is in Birmingham. The deaf and blind
    school is in Taladega. Those are not in my district. The school
    for math and science is in my district.
        Unfortunately, because they are not subject to the annual
    formula of our State legislature but through direct
    appropriations of the legislature, they did not receive any
    assistance from the stimulus bill. And knowing firsthand about
    the school for deaf and blind and also the school for math and
    science, these are good schools, residential campuses that
    serve the entire State of Alabama. Is there anything that we
    can do to try to make sure that they are included and not
    excluded from these formulas?

                  HELPING SCHOOLS NOT IN FORMULA CALCULATIONS

        Secretary Duncan. I think there is. Your State of Alabama
    received $1.16 billion, and I have had a great working
    relationship with your Governor, and I think we have saved a
    very significant number of education jobs in a State that has
    been critically important.
        I was in Selma, Alabama, 2 weeks ago.
        Mr. Bonner. That is where I was born.
        Secretary Duncan. It was a very moving experience and one
    of those amazing days.
        Tom Skelly can walk you through--I think we can help.
        Tom, why don't you walk him through what is possible here?

                        STATE FISCAL STABILIZATION FUND

        Mr. Skelly. Mr. Bonner, I know there were some questions
    about the schools there in Alabama, and we looked into it for
    your office earlier in the week. It turns out that you can use
    the government services portion of the State Fiscal
    Stabilization Fund. It is just the education portion that is
    restricted to programs that Alabama funds at the local level
    that are elementary and secondary education programs. The
    school for the deaf, the school for the blind, the fine arts
    school, those still could be funded through the government
    services portion.
        Mr. Bonner. And, unfortunately, my State is like 46 or 47
    other States. I think Oklahoma and North Dakota are the only
    two States that I know of that actually aren't facing severe
    economic crises. So I am afraid that our State has already
    tapped into the fund, Mr. Skelly, that was available. But that
    is our problem, not yours. And I certainly acknowledge that,
    and I appreciate that.

                   TAX CREDIT FOR PRIVATELY SCHOOLED STUDENTS

        Let me throw a crazy idea out from left field just for your
    opinion.
        The chairman said in his opening comments--and he is
    right--our schools are drowning in red ink, but our Federal
    Government is drowning in red ink as well. And would it be
    totally off the wall to consider--and I know this would be a
    tax issue, which doesn't come before our committee. But just
    your personal thoughts, Mr. Secretary, as a leader in education
    reform--for us to consider putting on the table a tax credit
    for families who send their kids to private schools or
    parochial schools or who home school? Because these kids are
    getting an education through a different means, but their
    families continue to support public education with their taxes.
    How crazy an idea is that?
        Secretary Duncan. I guess my primary concern is the vast
    majority of students in our country go to traditional public
    schools and I worry about how desperately underfunded our
    current public schools are. So my honest answer is my first
    priority is we need to do a much better job of supporting and
    investing--holding accountable for results, but investing in
    those public schools that serve the overwhelming majority of
    our country.
        Mr. Bonner. Thank you.
        Thank you, Mr. Chairman.
        Mr. Obey. Mr. Jackson.
        Mr. Jackson. Thank you, Mr. Chairman.

                FISCAL CONSTRAINTS ON NATION'S SCHOOL DISTRICTS

        Mr. Secretary, welcome back to our committee. It is good to
    see you. I have a couple of global questions, and then I want
    to ask a couple of specific questions in the time that has been
    allotted me.
        We really have two processes here in the Congress. Today,
    you are here before our committee presenting your fiscal year
    2011 budget, which represents substantial increases in
    education. You have correctly stated that it is the most
    aggressive investment in education in recent memory. But the
    context for which you seek to change public schools and our
    Nation's education system is obviously in the context of the
    worst economic recession since the Great Depression.
        Detroit public schools are in near collapse. They are
    expecting to close almost 40 schools this summer.
        The Chicago public school system, Ron Huberman said in
    yesterday's paper, I believe it was, that 37 students per class
    will not be an unusual size if these budget negotiations don't
    go well. But the expectations are that they will not go well,
    that the pension obligations, the local property tax issues,
    the inability of local taxpayers to shoulder the burden suggest
    major changes in the Chicago public school system.
        There are two processes. There is one process that shows
    your very aggressive budget that seeks to change the Nation's
    education system in the current economic context, but the other
    process is the supplemental process that ushers truly the
    Nation's priorities, whether they be for Afghanistan and
    Pakistan.

                  FEDERAL VS. LOCAL SHARE IN EDUCATION FUNDING

        The supplemental process bailed out our Nation's financial
    institutions, as carefully articulated by the President. I am
    wondering, in light of the fact that the Nation's top 50 school
    systems are experiencing shortfalls in revenue and, as the
    chairman indicated, drowning in red ink, why there is no
    emergency supplemental request by the Department of Education
    to provide relief for the major school systems that are near
    collapse by summertime. There will be no other process between
    now and the election, now and next year, to avoid many of these
    local disasters, and I am wondering why no supplemental
    request.
        Secretary Duncan. Obviously, Congressman, as you know,
    education in our country is primarily a local issue; and we are
    trying to help in every way we can. We provide usually 8, 9, 10
    percent of funding. Most of the money comes from the State and
    the local level.
        It breaks my heart to see some of the decisions that folks
    are having to make out there; and, as you know, those are my
    colleagues and peers. Those are folks I work closely with.
        Situations are different in different places. A place like
    Detroit has seen declining enrollment for a long time, hasn't
    had strong leadership, has put off tough decisions. I am
    actually very hopeful about where Detroit is going. They have a
    phenomenal leader there I think now who is doing a great job,
    who is getting their fiscal house in order. You had tremendous
    mismanagement there, adults using the system for their own
    benefit, not for students. And I have said repeatedly, Detroit,
    you know, may be ground zero; and we are going to do everything
    we can to support what they are doing and where they are going
    financially. Robert Bobb is financially----
        Mr. Jackson. I understand Mr. Secretary. No disagreement
    there.
        I don't meant to cut you off. My time is obviously limited.
        But why no supplemental request from the Administration,
    which is now prioritizing education, to address the red-ink
    issues in the top 50 school systems just as we are looking at
    the red-ink issues for the banking sector?
        Secretary Duncan. I hear the thought. I hear the concern.
    And it gives me something to think about.
        Mr. Jackson. It is hard to imagine that it is a priority if
    we are not looking at the only vehicle that is leaving the
    station from the Administration. I have been watching the news
    the last couple of days that, while Congress is bogged down in
    a health care debate, which hopefully will end soon, the
    Administration seems to have already moved to education; and
    yet the vehicles that are leaving the station to address these
    areas are very, very serious; and they have enormous
    ramifications at the local level. And I am sure that and I hope
    that you will take my concerns seriously.

                ADDRESSING LOW GRADUATION RATES OF NCAA ATHLETES

        I also want to ask a law, rules, and regulations question
    that followed what Mr. Moran indicated about the number of
    athletes that are graduating from NCAA schools. I am seriously
    hoping that you would use your good offices to seek a meeting
    with the NCAA and demand from them rules and regulations that
    provide the necessary tutoring and the necessary academic
    support for athletes not as a goodwill gesture or some hope
    that they will, but with some teeth.
        We have been discussing this too long, and the millions of
    dollars that basketball players make for many of these March
    Madness schools and the fact that they have shameful graduation
    rates, you would think that some of that money would go towards
    providing them with tutors, with mentors, with people to help
    them graduate and understand the significance of graduation.
    But it just seems to me the Secretary of Education's office
    should be honcho'ing with the NCAA such rules and regulations.
        Your thoughts on that, Mr. Secretary.
        Secretary Duncan. I spoke before the entire NCAA commission
    2 months ago--I mean, the entire NCAA delegation, a couple
    thousand people, 2 months ago and said exactly the same things.
    We do plan to meet with the President, and Ben Jealous has
    joined me in this. When so many schools do it in the right way,
    it is inexcusable to me why we allow a few renegades to
    continue to operate the way they do. The vast majority of
    schools do this very well, but we have a couple bad apples and
    the fact that we tolerate that is mind boggling.
        Mr. Obey. Ms. McCollum.
        Ms. McCollum. Thank you, Mr. Chairman.

              NATIVE AMERICAN AND ALASKA NATIVE STUDENT EDUCATION

        Mr. Secretary, I want to thank you for being here today. I
    do want to thank you for your efforts to make sure that all
    children, including Native American children and Alaska Native
    children, have an opportunity to----
        Mr. Obey. Is your mike on?
        Ms. McCollum. I guess I need to go to the school of
    technology. Thank you, Mr. Chair.
        But when we talk about Native American children and Alaska
    Native American children and the work that you have done, we
    have to be mindful that they are included in two different
    budgets, the budget of the Bureau of Indian Affairs and the
    budget that you have before you today that you are discussing
    with the committee. So, Mr. Chair, I really think in order to
    talk about doing what is in the best interest of our Native
    American children and Alaska Native children at some point if
    we could maybe figure out a way to have both the Bureau of
    Indian Affairs and the Department of Education in here at the
    same time, that would be very helpful for us to move forward.

                            COMMON COURSE STANDARDS

        Last week, 48 States announced their proposal for common
    course standards and I applaud their efforts, and I strongly
    support moving forward on the national standards reform. But I
    am concerned that two States, Alaska and, importantly, Texas,
    have not participated.

                        TEXAS PROPOSED TEXTBOOK CHANGES

        I am even more alarmed about decisions made on social
    studies education by the Texas Board of Education last Friday.
    Ten out of 15 elected people in one State have effectively
    manipulated academic materials based on their personal
    ideology.
        I have here an article from the Washington Post, and it
    says, ``Historians criticize proposed textbooks changes as
    partisan.'' In the article, the Post goes on to say that the
    Texas Board of Education is imposing a partisan, factually
    incorrect version of history on Texas students, in effect,
    students across America because of the way textbooks are
    purchased.
        It is outrageous and unacceptable, that a group of 15
    people should be allowed to influence the education of all of
    America's school children. And I don't want this decision in
    any way to influence textbooks in Minnesota. So I want to be
    clear. I don't want the Federal Government to write curriculum,
    but I don't want the Texas Board of Education to be writing
    curriculum for an entire country either.
        So, Mr. Secretary, one of my questions to you at the end
    will be are you concerned and should our Nation's school
    districts be concerned about this blatant manipulation of
    history?

                   48 STATES WORKING TOWARD COMMON STANDARDS

        Secretary Duncan. Obviously, as you said, the Federal
    Government does not and should not write curriculum. That is
    best done on the local level. But I share your hope in the way
    that 48 States are going together. And this is happening at the
    local level. If these are Federal standards, our national
    standard system dies. Because you have 48 governors, 48 school
    chiefs working together, you have the heads of both national
    unions working together on this, avidly supporting it, the
    business community has been crying out for this. This is a game
    changer. This is a game changer. We are still early. There is,
    you know, still a lot of hard work to go, but they have done
    phenomenal work. The leadership is exactly where it should be
    at the local level, and I think that is where we should focus
    our energy, and we should continue to move the country in the
    right direction.
        Ms. McCollum. Thank you for alleviating some of my
    concerns. So we have it in front of us, and we know what we are
    doing. I am going to remain guardedly optimistic.

                              ESEA REAUTHORIZATION

        Your blueprint for the reauthorization of the Elementary
    and Secondary Education Act puts, in my opinion, primarily all
    the responsibility for success with teachers. But, as you
    pointed out and as was mentioned in an earlier question, it is
    a shared responsibility.
        In full disclosure, people should know I have been a
    classroom teacher. I know that the success of my student
    depended upon many factors, the ability of myself to teach but
    many outside classroom factors. Are the students having a bad
    test because they went to bed hungry the night before, because
    they don't have proper vision, because their parents have not
    been involved in making sure that homework was done, because a
    family is losing their house to foreclosure? All of these
    factors, including violence in the home, affects a student's
    ability to perform.
        Now, sometimes a student's lack of performance will be a
    teacher, but it is not always. So if you could reiterate for me
    in a second a little bit more about that.

                 SHEPHERD PROGRAM--POVERTY AND HUMAN CAPABILITY

        And then we have focused primarily on K-12, but I want to
    talk to you more at some point about the Shepherd Program that
    provides a great interdisciplinary study focus on poverty and
    human capacity through the Shepherd Consortium in colleges and
    universities that I think will go to the heart of addressing
    disadvantaged youth and moving America forward.
        So, with that Mr. Chair, I will remain silent so you can
    answer.

                     EFFECTIVE TEACHERS AND LEADERS FUNDING

        Secretary Duncan. I am just thrilled that we have a former
    teacher on this committee. We need more educators in the rooms,
    and you have lived this. You have lived the challenges that
    students face every single day, and I appreciate your
    commitment so much.
        Again, a couple fundamental changes we are making from No
    Child Left Behind is all the accountability was on teachers
    before and, for the first time, we are saying this is a shared
    responsibility among schools, districts, and States. That is a
    fundamental change that I think folks haven't quite appreciated
    yet.
        Secondly, we are trying to do everything we can to support
    teachers. A huge increase in funding to almost $4 billion,
    $3.86 billion, to create better mentoring programs, more time
    for collaboration, better pipelines, master teachers, giving
    teachers the time they need to work together and be successful.
        And to your point about students, you know, not arriving to
    school in a vacuum, this idea of student support. A 16 percent
    increase to create communities whose schools give students a
    chance to be academically successful--schools with safe
    climates where students' physical and emotional needs, and
    psychological needs are being met.
        There is so much we can do there, and we are trying to make
    an unprecedented investment to give teachers an opportunity to
    actually teach and give students a chance to actually
    concentrate on their academic study and think about their long-
    term futures.
        Ms. McCollum. Thank you, Mr. Chairman.
        Mr. Obey. Mr. Honda.
        Mr. Honda. Thank you, Mr. Chairman; and welcome, Secretary.

                   EDUCATIONAL OPPORTUNITY EQUITY COMMISSION

        These past few weeks I have enjoyed our past discussions
    about establishing equity among our schools. This subcommittee
    included language in the fiscal year 2010 Consolidated
    Appropriation Act directing the Department to establish an
    Educational Opportunity Equity Commission to conduct hearings
    and community engagement meetings about how the Federal
    Government could improve education and eliminate disparities. I
    am glad to hear from my staff that your Department has been to
    work on this effort, and I look forward to working with you on
    this moving forward.
        I notice that your Blueprint for Reform released the other
    day prominently features the words ``equity'' and
    ``opportunity'' on the cover and includes equity and
    opportunity for all students as a key goal. Can you outline for
    me the approaches you are proposing both in the Blueprint for
    Reform proposal for the Elementary and Secondary Education Act
    reauthorization and your fiscal year 2011 budget proposal that
    will help to meet the educational needs for each student,
    foster the maximum development potential for each student, and
    to ensure that each student has the knowledge and skills needed
    to participate effectively in community life?
        And in particular can you discuss a few items like what
    role do your proposals envision for the Federal Government in
    ensuring that States maintain levels of educational service to
    provide each student an equitable and sound basic education
    during times of declining State and local revenues? How you
    propose to assess the needs of each student, the effectiveness
    of schools in meeting the standards of an equitable and sound
    education for each student? How does the Administration propose
    to address and rectify the deep, abiding inequality that exists
    in public education in this country?
        And you will notice that instead of saying ``all''
    students, I really emphasize ``each'' student, because I think
    that terminology will drive policy and the expression of
    policy. What are your thoughts on these questions?

                          ENSURING EDUCATIONAL EQUITY

        Secretary Duncan. First of all, Congressman, I just want to
    thank you for your leadership on this issue. This is one that I
    think is hugely important for the country. What I have said
    repeatedly is if we are serious about trying to close the
    achievement gap, we have to close what I call the opportunity
    gap. And I am convinced that children from, again, poor
    neighborhoods, poor communities, tough families, if they have
    the opportunities they can do very, very well.
        As you know, I have brought in Russlynn Ali to lead the
    Office for Civil Rights. She is an absolute superstar. She has
    an absolute passion for this.
        We want to reinvigorate that office. We want to step up our
    enforcement of civil rights on behalf of students, and we will
    be working hard to make sure the rights of all students are
    protected.
        We are going to specifically focus on schools with large
    achievement gaps and ask them to implement data-driven
    decisions to close that gap, and we are going to hold districts
    accountable for closing the gap within districts.

                          TEACHER AND PRINCIPAL EQUITY

        We want to have a reinvigorated focus on teacher and
    principal equity. We have to do a much better job of supporting
    States and districts to ensure that the highest need schools
    have effective teachers and principals, and we are going to ask
    districts to show that the resources that they provide to high
    poverty schools are truly comparable to those they provide to
    low poverty schools.
        And, finally, we have in our proposed budget approximately
    $900 million in school improvement grants to make sure those
    students who have been historically underserved have an
    opportunity to get a dramatically better education, and we do
    this with a sense of urgency.
        So, a lot of hard work ahead of us. I look forward to the
    collaboration with you, and I think we have a chance to do some
    very important work as we move forward.

                      SCHOOLS AS A REFLECTION OF COMMUNITY

        Mr. Honda. The civil rights of youngsters--as you have said
    before, education is a civil right, and I agree with you. This
    country has attempted to correct that in terms of our efforts
    in desegregation. We are seeing resegregation in different ways
    now.
        Looking at the bigger picture of how schools are created, I
    think what we have learned from the desegregation effort is
    that a school reflects the community that it is in. Will there
    be a role in this effort where we will work with local entities
    in the zoning efforts? Because the zoning determines the
    community, and the community is from which the students are
    coming from.
        Looking at redevelopment projects where entire
    neighborhoods are gone and new ones are brought up without any
    consideration to its impact on schools, if we have
    environmental impact reports, should not the social impact of a
    neighborhood on children also be part of the consideration? If
    you have any thoughts on that.
        Secretary Duncan. Again, schools don't exist as islands;
    and how we create communities to support those schools, how we
    fund schools equitably, all those things help to give students
    a chance to be successful. I think we can be much more creative
    and much more thoughtful on how we do that. And it troubles me
    that far too often the children who need the most help, the
    most resources, the best teachers, the best principals, the
    best facilities don't receive them.
        Mr. Honda. So it seems to me that we have to be looking at
    our cities and counties and our States in how they develop land
    use rules and regulations and know that schools are part of the
    infrastructure of a new community.
        Thank you, Mr. Chairman.

                             PROMISE NEIGHBORHOODS

        Secretary Duncan. Critically, one of the big investments we
    want to make is in this Promise Neighborhoods initiative, again
    to create communities around schools to give those schools a
    chance to really help students learn.
        Mr. Obey. Ms. Roybal-Allard.

              SHIFT TOWARD COMPETITIVE PROGRAMS AND CONSOLIDATIONS

        Ms. Roybal-Allard. Welcome, Secretary Duncan.
        First, let me associate myself with Chairman Obey's
    comments about funding new and untested competitive grant
    programs while districts struggle to provide children the
    education they need and deserve in the wake of devastating
    budget cuts.
        The Los Angeles Unified School District is a perfect
    example. With a $620 million deficit, it has been forced to
    issue 5,200 pink slips and shorten the school year by 5 days.
    LAUSD and districts like that desperately need funding from
    reliable tested programs like Title I to retain teachers and to
    keep classrooms open, and I want to thank the chairman for
    raising the issue, and I hope you will be giving it very
    serious consideration.

                  EDUCATIONAL TECHNOLOGY STATE GRANT PROGRAMS

        Mr. Secretary, the Administration has proposed the
    consolidation of many education programs that provide badly
    needed services. I find this to be very troubling because, from
    my experience, consolidation can and often results in the
    elimination of a program regardless of how great the need.

                  EDUCATIONAL TECHNOLOGY STATE GRANT PROGRAMS

        I am particularly concerned about consolidating the
    educational technology State grant programs which complements
    our $30 billion investment in broadband Internet access and
    other technology for our Nation's classrooms. These grants have
    been essential to our State and local school districts' efforts
    to coordinate the purchase of technology and the training of
    educators on how to use it.
        For example, the State grant funding received by the Los
    Angeles Unified School District is used to hire technology
    coaches who train teachers at its 680 campuses on the use of
    technology. Without a dedicated funding for this purpose, how
    will the district coordinate their technology programs and
    ensure that educators can effectively use the technology made
    available to them?
        Secretary Duncan. I appreciate your concerns. Obviously, we
    think technology is a hugely valuable tool going forward to
    accelerate learning and to help students who haven't had those
    opportunities before; and we will work with Congress on
    reauthorization of technology activities. There has been no
    decision yet on whether nationally it will be formally
    competitive, so we look forward to working with you on these
    issues.
        Ms. Roybal-Allard. So this is not going to become a
    competitive----
        Secretary Duncan. No decision yet has been made. But we
    look forward to working with you on this issue.
        Ms. Roybal-Allard. That is great to hear.
        Secretary Duncan. And note, just big picture, we think that
    technology is a huge piece of the answer going forward; and we
    want to find ways to integrate it into everything we do.
        Ms. Roybal-Allard. Right. Because it makes no sense that we
    have spent already $30 billion if teachers don't know how to
    use that technology.

                    INCOME-BASED REPAYMENT OF STUDENT LOANS

        When the Higher Education Opportunity Act was signed into
    law in August of 2008, a loan forgiveness program was
    authorized for service in areas of national need, including
    health care professions. In light of the critical and the
    growing demand for nurses, I find it surprising that this
    program has yet to be funded. Why did the Department not
    include the loan forgiveness for service in areas of the
    national need program in your budget proposal?
        Secretary Duncan. That is actually part of the higher
    education bill that is before Congress and before the Senate.
    So the IBR, Income-Based Repayment, we are a huge fan of. It
    significantly reduces loan repayments on the back end and
    brings folks into the public sector, great talent, and we will
    forgive that debt after 10 years.
        So that is something that we think is very, very important;
    and we continue to advocate for right now, we have already
    reduced it to 15 percent of income in terms of loan repayments;
    and we want to take that down to be 10 percent and after 10
    years of public service have all those loans forgiven. So
    whether it is nurses, whether it is folks working in medical
    clinics, or legal clinics, or teachers, folks going into the
    public sector, we want to create much better avenues so they
    are not handicapped by staggering debt that prohibits them from
    following their heart and helping out in the community.

                  TRIO, GEAR-UP, HEP AND CAMP PROGRAM REQUESTS

        Ms. Roybal-Allard. In the few seconds that I have left, I
    also want to express my concern about the flat-funding for the
    TRIO, GEAR UP, and the High School Equivalency and College
    Assistance Migrant Programs, especially when the President has
    this goal of, by 2020, having the United States to be first in
    the world in the percentage of citizens with college degrees.
    These are, again, proven college preparation and support
    programs that have successfully helped low-income students
    achieve; and particularly when we are having experts telling us
    that the education of poor and minority children is absolutely
    key to our Nation's future economic success, I just find it
    incredibly surprising that the Department again is only level-
    funding these programs which could truly help us to reach the
    President's goal of 2020.

                       COLLEGE ACCESS AND COMPLETION FUND

        Secretary Duncan. I appreciate that; and, again, I am a big
    fan of those programs. They have done a great job, and we have
    proposed a College Access and Completion Fund that would enable
    those and other programs to actually significantly increase
    their funding based upon their ability to demonstrate exactly
    your point, that they are making a difference in student's
    lives.
        Mr. Obey. Mr. Ryan.
        Mr. Ryan. Thank you, Mr. Chairman.
        Thank you, Mr. Secretary. You are doing a great job. I
    really appreciate everything you are doing and using your bully
    pulpit to reach out to different areas like the NCAA issue. I
    really appreciate that.

                     SOCIAL AND EMOTIONAL LEARNING PROGRAMS

        Last year, in our report language we put some--this
    committee put some language in regarding social and emotional
    learning, and I have talked to you about this a few times. The
    committee believes that addressing the social and emotional
    development of students through evidence-based social and
    emotional learning programs is a highly effective way to
    promote safe and drug-free schools and to promote higher
    student achievement and attainment. The committee urges Federal
    support for the implementation of evidence-based social and
    emotional learning standards and programming. Can you just kind
    of comment on what you guys have done recently?
        Secretary Duncan. And what we will continue to do.
        In this budget, we are proposing $1.8 billion for a range
    of student supports, including social and emotional learning.
    That would be a $245 million increase, a 16 percent increase.
    So we are trying to put our money where our mouth is and say
    that we have to create climates again where students have a
    chance to be academically successful. And if we are not
    addressing those social and emotional needs, quite frankly, we
    are kidding ourselves.
        Mr. Ryan. I agree.

           SOCIAL, EMOTIONAL DEVELOPMENT AND DECISION MAKING ABILITY

        I want to bring to your attention--Representative Kildee
    and I are sponsoring the Academic Social and Emotional Learning
    Act to provide technical assistance to schools to try to
    implement these social and emotional learning programs and hope
    we could get your support and hopefully get that passed and get
    some money into that as well.
        One of the recent studies I wanted to share with you, a
    casel meta-analysis of more than 700 positive youth
    development, SEL character education, and prevention
    interventions has shown that SEL programs improved students'
    achievement test scores from 11 to 17 percentile points. And,
    as we see, the brain science, you know, more and more backs up
    that we have got to teach these kids how to regulate their
    emotions. We now know that the part of their brain that has to
    handle the emotional situations that these kids are dealing
    with also deals with their short-term memory, their decision-
    making ability. So all of these issues that we have talked
    about these kids making bad decisions, whether it is teen
    pregnancy, whether it is alcohol abuse, regardless, I think
    teaching these kids these skills is unbelievably effective.
        I have been to schools in Cleveland. We are starting a
    pilot program in three of the schools in my district. So I
    would just encourage you to stay focused on SEL. We are
    throwing a lot of money around, and I think this--which in many
    instances is needed--but I think this is a very, very
    effective, cost-effective way of doing business.
        Secretary Duncan. I appreciate your leadership so much, and
    you hit the nail on the head that these are learned skills. So
    children can have huge challenges, but if you help them learn
    how to handle those and deal with them, then you have a chance.
    When you don't, they can't get past those challenges and can't
    begin to think about what is going on in class. But these are
    absolutely teachable, learned skills; and the more we can do
    that--and I think children today have probably never had more
    challenges--huge pressures, huge temptations, stresses at
    home--and if we are not addressing this, we are not in the
    game.
        So thanks so much for your leadership----

                    TEACHING STUDENTS TO UNDERSTAND EMOTIONS

        Mr. Ryan. You have got it. There are a lot of good programs
    out there that really break it down in the curriculum, where
    they are teaching about the brain, they are teaching about the
    amygdala and the prefrontal cortex to first and second graders
    so that they understand what is happening to them when they get
    pushed on the playground or when they have a domestic issue at
    home. They know what is going on.
        And I think that level of awareness that the student has
    about what is happening to them is critically important for
    them to be able to then figure out how to not respond in a bad
    way.

             EARLY COLLEGE ENROLLMENT AND DUAL ENROLLMENT PROGRAMS

        One other question. We have a great early college
    enrollment program in Youngstown, Youngstown city schools. We
    also have one in Akron as well in my district. One of the
    issues I wanted to bring up, because of budget constraints,
    Youngstown State University, they have cancelled the program.
    So what I wanted to ask you about is making Pell grants
    eligible for kids who are going into early college.
        I don't think it is going to cost us any more money. I
    think in the end it will actually save us money, because we are
    front-loading the money. So paying for these kids to go to
    college with Pell grants their last 2 years of high school and
    so we are going to avoid the latter years of the cost of living
    or the increase in education costs had they waited 2 more
    years.
        So can you help us with that and comment on it, about
    creating that pipeline?
        Secretary Duncan. Our Administration is hugely supportive
    of early college and dual enrollment. What is interesting to me
    is so often historically this is seen as a thing for the
    advanced juniors and seniors to do. What I often see in
    different contexts, it is actually a dropout prevention
    program.
        For students who may not be the highest performing but are
    in the middle of the pack, when they start to take a college
    class and get college credit and start to think, man, I can
    really function and be successful in this environment, it
    changes their whole perspective on life. So it is a very
    interesting range of students who can benefit from this.

                                COLLEGE PATHWAYS

        We have proposed in our budget $100 million for College
    Pathways, an accelerated learning program that would expand
    access to college, dual-enrollment, AP classes, the
    international baccalaureate program as well. So $100 million
    there.

                     PELL GRANTS AND EARLY COLLEGE PROGRAMS

        On the Pell grant issue specifically we have talked about,
    it is an intriguing idea. I think it has been considered in the
    past, and there are some challenges associated with expanding
    Pell grant eligibility to students during high school, but it
    is an idea worth kicking around, and I would be happy to look
    into this and other options. At the end of the day, your goal
    of significantly expanding access to early college programs, I
    don't think we can do enough of this, and we have to be very
    creative in how we think about this.
        Mr. Ryan. I mean, we are going to spend this money on the
    Pell grant one way or the other--I mean, if they go to college,
    you know--and let's spend it early and make sure they get into
    college, like you said, even the people in the middle of the
    pack.
        Thank you, Mr. Chairman.
        Mr. Obey. Thank you.
        Ms. DeLauro.
        Ms. DeLauro. Thank you very much, Mr. Chairman.

                    DISPROPORTIONALITY IN SPECIAL EDUCATION

        Good morning, Mr. Secretary. It is great to see you.
        Just very quickly a point, I am going to send a letter to
    you about an important issue in my district regarding
    significant disproportionality in IDEA. I don't want to take
    your time this morning.
        Secretary Duncan. Give it to me when we are done.
        Ms. DeLauro. I will get it to you, and hopefully we can
    take a look at this.
        Secretary Duncan. I will have Alexa Posny take a very close
    look at it for you.
        Ms. DeLauro. Great. Thank you.

                         EARLY LEARNING CHALLENGE FUND

        Mr. Secretary, I have been a long-time and a strong
    supporter of early childhood education and the resources for
    critical programs like Head Start, Childcare Development Grant,
    others. I was excited to see the Administration's focus on
    early childhood through the initiative in the Early Learning
    Challenge Fund. I was proud to vote for this in the education
    bill that now will be part of reconciliation.
        But, let me ask you, if we are not successful in including
    the Challenge Fund in reconciliation, what is the
    administration's backup plan to make this important
    initiative a reality?
        Secretary Duncan. It is hugely important. And,
    Congresswoman, I would agree with you that probably the best
    investment we could make, the best return is in early childhood
    education. And what we all talk about is we are constantly
    playing catch-up. I keep saying we have to get out of the
    catch-up business, and the best way to get out of the catch-up
    business is to make sure that our 5-year-olds hit kindergarten
    ready to learn and ready to read.
        We have far too many children who--it is not just 3- and 4-
    year-olds, but what are we doing zero to 5 to make sure that we
    are leveling the playing field? I am convinced that if we did
    that well, so many of these challenges we face long-term,
    dropout rates and other things, would be dramatically lower.
        So, you know, we desperately want that Early Learning
    Challenge Fund to be in there. If it is not, we need to work
    through a different vehicle or do something.
        But this President, this Administration, is absolutely
    committed here. You know, we are asking for almost $10 billion
    over the next 10 years. We have had some questions about
    collaboration. We have had a wonderful, wonderful partnership
    with HHS and Secretary Sebelius; and we all are working
    together. This is a huge opportunity for the country to break
    through, and we hope it goes through. If it doesn't, we need to
    work together----
        Ms. DeLauro. I, for one, will push to be a part of that
    effort. I think if it is not, we must really work together and
    collaborate to make sure that that happens.

                                   EVEN START

        Let me ask a question about Even Start. That is something
    that I have talked about before.
        Last year's House report reflects the priorities of this
    subcommittee and the members and, I might add, certainly of the
    chairman. And just very briefly, the committee strongly
    recommends $66 million for Even Start, which is the same amount
    as the fiscal year 2009 funding level. It provides grants to
    States, family literacy, integrating early childhood education,
    adult education, parenting education for low-income families
    and their children from birth to 7 years old.
        The committee goes on and says it does not agree with the
    Administration's program to eliminate Even Start, and the view
    on that was that--the elimination, which our view is that it
    was based on results of flawed evaluation studies, studies that
    were not representative of Even Start participants and programs
    based on small samples, et cetera.
        I have to ask you this: Why have you come back again with a
    proposal to eliminate this program? This is a program that
    serves 50,000 families nationwide. It is the only Federal
    education program that focuses specifically on parents and
    their children and the literacy learning skills that they can
    work on together. So I am having trouble understanding why
    you--why the Administration insists on ending this program.
        Secretary Duncan. We talked about it earlier, and I am a
    huge fan and supporter of family literacy. Growing up, as part
    of my mother's after-school program, she spent a lot of time
    not just working with children but working with parents and
    trying to make sure that she was changing what was going on
    inside the household and really making sure parents had the
    skills to function and to support their own children.
        So this is one that we are passionate about. Family
    literacy is something that is part of the literacy program in
    the proposed ESEA authority on a well-rounded education. We
    actually propose a 10 percent increase in funding. Even Start
    projects can absolutely apply--compete to do that. Brenda Dann-
    Messier, who is leading our adult ed work, is a passionate
    advocate and did phenomenal work in adult literacy.
        So this is something we are going to work very, very hard
    on, going forward. So it is part of an overall literacy
    package. We don't have a line just for Even Start.
        Ms. DeLauro. Well, you know, I can't be a predictor of
    where this committee will come out, but I can say for myself
    that I would be one and I suspect that there are others that
    are going to want to see that this program continues.
        Secretary Duncan. We are happy to have that conversation.
        Ms. DeLauro. Thank you very much, Mr. Secretary.
        Thank you, Mr. Chairman.
        Mr. Obey. Thank you.

                      EDUCATION JOBS SAVED BY RECOVERY ACT

        Mr. Secretary, you indicated and witnesses did yesterday
    that about 325,000 teachers' jobs were saved by the Recovery
    Act. We roughly filled about 40 percent of the hole in State
    budgets last year. This year that is going to drop about 20
    percent. This program is meant to be temporary. Some people
    object to it; and they say, well, this is going to wind down.
    What good did you do?

                              EDUCATION JOBS BILL

        And the whole point of the program was to simply get us
    through the next 2, 2\1/2\ years until the private sector could
    recover and pick up the slack again. To do that, last December
    the House passed a second jobs bill, which contained $23
    billion in additional assistance to education because we don't
    want to see 50 percent of the teachers whose jobs were saved
    last year lose those jobs in the coming year.
        So let me ask what will happen at the local school district
    level to their ability to retain those teachers if we do not
    pass that bill or something similar to it that provides at
    least a similar amount of assistance to States and local school
    districts.
        Secretary Duncan. Chairman, I appreciate your huge
    leadership on this. I share your concern. I am very, very
    concerned.
        As I travel around the country, everywhere I go,
    everywhere, no one is immune from this. Folks are hurting. And
    we are not just cutting through fat. We are beneath bone now.
    And to hear about skyrocketing class sizes, to hear about--I
    keep arguing for more time, Mr. Chairman. We see students going
    to 4-day work weeks. Those are huge challenges, and we need to
    do something. We need to do something.
        Mr. Obey. What will happen if we do nothing?
        Secretary Duncan. You will see some devastating cuts around
    this country. And folks that are making these cuts, fiscally
    responsible superintendents, school boards for the fall are
    planning budgets now, March and April. So this is not something
    that is going to play out in August. These things are happening
    in real time.
        Mr. Obey. And won't it also put additional upward pressure
    on local property taxes?
        Secretary Duncan. Sure. Sure. Absolutely.

                  TITLE I, ESEA FUNDS FOR HIGH-POVERTY SCHOOLS

        Mr. Obey. I referred to this chart earlier, and what it
    shows is that, among students who scored in the top quarter--I
    said 20 percent earlier. I should have said top quarter--on
    eighth grade math tests, the child of a wealthy family
    graduated from college 74 percent of the time, while a child
    that came from a poor family graduated only 29 percent of the
    time, even though they demonstrated the same ability.
        I would point out a similar relationship exists between
    that eighth grade performance and the decision to even enter
    college. What is the one program for elementary and secondary
    education which we have relied upon for years to try to
    equalize that poverty situation?
        Secretary Duncan. Title I.
        Mr. Obey. Right. How do we correct that if we don't provide
    significant increases in Title I?

                           SCHOOL IMPROVEMENT GRANTS

        Secretary Duncan. A couple ways. One is, as you know, the
    school improvement grants are going to be directed to those
    low-performing, high-poverty schools. So we are trying to make
    a very, very significant investment there. We have $3.5 billion
    that we want to put out to those schools now.
        We have to focus--and there aren't simple answers here. You
    have to focus on getting great talent into those historically
    underperforming schools, and we want to work hard on that as
    well.
        And I would argue that Pell grants, making sure students
    have access to resources to go--we have so many families--you
    probably saw the same survey I saw a couple weeks ago. A lot of
    American families just don't think college is for them.

                                TITLE I FUNDING

        Mr. Obey. I understand about Pell grants, and I will get to
    that. But the fact is that if you want to provide assistance to
    all poor kids around the country, you don't need to go through
    a targeted program that gets to a few school districts. Because
    there are many, many poverty districts around the country who
    will never get the grants that you are talking about.

                       ADDRESSING INEQUALITY IN EDUCATION

        Which leads me to the same question that I was asking
    before and several others have been asking. Why if we want to
    close that gap would we not concentrate on Title I? I mean, I
    was elected in 1969. That was at a time when the Federal
    Government had just started programs like Title I, and I
    sponsored Wisconsin's first State version of Title I. I still
    remember the bill number, 51-A. That was a tiny little
    initiative at that time, $5 million for the entire State. That
    went a lot further in those days than it does now.
        But I mean I have been trying and so have most people on
    this panel been trying ever since to meet the needs of Title I
    by providing for more full funding. We have never come anywhere
    near close to where we should be in funding Title I.
        So, I don't understand why I should be all that interested
    in focusing what meager additional resources there are in the
    education budget this year on a new program when we know that
    the basic program is there to deal with poverty stricken kids
    all over the country.
        Secretary Duncan. I think obviously what you and I
    absolutely share in common is a passionate desire to help
    disadvantaged children be successful, and Title I is a huge
    piece of that.
        But I would argue that everything we are trying to do is
    trying to address those inequalities. So trying to put money to
    attract great teachers into poor communities we think is hugely
    important. Trying to make sure that students have a well-
    rounded education, where so often it is narrowed, is very, very
    important.
        Chairman Obey. I think that is important, too, but, to me,
    there are lots of ways we can provide incentives to put better
    teachers in some of those schools. But I question such a heavy
    focus on teachers. Yes, I want quality teachers, but let me
    give you an example: Me.
        When I was in 7th grade, I skipped school 2 days a week,
    and that is how I learned to play the harmonica. I was hiding
    out in the woods.
        Secretary Duncan. We need more music in school.
        Chairman Obey. But I finally got turned around essentially
    by two teachers. Now, if I hadn't gotten turned around, should
    those teachers have been blamed for my failure?
        Secretary Duncan. No. No, of course not. Nobody is
    suggesting that. No, of course not. Of course not.
        But great teachers turn around children, you and many
    others included. We all remember those teachers that changed
    our lives. And all we want to do is we want to shine a
    spotlight on excellence. What I will tell you is there have
    been very few incentives for those great teachers to go to
    historically underserved communities, very few rewards to do
    that, and we want to make sure the children who need the most
    help are getting it.
        Mr. Obey. I understand, and you are focusing on heavily
    underserved communities.

                      RACE TO THE TOP APPLICATION PROCESS

        But let me make a point. In your Race to the Top package, I
    am told by my State education people and by my Governor that
    when your Department considered their application, that all of
    the points that they would have earned in your evaluation
    system were roughly related only to six counties in the State--
    Milwaukee, Kenosha, Racine, Madison, Green Bay, and I have
    forgotten the other one.
        Secretary Duncan. I don't know the specifics of your
    proposal, but I will say what we were trying to reward is
    States that had comprehensive plans--urban, rural, suburban,
    every child.
        Mr. Obey. All I can tell you is that my State people think
    that the focus of your attention was almost exclusively on
    those six urban counties.

                   FOCUSING INCREASED RESOURCES ON INEQUALITY

        The point I would make is simply that we have got 72
    counties in the State, and there are a lot of them outside of
    that area that are low income and have lots of poverty kids. I
    just do not understand why we do not--very frankly, I am a
    Democrat, as you know, and so are you. I do not understand why,
    when we finally have a shot at it, we are not greatly
    emphasizing Title I before we do others.
        I am all interested in reform, but, as Richard Nixon said,
    timing is everything in politics. And as I see it, I will be a
    whole lot more interested in putting additional money in reform
    efforts 2 years from now when the economy is through this
    recession than I am right now when everybody is sucking for
    air. I don't understand why we do not have a greater emphasis
    on trying to help those school districts.
        Secretary Duncan. Obviously, I think we would agree we need
    to do both. We need to help stabilize schools under huge
    stress, and we need to get dramatically better, and we are
    trying to find that balance.

                          HISTORY AND CIVICS EDUCATION

        Mr. Obey. Let me ask an additional question. I asked this
    yesterday of the panel, too.
        We seem to be fixated on improving performance for math and
    science, but I, frankly, am concerned that we are going to be
    producing a generation of societal and political illiterates.
    Because I think you see as the testing focuses on math and
    science, for instance, or math and reading, it isn't just the
    arts that get squeezed aside, it is history, it is civics.
        As I said yesterday, I was in one class a few months ago
    where the kids couldn't tell the difference between a State
    legislator and a third baseman for the Chicago Cubs. They were
    absolutely illiterate in terms of the things they would need to
    know to function as citizens in a democracy.
        How do you feel about this emphasis on math and science and
    how do we produce a much more well-rounded approach to
    education? Because, otherwise, we can set utilitarian goals,
    but it is not going to meet our other societal needs.

               BUDGET INCREASE TO PROMOTE WELL-ROUNDED EDUCATION

        Secretary Duncan. I will tell you, I was in 37 States last
    year--rural, urban, suburban. Everyone--teachers, parents,
    students--all expressed their huge concern about what we are
    seeing in this country, which is a narrowing of the curriculum.
    I couldn't agree with you more.
        So yes, reading and math are important, but, again, one of
    our six big buckets is a well-rounded education for history,
    for arts, for financial literacy, which we haven't talked
    about, which is a big one, for foreign languages----
        Mr. Obey. Financial literacy, we could start with Wall
    Street bankers.
        Secretary Duncan. And we ought to produce a next generation
    of students who do better than what we have seen today. I mean
    that very seriously.
        For all those things, civics education, history, social
    studies, we propose a 17 percent increase, $265 million.
        So the need for a well-rounded education--let me just say
    one more thing about it, Mr. Chairman. It is hugely important.
    It is not just important at the high school level, which is
    often what people think. I think that for first graders, second
    graders, and third graders, we have to give students a chance
    to find their passion--music for you, art for someone else,
    drama for someone else. We have to provide those opportunities;
    and if we don't do that, we really put a ceiling, a limit on
    what students can accomplish.
        So math, reading, science, are very important. So is
    foreign language, literature, arts, PE. We need to get back to
    those things, and we are trying to do everything we can to
    encourage that. A well-rounded education is critically,
    critically important.
        Mr. Obey. Mr. Tiahrt, why don't we give everybody a shot at
    one last question or so before we shut down the hearing. Take a
    couple minutes yourself, if you want.

                                  CIVIL RIGHTS

        Mr. Tiahrt. Thank you, Mr. Chairman.
        I have been hearing several times that education is a civil
    right. So I don't recall it being in the 14th amendment or the
    Civil Rights Act of 1964. I checked the White House Web site.
    It is not included there under civil rights. It is not in
    Wikipedia. I don't think it is a civil right. I think it is
    very important, but I don't think it has the status of a civil
    right, and I think it diminishes those who are protected by our
    laws for civil rights by trying to broaden it.

                 PROPOSAL FOR DIRECT LENDING FOR STUDENT LOANS

        I have a question more directly about student loans and the
    government taking over the process of administering student
    loans. As I see it, we have these two avenues: One is where the
    government takes over student loans and takes money that we
    don't have, so we have to go borrow money to loan to students.
    So the students end up going through school and then have to
    pay back not only the student loans but then the money that the
    Federal Government borrowed to provide the student loan. When
    you compare that to banks, banks already have money to lend. We
    don't have to go borrow from the Chinese. So the student just
    has to get his education and pay back the student loan.
        One can make the argument that the Federal Government is
    subsidizing the money and will have to borrow money to
    subsidize the interest. And I would say it is much cheaper to
    borrow just for the interest, rather than for the loan and
    interest, and I think you would agree that math is correct.
        So why are we doing this? Is it for control? Is it to limit
    what institutions can receive money or limit some curriculums?
    What is the purpose for borrowing money for student loans when
    we don't have it?

                    PROPOSAL TO INCREASE PELL GRANT FUNDING

        Secretary Duncan. It is very, very simple. Taxpayers are
    already spending this money. Taxpayers are subsidizing banks
    today. This is not a new expense.
        Mr. Tiahrt. This program will continue, but we are not
    going to continue to subsidize banks.
        Secretary Duncan. Let me just finish. So we think we should
    stop subsidizing those banks; and we think we should invest
    scarce resources, taxpayer resources, yours and mine, into
    students.
        To be clear, what we want to dramatically increase is
    access to Pell grants. That chart that Chairman Obey put up
    there haunts me, and the lack of financial resources for poor
    families to go to college is a huge impediment and a huge
    killer of dreams.
        Mr. Tiahrt. Since my time is limited----
        Secretary Duncan. Let me finish. These are Pell grants.
    Students don't have to pay these back. These are grants.
        Mr. Tiahrt. I am talking about student loans, the student
    loan program that the government is trying to take over.
        Secretary Duncan. This is Pell grants that we are trying to
    increase.

                              STUDENT LOAN REFORM

        Mr. Tiahrt. I am talking about student loans. The
    government is trying to take over student loans, correct?
        Secretary Duncan. We are trying to stop subsidizing. We are
    trying, rather than have the private sector initiate those, we
    would initiate those.
        Mr. Tiahrt. The bank I received my student loan from is
    still in business today, and it did not receive any subsidized
    funds, even in the latest go-around.
        Secretary Duncan. I would beg to differ on that one, and I
    am happy to look at that specific situation.
        But we can dramatically increase Pell grants to students,
    we can invest in community colleges, we can lower loan
    repayments at the back end, the income-based repayment, simply
    by stopping subsidizing banks.
        Mr. Tiahrt. Well, there are students that will get access
    to college through student loans, do you agree?
        Secretary Duncan. Sure.
        Mr. Tiahrt. Okay. So why is the government taking over
    student loans? Why don't we continue to pursue that through the
    private lending institutions, like I did when I got my college
    student loans?
        Secretary Duncan. Because we can save tens of billions of
    dollars by initiating the loans ourselves. The servicing of the
    loans will all be done by the private sector.
        Mr. Tiahrt. How can we save money when we have to borrow
    money for the student loans and for the interest?
        Secretary Duncan. We are going around in circles here. We
    can save money because of subsidizing banks, and the----
        Mr. Tiahrt. The bank that I got my student loan from is not
    subsidized. Which bank is subsidized that is providing student
    loans today?
        Secretary Duncan. This is across the country. The servicing
    of these loans would all be done by the private sector. It is
    not our sweet spot. We would do none of that. Good actors would
    get a lot more business. We have more and more people going
    back to college in this country, which is a good thing. Bad
    actors would lose business. The free market would play.
        Mr. Tiahrt. I think it is out of line for us to get into
    the student loan business, because we don't have the money to
    start with. And it doesn't save us money. It costs us money to
    do this. Private banks have the money available. So I think it
    goes beyond just the financial side. I think there is some
    control issue here, and I want to know what it is.
        Secretary Duncan. There is zero control issue.
        Mr. Tiahrt. What requirements would we put on student
    loans? Mr. Kennedy advocates cutting them out for Ivy colleges,
    and I think he makes a good argument for that.
        Secretary Duncan. Let me finish. The private market, before
    we have done anything, as you know, has been collapsing. This
    thing has been on life support. And before we got here, we have
    seen a huge migration of universities to direct lending, from
    about 1,000 universities to 2,300 before we got to town. So
    this is something that has happened without us doing anything
    because the private market wasn't working.
        Mr. Tiahrt. I would say if private institutions want to
    pursue that path, they should be open to doing it. I just think
    there is something beyond this, and it is in the element of
    control, and I think it is a bad path.
        The other thing I want to mention before my time runs out--
    --
        Secretary Duncan. I just want--for the record, I want to
    say we have zero interest in that. We simply want to stop
    subsidizing banks and put scarce resources behind students.

                INDIVIDUALS WITH DISABILITIES--GRANTS TO STATES

        Mr. Tiahrt. I want to join with Congresswoman DeLauro about
    my concerns on IDEA as well. I want that for the record, that
    we need to get to our proportionate share, and it needs to be
    equitable.
        Secretary Duncan. We have a $250 million increase for IDEA
    grants to States. I hear that concern.
        Mr. Obey. Ms. DeLauro.

                       TEACHER RECRUITMENT AND RETENTION

        Ms. DeLauro. Let me just echo something that the chairman
    said, and I guess many of my colleagues, because I arrived
    late, and that is it was Randi Weingarten who said a child's
    education should not be based upon how well adults write grant
    applications. I couldn't agree more.
        When States start to lay off teachers--I just want to make
    this statement because it has been discussed here--they
    undermine our economy further, not to mention increasing class
    sizes.
        I know you believe that we have to have reform in a good
    and a bad economy, but I think what is key to all of us at the
    moment or at our core here is the timing and making this shift
    in education funding and the effect that it is going to have in
    terms of worsening the economy; and instead of providing that
    opportunity, a better education opportunity, we will be
    curtailing that. So I just want to add my voice to that.
        But let me ask about the Teacher Incentive Fund, if I can.
    Teachers, you know, we have said are the most critical factors
    in improving student achievement. We are doing everything that
    we can to make sure we can recruit and retain the best
    teachers. But we know from the research that the financial
    incentives are of limited value to attracting teachers to low-
    performing schools.
        A survey by Scholastic, Inc., and the Bill and Melinda
    Gates Foundation show that non-monetary rewards are the most
    important things in obtaining good teachers. I believe only 8
    percent responded that pay-for-performance plans are key.
        What initiatives do you propose in your budget to attract
    the best and the brightest to serve the neediest kids,
    especially once the schools are labeled as the State's worst
    schools?

                             TEACHER INCENTIVE FUND

        In a related question, how can we justify an increase of
    $800 million in the Teacher Incentive Fund, a program that 2
    years ago was only $97 million and also a program that received
    $200 million in the Recovery Act and I believe that the funding
    has not gone out yet?
        Secretary Duncan. Many, many factors go into attracting
    great talent to underserved communities. I absolutely agree.
    Increased financial rewards is a small piece of that.
        A couple of things have to happen. You have to have a great
    principal. Teachers will follow a great principal to the end of
    the Earth. Great principals make a huge difference. Bad
    principals run off good teachers. That is part of the problem.
    Principal leadership is hugely important, and we have to invest
    there, and we are looking for a five-fold increase there.

                             PROMISE NEIGHBORHOODS

        You need a community to rally behind a school. So all the
    work we are trying to do around Promise Neighborhoods tries to
    create that community of support behind those troubled schools.
        Ms. DeLauro. That is the Comer Model, and I am very
    familiar with the Comer Model in schools, Jim Comer.
        Secretary Duncan. And when you put it in place, great
    teachers want to go to those tough communities. They want to
    have a chance to succeed. And if we can put in place the
    structure, more time for them, more time to collaborate, better
    resources, better data, we put those in place, I promise you
    great teachers will want to go to underserved communities.
        Mr. Obey. Mr. Cole.
        Mr. Cole. Thank you, Mr. Chairman.

            MOVE TOWARD MORE CONSOLIDATION AND COMPETITIVE PROGRAMS

        Just an observation and a couple questions.
        I think what you are running into, Mr. Secretary, is there
    is a lot of confidence in you, quite frankly, but I don't know
    who the next Secretary is going to be. And I worry about just
    the centralization of power and the grant approach that brings,
    the pickers of winners and losers, who is going to do it, how
    it is going to work, and how you are going to have any
    certainty at the receiving end of this process. I think you do
    need certainty over a period of time if you are going to make
    the kind of investments that are necessary.

                       ASSESSMENT OF NO CHILD LEFT BEHIND

        But let me ask a historical question, because I am
    struggling with trying to understand what we have done right
    and where we need to change, get better, and what you want to
    do.
        Under No Child Left Behind, which is now, of course, much
    maligned but actually had a couple of great virtues, one of
    which was actually bipartisan, which I think to move ahead here
    you need to be bipartisan; and, second, that it really did put
    a lot of focus on the consumer here, i.e., the kids, as opposed
    to anyplace else in the bureaucracy and how are we doing with
    them and are we really particularly looking, by breaking
    students out, at kids that are the most disadvantaged, the most
    challenged, and trying to target resources there.
        I am happy we are going through reauthorization, because
    that is why we have it. So what have we learned? What do we
    need to do different?
        Looking first at No Child Left Behind, could you tell me,
    did scores for kids broadly--and I mean very broadly--go up?
    Did we narrow differences, which is what we all wanted to do on
    both sides of the aisle?
        Secondly, going forward, could you just explain for me the
    differences in where you propose to go? And I actually look on
    this as building on. I don't see this as antithetical efforts
    necessarily. But where are the differences, the course
    corrections you are making, in contrast to where we would have
    been had we just simply stayed on line, which never is a very
    good idea?
        Secretary Duncan. I appreciate that, and I want to assure
    you that we will only do this and want to do this in a
    bipartisan way. I consider that education has to be the one
    thing that rises above politics and ideology. We all have
    common interests. I have been so impressed here. The leadership
    of the House, the Senate, Republicans, Democrats, everybody is
    working hard on this together.

                      DROPOUT RATE AND COLLEGE COMPLETION

        My sense of urgency is--I go back--we have a 27 percent
    dropout rate. That hasn't moved. We used to lead the world in
    the percentage of college graduates 2\1/2\ decades ago. We have
    flat-lined. Everybody else has passed us by. You want to know
    why we are in a tough economic position now? I think that
    explains a lot of it. So we need to get dramatically better,
    and we need to get better as fast as we can.

                           FOCUS ON ACHIEVEMENT GAPS

        What I will always give the previous Administration credit
    for was focusing on achievement gaps. We used to like to sweep
    that under a rug as a country, and it forced us to have those
    tough conversations. We need to continue to have them and the
    idea of disaggregating data, really looking at what is going on
    there. That is something we will never, never walk away from.
    And we have to have focus on achievement gaps.

                       ASSESSMENT OF NO CHILD LEFT BEHIND

        Having said that, I wasn't here. I don't know the history.
    There were a number of consequences intended, unintended I
    don't know about, challenges that I have heard repeatedly
    around the country as I have traveled. The law was far too
    punitive. The law was very prescriptive. And this is well-
    documented. It actually lowered the bar. Due to political
    pressure, States lowered standards, which is absolutely the
    wrong thing to do, wrong thing educationally, wrong thing
    economically. But due to political pressure, the standards got
    lowered in many cases; and, to Chairman Obey's point, we saw a
    narrowing of the curriculum.

               FOCUS ON GROWTH, GAIN; REWARD SUCCESS, EXCELLENCE

        So what do we need to fix? We need to raise the bar, have
    meaningful standards, a high bar for every child. We need to
    reward excellence and success.
        Again, I want to look at growth and gain, how much are
    students improving each year.
        Let me give you one example I use. Let's say you are a
    sixth-grade teacher, and I come to you, and I am three grade
    levels behind. I am reading at a third-grade level. I leave
    your class, I am one grade level behind. Under No Child Left
    Behind, you are a failure. You are a failure. Your school is a
    failure. Your State is a failure.
        I think not only are you not a failure, you are not just a
    good teacher, you are a great teacher. I had 2 years' growth
    for a year's instruction, and we should be recognizing that
    excellence. We should be learning from it. We should be
    encouraging it. We should get more of those teachers into
    underserved communities.
        So that is a huge problem we have to fix. I think by
    focusing on growth and gain, that is the right way to do it. So
    reward excellence and success, more local flexibility,
    essentially how you want to manage.

                         FLEXIBILITY AND ACCOUNTABILITY

        No Child Left Behind was very loose on goals: 50 different
    goalposts, 50 different standards, many got dummied down, very
    prescriptive, very tight on how you get there. We want to flip
    it on its head: tight on its goals, high bar for the country,
    college- and career-ready standards. But give much more local
    flexibility, hold folks accountable for the results, let them
    move to get there. And then, finally, and we are trying to
    invest heavily here, our students need a well-rounded
    education.
        Mr. Cole. Thank you, Mr. Chairman.
        Mr. Obey. Ms. McCollum.
        Ms. McCollum. Mr. Secretary, you talked about holding, and
    so I want to give you an example of why I think you need to do
    that.
        The State of Minnesota, for balancing its budget a couple
    decades ago, decided it would delay payments to school
    districts, not make them on time. School districts had to go
    out on the market and borrow money and pay interest. That money
    wasn't going to children.
        That was one of the last actions I took. We corrected that
    before I ran for Congress. And now Governor Pawlenty is right
    back. That was the demand that he had in balancing the budget,
    that the school districts have to go borrow money in order to
    make their day-to-day payroll obligations so the State of
    Minnesota didn't have to. That is wrong, and I hope you hold
    States accountable.

                PROPOSAL TO MOVE TO STUDENT LOANS DIRECT LENDING

        I would like to give you an opportunity to walk through
    what we are doing with the Direct Student Loan program. It used
    to be, if I understand, the U.S. had the money, we gave it to
    the banks that then distributed it to the schools, and
    everybody took their cut on it, and we took the full risk. But
    now we are lending directly to the schools where the financial
    counselors and the students are sitting together.
        Would you walk through that for me?
        Secretary Duncan. You summarized it perfectly. We have
    subsidized banks where we have all the risk, and if we can just
    cut out the middleman there and do direct loans across the
    country--again, we are seeing a huge migration towards this
    anyway before we did anything because the private market was
    drying up. We saved tens of billions of dollars.
        I understand banks' resistance to this. They have had a
    very good deal; and because of those subsidies--and this is all
    a matter of public record--they have been able to hire and
    spend millions of dollars on lobbyists to oppose this. They are
    running ads in States opposing this. And I understand it, from
    their perspective, it is a hard thing to give up.
        But if we can take tens of billions of dollars at a time of
    tremendous economic crisis and make college much more
    accessible and affordable for hard-working Americans, middle-
    class, working-class Americans, I don't see how in good
    conscience we can stay on the sidelines.
        Ms. McCollum. Mr. Chair, I don't see how we are taking over
    anything except an opportunity for more children to have a
    chance at college. Thank you.
        Mr. Obey. Mr. Ryan.
        Mr. Ryan. I appreciate you doing that, too, Mr. Secretary.
    I mean, subsidizing the banks where they had no risk at all
    and, if someone bailed, we picked up the tab. I appreciate how
    you are doing that.

                             ROBOTICS COMPETITIONS

        Two things. One, the issue of math and science. We have
    some programs in Ohio, robotics programs, they had the first
    competition and whatnot, just unbelievable, where you see kids
    get so excited and passionate about using their hands and
    conceptualizing what they are going to create. And the first
    competition is probably the most prominent competition around
    the country.
        When I think about robotics, I think about the old shop
    classes and how this is kind of like 2.0 in the shop classes.
        Secretary Duncan. The new shop.
        Mr. Ryan. Yes, exactly. Is there anything in this budget
    that would help local schools? Now a lot of schools can't even
    afford the start-up to get the kit and to pay the supplemental
    for the teacher.
        Secretary Duncan. Yes, I am a big fan. We talk about well-
    rounded education. I am actually going to go to the national
    championships, the national finals of the first competition. I
    am a big fan. And we talk about a well-rounded education. It is
    those kinds of opportunities again, whether it is robotics,
    debate, academic decathlon, music. So I worry in tough times
    that those extra curricula are often the first things to get
    cut. Those are things that keep students engaged and keep them
    motivated. So we want to continue to encourage a well-rounded
    education. I love those robotics competitions.

                   INCENTIVES AND PUBLIC-PRIVATE PARTNERSHIPS

        Mr. Ryan. How can we create incentives? In Warren, Ohio, we
    have a great program at Warren Harding High School, and it is
    with non-traditional kids. They are not playing hoops, they are
    not on the football team, whatever. The reason they have been
    so successful is Delphi was a local corporation who was very
    involved in the start-up of the robotics program at the high
    school.
        So how do we create incentives for local manufacturers or
    local corporations to help contribute to these programs?
        Secretary Duncan. That is the thing. I think the start-up
    costs for the robotics competition are actually minimal, and it
    is easy. Again, that is where we can think about it at the
    Federal level. But I think that that is, at the local level,
    just going out to those businesses and saying, for a small
    amount of money, you create this huge life-changing, life-
    transforming opportunity for students.
        Those kinds of sponsoring partnerships are out there.
    Obviously, business is struggling now, and there are maybe
    fewer available dollars. But this is a low-cost, high-impact,
    high-visibility activity, where students from very non-
    traditional backgrounds are getting interested in science and
    engineering and thinking about a whole set of careers that they
    never would have thought about without this competition. So
    there is a huge amount of space for folks to be creative and
    innovative and build those public-private partnerships.
        Mr. Ryan. Most of these programs, you see these kids, they
    have like a 98 percent graduation rate, a placement rate in
    college, the military, something when they get out.

                PARTNERING OF SCHOOL DISTRICTS TO SHARE SERVICES

        One last question before we have to run, I am not for
    consolidating school districts or schools. I believe in the
    neighborhood school. I think that is very important. But there
    are a lot of services that I think school districts can share--
    buying the food, buying computers.
        Secretary Duncan. Textbooks.
        Mr. Ryan. Textbooks, those kinds of things. Is there
    anything in here to create an incentive for school districts to
    partner with each other on those services?
        Secretary Duncan. When times are tough, what would you
    rather do, increase your purchasing power or lay off a bunch of
    teachers? I would much rather increase my purchasing power and
    keep those desperately needed adults in the building. So where
    folks are doing all these things--HR, buses, food, textbooks--
    where they are doing it on an individual basis, that to me is
    just an absolute waste of money at a time of desperate need.
        Mr. Ryan. Are there any incentives in here?
        Secretary Duncan. We can think about it. I think this is
    one that is common sense.
        Mr. Ryan. Well, if we are relying on common sense--thank
    you, Mr. Chairman.
        Mr. Obey. Thank you.
        Mr. Secretary, let me simply summarize by asking two
    questions and then making a point.

                                  PELL GRANTS

        With respect to Pell grants, lest anybody think that we are
    being overly generous with them, when they were first
    instituted, the maximum Pell grant covered over 70 percent of
    the cost of going to a 4-year university. Today, despite the
    increases that we have had that has taken it from 32 percent
    upwards somewhat, we are still riding at about 37 percent. So
    we have hardly been overly generous.

                          SAVINGS FROM DIRECT LENDING

        Secondly, with respect to student loans, I just want to
    read something that appeared in Roll Call last week. I want to
    quote two sentences.
        ``The legislation deserves GOP backing first and foremost
    because it eliminates government waste and saves billions. The
    choice is simple. Do we help Citibank make millions of dollars
    in profits from zero-risk student loans or find other ways to
    use the up to $87,000,000,000 in savings?''
        That savings number comes from the nonpartisan
    Congressional Budget Office.
        The article was written by Dr. Susan B. Neuman, former
    Assistant Secretary of Elementary and Secondary Education under
    former President George W. Bush.

                           IG AUDIT OF READING FIRST

        Let me also ask this question: I am sure that you are
    familiar with the Inspector General's alarming audit of the
    Reading First Initiative under the previous administration. The
    investigation concluded that Federal officials violated
    conflict of interest rules when awarding grants to States under
    the reading program and steered contracts to favored textbook
    publishers. The IG's report found that the program was awash
    with conflict of interest and woeful mismanagement.
        It also suggested that the Department of Education violated
    the law by attempting to dictate which curriculum schools must
    use. The report states that program review panels were stacked
    with people who shared the Reading First director's views and
    that only favored publishers or reading curricula could obtain
    program funding.

             ELIMINATING CONFLICT OF INTEREST IN COMPETITIVE AWARDS

        What is your Department doing to ensure that conflict of
    interest does not exist in competitive grant programs under
    your leadership? What kinds of measures have been put in place
    to prevent an outcome along the lines of the Reading First
    initiative?
        Secretary Duncan. First and foremost, we don't think we
    should be involved in curricula decisions. This has always been
    down at the local level and should not be driven at the
    national level. So we have no opinion, no stance, no interest,
    no investment, and are absolutely dispassionate on it. So in
    that spot you can't have a conflict of interest.
        We have tried to recruit people with the highest integrity
    and to do things the right way. We absolutely hope to be and
    should be and will be held accountable for that. All we want to
    do is invest in great ideas that are coming from the local
    level.
        But we have no agenda here, no interest in textbook
    publishers, and we don't think we should be playing in the
    curricula field whatsoever.

                    ACTIONS TO PREVENT CONFLICTS OF INTEREST

        Mr. Obey. I am concerned not just about that narrow
    approach but across the board in the agency. If you can get us
    some more information for the record, that would be helpful.
        Secretary Duncan. I will.
        [The information follows:]

                    Actions To Prevent Conflicts of Interest

        The Department has taken significant actions to prevent conflicts
    of interest in the implementation of our programs. On December 4, 2007,
    after the release of the Office of Inspector General reports on the
    Reading First program, the Department issued an internal directive,
    ``Improving Administration and Management of Department Programs.'' The
    directive provided all employees with program implementation guidance
    on a number of topics, including identifying a conflict of interest,
    prohibitions against controlling and directing curriculum and
    instruction, controls for the proper use of peer-review processes, and
    early and ongoing consultation with the Office of the General Counsel.
    The Department requires all employees to participate in annual training
    to ensure that they follow the policies described in the directive.
        The policies and procedures used in the Race to the Top competition
    provide a recent example of the emphasis that the Department places on
    ensuring that grant competitions meet the highest standard of
    integrity. The Department has taken several actions to ensure that the
    Race to the Top competition peer review process is conducted in an
    objective manner free from conflicts of interest. A document that
    describes the steps the Department took to identify potential, direct,
    and indirect conflicts of interest, as well as the appearance of a
    conflict of interest, is available on the Department's Web site at
    http://www2.ed.gov/programs/racetothetop/application-review.html.

                            ORIGINS OF U.S. DEFICIT

        Mr. Obey. Let me say, lastly, with respect to the education
    budget, I hope that you will give no ground--I would ask you to
    put chart number one up.
        I would ask that you give no ground when people are
    suggesting that somehow the deficit is impacted in a major way
    by what we are doing in education.
        As that chart shows, if you take a look at the deficit
    which was inherited this year by the Obama Administration, $5.1
    billion of that--I mean $5.1--I can't read my own writing----
        Secretary Duncan. I think it is trillion.
        Mr. Obey. Yes, it is $5.1 trillion. I read better with my
    glasses off. These are new glasses, and they are not worth you
    know what.
        But $5.1 trillion of the 2009-2019 deficits were caused by
    tax cuts which were paid for with borrowed money and $1.8
    trillion paid for by our entry into two wars, as I said
    yesterday, one I believe justified and one not. Then the
    economic collapse contributed $3 trillion to that deficit over
    that same period. Meanwhile, the Recovery Act--the entire
    American Recovery and Reinvestment Act, not just the education
    piece--the entire Recovery Act accounts for $1.1 trillion.
        I would simply suggest I don't offer that chart to critique
    Administration performances, because you are not done yet. But
    what I do do is to offer it to simply suggest that, in judging
    whether debt is useful or not and whether deficits are useful
    or not, we have to differentiate between what the money was
    used for.
        If the money was invested in items that simply add to
    economic consumption and immediate gratification, we have done
    ourselves no favor by borrowing that money. But if that money
    is used to invest in the long-term efforts to make this country
    independent from foreign oil, so we aren't shipping $400
    billion a year to the Middle East to pay for our lack of
    foresight in energy; if we are investing in infrastructure that
    makes it cheaper to deliver products to market; if we are
    investing in education, which increases the competitiveness of
    our workforce and the quality of our individual lives, then
    those are investments worth making, provided that over time
    when the economy resumes its full level of performance, that we
    begin to pay that money back.
        To me, that is the way to look at it; and I would urge the
    Administration to give no quarter in setting the record
    straight on that.

                           CHAIRMAN'S CLOSING REMARKS

        With that, thank you for coming.
        Secretary Duncan. Thank you for the opportunity. Thank you
    so much for your leadership and hard work.
        [The following questions were submitted to be answered for
    the record of the hearing:]

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                                             Wednesday, April 21, 2010.

        FY 2011 BUDGET OVERVIEW: DEPARTMENT OF HEALTH AND HUMAN SERVICES

                                    WITNESS

    HON. KATHLEEN SEBELIUS, SECRETARY

                     Opening Statement by Congressman Obey

        Mr. Obey. Well, good morning, Madam Secretary. Sorry to be
    late. I don't really have any good excuse. I just got involved
    in some things.
        Secretary Sebelius. I don't think the chairman is ever
    late, sir.
        Mr. Obey. Well, I think so. I detest being late.
        Anyway, let me welcome you here today. It is good to have
    you at a historic time, as you and your department begin to
    implement the health reform legislation we just passed. That
    debate has been going on a long time, and the Congress and the
    President have finally made some decisions. And, to me, the job
    at hand now is to try to implement it, make it work, see
    whether adjustments need to be made down the line, and make
    certain that it develops in a way which is beneficial to the
    American people.
        In this subcommittee, we have been doing a number of things
    to make health care more accessible, more affordable, and more
    effective. In the Recovery Act, for instance, we accelerated
    those efforts. For example, we have been expanding education
    and training programs to address the shortage of nurses,
    primary care doctors, and other health professionals and to
    encourage more practitioners to go into primary care and to
    practice in places where they are most needed. As far as I am
    concerned, that means especially rural areas.
        Our regular appropriation bills have increased funding for
    health professional programs by 35 percent over the past 4
    years, and the Recovery Act included another $500,000,000 for
    that purpose.
        Another focus has been on prevention. We have provided a
    billion dollars for prevention and wellness activities to jump-
    start new efforts in this area. I should add at this point that
    one of my special concerns is the area of hospital infections.
    It just seems to me that that has to be at the top of our list,
    in terms of priorities. We don't do people any favors if we
    give 30,000,000 people additional access to health care and
    then they wind up dying because of something that they caught
    in a hospital. That happens at a disgracefully high level
    lately, and I think we need to be very aggressive in doing
    something about it.
        Our subcommittee has also emphasized medical research. That
    includes basic and applied research supported by the National
    Institutes of Health. It includes patient-centered health
    research to help practitioners decide which treatment works
    most effectively for their patients and thereby improves
    outcomes. The Recovery Act added $1,100,000,000 to support a
    major expansion of patient-centered research.
        Yet another priority has been to encourage a more
    widespread use of information technology and electronic health
    records to reduce medical errors and to make health-care
    delivery more efficient. In the 21st century, piles of paper
    are not the way we ought to be managing records that are vital
    to patient care. And, as you know, the Recovery Act included
    $19,000,000,000 to launch a major push for adoption of those
    technologies.
        Finally, we have the need to combat fraud and abuse in
    health programs. We increased discretionary funding for this
    purpose by 57 percent last year to support a wide range of
    activities, from reviewing Medicare claims to prevent improper
    payments to conducting criminal investigations. We held a
    separate hearing on that issue several weeks ago.
        While these and other health-care priorities are at center
    stage, HHS also has many other responsibilities. Its human
    services programs help families with access to child care, help
    low-income people pay their winter heating bills, and assist
    older Americans through programs like Meals on Wheels, to give
    just a few examples. The need for these services has grown
    during the current recession, and we have given the Department
    resources to respond in both the Recovery Act and our regular
    appropriations bills.
        The President's budget request provides further increases
    in some high-priority areas, including biomedical research at
    NIH, child care, Head Start, mental health and substance abuse
    programs, and health fraud and abuse control.
        On the other hand, I am not at all thrilled at the proposed
    35 percent cut to LIHEAP, and I am also concerned that we are
    not yet well prepared to deal with public health emergencies
    like a flu pandemic or bioterrorism.
        I should also mention again that the administration has put
    us in a box--not you, but, frankly, the White House has--by one
    aspect of their budget submission because they have left a very
    large hole to fill with respect to Pell grants. And if we are
    going to meet our obligations in that area, we need to have
    that problem addressed, or a lot of people's priorities,
    including the administration's, will suffer greatly.
        So, with that, let me welcome you. I look forward to
    hearing from you. But first let me call on Mr. Tiahrt for
    whatever comments he might have.
        Mr. Tiahrt. Thank you, Mr. Chairman.
        As always, it is good to have Secretary Sebelius, the
    former Governor of Kansas, before the committee today. I have a
    great many questions for the Secretary, so, in the interest of
    time and the hope that we will get to at least two rounds of
    questions, I am going to be brief.
        Like many Americans, I have some very serious concerns
    about the recently enacted government takeover of health care
    in this country, what many refer to as ``Obama-care.'' I have
    concerns about what it will do to the quality of care people in
    this country currently receive, what it will do to small
    businesses and the people who work for them. And I have
    concerns about what it will do to our already-hemorrhaging
    Treasury.
        The level of spending authorized under this new law is
    breathtaking, not to mention the audacity of the Federal
    Government under this new law telling individual American
    citizens what they must do in regard to health insurance. Many
    of us opposed the new law and have serious concerns about what
    it means both in terms of the cost as well as the role of the
    government in health-care decisions.
        Over the last 2 years, the President has made a number of
    promises regarding this new health-care law. On June 15th,
    2009, the President said, ``If you like your doctor, you will
    be able to keep your doctor, period. If you like your health-
    care plan, you will be able to keep your health-care plan,
    period. No one will take it away, no matter what.'' Well, with
    $130,000,000,000 in cuts to the Medicare Advantage plans, it
    sure seems like 11,000,000 seniors will be in jeopardy of
    losing their plan.
        The President also said, on March 25th of this year, that
    if you already have insurance, this reform will make it more
    secure and more affordable. Apparently, that is true unless you
    are one of the millions of Americans who buy an individual
    policy that you like and want to keep.
        I am also concerned about the pressure that the host of
    newly authorized programs will force on other important
    programs in this bill. There are at least $100,000,000,000 in
    specific authorizations that Congress will be expected to fund
    and countless billions in programs with wide, open-ended
    authorizations. We have no idea how high those costs will be.
        I could go on, but the bottom line for me is: What was
    promised isn't what was delivered. I look forward to the
    opportunity to ask a few questions.
        And I thank the chairman and yield back.
        Mr. Obey. Mr. Lewis.
        Mr. Lewis. Mr. Chairman, I would prefer to wait and listen
    to the Secretary and then ask questions.
        Mr. Obey. All right. Thank you.
        Ms. Secretary, please proceed.

                      Secretary Sebelius Opening Statement

        Secretary Sebelius. Well, thank you, Mr. Chairman. It is
    good to be here in the subcommittee with you, with Congressman
    Tiahrt, and other members of the subcommittee.
        I want to thank you, first, for inviting me here today to
    talk about the 2011 budget, and I look forward to the
    opportunity to respond to questions. But I want to spend just a
    couple of minutes framing our budget, which I think advances
    the Department's central goals: improving the health of all
    Americans; expanding access to high-quality health care; and
    providing children, families, and seniors with the critical
    health services that give them a chance to thrive.
        To do that, we have tried to make prudent investments that
    actually echo the goals that the members of this subcommittee
    have championed for years: attacking health-care fraud with new
    tools and more resources; a new focus on preventing chronic
    disease and promoting wellness; emphasizing a reduction in
    medical errors and improving the overall quality of care; and
    strengthening our public health system so that we will be
    better prepared for new threats that come at us.
        At a time when so many American families are trying to
    balance their own household budgets, we think it is appropriate
    that we not let taxpayer dollars go to waste. So the budget
    reflects the difficult, time-consuming work we have done over
    the last year to try to eliminate waste and fraud and focus our
    resources so they can make the biggest impact on Americans'
    lives.
        Last month, you heard from our department's Deputy
    Secretary, Bill Corr, about some of the expanded efforts to
    identify, prosecute, and prevent health-care fraud as part of
    the new partnership with the Justice Department known as HEAT.
    And this budget, Mr. Chairman, builds on that progress. It adds
    new fraud-fighting funds to help us expand proven strategies,
    like putting Medicare fraud strike forces in cities that we
    know are hubs for fraudulent activities, and invests in
    promising new approaches like the systems that will help us
    analyze claims for suspicious activity in real time. When the
    budget takes effect, it is going to be a lot harder for
    criminals to get rich stealing from seniors and from the
    health-care system. And, over time, we believe the anti-fraud
    efforts will pay for themselves many times over.
        The budget also takes aim at medical errors. We know that
    the quality of health care in America varies widely, and, most
    tragically, in the case of tens of thousands of Americans who
    die every year from health-care associated infections, many of
    which are preventable. Chairman Obey, you have been a national
    leader for eliminating these unnecessary deaths, and our budget
    is aimed at helping to do that by doubling the size of the CDC
    National Healthcare Safety Network to 5,000 hospitals.
        You also mentioned the need to be ready for immunizations,
    and I want to thank you for your support of the CDC Section 317
    immunization program, which we have asked to receive additional
    funds to make sure that all Americans have access to vaccines
    that are the best protection against some of our most dangerous
    diseases.
        Investments like these will help make sure that Americans
    get the best possible care when they are sick, but we also have
    to do a much better job keeping Americans healthy in the first
    place. So this budget builds on the Recovery Act's significant
    investment in health information technology, which moves us
    closer to nationwide interoperability and helps providers make
    health IT part of their daily routine.
        We try to build on the historic investment in prevention
    and wellness that Congress made last year in the Recovery Act
    with new efforts that will reduce the harmful effects of
    chronic disease in our cities and create a new health
    prevention corps and aim at preventing unintended pregnancies.
        And because minorities and low-income Americans are likely
    to be sick and less likely to get the care they need, our
    fiscal year 2011 budget makes critical investments in areas
    like community health centers and HIV/AIDS prevention and
    treatment so we can address the disparities that have plagued
    our health system and our country for far too long.
        HHS has spent our Recovery Act funds responsibly, balancing
    the need for getting these dollars into the economy with
    assuring the proper stewardship of taxpayer dollars. By January
    2010, HHS Recovery Act recipients reported having created at
    least 30,000 new jobs and saving millions of jobs. The April
    report period has not yet concluded, but we fully expect those
    numbers to rise. By the end of September, we fully expect to
    obligate the remaining $6,800,000,000 in Recovery Act
    discretionary dollars available for fiscal year 2010.
        So these are just a few ways that our department will work
    to build a healthier America. At the same time, we will
    continue our work, which is already under way, to effectively
    implement many of the provisions in the historic health
    insurance reform legislation that Congress passed last month.
    The Affordable Care Act enshrines the principle that every
    American should have access to the health care they need. It
    also begins the transformation of our health-care system, with
    a wide range of new programs and incentives to promote the kind
    of coordinated, patient-centered, evidence-based care that has
    been shown to generate far better health outcomes.
        These changes, along with the investments in our fiscal
    year 2011 budget, will mean that Americans getting access to
    care as part of the Affordable Care Act will be joining a
    health-care system that is more consumer-friendly, provides
    more security, and, more importantly, does a better job at
    keeping them healthy.
        Those are the goals, but we cannot accomplish any of them
    alone. We rely on partners across the Federal Government and
    States and communities across the country. And no one has a
    more important role than those of you in the United States
    Congress.
        So I want to thank you again for the opportunity to be here
    today, and I would be happy to respond to the questions.
        [Prepared statement of Secretary Kathleen Sebelius
    follows:]

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        Mr. Obey. Thank you.
        Mr. Tiahrt.

                               HEALTH CARE REFORM

        Mr. Tiahrt. Thank you, Mr. Chairman.
        A while back, I found the comments made by our Speaker of
    the House, Ms. Pelosi, quite interesting. Specifically, she
    said on March 9th before the legislative conference of the
    National Association of Counties that--and I quote--``we have
    to pass the bill so that you can find out what is in it.'' My
    preference is that the American people know what was in the
    bill before it is passed, but I suppose that is just a
    philosophical difference.
        I was even more interested in a recent Rasmussen poll that
    shows that 56 percent of Americans believe that we should
    repeal Obama-care. In Kansas, it is over 70 percent, probably
    because four out of five jobs are small-business jobs, and
    there is a great deal of concern about what it will do to small
    employers. To be honest, I am not particularly surprised by
    that number, and I expect it will grow, since the American
    people are only now beginning to find out what has been done in
    the bill.
        This bill is widely unpopular. What is the most difficult
    part for the administration to sell to the American people?
        Secretary Sebelius. That is----
        Mr. Tiahrt. Yeah, which part of this bill will be the most
    difficult to convince the American people that it is going to
    be good for them?
        Secretary Sebelius. Well, Congressman, I think there has
    been an extraordinary amount of misinformation about what the
    law is and what it isn't. And one of the jobs that we have, I
    think, moving forward and that I look forward to, frankly, is
    telling people what is in the bill.
        For instance, for small-business owners, there is a lot of
    misinformation about mandates that currently are not part of
    the law, and were never part of the law. So any employer who
    has less than 50 employees has not only no mandate but may be
    eligible for tax breaks that begin this year at 35 percent,
    helping to secure employee coverage, and, eventually, in 2014,
    will have access to a new market.
        You and I know in Kansas that small employers are often
    squeezed out of the marketplace, priced out of the marketplace,
    don't have the leverage, whether they are a farm family or a
    small-business owner, that the large employers have. They don't
    have negotiating power. And they will have----

                           COST OF INSURANCE PREMIUMS

        Mr. Tiahrt. Bringing up the costs----
        Secretary Sebelius [continuing]. Opportunity through a
    State-based exchange.
        Mr. Tiahrt. I am sorry. I have limited time.
        Because of the cost, there was an article in the New York
    Times that talks about the effects the new law will have on
    insurance premiums that are routinely paid by ordinary Kansans,
    as you mentioned. Specifically, the article focuses on mandates
    contained in the new law that have been in place in New York,
    in Massachusetts, and a few other States.
        The article concludes that people who buy their own
    insurance--and that includes the self-employed, people who work
    for small businesses, and early retirees, those who do not yet
    qualify for Social Security--will have to pay, on average, an
    additional $2,100 for their health insurance.
        How does the administration justify forcing Americans who
    form the backbone of our economy, specifically those associated
    with small businesses, to pay an additional $2,100 for their
    insurance? Did we learn anything from Massachusetts, New York,
    and other States that have been doing some of these things that
    are contained in this new law, or is the New York Times wrong?
        Secretary Sebelius. Well, I would suggest that the New York
    Times may be pricing a policy in Massachusetts but is not
    pricing what will eventually be a State-based exchange in
    Kansas.
        The law is set up in a way that Kansas will have an
    opportunity, if they choose, to put together a State-based
    exchange to have the policies and programs be State-based. It
    doesn't import the mandates from Massachusetts and impose them
    on Kansas. It really is the law of the State of Kansas.
        So I haven't read the article, but the State-based
    exchanges, I would suggest, will make it much more affordable
    for those in the individual market or the small-group market to
    have affordable care, because they currently don't have the
    bargaining power and they are squeezed out or priced out of the
    market.
        Mr. Tiahrt. I will submit that article for the record, Mr.
    Chairman, if it is okay with you.
        [The information follows:]

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                              INDIVIDUAL MANDATES

        Mr. Tiahrt. While I am not a lawyer, I am aware----
        Secretary Sebelius. I am not either.
        Mr. Tiahrt [continuing]. That the Supreme Court has
    declared unconstitutional many Federal laws that contain
    individual mandates. However, the new health-care law contains
    a provision that appears to mandate that every individual in
    the United States must have some form of health-care insurance.
        Regardless of the lessons we have learned in Massachusetts
    and New York with respect to individual mandates, what makes
    this administration think that it can constitutionally mandate
    that every American must buy health insurance?
        And I ask specifically because there appears to be a fairly
    large segment of the American population that chooses, for one
    reason or another, not to buy health insurance even though they
    can afford it. This is a basic issue of liberty for me, not
    unlike deciding to purchase a house or rather to rent.
        So what is it about the mandate that we think we can impose
    on the American people? And do you think it will survive a
    constitutional test?
        Secretary Sebelius. Well, Congressman, I am also not a
    lawyer, but I have discussed the constitutional challenges with
    both our legal team and the legal team at the Justice
    Department, who feel that the Commerce Clause gives strong
    constitutional basis for the personal responsibility section of
    this bill.
        As you know, when Governor Romney signed the Massachusetts
    law, he felt that a critical piece of expanding health coverage
    was personal responsibility, that those who could afford,
    actually, to purchase coverage would do so; and if they needed
    assistance, that the State, in that instance--and, in our
    instance, the Federal Government--would provide that
    assistance, and there would be a waiver for those who couldn't
    afford it.
        It is the framework that we used to put together the
    Affordable Care Act, and I think at least the lawyers will
    debate this in the courtroom, but I am convinced that it does
    stand on the strong constitutional grounds.
        Mr. Tiahrt. Thank you, Mr. Chairman.
        Mr. Obey. Mrs. Lowey.

                               MEDICAL LOSS RATIO

        Mrs. Lowey. Thank you, Mr. Chairman.
        And welcome, Madam Secretary.
        Throughout the health-care debate, one of my highest
    priorities was to enable the Federal Government to better track
    and prevent premium increases for consumers. One of the
    provisions in the new law involves medical loss ratio,
    requiring insurance to spend at least 80 percent of premiums on
    health-care services. This will a great benefit to those who
    cannot continue to pay skyrocketing premiums. The law includes
    a host of other cost-control measures, including allowing
    exchanges to bar access to insurers with unreasonable premium
    increases.
        By the way, I found in my district--I had countless
    meetings with large employers, small employers, individuals,
    hospitals, doctors, and I cannot tell you how many people
    talked about their rates being doubled in the last 5 years. So
    we have to do something about this in this bill.
        And if you could share with us, how does the budget request
    enable HHS to police insurers and protect consumers from
    abusive practices? And, more generally, are there any changes
    to the budget request that are necessary now that health-care
    reform has been signed into law?
        First, let's talk specifically about the medical loss
    ratio, and then whatever time is remaining, I would appreciate
    it.
        Secretary Sebelius. Well, the medical loss ratio,
    Congresswoman, as you suggest, is part of the Affordable Care
    Act. I am a former insurance commissioner, and I am familiar
    with looking at the kind of data that is currently going to be
    requested. So we have already reached out to the National
    Association of Insurance Commissioners to, as suggested by the
    law, have them help to frame the definitions that are used as
    part of the formula for the loss ratio.
        I have actually reached out, also, to my former colleagues,
    Governors across the country to remind them--and in some States
    there is the full range of rate review authority, and in other
    States they are really missing big pieces of it, like
    California and others who found themselves in a situation where
    they do not have prior approval of rate increases--to remind
    them that that may be a good thing to address in their
    legislative session.
        So we are aggressively putting together the framework for a
    review of medical loss ratios and working in very close
    connection with the State insurance commissioners and the
    Governors to do just that.
        I think that our budget, what we have done, Congresswoman,
    as part of the implementation of the Affordable Care Act is to
    stand up a new Office of Consumer Information and Insurance
    Oversight that is going to be charged with not only
    implementing the medical loss ratio standards but a whole host
    of the market conduct standards for insurance companies and
    working very closely with the State offices.

                         STATE INSURANCE COMMISSIONERS

        Mrs. Lowey. Before we get to the next question, from your
    experience--and you interacted, I know, with other State
    commissioners before you took on these responsibilities--are
    there any States that are actually monitoring this issue
    effectively now? And I appreciate the fact that you said you
    had been meeting with the State commissioners of insurance. Are
    there any States that do it effectively?
        Secretary Sebelius. I think there are. There are some
    models out there that we look at very closely.
        Again, the State laws vary. So some States have what they
    call ``prior approval.'' Before a company can actually impose a
    rate increase, they have to submit actuarial data to the
    Department, have it reviewed, look at administrative costs,
    overhead costs, CEO salaries, and what portion of the premiums
    they are actually paying out in health benefits. Others have
    what they call ``file and use,'' where the company actually
    notices you that you have a rate increase and just files it
    with the Department. And some don't even have that. So there is
    a wide range of oversight.
        We are very hopeful that we can--this isn't, as you know, a
    Federal takeover of anything. It really is a State-based
    insurance regulatory system that stays a State-based insurance
    regulatory system. But we are working very hard with the States
    to remind them that this responsibility is theirs.
        We have asked--I actually went to the health insurers and
    asked that companies submit to our office at a minimum their
    actuarial information of what their overhead costs are, and
    what their benefit payouts are, so we can at least make it
    transparent to the American public. So far, we haven't had a
    terribly robust response, but I am hoping that we will.
        Mrs. Lowey. I look forward to your keeping us up to date on
    this. Because, from my perspective and many of my colleagues',
    we were moved to pass this legislation because, frankly,
    everybody, from small business to large small business, was
    just getting rate increases.
        And my time is up. And I look forward to continuing to hear
    from you and getting this information.
        Thank you, Mr. Chairman.
        Mr. Obey. Mr. Lewis.

                              SINGLE-PAYOR SYSTEM

        Mr. Lewis. Thank you, Mr. Chairman.
        Welcome, Madam Secretary. I don't envy you the challenge
    you have before you. All of us face the same thing, but you are
    in a very special hot seat.
        In general, I would like to talk about medical errors a bit
    and a bit about Medicare. But before getting to that, as we
    have gone through this debate over the last year, it has become
    very apparent to any observer who has looked closely that the
    key players on the majority side--the President; the Speaker;
    the Speaker's closest advisor, Mr. Miller of Oakland; indeed,
    Henry Waxman--have been supportive of a single-payor system.
        Now, I know that is not the bill that we produced, but it
    lays the foundation for exchanges to become a lot more than
    State-based but, rather, Federal-dominated. And it concerns me
    an awful lot that we ignore that.
        Would you respond to you and your office's view of a
    single-payor system at the Federal level?
        Secretary Sebelius. Certainly, Congressman. I would be glad
    to.
        I think, from the outset of this discussion, there were
    certainly those in the House and the Senate who favored a
    single-payor system and felt that that was by far the
    preferable option. From the beginning, the President made it
    very clear that he did not, in spite of the fact that he had,
    in years in the legislature and even when he came to the United
    States Senate, talked about that as an option that would be
    ideal. The more he looked at the situation, with 180,000,000
    Americans having insurance coverage that was preferable to them
    and that they liked, he felt that what we needed to do was
    build on the current system. And that is really the structure
    that the bill took from the outset, in spite of, I think, the
    disappointment of some in the caucuses who would have preferred
    to really dismantle the third-party-payor system.
        So this really starts at the States. States put together
    exchanges either as a single State or in a multi-State area, if
    that is what they choose. We provide technical assistance to
    the States to do that. And even though the timetable for
    exchanges doesn't begin until 2014, we intend, starting next
    year, to begin very robust discussions so that we don't wait
    until the last minute and have States in a situation where they
    can't do this.
        We have already had lots of positive discussions, and
    States are very eager to do this. And I think it will very much
    be a State-based program. And particularly, Congressman, it is
    not to dismantle what is in place right now. It is really to
    replace the market for self-employed Americans, many of whom
    cannot find affordable coverage, don't have any leverage, a lot
    of small-business owners who find themselves in the same
    situation.

                              MEDICAL ERROR RATES

        Mr. Lewis. Madam Secretary, if I could take you to medical
    errors----
        Secretary Sebelius. Yes. Yes.
        Mr. Lewis [continuing]. You suggest that, within the
    Department, you want to at least model some evaluation of
    medical errors to see how we can improve on that pattern within
    the health-care delivery system. Might I suggest that one of
    the major Federal medical health-care delivery systems lies
    within our military. There is plenty of evidence that there is
    rampant across this system an error-based system of delivery.
        I would suggest that you might start there and help us,
    with you, to evaluate what is going on in that medical health-
    care delivery system that supposedly is serving the most
    important servants we have in our society, the men and women
    who have fought for this country.
        Huge problem there. I would be interested in your reaction.
        Secretary Sebelius. I am sorry. I want to understand what
    you are saying, Congressman. We have begun, certainly,
    discussions with not only the VA but the Department of Defense
    on their system. But you are suggesting that there are rampant
    medical errors within the health-care system for----
        Mr. Lewis. That is correct. There is evidence at the
    highest levels that system deliveries are, at best, producing
    an awful lot more errors than the norm. And we might start that
    examination right there.
        Secretary Sebelius. Well, I think that is a good point, and
    I will follow up on that. Thank you.

                               MEDICARE ADVANTAGE

        Mr. Lewis. One of the President's major promises was that,
    if you like your health care, you can keep it. And yet, to pay
    for the new health-care plan, the law, it appears, would cut in
    a major way Medicare Advantage by more than $130,000,000,000. I
    have 50,000-plus seniors in my district who enjoy Medicare,
    and, indeed, they are concerned about what these proposed cuts
    might do to that service and existing delivery.
        What can my seniors expect relative to implementing this
    program?
        Secretary Sebelius. Well, I think that there is a
    provision, as you know, as part of the law that, over a decade,
    a portion of the overpayment to the Medicare Advantage plans
    will gradually be phased out. There are about 400 companies
    right now offering about 1,100 plans throughout the country.
    About 11,500,000 seniors taking advantage of those plans.
        We have just actually put out the 2011 Medicare Advantage
    updates, which will have the same rate payments for 2011 as
    they did for 2010, and noticed plans across the country. There
    will be a robust array of choices for Medicare recipients, as
    there are right now.
        I don't think there is any question that we are going to
    begin to pay more attention and collect more data, and the CMS,
    on medical outcomes, will be looking at not only the fee-for-
    service side of Medicare but also the Medicare Advantage side
    of Medicare to make sure that, if enhanced payments are going
    out the door, it is really for higher-quality health outcomes.
    And we know bundled care produces that, medical home models
    produce that. And there are a number of Medicare Advantage
    plans who are very eager to engage in that.
        But I think that the misinformation to seniors about the
    fact that Medicare Advantage is somehow not going to be a
    choice is just wrong. We anticipate that there will be no
    shortage of choices of Medicare Advantage plans throughout the
    country.
        Mr. Lewis. Thank you, Mr. Chairman.
        I must say, Mr. Chairman, that what she just mentioned is a
    major stumbling block. But if I were going to point to the
    greatest stumbling block, it is when the average family, let's
    say 25 to 45, suddenly finds a mandate, with the IRS looking
    over their shoulder, that they must start putting money into a
    pool for some future service delivery.
        Thank you.
        Mr. Obey. Well, I would say the greatest stumbling block is
    when people with insurance have to pay $1,000 a year to
    subsidize people who don't have it because we didn't have,
    until now, a program like this.
        Ms. Lee.

                       DIVERSITY IN HEALTH PROFESSIONALS

        Ms. Lee. Thank you very much, Mr. Chairman.
        Good to see you, Madam Secretary.
        First of all, let me just thank you so much for your
    leadership in helping to move the historic health-care reform
    bill forward, for your steady leadership and your choice and
    your experience.
        And also, for those of us who were adamant about a public
    option in terms of keeping costs down and holding the insurance
    companies accountable, we are counting on you to make sure that
    that happens, short of having a public option. And so, thank
    you very much for understanding how important that is.
        Myself, Congressman Honda, Congresswoman Roybal-Allard, the
    Tri-Caucus was lockstep, very adamant, on addressing racial and
    health disparities as part of the health reform bill. And I
    would like for you to elaborate on how this budget actually
    supports the goal of diversity in the health professions
    through recruitment and training; how you increase diversity at
    NIH institutions and researchers, ensuring that the racial and
    ethic minorities benefit from any new, innovative health
    research at NIH; also, in terms of the direct support for our
    Nation's minority medical colleges, the targeted support to
    help eliminate these disparities within communities where we
    see them the most.
        And so, in this budget, I just want to see how you are
    shaping this. I know that this year the Office of Minority
    Health, through I think it is called the National Partnership
    for Action to End Health Disparities, has produced a draft
    report, a national plan of action on disparities. So I just
    want to get a sense of where you are on that.
        Secondly--and I will ask all my questions right away, and
    then you can respond. Secondly, national AIDS strategy: Current
    budget allocation? Who is going to lead the implementation of
    the national AIDS strategy? And what part of the current budget
    allocation--I think it is $70,000,000--that is going to HRSA
    and CDC will be dedicated to the national HIV-AIDS strategy?
        Thirdly, let me ask you about nursing, because I had a long
    conversation with the dean of the Samuel Merritt Nursing School
    in Oakland, and she indicated that just in the Bay Area alone,
    40 percent of all new nursing graduates since October 2008 have
    yet to find a job. Yet I thought there was a nurses shortage in
    our country.
        I spend a lot of time, as I say to many, I spend a lot of
    time in hospitals. My mother is 85 years old. My sister has
    multiple sclerosis. And these are very good nurses, but we are
    always being treated by traveling nurses, nurses who have
    retired and who come to the hospitals to work because, I am
    told, that there is a shortage. And yet now the dean of the
    nursing school says nurses cannot find a job.
        So I would like to, kind of, get some sense of what you
    think is going on out there and what we can do to ensure that
    qualified nurses are being hired.
        And if I have any more time, I will ask some more
    questions, but go on and respond to those.
        Thank you again, Madam Secretary, and good to see you.
        Secretary Sebelius. Well, thank you, Congresswoman. I will
    try to hit the high points on the issues you raised.
        First, health disparities is, I think, a glaring failure of
    the health delivery system over years. And while our department
    I think has done a fairly decent job documenting health
    disparities, there has not been a very good strategy to
    actually reduce or eliminate health disparities.
        So the National Action Plan that you refer to is really the
    first time since 1985 that there will be a secretarial-level
    plan addressing health disparities. And it is one that I take
    very seriously. It is in draft form right now. We look forward
    to having a chance to preview it with you and to work on it.
        I don't think there is any question that passage of the
    Affordable Care Act is one of the most important steps we can
    make toward closing the gap. Over and over again, it has been
    identified that the lack of insurance, the lack of access to
    affordable health care is one of the underlying causes of
    health disparities. So a big step was made.
        Our budget, actually, will build on that effort in a number
    of ways. Not only will the Office of Minority Health focus with
    a strategic roadmap on this National Plan--and we see it not
    only within our department, but an across-government-agency
    effort, where health is impacted by neighborhoods, by food
    availability, and by the air you breathe. There are a lot of
    things that actually add or subtract from people's health. So
    we see this as a government-wide effort.
        We do have additional resources in the 2011 budget that
    look at recruitment of health providers from minority
    communities to make sure that we have not only people serving
    in underserved areas, but actually minority providers--nurses,
    doctors, health technicians, mental health professionals.
        As you know, the Affordable Care Act also made the Center
    for Minority Health and Health Disparities into an Institute at
    the National Institutes of Health which raises it to a level
    where it will have serious strategic focus and attention. So
    there are a whole host of assets coming together in a way that
    really hasn't been organized in our department.
        And, again, we look forward--I know this has been not only
    a cause that you have taken very seriously but your fellow Tri-
    Caucus members have been focused on for years, and I really
    look forward to working with you as we address these gaps and
    these underlying health causes.
        I would suggest, also, that the increased footprint for the
    Community Health Centers, which actually started in the
    Recovery Act and are, again, targeted to the underserved areas,
    as well as the efforts in wellness and prevention grants, will
    also help to close this gap.
        I can't respond very well to the nursing job shortage
    situation that you talked about because that is the first time
    I have ever heard of nurses not being snapped up immediately to
    be hired. I hear the other side of the story over and over
    again, that people need more nurses in the pipeline. And that
    is exactly what we have been doing, is trying to fill that
    workforce pipeline with more scholarships being paid off, more
    increases to the National Health Service Corps, more people in
    underserved areas. So I need to follow up on that.
        And then, finally, in the AIDS area, there is a national
    AIDS plan that is currently being formulated. It is not
    finalized at this point. As you know, President Obama has
    identified the fact that, while we had a very robust
    international HIV-AIDS strategy, we had kind of lost the
    attention and focus at the national level.
        We have already launched, under CDC, an outreach program on
    testing and particularly identified some of the most vulnerable
    communities that we are beginning to interact with, using
    social networking.
        But we look forward to the strategic plan, which will be
    led by the White House Office of National AIDS Policy and
    others who are focused on AIDS. There is a new AIDS Council,
    which will have a national and international focus. And we are
    going to be very intimately working with them.
        Mr. Obey. Mr. Rehberg.

                                HIGH RISK POOLS

        Mr. Rehberg. Thank you, Mr. Chairman.
        Temporary high-risk pools in Montana--I understand you have
    been in contact with our auditor already about it. But I
    noticed in the appropriations $5,000,000,000 was taken out of
    the general fund to pay for the high-risk pools around the
    country, but CMS is suggesting that the money will run out in
    2011 and 2012. And, of course, they don't have to be in place
    until 2014.
        Why the shortfall? Well, why the anticipated shortfall? And
    are there other areas that you see it is already coming in
    over-budget?
        Secretary Sebelius. Congressman, we don't know exactly how
    many people will be able to be enrolled in the high-risk pool.
    A lot of States offer high-risk pools right now. I think
    Montana--
        Mr. Rehberg. Which is one of the reasons we wondered why we
    did this in the first place. If we already had the high-risk
    pool in place, why supplant it with something created by the
    Federal Government to do something that we already had in
    place?
        Secretary Sebelius. Again, this is a totally voluntary
    program, first of all. Secondly, it won't be created by the
    Federal Government. If Montana chooses to set up what is a
    parallel pool, the money that is allocated in the Affordable
    Care Act is to subsidize rates so----
        Mr. Rehberg. The point is----
        Secretary Sebeli [continuing]. They don't rise above 100
    percent in Montana.
        Mr. Rehberg. Correct.
        Secretary Sebelius. They are well over 100 percent of the
    market right now, and it makes it very unaffordable for lots of
    folks.
        Mr. Rehberg. But my question is, you asked for
    $5,000,000,000, you got $5,000,000,000, and CMS is already
    anticipating it will not last through 2011 or 2012. And the
    high-risk pools are not to be in place by 2014. A shortage, a
    shortfall, an overexpenditure. How are you going to deal with
    it? Are you going to limit access?
        Secretary Sebelius. Again, sir, this is not a Federal
    program. If Montana chooses to participate, they will have an
    allocated set of resources, which helps subsidize care for
    Montanans who currently are uninsured and uninsurable.
        Mr. Rehberg. Madam Secretary, you----
        Secretary Sebelius. If they choose not to participate, that
    is a choice that the State will make.
        Mr. Rehberg. Let's go back to the question. The question
    was, the legislation created high-risk pools, or the
    opportunity to create a high-risk pool----
        Secretary Sebelius. That is correct.
        Mr. Rehberg [continuing]. By 2014.
        Secretary Sebelius. No, sir. Right now. This is the bridge
    strategy to a new market----
        Mr. Rehberg. Correct.
        Secretary Sebelius [continuing]. In 2014. Not by 2014.
        Mr. Rehberg. That is correct. But, by 2014, an alternative
    structure needs to be in place.
        Secretary Sebelius. The exchanges.
        Mr. Rehberg. Correct. But if the exchanges are in place in
    2014 but you are using Montana and the other States' temporary
    pool, and if you appropriated $5,000,000,000 and it is not
    going to make it to 2014, you are going to have to come back to
    this Appropriations Committee and ask for more money.
        You have already anticipated that it is going to cost more
    than you told us it was going to, in asking that the
    legislation be passed in the first place.
        Secretary Sebelius. Sir, currently, the Federal Government
    pays a fraction of a State's high-risk pool. It puts about
    $50,000,000 into an overall plan. This is an attempt to provide
    a safety-net coverage if the money actually is going to have a
    shortfall.
        Mr. Rehberg. Madam Secretary, with all due respect, that
    doesn't answer the question of the shortfall. I understand the
    bridge. I understand that you are going to cooperate or
    participate or help the States. But you said it was going to
    cost $5,000,000,000, your anticipated expenditure, and it is
    not.
        Secretary Sebelius. Well, we don't know what it is going to
    cost, and I would----
        Mr. Rehberg. So you disagree with CMS?
        Secretary Sebelius. We don't even know how many States want
    to participate in the program at this point. We put out a
    letter to Governors. I talked to my former colleagues
    yesterday. We will, by April 30th, have some idea. I mean, we
    really don't know, at this point, sir.

                   PROHIBITION ON LOBBYING WITH FEDERAL FUNDS

        Mr. Rehberg. Okay.
        The second line of questioning that I would like to go down
    the path--in the stimulus package, the law certainly says you
    can't lobby.
        Secretary Sebelius. Correct.
        Mr. Rehberg. You know, a bastion of information from CNN.
    State of New York, obesity, educate leaders and decision-makers
    about trans fat--this is a $3,000,000 grant award. Santa Clara,
    California, advocating for an increased statewide tobacco tax.
    The city of Chicago, tax increase at the city, county, and
    State levels. Iowa Department of Public Health, $3,300,000,000,
    inform local policymakers about evidence- and practice-based
    pricing.
        That sounds like lobbying.
        Secretary Sebelius. Congressman, I read the same
    information from the same news source. I can assure you that we
    will follow to the letter of the law the Federal law which
    prohibits Federal funds and has, not just in the Recovery Act
    but consistently, prohibited lobbying with Federal dollars. We
    will track that very carefully. We have already notified a
    whole host of folks that that is the law of the land. That was
    part of the grant application and will continue to be part of
    the monitoring.
        Federal funds will not be used for lobbying.
        Mr. Rehberg. Okay. Because those were all quotes from the
    grant application in the first place.
        Secretary Sebelius. A lot of the applicants have a whole
    host of strategies that they employ, have employed
    historically, and will continue to employ. We are funding
    programs that are not lobbying programs. They are actual
    prevention----
        Mr. Rehberg. But your oversight missed it in the initial
    grant application.
        Secretary Sebelius. Pardon me?
        Mr. Rehberg. Your oversight missed it in the initial grant
    application. The grant application had those exact quotes in
    it.
        Secretary Sebelius. They have been notified that there is
    an absolute prohibition for using any Federal funding for
    lobbying. And we will follow up on that very carefully.
        Mr. Rehberg. Thank you.
        Thank you, Mr. Chairman.
        Mr. Obey. Ms. Roybal-Allard.
        Ms. Roybal-Allard. Welcome, Madam Secretary.

                        PREVENTION AND WELLNESS FUNDING

        Last year, the American Recovery and Reinvestment Act made
    $650,000,000 in prevention and wellness funding available for
    chronic disease prevention and management. And this year, when
    Congress passed the Affordable Care Act, it included a
    $15,000,000,000 Prevention and Public Health Fund, of which
    $500,000,000 is, I believe, available this year. And, as I
    understand it, these new funds are not restricted to chronic
    diseases but are meant to fund the entire spectrum of public
    health efforts.
        I have been told that your office is currently working on a
    system to distribute the funds this year. However, there seems
    to be significant concern in the infectious disease community
    that, in an effort to obligate the $500,000,000 by September
    30th of this year, the Department will fund only existing grant
    applications for the ARRA of chronic prevention grants and that
    infectious disease programs will once again receive no funding.
        Can you please outline how you plan to allocate these funds
    and whether you will include new applications for prevention
    funds to target infectious diseases such as HIV-AIDS, viral
    hepatitis, sexually transmitted diseases, tuberculosis, many of
    which are at crisis levels in many communities? And what
    strategies is your department undertaking to address these
    infectious-disease disparities in our minority communities?
        Secretary Sebelius. Congresswoman, I would suggest that, at
    this point, as you have identified, conversations are going on
    with Members of the House and the Senate about the strategies
    for allocating these funds. So no decisions have been made, at
    this point, about either using traditional applications or not.
    But we absolutely want that kind of input and, you know, look
    forward to working with you on a plan.
        I think that the effort will be to actually build on--as
    you know, the investment in the ARRA funds was really a first-
    time-ever investment in wellness and prevention and
    strategically focused, at least in the community grant
    applications, on two underlying causes of chronic disease,
    which were tobacco cessation and obesity.
        This is likely to be a broader area. There are lots of
    ideas and good strategies about how to use this. We are looking
    carefully at the scientific data, at the evidence-based
    programs. I can guarantee you that what actually has been
    demonstrated to work will be one of the guiding lights.
        But I would say that discussion is very much under way, and
    we would appreciate your input.
        Ms. Roybal-Allard. So they are still open with regard to
    funding infectious disease?
        Secretary Sebelius. Yes.

                            REDUCING CESAREAN BIRTHS

        Ms. Roybal-Allard. Okay.
        As you are aware, the United States spends more on
    maternity care than any other country in the world. However, we
    rank 41st in the world in maternal mortality and rank 30th in
    infant mortality.
        While we know there is an extensive body of research
    regarding best evidenced-based practices in maternity care, our
    health-care providers seem not to be following that research.
    For example, despite Healthy People 2010 goals of reducing
    Cesarean births to 15 percent, the United States continues to
    have a 31.8 percent Cesarean section rate.
        Given the risks that are associated with medically
    unnecessary Cesareans and the extraordinary costs associated
    with Cesarean births, is the administration doing anything to
    refine our care system to support the best and most cost-
    effective, evidence-based care to reduce the rate of C-
    sections?
        Secretary Sebelius. Congresswoman, I am not sure I can
    speak with any specificity about what actions are currently
    being taken in dialogue with providers about the C-section rate
    beyond just publishing the data and highlighting the data.
        I can tell you that our Office of Women's Health is very
    focused on maternal and child health issues and, frankly, what
    are pretty dismal health results, as you suggest--high
    expenditure and not terrifically good results.
        I, again, think that the Affordable Care Act makes a big
    step in the direction of getting affordable prenatal care to
    pregnant women. That will be a major step forward----

                          INCREASING BIRTHING CENTERS

        Ms. Roybal-Allard. I am sorry to interrupt, because I see
    my time is up, but I did want to know whether or not, since the
    new law requires Medicare to cover care provided in all free-
    standing birth centers at a cost of $6,000 less, is there any
    consideration in the initiatives to increase the availability
    of licensed birthing centers across the country?
        Mr. Obey. Very brief answer.
        Ms. Roybal-Allard. Is that being looked at?
        Secretary Sebelius. I can't answer that, but I will look
    into it.
        [The information follows:]

                          Increasing Birthing Centers

        Thank you for your interest in the Medicaid program and the
    availability of licensed, free-standing birthing centers. As you know,
    section 2301 of the Patient Protection and Affordable Care Act of 2010
    (the Affordable Care Act) requires the States to cover services
    provided by freestanding birth centers as a mandatory service under
    Medicaid. Currently, we are focused on implementing and providing
    technical assistance to the States on this provision. We expect that
    States with licensed, freestanding birthing centers will build a
    foundation for expanding these services to the Medicaid population and
    that their experience will be instructive to other States considering
    expanding the availability of such centers.

        Ms. Roybal-Allard. Okay. Thank you.
        Mr. Obey. Mr. Alexander.

                                  FMAP FORMULA

        Mr. Alexander. Thank you, Mr. Chairman.
        Madam Secretary, I have two questions. One is about FMAP.
    Congressman Cao and all of the Louisiana delegation, as
    cosponsors, are supporting a piece of legislation to address
    Medicaid reimbursements or Medicaid costs. Governor Jindal is
    supporting the legislation, as well as Secretary Levine from
    the Louisiana Department of Hospitals. They are in a
    legislative session today dealing with the shortfall there of a
    half a billion dollars.
        My question is, what is being done to prevent States like
    Louisiana, who were unfairly, when you look at the FMAP
    formula--because we got a lot of money, as the State of
    Louisiana was recovering from the hurricanes. Louisiana was
    looked at as being a State that was financially better off than
    they really are.
        So what are we doing to prevent Louisiana or any other
    State, like yours, that received financial help from appearing
    to be wealthier than they really are and, therefore, suffering
    because of the Medicaid?
        Secretary Sebelius. Congressman, we have spent a good deal
    of time with not only your State health officials, your
    Medicaid director, the mayor-elect of New Orleans, and others,
    Senator Landrieu, on this situation. Frankly, one of the
    reasons I think that there is now a legislative discussion is
    because the law is pretty clear that we don't have
    administrative flexibility to change the calendar years for
    which the income level is calculated; and that is really the
    situation, is when the count began what the income level is and
    how it was calculated. But we are working very closely with
    them, well aware of the anomaly that income appeared to go very
    high because half the population was, frankly, gone and not
    counted and probably inaccurately reflects what is the true
    medical count.
        And if we can have a legislative fix, we will try to move
    it very, very quickly. But we have our hands tied in terms of
    what administratively we can do for this situation. But I think
    it is really worth looking at.
        As you suggested, it is not only Louisiana but what happens
    post-disaster in an area where Federal funding may come in as
    an aid after the fact, but then the result is a calculation
    that isn't a very accurate picture of what the financial
    wherewithal is.

                               HEALTH CARE FRAUD

        Mr. Alexander. Thank you.
        Chairman Obey a little earlier said something about a
    meeting that we had a few weeks ago about fraud. During that
    meeting, we heard all kind of reports about the number of
    physicians and other health care providers that were using
    sometimes information obtained from the inside to defraud the
    taxpayers. I asked the question about the number of individuals
    from the inside that might have been found doing something
    wrong.
        Again, I am not pointing fingers, but I just find it almost
    impossible to believe that there are numbers of individuals on
    the outside committing fraud at the numbers that we are hearing
    about without getting some help from the inside.
        When we talk about organized crime--and that term was
    mentioned--organized means at least two. You can't have
    organized crime with one. So I asked the question. I have not
    gotten an answer. I have had staff members to try to find out
    if in fact there are any individuals on the inside of any of
    the departments at all levels who have been found guilty of
    helping those on the outside. Can't get an answer. There is no
    answer or either they won't give it to us.
        Secretary Sebelius. Congressman, I can tell you I am not
    aware--and I will make sure we get this data and get it right
    back to you--I am not aware of if you are talking about State
    and Federal employees who have been charged and found guilty. I
    do know if ``inside'' means providers and not necessarily just
    doctors but so-called equipment providers and home health
    providers, there are dozens and dozens of insiders in that
    instance who have been charged and prosecuted, which is really
    the only way that we would be able to document if they have
    actually been found in some case. But I can get that
    information to you.
        That is the kind of thing that I think the new fraud effort
    is attempting to crack down on, people who pretend to be
    providers, if you will, set up sham operations, bill. But they
    are not necessarily part of organized crime. They are just
    operating as insiders but really conducting fraudulent
    activities. But we will circle back right away and get you that
    information.
        [The information follows:]

                               Health Care Fraud

        The HHS Office of Inspector General's (OIG) Office of
    Investigations (OI) has one known case where an employee was complicit
    in a health care fraud scheme. In the Los Angeles Region, two Centers
    for Medicare & Medicaid contractors admitted to receiving money,
    $15,000 and $5,000 respectively, from an outside source to process
    provider applications. One individual received 3 years probation and
    was fined $1,000, while the other received 2 years probation and was
    fined $5,000.
        Because many of the providers who had applications expedited are
    subjects of on-going investigations, the total loss to the Medicare
    program has not been fully determined. However, it was determined that
    one provider involved in this scheme, caused a $3.2 million loss to the
    government. Additionally, it is believed that at least one entity
    bribing the employees in this case is connected to an organized
    criminal enterprise, and there may be additional employees identified
    in this scheme.
        Instance of ``insider'' fraud within the Department or involving
    its employees are extremely rare, and when identified, are taken very
    seriously and investigated to the fullest extent by our law enforcement
    partners.

        Mr. Alexander. Thank you.
        Mr. Obey. Ms. McCollum.

                             MEDICARE REIMBURSEMENT

        Ms. McCollum. Thank you, Mr. Chair.
        To the gentleman's question, I know the Department,
    unfortunately, I have to report, in Minnesota found two
    internal problems with fraud. So you do do internal audits, and
    I am sad to report that there were people in Minnesota involved
    in it. I am happy that they got caught.
        I would like first, though, however, to commend Chairman
    Obey for his ongoing instrumental leadership in fighting for
    the best value and quality in health care. That just leads to a
    lot of hearings that you have had before and the hearing we are
    having today.
        I would like to congratulate you on the passage of the
    health reform bill. Your work and the work of the
    administration were key to ensuring that health care reform
    became a reality. I believe that the current Medicare payment
    system is deeply flawed and too many hospitals and providers
    shoulder the burden of unfair Medicare reimbursement for high-
    quality, low-cost care that they deliver, my State being one of
    them. I look forward to working with you as you convene the
    National Summit on Geographic Variation, Cost, Access, and
    Value in Health Care this year. And on this issue and the
    timing implications for some of the fact finding that you are
    looking at and for the implementation of change, I am going to
    submit some of those questions for the record.

                          HOSPITAL ACQUIRED INFECTIONS

        Ms. McCollum. So I would like to spend my remaining time
    talking about hospital-acquired infections. We are here today
    to learn how to work more effectively with you to improve the
    quality of our health care system for all Americans. Hospital-
    acquired infections contributed to almost a hundred thousand
    deaths. In a recent report, HHS concluded that hospital
    infections merited urgent action. We know that hospital
    infections add $28 to $33 billion to our national health care
    costs. This is a serious public health care concern, because
    are we not only paying the cost, there are patients paying for
    these mistakes with their lives.
        HHS has set out a goal to reduce hospital-acquired
    infections by 10 to 20 percent in 2 years, and 50 percent
    within 10. But we are far from reaching that goal. We know that
    most of these infections are preventable through low-cost
    techniques. There is a New York Times article that even talks
    about how we have had remarkable progress in reducing infection
    rates but how many of the hospitals have not yet worked to
    overcome these infection rates because they are in an
    entrenched medical culture which is not changing.
        My State has worked to lower infections, and I know others
    are doing that as well. You have examples at your Department on
    how we can reduce infection rates. But the report also points
    out that infection rates have gone up 8 percent.
        So here are my questions:
        Is the 8 percent increase because of better reporting,
    whether it is voluntary or mandatory? Because you can't address
    a problem until you know and you face the fact that the problem
    exists. What are some of the obstacles to addressing this
    issue? Does the agency need this committee or the policy
    committee to work more closely with you to address this public
    health care concern moving forward?
        Secretary Sebelius. First of all, Congresswoman, I think
    your targeted concern is one that is a huge issue, and it is
    not only a huge cost issue, it is a huge safety issue. I know
    the Chairman has been working with you and sort of focused like
    a laser beam on this. The notion that we have a hundred
    thousand deaths a year from what happens to people when they
    are in the hospital, not what brought them in the first place,
    is, frankly, totally unacceptable. And hundreds of thousands
    more in just high-cost, longer-care strategies and lingering
    diseases. So it is a very serious issue.
        We know what works. It has been demonstrated and proven. It
    has never been taken to scale.
        So I think a couple of things are happening simultaneously.
    First of all, the notion of increases, I would say, is a part
    of better reporting. It also is a snapshot of the past. We are
    hopeful that more current data gives more encouraging signs.
    This focus by the Department, by this Committee, through the
    Recovery Act, through the Affordable Care Act, and through our
    budgets, I think is relatively recent.
        Secondly, there is no question that it is a question of
    focus by hospitals. You have required as part of the Affordable
    Care Act that all hospitals now have to report, which is a big
    step forward, and that reporting will be much more transparent
    to consumers and others, which is, again, a big step forward.
        Third, we are putting real resources both to States for
    more frequent inspections and to hospital systems to encourage
    the adoption of the strategies that we know work.
        Fourth is the electronic medical records. I was in a
    hospital in Cincinnati 2 weeks ago, in Children's Hospital,
    which does some of the most complicated surgeries on infants
    and even prenatally that I have ever seen. They have embedded
    into their electronic records system the checklist that we know
    works to reduce hospital infections. They have gone a thousand
    days without any safety concern. It is a great example of what
    meaningful use in an electronic records system can do, which is
    embed the kind of safety checklist, make sure it is done time
    and time again. If you can do it in that type of environment,
    we can do it everywhere.
        So I think there are some resources coming together, but I
    can tell you that it is something that we take very, very
    seriously. And I think it is not only huge costs, but we are
    killing people by our health care system.
        Mr. Obey. Mr. Cole.

                          MEDICARE REIMBURSEMENT RATES

        Mr. Cole. Thank you, Mr. Chairman.
        Madam Secretary, thank you for being here today.
        As I talk to hospitals in my district, and it is a pretty
    rural district, a lot of small town, lot of Medicare- and
    Medicaid-intensive facilities, most of them are expecting, and
    this is not through your actions or through the health care
    bill, the Medicare reimbursement rates are being cut. They are
    going down. They look on the Medicaid new population that they
    will be getting under the health care bill as largely a break-
    even deal for them. They are really not making money off of
    that. They are very worried about what is going to happen to
    the private provider part of reimbursement.
        Because the point has been made here earlier, private
    insurance subsidizes the uninsured, but it also subsidizes
    Medicare and Medicare to a large degree, because those programs
    don't break even on costs. So they are looking at their future,
    and they are wondering where the dollars will come from for
    them to literally keep their doors open. And then the people in
    the larger cities wonder what happened to those smaller
    hospitals that closed and that population base is moved into
    their facilities.
        So I would like you to just walk through how you see
    hospital reimbursement rate developing over the course as you
    phase in the new health care bill.
        Secretary Sebelius. Congressman, I think that is a great
    question. Whether it is in rural areas in your district or in a
    State like Kansas, or in urban areas, I think every hospital
    administrator who I have talked to in the last 10 years has
    seen their uncompensated care rate rise. So there is currently
    a population with no payment stream at all and then
    insufficient payment streams and then private-payer streams.
        So I think one of the features of the Affordable Care Act
    is to actually have a payment stream arguably under every
    patient who comes through the door. It is one of the reasons
    that a lot of the hospital systems worked carefully with us on
    the framework of health reform.
        I do think that there also is an effort where the kind of
    bundled care strategies--again, hospital providers are very
    eager to have a payment system which actually looks at ways
    that they can be more appropriately compensated for keeping
    people out of the hospital. Right now, the only way they
    actually get compensated is if somebody actually comes back
    into the hospital.
        And the sorts of embedded directional changes in the
    delivery system for health homes and bundled care and
    accountable care organizations actually have, I think, some
    huge advantages for hospital systems to have a more appropriate
    reimbursement system and actually keep people healthier in the
    long term. I would say the third piece of the puzzle is a lot
    of hospitals right now, particularly through emergency rooms,
    are delivering care which could much more effectively be
    delivered in a primary care setting, in a community health
    center, in a variety of areas. They have begun to work on
    strategies to kind of triage that care so they don't have to
    have this robust sort of preventive care, and that I think is
    also part of the new structure.
        Mr. Cole. A lot of, again, my facilities are concerned
    with, again, on the private end of it is where they make the
    money to, frankly, reinvest in technology and facilities. They
    don't make that off Medicare. They don't make it off Medicaid.
    So they are really worried, are we going to crowd out the
    private market here and they won't have the money they need to
    give patients the best service that they possibly can give.
        Secretary Sebelius. Well, I think with the exchange
    opportunities, the private market, I would suggest, may be
    stronger. What is happening right now, and has happened over
    the last 5 years certainly, is more and more small employers
    have dropped their private coverage because they can't any
    longer pay the premium. A lot of individuals lost insurance
    when they lost their jobs, but I think the restabilization of a
    marketplace, of a private marketplace with larger purchasing
    pools but then stabilizing that coverage that people have is
    actually going to be good news.
        Mr. Cole. I hope so. I think that is a point worth making,
    though. Because a lot of my friends who favor the public option
    think, forget where the money comes from that actually allows
    health care to be delivered. It is very heavily from the
    private sector. You overpay, quite frankly, if you are on
    private insurance already. We know that problem was alluded to
    earlier. But that also supports Medicare, Medicaid, and,
    frankly, the new health care insurance bill as well. So I would
    be very careful about killing the goose that has actually
    provided the eggs for everybody else.
        Secretary Sebelius. Well, as you may know, of the 32
    million or so estimated new enrollees in a health insurance
    system, the majority of those individuals will be in the
    private market, will not be in the public market.
        Mr. Cole. Thank you, Mr. Chairman.
        Mr. Obey. Mr. Honda.

                             HEALTH INSURANCE COSTS

        Mr. Honda. Thank you very much.
        Welcome, Madam Secretary.
        Just to pick up with your last comment, the additional 32
    million that will be added to the population, would that tend
    to drive the costs down across the board in terms of insurance
    premiums if we have the other things in place like the
    antitrust provision and a public option?
        Secretary Sebelius. Congressman, what I think is
    anticipated to cost less is--first of all, the market right now
    is pretty fragmented. So if you are an individual buying your
    own coverage, or a small business owner, one health incident,
    one cancer survivor, one heart attack puts you in a very
    expensive category. Pooling that risk into an exchange, a much
    bigger purchasing pool, I think helps balance the costs
    overall. I think it is one of the reasons that costs will come
    down. Hopefully, a number of the underlying features that
    actually lower the overall health care costs also are impactful
    in terms of the health insurance costs.
        Mr. Honda. It seems to me that that is something that we
    can work towards and anticipate. We do know, though, if we
    don't do anything, we have 47 million people without insurance
    and the costs continue to rise. In the last 18 months, at least
    in California, the premiums have gone from 30 percent one year,
    38 percent this past year, in terms of premiums increase, in
    light of the debate we had already. So I am not sure the word
    is arrogant, but it sure is pretty bold to do that while we are
    having a debate on the high cost of insurance.
        I want to thank you for taking on this job. It is a massive
    job; and I think it is a very complicated, complex job that you
    have. But I am looking forward to working with you on this.
        I would note that the State you do come from is a very
    active State and very vigorous folks. I was pleased to see that
    a Congressperson did vote for the bill.
        I think that in my own district, District 15, which is
    Silicon Valley, which has probably the highest per capita post-
    graduate folks, probably the highest average income in this
    country, I had something like 70,000 folks who were uninsured.
    That is almost 10 percent of my population. It doesn't mean
    that they were unemployed, but they were uninsured.
        A fellow who ran against me for office when I first ran, a
    young man, a good friend of mine, said that in the current
    situation he would not be able to go into business for himself
    because his child has a pre-existing condition. My past
    opponent and friend said, go for it. It is important for our
    country.
        What is important for our country also is that we know that
    we have a viral hepatitis issue in America and globally, and we
    know that more Americans have chronic viral hepatitis. There is
    more of an incidence of that than HIV/AIDS, and the disease is
    100 times more infections than HIV. While I am grateful to the
    President for requesting an increase for the division in your
    2011 appropriation budget, I am glad that Assistant Secretary
    Koh, with whom we had met, had begun two major interagency
    tasks forces on this issue. We are very appreciative of that
    activity.

                       PREVENTION AND PUBLIC HEALTH FUND

        I am also aware that there is about $500 million for
    prevention and wellness funds that is made available through
    this bill. But there is nothing that says how it is going to be
    spent. Do you have any idea how your Department will be looking
    at that and how it will be spent?
        Secretary Sebelius. Congressman, I think that we are still
    seeking guidance from Members in the House and the Senate about
    that 2010 appropriation for the prevention funds. We did invest
    in prevention in 2009 and 2010 as part of the Recovery Act, and
    we see this as an opportunity to amplify and maybe look in some
    other directions, but those conversations are under way, and we
    would appreciate your feedback.
        Mr. Honda. We certainly will be willing to do that.
        Mr. Obey. The gentleman's time has expired.
        Mr. Ryan.

                           PREVENTION AND MINDFULNESS

        Mr. Ryan. Thank you, Mr. Chairman.
        I want to personally thank you for all your leadership with
    regard to the health care reform efforts in trying to push it
    through. I think history will judge us well, bringing a level
    of social justice to this country that we haven't seen.
        One of the things I mentioned before when you were here
    that I have been dealing with and working with for the past few
    months and years is the issue of stress in our society. I think
    as we talk about health care reform and the technology and
    everything else that there is a growing body of evidence, not
    just in the area of health care, of mindfulness and
    contemplative practices and their benefits on reducing stress
    levels and allowing our body to heal itself.
        So as we are moving 30 million more people into the system,
    there is inevitably going to be more costs, and I think we have
    dealt with that. And it will reduce costs, and I think we have
    dealt with that.
        But we need to, I think, pursue--and Mr. Honda just
    mentioned prevention. I know there is going to be a panel to
    evaluate what preventive measures actually work. So if you can
    just talk about that.
        But I would also like to encourage you that on that panel
    should be somebody who has been in the field, working in the
    field of mindfulness-based stress reduction. I think it is the
    most cost-effective way to drive down health care costs. It is
    about individual responsibility. It is about teaching people to
    manage their own health right in line with everything else we
    are talking about. So I want to encourage you to do that.
        It is not just in the area of health. The Defense
    Department is now doing this for pre-deployment for soldiers
    who are going over, allowing them to--and hopefully prevent a
    lot of the post-traumatic stress that goes on when these kids
    go into battle. So I want to encourage you to do that.
        If you can talk for just a second about the panel that is
    going to be created to evaluate adequate preventive measures in
    the health care reform bill.
        Secretary Sebelius. First, Congressman, I am all for
    looking at any strategy we can find that is successfully
    reducing stress. I am at the front of that line. I would be
    grateful for that evidence. I think that whether it is in this
    instance or the framework for the services, with the exchanges
    or others, certainly we will put together a very broad-based
    group of experts and look at what the evidence says. And in
    this area I think there are a number of cost-effective sort of
    patient-centered strategies that really do work. And so I look
    forward to getting the information from you and making sure
    that is part of the discussion.
        Mr. Ryan. I will get it to you.
        I was at a conference this past week and there was someone
    from Ms. McCollum's district at the University of Minnesota.
    They are offering basically a stress reduction class for
    incoming freshman. There is a 50-person wait list. So this is
    something that is throughout our society. So I think your
    leadership on this could be critical.

                        PRIMARY CARE PHYSICIAN SHORTAGE

        Another question I have, and it is something one of my
    colleagues mentioned, the shortage of nurses, is the issue with
    primary care physicians. If you can touch upon that and how we
    are going to try to bridge our way through that.
        Secretary Sebelius. I think there is no question we need
    more health care providers altogether, but we also need more of
    the providers to choose primary care, gerontology, family
    practice. So a couple of strategies simultaneously. One is
    using more of our loan repayment and scholarship funds to
    attract people to those fields at the outset and pay off more
    of the debt for health care provider training in the areas that
    we see the biggest needs.
        As you know, the Affordable Care Act had a feature which
    actually, again, moves primary care providers for a couple of
    years with 100 percent Federal funding from Medicaid rates to
    Medicare rates, which I think is, again, a big step forward to
    more adequately compensating the kind of work they are doing.
        Mr. Ryan. How about the bridge between those kids that they
    are going into school now maybe and they are saying, yeah, it
    looks like primary care is going to be an opportunity for me.
    But in 2014 they will be just getting their bachelor's degree
    or their BS degree and moving on.
        Secretary Sebelius. We are changing the Medicare pay rates,
    also. I think payment of debt once you get your medical degree
    is also a pathway to a much more robust primary care system.
    That is what I hear from medical students all the time, that
    they are in a real financial box in terms of not being able to
    pay off their loans and being inadequately compensated once
    they become providers. So we are looking at both ends of that
    puzzle.
        Mr. Ryan. So you think they will move over immediately.
        Secretary Sebelius. I do. Actually, we have seen an
    increase already this year in primary care choices made by
    first-year residents. It is up about 20 percent.
        Mr. Ryan. Great. Thank you.
        Mr. Obey. Ms. DeLauro.

                    HEALTH REFORM COMPLIANCE AND ENFORCEMENT

        Ms. DeLauro. Thank you, Mr. Chairman.
        Welcome, Madam Secretary. Thank you for your efforts in
    helping us to pass what is historic legislation.
        I know that your Department is working overtime to make
    sure that we begin the implementation of this legislation and
    that the people of this country can really experience the
    benefits as quickly as possible, whether they are small
    business owners or seniors or young adults or parents or people
    who have a pre-existing condition.
        We have already seen a couple of instances where insurance
    companies seem to be changing their behavior in response to the
    bill.
        On the positive side, we have seen several companies who
    plan to move ahead of schedule to let adult children stay on
    their parents' plan until age 26.
        But there are instances in which we will need to watch
    insurance companies closely to make sure they are following the
    new rules that have been laid out. For example, some reports,
    including the Senate Commerce Committee, indicates that
    insurers may be manipulating their medical loss ratios,
    reclassifying certain expenses to make it look like they are
    spending at a higher percentage of the premium dollar on
    medical care in order to meet the standards in the law. The
    Affordable Care Act included rate review provisions, including
    grant funding to assist States carrying out rate reviews to
    stop insurance from hiking those premiums to unacceptable
    levels. This law now bans a host of insurance company abuses:
    rescissions, denials of coverage for pre-existing conditions,
    gender rating, and health status rating.
        Let me just lay out the three pieces of this question, and
    I will let you go.
        What resources and tools does HHS and the Department of
    Labor need for enforcement of health reform and holding
    insurance companies accountable?
        With regard to medical loss ratio, how are you going to
    work with the National Association of Insurance Commissioners
    to ensure that terms like clinical services, activities to
    improve quality are defined appropriately, that do not include
    more routine activities that are more typically classified as
    administration expenses?
        Today, in the New York Times, there is an article that
    says, Senate bill sets a plan to regulate premiums. The Federal
    Government could regulate rates in States where State officials
    do not have sufficient authority and capability to do so. Let
    me ask you to comment on that.
        So if you could address those three pieces, I would
    appreciate it.
        Secretary Sebelius. In terms of the resources and tools,
    Congresswoman, we are working very closely with both Labor and
    with Treasury that has a sort of piece of some of these puzzles
    on the initial regulations. That has gone pretty well. We have
    put together our Office on Consumer Information and Insurance
    Oversight. It is going to be led by a former insurance
    commissioner who also has worked in many States around the
    country on regulatory oversight.
        We are working very, very closely with my former colleagues
    at the National Association of Insurance Commissioners because
    this has got to be, frankly, a State-led, on-the-ground
    program. They are the ones who have this ability and
    information.
        I think there is a very robust discussion. They are in the
    midst of identifying the terminology and definition for the
    medical loss ratio. We are looking at some laws that are in
    place and work very well and what the actuaries can actually
    take a look at. So it is something we are going to take very
    seriously.
        In terms of the rate review, the original Senate bill had a
    provision that Senator Feinstein was promulgating of a rate
    authority that would actually be the interim strategy between
    the time the bill passed this year and the time that the new
    exchanges were in place. That rate authority was not part of
    the reconciliation measure and I think would set up a framework
    where, absent State review authority, there would be a fallback
    review authority.
        So I think that debate is likely to go on and may be an
    important piece of this puzzle, because, right now, unless a
    State changes the laws and takes on this responsibility, there
    really is not fallback, other than highlighting what rating is
    under way. But there is no rating authority right now with the
    Department of Health and Human Services, and we are encouraging
    States to do just that.
        Ms. DeLauro. I am really pleased to hear that.
        As you know, I come from the State of Connecticut. We
    probably are the insurance capital of the country. Over and
    over again, as my other colleagues have experienced, the
    insurance companies, we have lived in their world a very long
    time. It is now time for them to live in our world.
        Thank you, Mr. Chairman.
        Mr. Obey. Mr. Moran.

                               PREVENTION ISSUES

        Mr. Moran. Thank you very much, Mr. Chairman.
        Let me join the chorus of gratitude for your leadership,
    Madam Secretary. But it does seem as though you are paddling
    upstream against the current. When you look at your budget,
    about 85 percent of it is really not under your control. It is
    reimbursement after people have gotten sick, and it is to the
    elderly. Medicare and most of Medicaid is still nursing home
    care for seniors.
        But something dramatic is happening in the health care of
    this current generation of young people that bodes ill for the
    future costs of care. Asthma rates have tripled in this past
    generation. One in every six American children now has a
    developmental disorder--attention deficit disorder, mental
    retardation, dyslexia. One in every 59 boys is diagnosed with
    autism today. After accidents, cancer is the leading cause of
    death among children. Primary brain cancer has gone up about 50
    percent. Childhood obesity has quadrupled in the last 10 years.
    Diabetes is out of control, about 25 million people now. In
    fact, they now say one in two minority children will develop
    diabetes during their lifetime. That is unbelievable.
        So it would seem that somehow we have got to get a handle
    on prevention. What is causing all this? Because it really is a
    dramatic change in the last generation. The First Lady's
    emphasis upon obesity, upon what people eat, is critically
    important. I would like to know how you are integrating that in
    terms of your program priorities.
        It also may have something to do with the chemicals in the
    air we breathe or the water we drink or the food we eat. In
    fact, there was an analysis of umbilical cord blood in 2007 and
    2008 that showed that the average infant had 232 industrial
    compounds present in the umbilical cord blood. So many people
    think there may be an endocrine-disrupting effect on health
    care that is contributing to this massive increase in certain
    diseases.
        I ask you because you have responsibility for the National
    Institute of Environmental Health Sciences. I know they have
    some indication this may be what is behind these massive
    changes in childhood illnesses. I am wondering if you have any
    plans to enable them to take a more robust, aggressive approach
    in terms of the environment's effect as well as what you are
    doing in coordinating with the First Lady's initiative on
    obesity.
        Secretary Sebelius. Thank you, Congressman.
        The statistics you recite are alarming and, unfortunately,
    very real and ones that we have to take incredibly seriously.
    The shorthand is that we spend more, live sicker, and die
    younger than most developed countries; and there is something
    fundamentally wrong with that picture.
        The First Lady's initiative, as you know, is not only
    focused on what you eat. That is a piece of the puzzle. But I
    think it is a strategy that really looks across the areas and
    understands that the health of kids is impacted by what they
    eat in and outside their houses, what goes on in school, how
    much exercise they get, whether there is a safe place to play
    and walk, a whole host of strategies that I think provide a
    template for the kind of thing that you are talking about.
        I don't think there is any question that, first, reporting
    is better in this generation. Some of what you are talking
    about is probably highlighted by better monitoring, better
    reporting. But that doesn't nearly compensate for the
    incredible increases. Some of it is preventable in terms of
    what we are doing to ourselves, and some of it is likely to
    have environmental impact.
        My Assistant Secretary for Health, Dr. Koh, has reengaged
    our Department in a very robust fashion in working with the
    Environmental Protection Agency and others in looking at the
    health impact of environmental issues. HHS had kind of
    withdrawn from that space for a while, and we are very much
    back at the table. So whether it is looking at carbon content
    or water-based diseases or air quality, which has a huge impact
    on asthma, there are huge health impacts from environmental
    issues. And I would suggest also that the Food and Drug
    Administration is taking very seriously a whole host of
    investigations in terms of chemical content, which may well
    impact people not in terms what they are eating, but the kind
    of cans, the bottling, a whole host of other areas.
        So this is all something that I think we are reengaging in
    a very active way and share your alarm and what the current
    health profile is for this country.
        Mr. Moran. Thank you, Madam Secretary.
        Mr. Obey. Madam Secretary, I have a number of questions
    that I would like you to answer for the record, one on health
    professions workforce, another on pandemic flu, a third on
    LIHEAP, one on health-care associated infections, oral health,
    health information technology, and several others.

                               HEALTH CARE REFORM

        Mr. Obey. But let me ask a couple of questions about the
    bill that we just passed.
        Mr. Tiahrt and I are friends, but we often disagree. We are
    not disagreeable friends, but we are disagreeing friends very
    often. But in light of his characterization of the health care
    bill as a government takeover, let me ask a few questions. Is
    the VA a government agency?
        Secretary Sebelius. Yes, sir.
        Mr. Obey. Is Medicare a government program?
        Secretary Sebelius. Yes, sir.
        Mr. Obey. Is Medicaid a government program?
        Secretary Sebelius. Yes.
        Mr. Obey. I thought so, too. Is this health care bill like
    Canada or Britain, or is it more based on a private-sector
    system?
        Secretary Sebelius. The system is based on building out a
    private-sector strategy with new health exchanges.
        Mr. Obey. Will the doctors under the system work for the
    government?
        Secretary Sebelius. Not unless they do right now. Some do
    for the VA, as you know, and for the Department of Defense.
    But, no.
        Mr. Obey. What about the nurses? Are we adding millions of
    nurses to the Federal payroll?
        Secretary Sebelius. No, sir.
        Mr. Obey. What are these things called insurance companies?
    Are they public entities or are they private?
        Secretary Sebelius. Private-sector companies.
        Mr. Obey. Are they usually profit-making private entities?
        Secretary Sebelius. From everything I can tell, yes, sir.
        Mr. Obey. I thought so, too.
        What does the health reform bill do for the fiscal solvency
    of the Medicare program?
        Secretary Sebelius. Well, the estimate that was made when
    the reconciliation bill was proposed was that it added a
    minimum of 10 years to the life of the Medicare trust fund.
        Mr. Obey. What does it do to change the payment system from
    one based on frequency of procedures to one based on quality of
    medical outcomes?
        Secretary Sebelius. Congressman, it sets a direction for
    Medicare to become, I would say, a quality-based purchaser as
    opposed to the current strategy of fee-for-service, which is
    more about content than about quality.
        Mr. Obey. I agree with all of that.
        Let me just tell you a story, because we have had such
    controversy and such points of disagreement about the details
    of this plan.
        Between 1930 and 1938, a fellow by the name of Gerry
    Boileau represented my congressional district. He was the last
    of the LaFollette Progressive Republicans. When Fiorello
    LaGuardia became mayor of New York, he succeeded LaGuardia as
    the spokesman for the Progressive Republicans in the House; and
    then he was beaten in 1938.
        My dad ran a supper club when I was much younger. Gerry
    came home and became a local judge. He came into our place one
    evening, and we started talking, and I finally asked him,
    Gerry, what beat you in 1938?
        He said, senior citizens. He said, I was strongly for
    Social Security and in my district the seniors were against it.
        I said, what on Earth are you talking about? How can
    seniors possibly be against Social Security? Not the seniors I
    know today.
        He said, in those days, it was different. He said, in those
    days, we had Social Security as one alternative, which is a
    contributory program. And then we had the Townsend plan, old
    Doc Townsend from California, who didn't want a contributory
    plan. He just wanted, I think, a hundred-dollar-a-month welfare
    payment to every senior. And he said, we all knew that couldn't
    survive very long because the country doesn't like welfare. So
    he said, I strongly supported Social Security. And old Doc
    Townsend came into my district and helped organize Townsend
    clubs; and he said, they beat me.
        The point of the story is this: We look today, shortly
    after the health reform bill is passed, and we see all of these
    little fights that we had--regional, ideological,
    philosophical--but I think 20 or 25 years from now we are going
    to look back at the bill and say, what on Earth was that fight
    all about? How on Earth could we ever have functioned without
    this program? I think all of these little fights that were so
    important to people as we were going through them, none of them
    are going to be remembered. What will be remembered is that we
    finally put this country in the rank of civilized societies
    that do not require people with very little money to beg in
    order to get health care. That, to me, is basically the lesson
    of Gerry Boileau's story.
        I mean, I lost a whole lot more fights than I won on the
    health reform bill. I favored public option. I have no
    objection to single payer. I, frankly, didn't care as long as
    we got two things, as long as we covered as many people as
    possible and as long as we changed the rules of the game so
    that little people weren't squeezed by corporate giants called
    insurance companies. That is basically all I wanted. Everything
    else is candy.
        I just want to thank you for the work that you did on this
    package and to thank everybody who voted for it and to thank
    those who opposed it and raised constructive questions along
    the way. Because, to me, regardless of all these little debates
    that we had, the obligation that all of us have now is to
    simply try to make it work and to think through whether there
    have to be adjustments down the line, make certain we have got
    plenty of oversight, and especially make certain we have got a
    huge expansion of our efforts to go after waste, fraud, and
    abuse. Because you have got lots of jerks in this society who
    will try to take advantage of this and rip off the taxpayer and
    rip off customers. If we believe in expanding these services,
    we just can't let that nonsense happen.
        Secretary Sebelius. Well, I appreciate that, Mr. Chairman.
        I spent Easter weekend with my father, who turned 89 on the
    22nd of March. He served in the United States Congress on the
    Energy and Commerce Committee 45 years ago when Medicare was
    passed. He told me a number of stories about how ferocious that
    battle was, how ferociously a number of people opposed
    Medicare's passage, and how differently it looked then than it
    does now, where he is now a pleased beneficiary, and reminded
    me that over 45 years there have been changes, there have been
    a number of improvements, but the basic tenet that, once you
    turn 65 in this country, that you have health security, was a
    promise made then and a promise that we intend to keep now. It
    was interesting having his historic perspective on the
    beginning of this new chapter in American health security.
        Mr. Obey. Thank you. I am going to have to go over to the
    House for action on a bill that is going to be pending shortly.
    And so if I have to leave before the hearing is done, it is
    nothing you said. I just have to get over there.
        Secretary Sebelius. I am pleased to hear that.
        Mr. Obey. I will ask Ms. DeLauro to take over if we are not
    done. Meanwhile, I would like to run a second round for about 3
    minutes apiece.
        Mr. Tiahrt.

                       UNFUNDED PROGRAMS IN HEALTH REFORM

        Mr. Tiahrt. Thank you, Mr. Chairman. I want to remind you
    the hearing isn't done, so maybe there will be something come
    up that won't make you want to leave early.
        One of the things that concerns me greatly is about the
    cost of this. Because, quite frankly, we have overspent this
    year by more than $800 billion this fiscal year. We know that
    there are at least 80 programs that are in the bill that
    require discretionary appropriations, and we have about $110
    billion for these 80 programs. There are also 36 programs, at
    least--three dozen programs--that are open-ended.
        I have asked the Congressional Budget Office to give us
    some estimate as to what they are going to cost. They don't
    sound like very cheap programs. Of the 36, community health
    insurance option, design and implementation of regional systems
    for emergency care, trauma care centers and service
    availability, oral health care prevention activity, programs
    relating to congenital hart disease, multi-State qualified
    health plans, community-based collaborative care networks, to
    name a few.
        So, in addition, it is my understanding the CBO has
    estimated that CMS and the IRS will need an additional $20
    billion in order to set up the systems just to implement
    ObamaCare. So has your Department developed a cost estimate for
    all these new programs that are not in the President's budget,
    and when will you be sending an addendum to the President's
    budget for next year to cover these costs, and where will the
    money come from?
        Secretary Sebelius. Well, Congressman, you have our 2011
    budget presentations; and there is not an intent to send an
    addendum to the budget.
        Mr. Tiahrt. How will you cover the cost of these programs
    that are not in the budget? It says in the law such sums as
    required. Where are such sums going to come from?
        Secretary Sebelius. Well, my understanding is, the way that
    process works, if there isn't authorization in the bill itself,
    this will be a discussion that you and your colleagues will
    have here in Congress.
        Mr. Tiahrt. So we are going to have to come up for the
    funding for these programs?
        Secretary Sebelius. If the priorities are to move ahead on
    those programs, I assume they will be funded. But you have our
    2011 budget submission before you.
        Mr. Tiahrt. So the 302(a) allocation that we have and the
    302(b) allocation for your Department right now doesn't have a
    request from the President for such sums as required on these
    36 programs.
        Secretary Sebelius. That is correct.
        Mr. Tiahrt. So, Mr. Chairman, where are we going to get the
    money for these programs that we don't have any budget for and
    we won't have any allocation for?
        I guess he is involved in another conversation.
        My concern is that we don't have the funding for this and
    we have no idea how much it is going to cost and, again, we
    don't know where the money is coming from. China is not lending
    us money on long-term Treasury bills now. The Fed has loaned
    money to the United States. They already owe us--or we owe them
    $5.5 trillion as taxpayers. Where is the money going to come
    from?
        Secretary Sebelius. Congressman, again, I think that the
    programs are likely not to exist unless they are funded by
    Congress. That is not currently part of the authorized bill. I
    think the very good news for the American public is that,
    unlike the last major health initiative move forward, the
    prescription drug benefit, this bill is paid for. It is paid
    for over time. In fact, the Congressional Budget Office has
    estimated an $100 billion decrease in the deficit in the first
    10 years and closer to a trillion dollars decrease over the
    next 10 years. This is fully paid for over the life of the
    program.
        Mr. Tiahrt. You can't count Medicare dollars twice. We are
    taking money out of Medicare and adding them to the program
    that you are going to administer. Where is the money for the
    $500 billion for Medicare? There are a lot of programs, Mr.
    Chairman, that don't have funding. They are not in the
    President's budget. We won't get the allocation for them. I am
    just wondering how we are going to fund them.
        Mr. Obey. First of all, the gentleman's time has expired.
        But let me simply answer the gentleman's question by saying
    there is a big difference between programs that are authorized
    and programs that are mandatory. These are not mandatory
    programs, to my understanding.
        Mr. Tiahrt. Are we not going to fund the community health
    insurance option, the oral health care prevention activities?
        Mr. Obey. Given the fact that we have a good $17 billion
    hole in the budget on Pell Grants, I have no idea what we are
    going to be funding on anything.
        Mr. Tiahrt. Thank you, Mr. Chairman.
        Mr. Obey. I don't think anybody else does, either.
        Who is next? Ms. Roybal-Allard.

                               UNDERAGE DRINKING

        Ms. Roybal-Allard. Secretary Sebelius, Congresswoman
    DeLauro and I have been working together for over 10 years to
    reduce the dangerous incidence of underage drinking in this
    country, and we were very pleased that your administration
    recommended an increase to the STOP grants this year to enable
    more communities to address the critical problem. We have
    heard, however, that the HHS is looking to further expand its
    efforts in underage drinking prevention.
        The questions that I have are, first of all, CDC and NIH
    are recognized leaders in developing evidence-based strategies
    on underage drinking. So what are you doing to ensure that the
    rest of HHS uses their guidance and guidelines in implementing
    programs directed at preventing and reducing underage drinking?
    How will you ensure that the State public health agencies with
    their own rich experience in tobacco control and other public
    health insurance are fully engaged in collaboration with State
    substance abuse agencies? And what will be the roles and
    resources available to the various HHS agencies to ensure that
    all of this happens?
        Secretary Sebelius. Congresswoman, as you say, we do have a
    recommended budget increase for the STOP Act. I think that is a
    step of directing more resources.
        We also have a talented new leader in the agency as my
    Assistant Secretary of Substance Abuse and Mental Health
    Services, Pam Hyde, who not only has run State systems but has
    worked in the private sector and run medical systems and is
    very tuned into this issue and is very much at the table
    looking at collaborative strategies.
        So we have the Substance Abuse and Mental Health Services
    Administration at the table. We have our scientific-based
    evidence from CDC and the strategies that work on the ground,
    and we are working in collaboration with State and local
    partners to make sure what we know is effective actually is
    drilled down. So this is an effort.
        One of the things that the President made clear to all of
    his Cabinet officers is that he wants us to leverage our assets
    not only across departments but within our own agencies. So we
    have a number of cross-agency collaborations, and this is one
    of them.

                        SECTION 317 VACCINATION PROGRAM

        Ms. Roybal-Allard. That is great to hear.
        In fact, you mentioned in an earlier statement, the 317
    vaccination program. This program historically has been used
    for vaccinating children. However, each year, hundreds of
    thousands of American adults are hospitalized and tens of
    thousands die from diseases that could have been prevented
    through vaccination.
        It is estimated that the cost of the health burden to
    society from vaccination-preventable diseases is approximately
    $10 billion annually. How will HHS use existing funding streams
    to address the issue of increasing adolescent and adult
    vaccinations, and has the Department considered developing an
    adult immunization strategy? And, in particular, what could be
    done to increase vaccination rates among health care workers?
        Mr. Obey. If we could have a fairly short response, please.
        Secretary Sebelius. We are working on this. I was just at
    the 44th annual vaccination week-long conference. We learned a
    lot of lessons from H1N1 that we intend to apply across the
    board, and one of them is how to deal more effectively with not
    only minority communities but with health care workers.
        Ms. Roybal-Allard. Hopefully, we can follow up on this.
        Mr. Obey. Mr. Cole.
        Mr. Cole. Thank you, Mr. Chairman.
        I was listening to that wonderful story about Gerry
    Boileau. And I must say, the moral I drew was that progressive
    Republicans always get beat by liberal Democrats that say they
    love them. So it is kind of a warning story there for me.
        On a more serious note, I share Mr. Tiarht's----
        Mr. Obey. But he got beat by another Republican.

                            PROJECTED COVERAGE RATES

        Mr. Cole [continuing]. I share Mr. Tiahrt's concern about
    some of the financial bases of the bill, the one he
    particularly highlighted about the transfer of Medicare funds
    out for, really, a new entitlement program at a point when we
    have a baby-boom generation hitting Medicare age. I just don't
    think it is going to hold.
        Let me ask you about another part of it that concerns me
    greatly, Madam Secretary. Right now we assume that there is--
    and I think you said the majority of people moving into the
    system would be insured by private insurance. I am not 100
    percent sure that is accurate, because the numbers I saw
    suggested about half were going to be, actually, Medicaid
    patients. So, at best, it is pretty close as to whether they
    are going to be purchasing insurance.
        And, as I understand the bill, frankly, those younger
    people are going to have an option--well, it is, quote,
    ``mandatory.'' They can pay a penalty as opposed to just buy
    insurance. The penalty that I have seen is cheaper than the
    insurance. And I would suggest a lot of them are going to do
    what most people in their 20s and early 30s do, and that is
    take the cheaper road out. Whether that is wise or not is
    debatable, but I think that is true.
        So how confident are you that the new people showing up to
    be insured, given the fact that many of them are Medicaid and
    given the fact that many of them have a way out when they are
    young and healthy, are actually going to provide the revenue
    stream that the bill envisions?
        Secretary Sebelius. Well, Congressman, the experience in
    Massachusetts, which is one that we looked to--and there are
    other States who have--Wisconsin, again, has a pretty near-
    universal insurance avenue. But in Massachusetts, a fairly
    similar structure--an individual mandate with a relatively low
    penalty for failing to buy insurance, plus a hardship waiver--
    has produced 97, 98 percent insurance coverage.
        The experience that they have found is that people really
    wanted insurance; they just felt that there were too many
    financial barriers or health barriers, frankly, to get into the
    marketplace.
        So, at least in the instance that that fairly similar
    structure has been tried, there actually was a very robust
    take-up in spite of some skeptics who thought that people would
    opt out if they were younger and healthier.

                           PHYSICIAN-OWNED HOSPITALS

        Mr. Cole. Let me ask you--my time is about to run out, and
    it is a totally unrelated question. But one of the provisions
    of the bill that really concerned me, the treatment of
    physician-owned hospitals--and I realize there is a
    philosophical divergence in Congress over that particular
    issue. In my State, they are some of the highest-performing
    hospitals that we have. By every rating they provide excellent
    care, and we have been very pleased with them.
        What is the general attitude of the administration toward
    physician-owned hospitals, looking forward?
        Secretary Sebelius. I can honestly tell you I haven't ever
    been involved in a, sort of, philosophical discussion. There
    isn't any directional discussion. I think it has more come from
    Congress, frankly, and the alarm in certain areas of the
    country of the proliferation to what some have seen as the
    disadvantage of community hospitals trying to run emergency
    rooms and contributing to graduate medical education and then
    being cherry-picked by provider-based hospitals.
        But I don't think the Department, itself, has a directional
    strategy. It really is looking at high-quality, cost-effective
    health-care delivery. And, as you say, some are in physician-
    owned hospitals and others are sometimes in community
    hospitals. But that is really our goal.
        Mr. Cole. I would just say in closing on that, just so you
    know, in our State most of the physician-owned hospitals
    operate emergency rooms, they take Medicare patients. So they
    really stack up pretty favorably. And I would just commend you
    to consider that as one of the models, going forward. I am glad
    to hear that there is not an administration position per se.
        Thank you.
        Mr. Obey. Mr. Honda.

                          CHILDREN'S HEALTH TASK FORCE

        Mr. Honda. Thank you, Mr. Chairman.
        The health reform issues are also going to be including our
    concerns of children's health issues. And children probably
    compromise 50 percent of our Medicaid rolls. Will there be any
    thought about establishing a children's health task force?
        And leading up to that, my county of Santa Clara County
    recently has had the third-highest rate of TB in California,
    and it has really grown from almost an elimination of TB in our
    county to being third in the State of California.
        Given that rise and given the work that you are going to be
    required to do, as far as travelling and everything else like
    that, I was just concerned that you had sufficient resources to
    be able to do the kind of travel and create the kind of
    presence that is going to be expected when you are going around
    the country to make the negotiations and be an advocate for
    this program.
        Those two questions, if I could have a quick response.
        Secretary Sebelius. Congressman, I think in terms of the
    travel and presence responsibility, cloning would come in very
    handy in this instance, because I do think there is a lot of
    confusion and concern and also a lot of eagerness about people
    wanting to know about the bill, how it is going to work, how it
    is going to be implemented. And I can assure you, I am going to
    do my best, as are lots of members of our department, to be out
    and about everywhere.
        The Children's Health Insurance Program, which you all
    extended in 2009 prior to the passage of the Affordable Care
    Act, I think is a great focus on making sure that children have
    appropriate intensive care, particularly at the youngest ages.
    And we are undergoing a very aggressive outreach effort in
    conjunction with faith-based and neighborhood groups, with
    health-care providers, with State and local partners, to
    identify and enroll the approximately 5,000,000 children who
    are eligible but currently not enrolled. It continues to be a
    challenge.
        The good news is, even last year in very difficult budget
    times, States and local governments signed up an additional
    2,500,000 American children. We would like to see that continue
    to rise. And I think that, as you know, the SCHIP program
    continues during the life of the Affordable Care Act. And I
    think that is going to focus that kind of attention and
    services on the children's population and one that we take very
    seriously.
        Mr. Obey. Mr. Ryan.

                            FORUM HEALTH BANKRUPTCY

        Mr. Ryan. Thank you, Mr. Chairman.
        Madam Secretary, you know Ohio well. I represent a district
    in Youngstown and Akron. And in the city of Youngstown, we have
    two health-care systems. One of them is Forum Health, which
    employs approximately 4,000 people in the region, and it is now
    trying to emerge from bankruptcy. Youngstown has about a 15 or
    16 percent unemployment rate. The city of Warren has one very
    similar.
        In adding 30,000,000 new people to the system and many in
    Ohio and western PA, I don't think now is a good time to see a
    hospital close down. And I was wondering if there is anything
    in your sights or from the administration that could help
    address this issue.
        Secretary Sebelius. Well, my understanding is we solved one
    of the problems, in terms of a payment stream that will
    continue during the discussion, which I think is important.
    And, again, I think that the framework of having a payment
    system under the individuals who will seek hospital care in the
    future is a big step forward. And hospitals have really
    struggled.
        I also think that there were huge improvements made in the
    bill over the course of the discussion dealing with
    disproportionate share allocation, where originally there was a
    thought that it could disappear entirely, and I think that was
    recalculated appropriately based on the fact that there are
    huge disparities in terms of the patient load that is likely to
    hit various hospitals.
        But I think you are absolutely right that we need a robust
    health-care delivery system. And it is something that we are
    going to be working with local communities, looking at ways we
    can provide resources in this kind of bridge strategy to make
    sure they continue to provide services.
        Mr. Ryan. Well, in the meantime, until 2014 when everyone
    comes in, I mean, hospitals like this could potentially close
    down. And I think in the Department of Agriculture there are
    some loan guarantees. And maybe we can come up with some ways
    to help these hospitals refinance. Because, you know, between
    now and then, a lot could happen, and the other hospital in
    town can't handle the influx that they could potentially
    receive.
        Secretary Sebelius. With the Community Development Block
    Grant money, I think which is in HUD, and some other funding
    streams, I think we have to be more creative about bringing
    other agencies in. HHS really doesn't have either operational
    money or construction money, with regard to hospitals. But I
    think having that dialogue with my Cabinet colleagues is
    something that I am going to pursue, because it has come up in
    a number of areas, and it is a very critical piece of the
    health-care system. I think just like closing a school in a
    small town, you can't close a hospital, or people won't stay in
    the community.
        Mr. Ryan. Right. So I look forward to working with you on
    that, because it is urban development, it is health, it is
    education, it is everything. So I appreciate that.
        Mr. Obey. Ms. DeLauro.

                                  FOOD SAFETY

        Ms. DeLauro. Thank you, Mr. Chairman.
        Madam Secretary, let me just ask a food safety question of
    you. The volume of FDA-regulated imports has increased
    substantially over the past decade. The statistics say that FDA
    recorded 8,200,000 imported food lines in 2007; fewer than
    2,800,000 entry lines a decade earlier.
        You have just over 1 percent of these lines that were
    physically examined and/or tested. It is often reported that,
    even with increased funding that the Congress has provided to
    the agency in these past 3 fiscal years, the FDA will still
    inspect less than 2 percent of import lines in 2011.
        This is mainly because the FDA relies on a very weak border
    inspection system. I also might add that there are indications
    that there potentially will be more inspectors but we could
    have fewer inspections.
        Again, can you tell us how do you think the FDA can improve
    in this area? There is the FDA food safety bill pending before
    the Congress in the Senate. How can that help to change this
    equation? And how do we deal with improving the inspection
    ratios in the next 5 years?
        Secretary Sebelius. Well, Congresswoman, first of all,
    thank you for your long-time leadership and expertise and
    interest in this area. And it is one that has changed
    dramatically over time. We no longer have an American-based
    food system, and I think that the regulatory framework is 20th-
    century at best and the system is global and increasingly
    global. Half our fruits and vegetables come from outside our
    borders; about two-thirds of the seafood comes from outside our
    borders, just to name a couple of products.
        No question that the new framework passed by the House and
    pending in the Senate is a huge step forward and has a lot of
    the expertise of this committee's stamp on it--not this
    committee, but your expertise as part of moving that ahead.
        I do think that part of the strategy also is the FDA
    establishing a much more robust footprint in other parts of the
    world. So there are now four new offices in China, there are
    offices in Mexico, there are offices elsewhere, to not wait
    until products actually come across the borders, but look at
    the origins of those products.
        Secondly, I think it is critical that we have a much more
    robust and a different relationship with the private sector.
    The food industry often takes the hit. At a time of a recall,
    they have enormous financial risk, but have been, I think, not
    as engaged and involved in self-reporting, identification,
    quick recalls. The FDA needs some additional subpoena power and
    automated recall power, but also engagement of the industry at
    a much earlier stage, which, again, is part of the framework
    moving forward.
        Ms. DeLauro. Mr. Chairman, just one final comment.
        I just would say this to you, Madam Secretary. For years
    and years and years, the whole issue has been that trade in
    this area of food safety has trumped public health. I will be
    vigilant--I am hopeful, but vigilant that that will continue
    not to occur, that trade will get in the way of what we can do
    with regard to the public health as it regards food safety.
    Thank you.
        Thank you, Mr. Chairman.
        Mr. Obey. Thank you.
        Madam Secretary, thank you for being here. We kept you a
    few minutes over, but not much. Good luck to you.
        Secretary Sebelius. I appreciate it. Thank you so much.

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                                             Wednesday, April 28, 2010.

             FY 2011 BUDGET OVERVIEW: NATIONAL INSTITUTES OF HEALTH

                                   WITNESSES

    FRANCIS S. COLLINS, M.D., PH.D., DIRECTOR, NATIONAL INSTITUTES OF
        HEALTH
    ANTHONY S. FAUCI, M.D., DIRECTOR, NATIONAL INSTITUTE OF ALLERGY AND
        INFECTIOUS DISEASES
    THOMAS R. INSEL, M.D., DIRECTOR, NATIONAL INSTITUTE OF MENTAL HEALTH
    GRIFFIN P. RODGERS, M.D., DIRECTOR, NATIONAL INSTITUTE OF DIABETES AND
        DIGESTIVE AND KIDNEY DISEASES

                        Chairman Obey Opening Statement

        Mr. Obey. Good morning, everybody.
        Today we will hear from a variety of witnesses on the
    President's request for the National Institutes of Health. We
    will have as a principal witness Dr. Francis Collins, who has
    been here many times in his former role as the Director of the
    National Human Genome Research Institute at the National
    Institutes of Health (NIH). This is his first appearance before
    the Subcommittee in his new capacity as the Director of NIH.
        Accompanying Dr. Collins is Dr. Tony Fauci, Director of the
    National Institute of Allergy and Infectious Diseases; Dr. Tom
    Insel, Director of the National Institute of Mental Health; and
    Dr. Griffin Rodgers, Director of the National Institute of
    Diabetes and Digestive and Kidney Diseases.
        I think it is fair to say that supporting the work of NIH
    has been a priority of this Subcommittee, certainly for as long
    as I have been in the Congress, and I am pleased that the
    President has, in the context of a tight budget situation,
    still provided a request for a $1,000,000,000 increase proposed
    for NIH overall.
        Depending upon how you measure it, NIH has either had a
    meaningful increase in spending over the past 30 years or it
    has had a spectacular increase in funding. NIH was spending
    $1,800,000,000 when I joined the Subcommittee in 1973. The
    current fiscal year budget provided NIH with $31,000,000,000,
    so that is 16 times what it was spending when I joined the
    Committee, which sounds awfully big except that it is not
    adjusted for inflation. When you adjust it for inflation, we
    have not quite doubled in real dollar terms funding for NIH
    over that period.
        We have had, I think it is fair to say, a mixed bag with
    respect to success against various diseases. With some,
    childhood leukemia, we have had significant gains. We certainly
    have had gains in holding at bay, somewhat, AIDS in comparison
    to what we feared when the Subcommittee first started talking
    about it. And yet there are other areas where very little
    progress has been made; example, pancreatic cancer, esophageal
    cancer, and a variety of other maladies.
        So today we want to hear from these witnesses about not
    only what they intend to do with their money, but what their
    observations are in terms of how we can develop a better track
    record in the future in attacking diseases that have not been
    the subject of much progress over the past two decades.
        And I have to say one thing before I ask Mr. Tiahrt for his
    comments. I have always been rather disappointed that, in my
    many conversations with people in the medical field, with
    providers in the field, that the discussion, when it turns to
    health care, so often is focused simply on issues such as
    reimbursement rates, what are hospitals going to get by way of
    compensation, what are doctors going to get paid.
        And that is all very legitimate, but I have personally been
    struck by the lack of comment or curiosity or, for that matter,
    the lack of visible political support for added medical
    research which, after all, lays the foundation for the product
    that the practitioners in the health care area have to offer
    their patients and their customers.
        So I think while there are many activists who have, for
    years, been pushing for additional funding for National
    Institutes of Health, I think in some ways I have been
    disappointed by the lack of aggressive activism on the part of
    so many professionals in the field. And I am not quite sure
    what to do about that, but I know since Dr. Collins is a very
    smart fellow, he will have an answer to that and everything
    else.
        The other thing I want to say, Doctor, I want to express my
    personal appreciation for the fact I think you have, by your
    public statements, made it quite clear that one does not have
    to believe--I am saying it backwards. You have made it quite
    clear that there is not necessarily any inconsistency between
    pursuit of science and the belief in religion. To me, I have
    never understood why people think that the two are at
    loggerheads; that has never been my conclusion either
    intellectually or emotionally. So I appreciate the role that
    you have played in driving that point home as well.
        With that, let me simply turn to Mr. Tiahrt to see what
    comments he might have.
        Mr. Tiahrt. Thank you, Mr. Chairman. It is always a
    mystery, what I am going to say, is it not?
        I am very pleased to see you gentlemen here today. Thank
    you for coming; appreciate your time. Dr. Collins, I am
    enjoying the Language of Life. The first chapter caught my
    attention when you say we are not in Kansas anymore. Being from
    Kansas, you do not know how many times I have thought that here
    in the District of Columbia.
        I think you do present genetics at a level that can be
    understood, and I think that is very important for our culture
    today. But certainly DNA research is proceeding at a very fast
    pace, and one of the concerns that I have is what we call the
    valley of death, the gap between our basic research and
    clinical development.
        We seem to have this void in the middle where we cannot get
    it into action sometimes, and you are coming across very
    critical research, and we want to find mechanisms to get it
    into the clinic and get it into applying; I guess because I
    feel like basic research will not do us any good unless we get
    it in a practical application for those of us out here. And
    that is why we make the investment, so that we can get it into
    the clinics and into the cures.
        I am pleased to see that there are initiatives that are
    relatively new in your budget request, particularly the
    Therapeutics for Rare and Neglected Diseases, or TRND. I think
    that is exactly the type of effort we need to focus NIH's
    resources so that we can get across this valley of death and
    start funding cures.
        So I look forward to your testimony and I have some
    questions once we get through it.
        Thank you, Mr. Chairman.
        Mr. Obey. Mr. Lewis.
        Mr. Lewis. Thank you very much, Mr. Chairman. I will wait
    to ask questions after we have heard from the witnesses. I
    appreciate being recognized.
        Mr. Obey. All right. Dr. Collins, please proceed. Take as
    much time as you want, within reason. [Laughter.]

                         Dr. Collins Opening Statement

        Dr. Collins. Well, thank you, and good morning, Mr.
    Chairman and distinguished members of this Subcommittee. It is
    a great honor to appear before you for the first time in my
    role as the Director of the NIH and to present the fiscal year
    2011 budget, but especially to discuss my vision for the future
    of biomedical research.
        I would like for my written testimony to be included in the
    record. I am going to deviate from it quite a bit in my remarks
    this morning.
        So I would like to thank each of you for your steadfast
    support of NIH's mission, which, as you can see--and I am going
    to show a few visuals on these screens--is a dual one: to
    support the discovery of fundamental knowledge about the nature
    and behavior of living systems, but to be sure that we are then
    applying that to extend healthy life and reduce the burdens of
    disability and premature illness and death.
        I want to thank the Committee for the support in fiscal
    year 2010 of $31 billion, as well as the $10.4 billion that was
    provided through the American Recovery and Reinvestment Act.
    And I have been very grateful, over 15 years leading the Human
    Genome Project, for the support of this Committee. As you know,
    that project finished ahead of schedule and under budget, and
    was supported strongly by this Congress and by this Committee
    even at times when there were controversies about it.
        But now, as steward of the entire portfolio of NIH, I
    believe that opportunities to turn discovery into health have
    never been greater. I am honored to have with me this morning
    three distinguished leaders from NIH that the Chairman has
    already introduced, Dr. Rodgers, Dr. Insel, and Dr. Fauci, and
    I am sure they will be happy to also engage you in the
    questions.
        But I also want to introduce you to some other folks today,
    just a few of the millions of Americans who have been helped by
    NIH-funded research. And let us begin with Kate Robbins. So let
    us hear from Kate.
        [Video shown.]
        Kate Robbins. The message I got is make your plans, get
    your life in order, and enjoy the next few months; and I was
    enraged.
        [End of videotape.]
        Dr. Collins. So eight years ago, at the age of 44, this
    non-smoking mother of two was diagnosed with lung cancer and
    given a diagnosis essentially of terminal disease. She had non-
    small cell lung cancer that had already metastasized to her
    brain. And it continued to spread, after surgery, radiation,
    and chemotherapy, to her liver, her pancreas. But she enrolled
    in a clinical trial of a new drug called Iressa, or gefitinib,
    which is a new genome-based drug for cancer. And after Kate
    started the drug, dramatic things happened: most of her
    metastases vanished.
        As you can see in these CT scans of her liver before and
    after Iressa--this is before, six months later, and then today,
    seven and a half years later, those metastases shrank and
    disappeared and have not returned. There is no sign of cancer
    in her liver, her lungs, her pancreas. Her brain metastases are
    small and manageable; and, as you saw in the video, she is
    doing extremely well.
        So why does not Iressa work in all cases? Well, we
    understand that. The response depends on whether or not the
    tumor has a specific mutation in a gene called EGFR. And we now
    understand that, which demonstrates the potential of
    personalized medicine. This drug is a god-send for that subset
    of individuals with those mutations, but it is unlikely to work
    if that mutation is not present.
        We need a lot more stories like Kate's, so NIH-funded
    researchers are now busy with projects like the Cancer Genome
    Atlas, mapping genomic changes in many types of cancer,
    including, Mr. Chairman, pancreatic cancer, which I agree is
    one where we desperately need new solutions.
        Next, I would like you to meet nine-year-old Corey Haas;
    his parents, Nancy and Ethan, shown up here in this photo.
    Corey was born with a disease which has quite a mouthful,
    Leber's congenital amaurosis, and it is a cause of blindness;
    it gradually robs young people of their sight. It is caused by
    mutations in a gene called RPE65.
        Now, by age seven Corey was legally blind; he needed a cane
    to get around, had to use a special computer screen. But that
    all changed in 2008, when Corey enrolled in a gene therapy
    trial at the University of Pennsylvania, which involved
    injecting normal copies of this RPE65 gene into his left eye.
    Researchers shot this video, then, of Corey navigating an
    obstacle course, and let me explain here. I am going to show
    you a video that is in the lower left here.
        Basically, Corey is being asked to walk a maze pattern.
    There are arrows painted in the floor. In this image they have
    covered up his treated eye, so he is only able to navigate
    based upon the untreated eye; and you will see that he is very,
    very limited in his eyesight.
        [Video shown.]
        Unidentified Speaker. You do not see any lines on the floor
    that tell you which direction?
        Corey Haas. No. No, I do not.
        Unidentified Speaker. Do you want a clue?
        Corey Haas. I cannot even see anything.
        Unidentified Speaker. Okay.
        [Video paused.]
        Dr. Collins. Now see what happens when they repeated the
    trial, same day, but now covering up his untreated eye and
    allowing him to use the eye that has received the gene therapy
    to find his way around.
        [Video resumed.]
        Unidentified Speaker. Okay, perfect. All right. And you can
    start whenever you are ready.
        Wow. Wow.
        [Applause.]
        [End of videotape.]
        Dr. Collins. Pretty amazing, though Corey is probably even
    more amazed he can ride a bike now and read the chalkboard like
    any other kid.
        Now finally meet Leslie Cook, a wonderful example of
    prevention-oriented research. Leslie smoked for 25 years, half
    of her life, a habit that put her at increased risk for heart
    attack, cancer, and many other diseases.
        [Video shown.]
        Leslie Cook. I felt as though the drug nicotine was
    actually controlling me, I was not controlling it, and I just
    wanted control over my life again.
        [End of videotape.]
        Dr. Collins. So this high-powered real estate lawyer tried
    to kick the habit many times; she used the gum, the patch. You
    name it, she had tried it. Nothing worked. And then in 2006 she
    enrolled in a phase 2 clinical trial of an anti-nicotine
    vaccine called NicVAX. This vaccine actually stimulates the
    immune system to produce antibodies against nicotine. Those
    antibodies bind to the nicotine and keep it from entering the
    brain, therefore reducing the pleasure associated with smoking.
        NicVAX apparently did the trick for Leslie; she has not
    smoked in three and a half years.
        Now, hopefully her experience will soon be repeated on a
    much larger scale. A clinical trial of NicVAX involving about
    1,000 smokers was recently launched. About $10 million in NIH
    Recovery Act funds are being used to support that effort, which
    is rooted in research-funded at NIH, and it is the first ever
    phase 3 trial of a smoking cessation vaccine.
        So I would like to thank Leslie, Corey, and Kate for
    allowing me to share their stories. I think their experiences
    show that science is not a 100-yard dash, it is a marathon.
    Each of those built upon years of research getting to that
    clinical advance. But thanks to discoveries you have funded
    through NIH appropriations, we have covered a lot of ground in
    this marathon.
        Let me tell you how NIH plans to meet that continuing
    challenge, because there is still a ways to go.
        So one of my first actions upon being named NIH Director
    was to scan the landscape of biomedical research for areas that
    were ripe for major advances that could yield substantial
    benefits downstream, because this is a unique time. While the
    list of specific projects could go on forever, I have
    identified five areas of exceptional opportunity I want to very
    briefly tell you about, and they are in a paper that you have
    at your place published in Science Magazine on January 1st.
        The first of those opportunities is to use the high
    throughput technologies that have recently been invented to
    understand fundamental biology and how disease occurs. This
    includes genomics, nanotechnology, imaging approaches,
    computational biology, and a host of other new technologies
    that are truly powerful to understand the causes and the means
    to treat or prevent cancer, autism, infectious diseases, and a
    long list.
        A second opportunity--and this ties very much into what Mr.
    Tiahrt was asking about--is the effort to take these basic
    science discoveries that are pouring out of research
    laboratories and accelerate the translation of this into new
    and better treatments. This is not an easy process, as the
    picture shows you; there can be a difficult passageway between
    basic research and drugs. We need to build a bridge--by the
    way, that is San Francisco, in case the first picture was not
    so clear--and we are doing that with programs like TRND, which
    stands for Therapeutics for Rare and Neglected Diseases.
        And in the health care reform bill the cures Acceleration
    Network, which is a new provision that would give NIH
    additional flexibility to push this translational agenda even
    more robustly and in a more innovative way. And this includes
    cell therapy as well, the effort to use stem cells for
    therapeutics. If you noticed in this morning's Washington Post,
    we have now approved another set of stem cell lines, bringing
    the total to 64 that are available for use by federally funded
    researchers.
        The third opportunity here, shown by these various banners
    representing programs that NIH has supported particularly to
    try to get information out there about the public health, is to
    put science to work for the benefit of health care. We, after
    all, need evidence to support the transformation of the
    practice of medicine that we all agree is necessary. Some of
    that is comparative effectiveness research, personalized
    medicine, the study and the attempt to solve health
    disparities, the efforts to focus on behavioral medicine; and
    even on health care economics, to understand what are the
    factors that play into better outcomes at lower cost.
        The fourth area, global health. Clearly we have a great
    opportunity now because science has moved forward rapidly in
    uncovering the nature of many pathogens that we previously did
    not understand that affect hundreds of millions of people in
    the developing world. We have the chance to push that agenda
    forward, building upon what NIH has done already in the past
    and focusing now not only on infectious diseases, but also on
    noncommunicable diseases like depression, which also become, in
    the developing world, major public health problems. It is the
    noncommunicable diseases that represent the most rapidly
    growing area of morbidity and mortality.
        And, finally, and fifth, we need to reinvigorate and
    empower our biomedical research community, our most important
    resource. That means we need to focus on innovation, making
    sure that we are giving ideas that are a little wacky and out
    of the box a chance to get supported. We need to be sure that
    we are supporting early-stage investigators, giving them the
    confidence that there is a place for them in our research
    community, even at times when budgets are tight. And we need to
    focus on training the next generation, and particularly
    reaching out to diverse communities that are not adequately
    represented right now in our workforce.
        Those are the five themes that I have focused on. You also
    have at your place a new document that has just come out from
    NIH that talks more about these, and also the many advances
    that have occurred because of NIH research over the last few
    years.
        So, to summarize, if our Nation is bold enough to act today
    upon these unprecedented opportunities in medical research, I
    think we will be amazed at what tomorrow can bring. In the
    world I envision just a few decades from now, the one-size-
    fits-all approach to medicine will be a thing of the past. We
    will use genetic information to personalize our health care. We
    will use stem cells to repair spinal cord injuries;
    bioengineered bones and cartilage to replace worn out joints;
    nanotechnology to deliver therapies with exquisite precision.
    We will preempt heart disease with minimally-invasive image-
    guided procedures and use an artificial pancreas or other new
    technologies to manage diabetes better.
        As for infectious diseases, I look forward to having a
    universal vaccine with the power to protect against both
    seasonal and pandemic flu. I also hope, and that hope is based
    upon progress, for an AIDS vaccine and a malaria vaccine, which
    together would save millions of lives around the globe every
    year.
        And I dream of a day where, in ways yet to be discovered,
    we will be able to prevent Alzheimer's disease, Parkinson's
    disease, and many others that rob us much too soon of family
    and friends.
        Just imagine what that future could mean for our Nation,
    our economy, for all humankind. This is what keeps NIH in the
    research marathon and why we are asking you to go the distance
    with us. The fiscal year 2011 request for NIH from this
    Committee is $32 billion, an increase of $1 billion, or 3.2
    percent above the fiscal year 2010 level. Those funds will
    enable the nationwide biomedical research community to pursue a
    whole number of substantial opportunities for major scientific
    and health advances.
        So thank you, Mr. Chairman and members of the Subcommittee.
    I would be pleased to respond to any questions you may have.
        [Written statement by Francis S. Collins, MD, PhD,
    follows:]

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        Mr. Obey. Thank you.
        Mr. Tiahrt.

                       COMPARATIVE EFFECTIVENESS RESEARCH

        Mr. Tiahrt. Thank you, Mr. Chairman.
        Just reading on personalized medicine in this new
    publication here. I think one of the concerns I have had with
    the comparative effectiveness money that we have invested is
    that the good side of comparative effectiveness is we see what
    works and we communicate it well to physicians and clinics and
    hospitals and treatment centers. The part that concerns me is
    that when we start placing a dollar value on comparative
    effectiveness, that at some point we start making decisions
    based on costs that start rationing some care, rationing some
    treatments.
        And I think, during this health care debate that we have
    had over this past year and a half, that that has been part of
    the topic. Can you kind of give me some confidence that what we
    are doing at NIH now through comparative effectiveness research
    is not going to lead to rationing in the future.
        Dr. Collins. So, Mr. Tiahrt, I understand the concern. I
    think when we look at the kinds of research that NIH has done
    in the past and are planning to do now, the goal really is here
    to identify interventions that may be more effective and others
    that are less so, because evidence has to be valuable in making
    decisions about how we are going to put together a health care
    system that actually works.
        I might even ask my colleague, Dr. Rodgers, to tell you
    briefly about the Diabetes Prevention Program, the DPP, as an
    example of a comparative effectiveness research study that
    taught us something really important about how to prevent
    diabetes and which is now being implemented across the Country
    in a new and exciting way by United Healthcare.
        So, Griff, do you want to say a word about the DPP?
        Dr. Rodgers. Be very happy to.
        The Diabetes Prevention Program was a landmark study that
    was started over 10 years ago involving the NIH, the Centers
    for Disease Control and Prevention (CDC), and multiple
    institutes within the NIH, to identify those patients who are
    at high risk of developing diabetes. In this country, at the
    moment, there are about 24 million Americans who suffer with
    diabetes, but there are 57 million Americans who are at high
    risk of developing diabetes based upon family history, racial
    and ethnic groups, the fact that they may be overweight or
    obese. And clearly we are understanding now that a lot of this
    has to do with the susceptibility genes for diabetes.
        This intervention, which was a comparative effectiveness
    study, involved patients being treated with just general
    instructions, a so-called placebo group; a second group with a
    standard therapy for diabetes, Metformin; and a third group
    with an intensive lifestyle modification. In these over 3,000
    patients that were studied, there was about a 58 percent
    reduction in the risk of patients who are at high risk for
    developing diabetes who underwent this intensive lifestyle
    modification over the period of time.
        That study was published in 2002, but just last year a
    follow-up study to that DPP, called the Outcome Study, was
    published which shows that there is an ongoing effect, even as
    long as 10 years. Patients who were randomized in this
    intensive lifestyle still maintain the ability to prevent or
    delay the onset of diabetes.
        Now, in a clinical research study, of course, we required
    one-on-one counseling with these individuals, but it was clear
    that in order for this to be effective, we had to figure out a
    way to make it more reasonable and cost-effective. So we turned
    to the YMCA to do a translational study to determine whether--
    because, of course, YMCAs exist in all communities. We have
    estimated that most individuals in the U.S. live within a five-
    mile radius of the YMCA, and we wondered whether, rather than
    doing this on a one-on-one basis, if we do it in a group basis,
    whether we can cut the cost. In fact, we did. The cost for
    implementing this intensive lifestyle was reduced from the
    thousands down to $300 with the same effect.
        Mr. Tiahrt. Is that the dues at the YMCA?
        Dr. Rodgers. I am sorry? Yes. That is right. I have to say
    that this study was so effective, our colleagues at CDC got
    involved, expanded beyond the Indiana center that we initially
    funded, and just two weeks ago United Healthcare have, for the
    first time, decided to provide coverage for the use of this
    intervention at Ys and similar places to all of its members.
    Initially in six cities around the Country, but in fiscal year
    2011 they plan to roll this out nationwide.
        Mr. Tiahrt. That is good, because diabetes is one of the
    leading causes for many things--amputation, blindness, heart
    disease.
        Dr. Rodgers. Absolutely.

                         ADULT AND EMBRYONIC STEM CELLS

        Mr. Tiahrt. One last question here, because my time is
    short. There are basically two kinds of stem cells--there is
    the adult and the embryonic--and you have come up with a third
    from skin cells that you can engineer. Can you tell me what the
    results have been as far as research? Which category has
    yielded the most results as far as getting cures available for
    people?
        Dr. Collins. Well, we are very interested in the research
    on stem cells and, of course, that is a very much discussed
    topic. Adult stem cells, as they are called, have been around
    longer and certainly bone marrow transplants, for instance,
    depend upon the idea that there are stem cells in the bone
    marrow that can expand and repopulate when needed. So we have
    the greatest clinical experience because that kind of study has
    been around for quite a while.
        Human embryonic stem cells have only been around for about
    10 years, and because of the concerns about safety and also
    some limitations in terms of who had the authority to work with
    those cells, we are not yet in a position of really knowing
    what their therapeutic potential might be, although many people
    are quite excited about that potential based on animal studies.
    There is so far only one Food and Drug Administration (FDA)
    approved trial for human embryonic stem cells, and that is for
    spinal cord injury, and it is too soon, by far, to know how
    that is going to turn out.
        The most recent type, as you mentioned, derive from skin
    cells, the so called induced pluripotent stem cells, or iPS
    cells, are even much newer on the scene. Only about three years
    ago Shinya Yamanaka came up with this amazing observation that
    with just four genes you could take a skin cell and convince it
    to be pluripotent.
        The potential here is enormous, because that would mean
    these cells came from the individual, so they could potentially
    be used therapeutically without rejection by the immune system.
    But there are many concerns about safety, because pluripotent
    cells are also capable of growing when you do not want them to,
    and can even cause tumors. So we have to work that safety issue
    out very carefully before even beginning to propose a clinical
    trial. But I think there is a lot of excitement about getting
    there.
        I have just recently initiated an Intramural iPS Cell
    Center at NIH to try to accelerate our study of these cells and
    the way in which they could be used in therapeutics.
        Mr. Tiahrt. Thank you.
        Thank you, Mr. Chairman.
        Mr. Obey. Ms. Lee.

                                  SICKLE CELL

        Ms. Lee. Thank you very much, Mr. Chairman.
        Let me first thank you all for being here again and just
    say how important we all recognize and know that your work is
    at NIH. Following up on the issue that we have discussed, I
    think most of you were here on the A1C diabetes public
    awareness campaign. I wanted to see, Dr. Rodgers, if you had
    any kind of results, feedback from what took place.
        Just a bit of background. We learned--and I learned and we
    brought it to this Committee--and thank you for following up on
    this--that people who have the sickle cell trait, oftentimes
    the A1C test for diabetes gives or could give a false result, a
    false positive, false negative. So we developed a public
    awareness campaign to let physicians, labs, and what have you,
    and community clinics know that there are other tests.
        So I just want to see how that public awareness campaign
    developed, what were the results, and also could you clarify
    the whole issue around sickle cell testing? Is sickle cell
    testing required at birth? I know it is no longer required when
    people apply for a marriage license, for what that is worth. So
    how do we make sure that people are aware that they have the
    trait or, well, the disease or prone or susceptible to the
    disease?
        Dr. Rodgers. Thank you. Let me answer your second question
    first, and that is related to is it required to test for sickle
    cell disease. These are really done on a State-by-State basis,
    and it is my understanding that most States do now test at
    birth for the presence of the sickle cell protein. It can be
    done very easily, using blood samples to detect either sickle
    cell trait or sickle cell disease. When there are problems, the
    infant is called back and confirmatory tests are done. It is my
    understanding that most States currently do testing, but I
    would have to----
        [The information follows:]

                              Sickle Cell Testing

        Sickle cell (SC) disease testing is now universally required.
    Because of the testing used, ``carrier status'' is determined. While
    all states do report our carrier status to the responsible physician,
    where it goes from there (if anywhere) is highly variable, depending
    upon state and physician practice. In reality, it is likely a
    relatively small proportion of parents who are actually informed if
    their child is an SC carrier.

        Ms. Lee. And how are adults reminded of that test result
    when they become adults? How do they know that? How does that
    follow the adult in terms of their medical records?
        Dr. Rodgers. Right. Well, that is something that is
    certainly, with electronic health records and the ability to
    follow that as patients move from doctor to doctor and clinic
    to clinic would be very important. I would have to get
    information on how that is followed comprehensively. I am sort
    of aware of this from a limited number of experiences that I
    have, and I can certainly provide that information to you with
    our sister organization, the National Heart, Lung, and Blood
    Institute.
        [The information follows:]

                              Sickle Cell Results

        There is at present no system in place that ensures the orderly
    transition of health care information for an individual throughout his
    or her lifespan. Individuals diagnosed with sickle cell disease would
    ordinarily be aware of their diagnosis and in late adolescence the
    ongoing care of the child would be transferred from a pediatrician to
    either an internist or adult hematologist.
        The maintenance of information on being a carrier of sickle cell
    disease is a responsibility shared by an individual, his or her family
    members, and the team of health care providers.

        But back to your first question, and that relates to
    hemoglobin A1C. That is a very vital test that shows what the
    average level of blood sugar control is over the preceding
    three months. When we testified several years ago, you raised
    our attention to the fact that many patients are receiving this
    test done in the office and they may have sickle cell trait,
    and that is a confounding variable, and, as a result of that,
    we did develop this public awareness campaign, and in no small
    part due to that most of the tests that are done are now in
    compliance with the understanding that there is interference of
    the sickle cell and other genes that can cause a problem.
        So essentially all of the commercially available testing
    for A1C is done using systems that can--that having an abnormal
    hemoglobin is no longer problematic.
        Ms. Lee. Thank you very much.
        Mr. Chairman, let me just say to the Committee that this
    was very important because so many people I know--family
    members, friends, people in especially communities of color--
    there were a lot of people who had false positives because of
    the fact that they had been tested with the wrong test, and did
    not even know they had the sickle cell trait. So this was a
    very important effort that started in this Committee, and I
    just wanted to thank you all for that.
        And I am glad to hear now that they have changed the
    testing now is clear in what to do and look forward to your
    report back on the sickle cell trait, because I know a lot of
    people who I just talk to and say, look, do you have the sickle
    cell trait, and they say we do not know, and will ask their
    doctor to test them and, lo and behold, they have the trait,
    which, of course, means certain kinds of medical tests would
    not be valid or they need to do certain things in terms of
    their health.
        But unless you follow from birth in the States that do do
    the testing and somehow people know as an adult they have the
    trait, they get in a lot of trouble. So we need to really
    figure out how to make sure that that happens, because most
    people I know, especially most African-Americans, do not ask
    their doctor to test them for the sickle cell trait.
        Thank you.
        Mr. Obey. Mr. Lewis.

                            FISCAL YEAR 2011 FUNDING

        Mr. Lewis. Thank you very much, Mr. Chairman.
        Gentlemen, very much appreciate your presence here today.
    The Chairman has appropriately outlined the pattern of funding
    for NIH over time. There is a piece of that that concerns me.
    You know, beauty lies in the eyes of the genuflector, and with
    NIH funding we had a very significant increase in the 2009
    fiscal year as a result of the stimulus package. I have some
    questions about that, but, most importantly, I am concerned
    that even though the President's budget has a $1,000,000,000
    adjustment, if you take where we were in 2009 and that dollar
    amount, one could argue that there is an $8,000,000,000
    reduction, if real value came from that stimulus funding.
        So I would like to have some commentary regarding that and
    how you have budgeted to try to deal with that adjustment, if
    it remains as a part of our pattern, and very much be
    interested in knowing--maybe Dr. Fauci would like to respond to
    this piece of it.
        There has been consistent adjustment also for Labor, Health
    and Human Services across the board, with a similar big
    adjustment in 2009. If I were looking at those adjustments and
    readjusting budgets, I would make sure that continuing funding
    flowing to NIH would have very high priority in those
    considerations. There is a broadly based nonpartisan support
    for research, applied research as well as the basic research.
    Lots of discussion that is healthy, pushing you to get more in
    the direction of the applied research, but, nonetheless, we
    need to preserve this nonpartisan environment in this Committee
    and otherwise.
        So if you would start with that, Dr. Collins, I would
    appreciate it.
        Dr. Collins. Mr. Lewis, I appreciate the question and I do
    appreciate the strong bipartisan support for medical research
    that has characterized the actions of this Subcommittee for
    many years. The diagram that you see on the screen there shows
    you what the total funding allocated for NIH has been over the
    course of the past decade, and, as you can see, after a period
    of flat funding from 2003 to 2008, with only modest increases,
    then, as shown in red, the Recovery Act dollars, $10.4 billion,
    were given to NIH, but obviously as a two-year enterprise, so
    roughly $5 billion each year.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T8233B.118

        And the budget is here shown for fiscal year 2011, and I
    think you can see the delta there, and, in fact, this is the
    cliff that people are talking about, because effectively in
    fiscal year 2010, if you include the Recovery Act dollars, the
    total funding that NIH has had available is $36 billion. What
    is proposed in the President's budget is $32 billion.
        Now, let me say that given the very difficult economic
    times, the President's support of science and the willingness
    to put forward a $1 billion increase for NIH is reflective of
    the Administration's strong support for research and what it
    can do, and we are deeply grateful for that, because certainly
    it could have been justified, at a time of growing deficits, to
    be even more conservative here in terms of providing support
    for this.
        So the $1 billion is certainly something we are delighted
    to see come forward, although it is a dollar figure which
    basically matches the inflationary index for biomedical
    research, just about 3.2 percent.
        We were aware that this might be an outcome. What we have
    tried to do--although I would not tell you that we are going to
    be completely successful in reducing the consequences of this
    cliff--certainly some of the money funded by Recovery Act has
    been for one-time expenditures, special equipment needs, for
    instance, that universities across this Country have been
    clamoring for years during the flat funding; construction
    grants also to help those universities and institutes build up
    their physical plant or to do some renovations that are badly
    needed.
        We have tried to fund special projects that we thought
    could get done in two years. The Cancer Genome Atlas, which
    went from a pilot phase into a full-bore assault on
    understanding cancer, and which, with that accelerated funding,
    will tell us in two years the basic landscape of cancer for the
    20 most common cancers at the DNA level, a dramatic series of
    advances.
        But we also funded a lot of innovative grants. We invited
    investigators out there to come forward with their best ideas,
    and they came forward in great numbers with exciting,
    innovative stuff. When I arrived at NIH in August, one of my
    first tasks in those first few weeks was to read a lot of these
    grants that came forward asking for support from the Recovery
    Act, and these were really exciting, innovative, many from
    investigators that had not previously come forward to NIH.
        But science is, as I said in my opening statement, not a
    100-yard dash, it is a marathon, and two-year cycles are really
    not the way that advances occur. So we are going to face a
    crunch in fiscal year 2011. We will be, I think, gracious to
    investigators who were funded during the Recovery Act for two
    years and who asked could they please have a no-cost extension
    for a third year. We will probably, with good justification, be
    willing to do that in order to try to smooth this out a bit.
        But there is no question that if you measure what happens
    in terms of success rates, that is, what is the chance that an
    investigator who sends a grant in to NIH is actually going to
    get funded, that is going to be a tough number in fiscal year
    2011. That number used to be, back in the course of the last 30
    years, around 25 to 35 percent. That was the success rate for
    grantees. It has trickled down more recently to 20 percent.
        Our predictions are that in fiscal year 2011, with this
    budget number, it will be more like 15 percent, one grant out
    of every.
        Mr. Lewis. Dr. Collins, your response has taken up my time,
    but----
        Dr. Collins. I am terribly sorry.
        Mr. Lewis [continuing]. In the meantime, I would hope, as
    you see some of those vacuums or difficulties, that you and
    your people, Dr. Fauci, would keep very much in touch with this
    Committee so that we can try to be responsive in ways that will
    accelerate those opportunities.
        Dr. Collins. Will do.
        Mr. Obey. Ms. Roybal-Allard.

                               PANCREATIC CANCER

        Ms. Roybal-Allard. First of all, let me thank you all for
    being here and for the really important work that you do.
    However, I have had some concerns with regards to NIH's lack of
    responsiveness to this Committee on two particular issues.
        As you are aware, pancreatic cancer is the fourth most
    deadly type of cancer, with survival rates that have remained
    largely unchanged for the last 40 years. Yet, despite its
    lethal prognosis, only about 2 percent of the Federal cancer
    research budget continues to be devoted to pancreatic cancer.
    Recognizing the seriousness of pancreatic cancer, this
    Subcommittee requested, in fiscal year 2009, in the
    appropriations report, that the National Cancer Institute give
    a detailed account of what it would do to increase research and
    training on pancreatic cancer.
        When that request was completely ignored, the Subcommittee,
    in fiscal year 2010, again made the request for a plan to
    address pancreatic cancer. The NCI once again ignored the
    request and has no plan, and we are being told now that there
    is going to be a meeting held in the future to address
    pancreatic cancer.
        Since the Subcommittee has always chosen to respect the
    integrity of the scientific community by not directing funds or
    micromanaging NIH's activities, short of doing that, what does
    the Subcommittee have to do to get NIH to respect the requests
    of this Subcommittee and respond to an issue as important as
    pancreatic cancer?
        Dr. Collins. Congresswoman, I was unaware, until this
    moment, of this lack of responsiveness to that specific request
    about pancreatic cancer, and I would promise to give it my
    personal attention. Pancreatic cancer is a particularly lethal
    and very devastating type of cancer about which, as you point
    out, progress has been rather limited.
        We do have some, I think, exciting opportunities on the
    horizon, particularly trying to understand at the detailed
    molecular level what are the first steps that cause pancreatic
    cells to begin to grow into a cancer and what might we do in
    terms of developing early detection methods based upon that,
    because that is obviously much of the problem, is not detecting
    this disease until it is already far advanced; but, most
    importantly, to develop new treatments that are targeted
    towards those specific pathways that seem to drive this cancer.
        Again, the Cancer Genome Atlas will provide that kind of
    information for our 20 most common cancers, and that includes
    pancreatic. But I am distressed that you feel that this
    Committee has not been answered in the requests you have made
    about this, and I will personally look into that. I will tell
    you that in the relatively near future we anticipate that a new
    Director of the National Cancer Institute will be named by the
    President, and I will be certain, if that happens, that this
    concern of yours is conveyed.

                                CLASS B DEALERS

        Ms. Roybal-Allard. I would appreciate that. Thank you.
        One other area of concern has been the use of Class B
    random source cats and dogs for NIH-funded research. We were
    pleased when NIH stopped purchasing dogs from Class B dealers
    for use in intramural research, but remain concerned that the
    practice still continues in some of the extramurally funded NIH
    research. So last year, once again, this Committee, in their
    report, asked NIH to submit a detailed plan for phasing out
    random source cats and dogs and extramurally-funded research.
    Again, NIH has ignored this Subcommittee's request and we have
    seen no plan.
        So my question to you is how much progress has been made
    towards phasing out this practice and has NIH identified all
    current NIH-supported extramural projects using Class B dogs
    and cats? And, if so, how many? Also, does NIH have a plan that
    we have not seen for implementing a phase-out of the use of
    dealers by its grant recipients?
        Dr. Collins. Congresswoman, again, I am sorry that this
    response has not been forthcoming in a timely fashion. I know
    it was due on April 1st. I can tell you that it is very close
    to being finalized; we wanted to be sure that we had answers to
    all of those questions. I can tell you the substance of the
    response will be that, yes, NIH is making a plan to phase out
    the use of Class B dealers for animals.
        It is not possible to do that overnight because the needs
    for animals that currently have been coming from Class B
    dealers for cardiovascular research and transplant research
    would be injured rather badly if we did this in a precipitous
    way. But we will transition over the period of roughly three to
    four years into a circumstance where we no longer depend upon
    Class B dealers for animals, and we arrange to have the
    breeding Class A suppliers fill that need.
        Again, that report should be coming forward to you very
    soon.
        Ms. Roybal-Allard. Thank you. Appreciate that.
        Mr. Obey. Mr. Rehberg.

                      BREAST CANCER MAMMOGRAPHY GUIDELINES

        Mr. Rehberg. Thank you, Mr. Chairman.
        Welcome. I always feel like apologizing to somebody with
    your talent and credentials. And you have entered into the
    political realm of our world, so I guess my questions probably
    will be a little more political from the perspective of the
    comparative effectiveness research that we were talking about
    before.
        While this organization is not necessarily under your
    purview, the U.S. Preventive Services Task Force, they have
    certainly created perhaps a firestorm within the breast cancer
    community, and I would like you to talk a little bit about your
    own concept of personalized medicine as it relates, then, to
    some of the comparative analysis that you are going to be doing
    within your research, because I will just use breast cancer as
    an example.
        This was in the New York Times, an influential group, the
    one I referred to, provides guidance to doctors, insurance
    companies, and policy makers, and they have now made the
    recommendation that mammograms do not need to occur until 50,
    as opposed to 40; and that was wildly hailed as a step forward
    by the National Cancer Institute, National Breast Cancer
    Coalition, Breast Cancer Action, National Women's Health
    Network welcomed the new guidelines, and, of course, the
    insurance companies will take that as, well, I guess we do not
    have to cover that until they are 50. Unfortunately, on the
    other side are the American Cancer Society and the American
    College of Radiology.
        So a fight has been created that will probably rage on for
    quite some time. How are you working or how do you intend to
    keep those kinds of food fights out of NIH? Because it has the
    potential of creating a lot of politics for you in an arena
    that research and science should not have politics.
        This is just one example, and it is the most recent example
    of something that is going to occur as a result of something
    similar to the comparative effectiveness research that is going
    on.
        Dr. Collins. Well, Congressman, I appreciate the question
    and this certainly is an example where those recommendations
    from the USPSTF on mammography created quite a firestorm of
    controversy. Specifically, NIH is not in the business of
    establishing practice guidelines, for the most part, and in
    that instance the National Cancer Institute stayed out of the
    fray, basically. Our role is to provide the kind of data that
    might allow the establishment of guidelines that improve
    outcomes, and that is something that we are very determined to
    do.
        When it comes to the mammography guidelines, I think you
    brought up the issue of personalized medicine. Perhaps the path
    forward here is for us to be more clear about how to utilize
    individualized information to make better predictions, because
    while there may be women who are not going to be benefitted by
    a mammogram in their 40s because they are at very low risk,
    there are others who are at higher risk for whom that is a
    highly appropriate procedure.
        The Task Force recommendations touched on that, but we did
    not have enough data to actually be able to say how do you
    factor that in. That would be one of the things that NIH very
    much wants to work on.

                 FUNDING FOR COMPARATIVE EFFECTIVENESS RESEARCH

        Mr. Rehberg. I feel very comfortable with your credentials.
    You are probably the right person at the helm of NIH at a time
    when we are spending a lot of money on this kind of comparative
    research. But the problem is--or not necessarily a problem--I
    do not want to create a problem--have you created an objective
    conclusion for the various research? You are spending
    $400,000,000 on this kind of research, but if it does not come
    to a conclusion, all it does in this kind of a case is create
    more confusion in the minds of the patient, the poor 41-year-
    old woman who does not know what to do now.
        And again I go back to this is an influential group that is
    now making a recommendation that provides guidance to doctors,
    insurance companies, and policy makers. So are you going to
    have $400,000,000 worth of confusion created at NIH similar to
    this, which is what this has done?
        Dr. Collins. Well, we certainly do not want that outcome,
    Congressman, and, again, the mammography circumstance had data
    that fed into it from a variety of perspectives, much of it not
    supported by NIH.
        If you look at our comparative effectiveness research
    portfolio, what you see are things like the Diabetes Prevention
    Program that Dr. Rodgers described. Now, there is an example
    where we learned by rigorous data analysis that in fact an
    intervention to prevent diabetes--which many people were not
    that convinced was going to work--worked spectacularly, and it
    worked better than the alternatives that are commonly used in
    practice, and that is now----
        Mr. Rehberg. Okay, so you will stay out of this controversy
    and anything else that is controversial?
        Dr. Collins. No. No, not at all. No, I am not trying to say
    that.
        Mr. Rehberg. Well, then what would be your conclusion here?
    Are you going to back the----
        Dr. Collins. My conclusion is that NIH's role is to do
    research that generates rigorous evidence that can guide
    conclusions that are based upon data, and we will do everything
    we can to provide that kind of data to guide those
    organizations outside of us that are going to try to decide
    what is right for the individual as far as their health care.
        Mr. Rehberg. So you are going to pick a fight.
        Dr. Collins. We are going to try to----
        Mr. Rehberg. Because you are going to provide data to both
    sides and then step back and watch them duke it out.
        Dr. Collins. I think we believe that data that is based on
    evidence and reason is a good thing to add to any discussion,
    and we hope to be the providers of that.
        Mr. Rehberg. Thank you, Mr. Chairman.
        Mr. Obey. Ms. McCollum.

                PRIVATE SECTOR INNOVATIONS FROM NIH INVESTMENTS

        Ms. McCollum. Thank you, Mr. Chair.
        I think what I heard clearly you said is that more research
    needed to be done so that people could make a better informed
    decision between doctor and patient, and that is your goal and
    your focus.
        Dr. Collins. Well said.
        Ms. McCollum. Thank you for that.
        Mr. Chairman, members of the Committee, I see NIH as a
    public good. Like highways and clean waters, NIH is a benefit
    to our entire society. Those benefits are widespread, long
    lasting, and not always immediately profitable, where we see
    immediate return. That is why private business does not do and
    cannot often make the investments that NIH makes. So funding
    for the public good is one of the most important functions that
    the Federal Government has, and I think you gave us some
    excellent examples in the three patients that you provided, and
    I know you have hours and thousands, tens of thousands of
    success stories.
        So the investment that this Committee is getting ready to
    make in the NIH are not only critical to the health of our
    citizens, but they also contribute to the growth of our
    economy.
        Dr. Collins, I am going to take a little different track in
    some of the questions I am going to ask you and the panel here
    today. In your testimony, you state that every $1 of NIH
    funding directly results in more than $2 in economic output.
    The indirect and long-term benefits from NIH investments are
    greater, and I would like you to talk a little bit about that
    this morning.
        So could you please tell us how investments in NIH lead to
    private sector innovation, both directly and indirectly? Where
    would the drug industry, the medical device sector, or any of
    the other major aspects of the U.S. health care sector be
    without the basic research that is supported by NIH?
        Thank you.
        Dr. Collins. Thank you for the question. And we do believe
    that by medical research investments at NIH are, besides being
    a wonderful stimulus of advances in health care, also a
    wonderful stimulus of the economy, and the evidence is very
    compelling for that.
        Economists agree that American economic growth since World
    War II, more than half of that has been driven by science and
    technology. And if we are looking for an occasion to try to get
    our economy back on track, this sort of economic investment
    makes a lot of sense.
        You quoted the direct effects of NIH investment, this more
    than twofold multiplier effect in one year. But if you look at
    the indirect effects in terms of our interactions with the
    private sector, if you look, for instance, at the development
    of new drugs, roughly 60 percent of new molecular entities that
    are put forward by pharmaceutical companies for FDA approval
    cite an NIH publication or an NIH patent as being fundamental
    to how that came forward.
        And if you look at the jobs in the biopharmaceutical sector
    that are directly, therefore, related to things that NIH has
    supported, that is 3.2 million jobs at the present time; and
    these are high-quality, high-paying jobs that we do not want to
    see go overseas instead of having them exist here.
        If you look at the way in which investments are being made
    by the pharmaceutical companies in research, again, much of
    that based upon the foundation that NIH provides, that is $56
    billion of research investments done by the private sector
    exceeding what NIH is putting in at a little bit more than half
    of that.
        The whole landscape, then, I think you can see is very much
    triggered by this. Let me give you an example of a company
    called Affymetrix in California, which is the main purveyor now
    of these DNA chips which have become a revolution in research
    and in clinical practice. They are the reasons now that people
    can actually get personalized medicine readouts, as I have done
    myself. This was started on an NIH grant, as a single
    investigator with a great idea; and here we are now with a
    company that has capitalized in the billions.
        I could give you many more examples. But I think your point
    is extremely well taken. People think of NIH--and we are glad
    about that--as the place where new cures for diseases are being
    sought, but it is also a place where our economy is getting one
    of the best kinds of stimulus it could.
        Ms. McCollum. Thank you, Mr. Chair. And I want to thank
    past members of this Committee for all the work they did in the
    genetic research that has led to the gene therapies that are
    out there now. If people were not willing on this Committee to
    invest in science, we would not only not have the cures, but we
    would find other countries getting far ahead of us in this
    technology and job creation field. So thank you, members.
        Mr. Obey. Thank you.
        Mr. Cole.

                   PRIORITY SETTING FOR RESOURCE ALLOCATIONS

        Mr. Cole. Thank you, Mr. Chairman.
        Thank you for being here and thank you all very much for
    the work that you do; it is extraordinary.
        A number of years ago our Congress passed the Caroline
    Price Walker Conquer Childhood Cancer Act and we authorized
    $150,000,000 a year for pediatric cancer research over a five-
    year period. We, as a Committee, never chose to fund that, to
    appropriate money for that purpose.
        When you are confronted with a situation like that, where
    you have sort of congressional authorization on one hand, this
    Committee does not--because, frankly, I think it is very
    careful about trying not to interject itself into what are
    scientific decisions--how do you take something like that and
    balance it and make basic decisions? Or do you at all?
        Dr. Collins. Well, it is a daily discussion that goes on
    amongst the NIH leadership about how to set priorities,
    Congressman, and it is not an easy task when we have so many
    opportunities and the resources are not sufficient to chase
    after all of them. A lot of this depends on scientific
    opportunity. Simply throwing money at a problem, even if it is
    a critical problem for public health, is not necessarily going
    to get you where you need to go; you need to see is there an
    idea here, is there a research project that could push the ball
    forward?
        So we are always trying to both weigh public health needs,
    as well as scientific opportunities. We do not want to neglect
    rare diseases--and many pediatric cancers are rare--just
    because they do not affect that many people, because if it is
    your family where a child has been stricken with cancer, it
    does not matter a whole lot to you that that happens to be a
    rare disease.
        With pediatric cancer, we have certainly adopted that as an
    area of great priority because of the terrible toll this takes
    on young people and their families. We have made great strides
    in many of these cancers that occur in children, but we have
    many others, particular solid tumors, for which we are not as
    successful as we would like to be.
        The good news here is I think we have the tools--and this
    was sort of a couple of the themes that I talked about in my
    opening statement--both in terms of really laying out the
    landscape of why cancer occurs in children and accelerating the
    process of going from that understanding to a therapeutic; and
    that is moving forward at a pace that would not previously have
    been imaginable, and we are empowering academic investigators
    to take a larger role in the development of therapies, which,
    in the past, was largely left to the private sector. And for
    pediatric cancers that are rare, there is not much of an
    economic incentive to develop a new therapy if it is going to
    be risky. If academic investigators could de-risk the project,
    then it becomes more attractive.
        The Cures Acceleration Network is another example of an
    authorized, but not yet appropriated, effort that I raised
    briefly in the opening statement that we are quite excited
    about because it would facilitate this process.

                           PEDIATRIC CANCER RESEARCH

        Mr. Cole. Well, quite often our colleagues count on this
    Committee to protect them from themselves, so this may be one
    of those instances, I do not know.
        Let me ask you a follow-up question. I have gotten two
    different sets of responses--and they are not dramatically
    different--on how much money is actually devoted toward
    pediatric cancer care. From Director Worzog I think we had a
    communication that suggested it was something like
    $215,000,000; from the NIC we got an estimate like it was
    $195,000,000. Do we have any idea what the range, relatively,
    of dollars devoted in this effort is?
        Dr. Collins. I do not have the numbers in front of me,
    Congressman; I can certainly provide them for the record. We do
    now have a better method of tracking how NIH is spending its
    dollars than we have had in the past, something that got
    unveiled about a year ago. So we are able to tell you, I think,
    accurate numbers based upon our entire portfolio.
        [The information follows:]

                           Pediatric Cancer Research

        NIH has not set its tracking system on disease spending to be able
    to capture estimates for childhood cancers or pediatric cancer research
    funding across all of NIH. However, these estimates are available for
    research funded by NCI. The estimated funding level in Director
    Orszag's letter reflects the NCI-projected FY 2010 funding level for
    pediatric research (approximately $215 million), which is a broader
    research category than childhood cancer alone, and includes research
    related to child health, childhood cancers, birth defects, multiple
    sclerosis, etc. In FY 2011, NCI expects to fund pediatric research at
    $233.7 million. NCI also projects funding in the category ``childhood
    cancer research'', which is a subset of pediatric research and includes
    only childhood cancer research (such as childhood leukemia and
    neuroblastoma). The National Cancer Institute (NCI) estimates it will
    spend $196.3 million in FY 2010 and $202.7 million in FY 2011 on
    childhood cancer research. This is the funding level that was provided
    in the recent NCI document. The key difference between these two
    categories of research is pediatric research is a broader category that
    includes research related to child health in general, whereas childhood
    cancer specifically deals with cancers affecting children.

                            NCI's Pediatric Research and Childhood Cancer Funding, 2007-2010
                                                  (dollars in millions)
    ----------------------------------------------------------------------------------------------------------------
                                                                                                             2010
                                Year                                  2007         2008         2009      (estimate)
    ----------------------------------------------------------------------------------------------------------------
    Pediatric Research..........................................        243.2        235.4        240.8        215.0
    Childhood Cancer............................................        172.7        189.7        192.9        196.3
    ----------------------------------------------------------------------------------------------------------------

        Mr. Cole. That would be very helpful. I would really
    appreciate that. And particularly if you could trend-line is
    over several years, if that was possible, so we could sort of
    see relatively where we are headed.
        Finally on this topic--and you have answered this partly,
    but I just want to give you an opportunity to add anything else
    you would like to--where do you see us going in pediatric
    cancer research over the next five or ten years?
        Dr. Collins. I think it is going to be a very exciting
    time. We will have the ability to identify what are the basic
    molecular drivers of a cancer that occurs by analyzing hundreds
    of these tumors and figuring out precisely what has gone wrong;
    what has made a good cell go bad and have it start growing in
    this fashion.
        I should say, by the way, there is a wonderful new
    partnership between St. Jude's and the Genome Center at
    Washington University in St. Louis involving $60 million of
    private philanthropic donations to make this go forward for
    pediatric cancers on hundreds of tumors.
        We are going to, therefore, be able to say what are the
    targets for which we need magic bullets, and we should be able,
    in the next five or ten years, to transform our approach to
    pediatric cancer from the chemotherapies, which can be
    successful but which, as you know, are also quite toxic, into
    compounds that are much more directed, much more rational; more
    likely to be effective, less likely to be toxic.
        Mr. Cole. Terrific. Thank you.
        Thank you very much, Mr. Chairman.
        Mr. Obey. Mrs. Lowey.

                                 FOOD ALLERGIES

        Mrs. Lowey. Thank you very much, Dr. Collins, Doctors all.
    I must say, having served on this Committee for many years,
    this is one of the most exciting hearings that we have, and I
    do wish we had hours, but we do not want to take you away from
    your important work, so let me just thank you for your service
    to the Country and to the people, and we look forward to
    continuing to increase the appropriations.
        A few particular areas, first with food allergies. It is
    very frustrating, to those who suffer, that the only advice
    doctors can give now is do not eat certain foods. And as you
    probably remember, shockingly, it took me five years, five
    years to get legislation passed that mandated clear labels on
    food. But now at least allergy sufferers and celiac disease
    people call me and tell me how grateful they are that we have
    those labels on food.
        So two questions. Allergies. I never had them until I got
    here to Washington. What progress are we making in
    understanding why the same amount of allergens has minimal
    impact on one person, lethal to another? And we are any closer,
    Dr. Rodgers, to understanding why the number of children under
    the age of five who suffer from peanut allergies has grown so
    much between 1997 and 2002? Every school has peanut tables;
    many schools do not allow peanuts to be served. Perhaps you can
    respond.
        Dr. Rodgers. We are going to redirect it.
        Mrs. Lowey. Wrong directions. Dr. Fauci.
        Dr. Rodgers. I would be happy to talk about celiac, but let
    me turn to my colleague.
        Dr. Fauci. Thank you for the question. It is obviously
    very----
        Mrs. Lowey. How could I forget my good friend Dr. Fauci? I
    do not know. Yes.
        Dr. Fauci. It is very important, as you well know. Four
    percent of the people in the United States of America suffer
    from food allergy, peanut allergy being one of the most severe.
    Your question about the differences in individuals are clearly
    related to genetic predispositions. We do not know the exact
    genetic profile that would pinpoint someone who has a
    propensity, but clearly these are things that run in families,
    which strongly point to it being genetic factors, which, as Dr.
    Collins mentioned in many of his remarks related to other
    diseases, the more we get a better handle on the genomic basis
    of disease, the better opportunity we will have to do one of
    the things that Francis mentioned, more personalized medicine
    approach. And I think allergies and the response to allergies
    and the desensitization to allergies are going to very, very
    much fall into that category of personalized medicine.
        The other question you asked is that why does it seem like
    we have more peanut allergy now than we had before. Well, the
    honest answer is we do not know. But we do feel that one of the
    issues that may contribute to it is that, because of the
    greater sensitivity in the community to the possibility of
    peanut allergy, more families are withholding peanuts and
    peanut derivatives from children early on in their lives,
    which, in our research projects now, we are finding that that
    might actually, if a person is not allergic to peanuts, have a
    paradoxical, deleterious effect, because some studies are
    showing now that when you give children, at a very early age,
    exposure to peanut, you naturally desensitize them to any
    allergy they may have. There is a very interesting Israeli
    study that shows that early exposures to peanuts actually wind
    up having a lesser incidence of peanut allergy as the child
    gets older.
        So there is a lot of active research going on. We are very
    excited about it. We are getting new young investigators in the
    field, and I hope in a year or so we will be able to give you
    even more encouraging information.

                               PEDIATRIC DIABETES

        Mrs. Lowey. Thank you very much.
        I was looking at you, Dr. Rodgers, because a group of
    children came to my office just this week who suffer from
    diabetes, and it is extraordinary to see the advances in
    treatment. Little children are taking care of themselves. But
    we are not preventing diabetes and we are not curing diabetes,
    and perhaps you can--I am not talking about adult onset
    diabetes; I am talking about those that are affecting our
    children. Perhaps you can comment on the research there and
    what progress are we making.
        Dr. Rodgers. Thank you. We are actually making
    extraordinary progress on the treatments for kids with type 1
    diabetes, the type that you are referring to. In fact, just to
    back up to one of the points that you made. What we are
    learning a lot about diabetes, actually type 1 diabetes, which
    is an autoimmune disease in which the body, for unclear
    reasons, turns against these insulin-producing islet cells in
    the pancreas, are actually giving us clues to patients with
    celiac disease. They share many features. So what we are
    learning in this particular disease may also have implications
    in a disease that perhaps affects about one percent of the U.S.
    population, that is, celiac disease.
        In diabetes, we are trying to--this is a disease that
    affects individuals who have a particular genetic
    susceptibility, and within the last few years the number of
    genes that account for this susceptibility has greatly
    increased. Today there are over 40 susceptibility genes, which
    account for more than half of the predilection for developing
    the disease, so what that means is that we can identify, early
    on, which kids are likely to develop type 1 diabetes and when.
        Now, it is thought that there are triggers associated with
    this, and understanding what the environmental triggers are is
    extremely important. We have almost, very recently, completed a
    study, a recruitment of about 7,800 infants who have this high
    type 1 diabetes propensity to follow them for a period of 15
    years to understand what it is in the environment that is
    leading to the disease is it something that they eat, is it
    something in the environment, et cetera?
        And this work is going on with other work that is funded by
    the NIH in specific areas, for example, the National Institute
    of Child Health and Human Development (NICHD) is funding a
    study comparing the effects of hydrolyzed infant formula to
    that of cow's milk, because there are a number of people who
    believe potentially that cow's milk may be that trigger. And
    that work is proceeding quite well.
        The NIH, in association with the CDC, has also, for the
    first time, developed a surveillance program to look for
    diabetes in youth. This includes both type 1 and type 2. But,
    importantly, having CDC's involvement, and because of their
    ability to do surveillance within States, we can better
    understand the clustering of type 1 diabetes that we are
    seeing. This may point to specific triggers in certain locales.
    And this is just in the surveillance. I can provide you more,
    because I see my time--
        [The information follows:]

                               Pediatric Diabetes

        If we find the trigger, we may be able to develop a vaccine or
    implement a change in diet that can prevent the disease. In addition to
    research to uncover the genetic and environmental components that
    contribute to the cause of type 1 diabetes, the NIH is pursuing
    research to prevent, treat, and one day cure type 1 diabetes. For
    example, Type 1 Diabetes TrialNet tests strategies for type 1 diabetes
    prevention and early treatment. TrialNet recently reported that the
    drug rituximab could preserve the function of the insulin-producing
    beta cells in people newly diagnosed with type 1 diabetes. Previous
    clinical trials have suggested that preserving patients' remaining beta
    cell function can have dramatic, long-term health benefits. TrialNet
    has also launched a trial testing the ability of another agent, oral
    insulin, prevent the disease in people who have high levels of insulin
    autoantibodies, a pre-clinical marker of the disease. TrialNet also has
    two other prevention trials that will launch soon or are under
    development.
        An earlier, landmark NIH-supported clinical trial showed that
    improved control of blood sugar beginning as soon as possible after
    diagnosis can greatly improve the long-term prognosis of type 1
    diabetes and result in reduced rates of life-threatening diabetes
    complications. This research has contributed to the fact that people
    with type 1 diabetes are living longer and healthier lives than ever
    before. However, blood sugar control is not always easy and even the
    most vigilant patients are at risk for sudden, acute episodes of
    dangerously low or high blood sugar levels. The NIH is deeply committed
    to helping patients achieve good blood sugar control and is taking two
    approaches to realize this goal: beta cell replacement and development
    of an artificial pancreas. With respect to beta cell replacement, the
    NIH supports the Beta Cell Biology Consortium (BCBC), which is studying
    ways to grow beta cells in the laboratory for transplantation into
    people and examining strategies to promote new beta cell formation in
    the pancreas. BCBC scientists are gaining key insights about beta cell
    biology and development, which is paving the way toward new cell-based
    therapies. The NIH also supports research toward the development of an
    ``artificial pancreas''--a mechanical system that links glucose
    monitoring to insulin delivery--and has the potential to alleviate an
    enormous amount of patient burden.

        Mrs. Lowey. Thank you. I see that. But I look forward to it
    and thank you again, Dr. Collins.
        Mr. Obey. Mr. Moran.

                        ENVIRONMENTAL CAUSES OF ILLNESS

        Mr. Moran. Thanks very much, Mr. Chairman.
        I want to follow up somewhat on the line of inquiry of Mrs.
    Lowey and Mr. Cole. First of all, NIH, of course, has done
    wonderful work. The whole Nation is justifiably proud of all
    you have done. In your opening remarks you cite the extension
    of life and the progress particularly in cardiovascular
    disease, the fact that older people with chronic disabilities
    is down markedly.
        But much of the effort, at least in the past--now, I can
    sense kind of a shift here--has been on those called the dusk
    of life, and less emphasis on those at the dawn of life. That
    is why I was particularly impressed by a lot of the questions
    from the panel.
        Something is happening among our children. This past
    generation, for example, the rate of asthma has tripled. Cancer
    is now, for the first time, other than accidents, the primary
    cause of childhood death. One in every six children is born
    with a developmental disability now; attention deficit
    disorder, dyslexia, but in many cases significant mental
    disability. One in 59 children is autistic. And we have talked
    about obesity, and it is just stunning that one in three
    children now, we estimate, will suffer from some form of
    diabetes, we understand.
        There was a study commissioned by the Environmental Working
    Group that looked into umbilical cord blood, and they found
    that there were 232 industrial compounds in that umbilical cord
    blood. Many feel that what is happening with this most recent
    generation is a result of environmental factors; it is
    something we are breathing, we are eating or drinking. And it
    could well be the number of chemicals that we now depend upon
    for our food supply. Cow's milk, I read a number of studies
    that it may have a direct link to diabetes.
        You have the National Institute of Environmental Health
    Sciences (NIEHS), and it is kind of a new thing. For a while it
    was sort of marginal in terms of focus.
        Well, that is true, Doctor, you know that. You do not need
    to be defensive about it, but it really was not NIH's focus.
        But I think, as we see what is happening in this new
    generation of young people, these dramatic statistics point to
    environmental causes that we need to coordinate with our
    research. The endocrine disruptors is one. In the Potomac River
    here, that we are all familiar with, every single small mouth
    bass--and that is a principal fish species--every single one of
    them is intersexed. Something is wrong.
        So I wonder--my first question really would be the extent
    to which we are integrating some of our findings with what the
    NIEHS is coming up with.
        Dr. Collins. I appreciate the question, Congressman, and I
    agree that studying the environmental impact on diseases of
    children and of adults is a very high priority. We may be able
    to understand hereditary implications, but we are not going to
    change those anyway, so it would be much better if we
    understood how those interact with the environment.
        And this has been one of the challenges, because a compound
    that in a certain concentration might be entirely safe for one
    person may actually be quite dangerous for another; and if we
    do not understand those differences, we have a very hard time
    identifying what in the environment we should pay attention to,
    because it all gets sort of blurred out by those individual
    differences.
        With regard to children, the National Children's Study,
    which is in its pilot phase of enrolling participants--and we
    are working hard to figure out how to do that in the most
    effective and cost-effective way--aims to follow 100,000
    children preconception, all the way through pregnancy, and then
    until age 21. And a big part of that study is to collect the
    most sophisticated data we possibly can on environmental
    exposures, including in utero exposures, to try to see whether
    we can draw conclusions that so far have escaped us about what
    is causing these many different problems that we see in
    pediatrics.
        That is the most ambitious enterprise that has yet been
    mounted. But, meanwhile, there are specific efforts in specific
    diseases to try to collect that kind of information, for
    autism, for instance. Certainly for pediatric cancers, if you
    see a cluster, what is going on there in terms of environment?
        The difficulty we have oftentimes is we can measure the
    presence of many of these compounds, and we know that in larger
    concentrations they are not safe because animal studies have
    told us that. We often do not have the data to know what level
    would be safe, if any.
        So our environment, which is full of the consequences of
    industrialization, may have things in it that, if we understood
    them better, we would want to get out of there, but the data is
    often insufficient to be confident that we know that answer;
    and what is the safe level is often the question for which
    there is not a clear response.
        Mr. Moran. Thank you.
        Mr. Obey. Mr. Kennedy.

                         MENTAL ILLNESS AMONG VETERANS

        Mr. Kennedy. Thank you, Mr. Chairman.
        Welcome all of you. Thank you for your service to our
    Country in a very significant way in reducing the burden of
    illness for our people. One of the big burdens of illness for
    our people, and certainly an area where our budgetary dollars
    are so significant now, more than ever before--and if I could
    ask you all to comment on that with respect to the recent
    technology and the opportunities for that technology in the
    research that we have uncovered so far to make huge advances in
    this area as it relates to all of your institutes and every
    institute--is in neuroscience.
        And particularly, talking about the burden of illness, my
    colleague, Mr. Moran, just mentioned autism and the prevalence
    of autism. Others of my colleagues have mentioned the burden of
    illness of Alzheimer's with the aging of America. And then, of
    course, you already have, as Dr. Insel knows, the huge burden
    of illness of mental illness in this Country, and addiction and
    substance abuse. And then on top of all of that you have a bow
    wave of needs coming down the line with our veterans
    population, and that is what I want to ask you about.
        I know that there is greater coordination within the
    institutes on sharing relevant science amongst yourselves. When
    you are under a budget that Mr. Obey understands is part of the
    cap on discretionary funding increases, but Department of
    Defense and the VA are not, what I would like to know from you
    is to what extent can you coordinate your neuroscience research
    and--by the way, they have a big portfolio in areas that you
    also do research--that affect the veteran.
        And I would like to know to what extent do you coordinate
    your work with perhaps medical research that is designed to
    help the veteran, because clearly the veteran is going to be--
    their challenges are going to also be the challenges of America
    with respect to all of these issues, because in finding out
    more about Traumatic Brain Injury (TBI) and Post Traumatic
    Stress Disorder (PTSD) and the complications of those, we are
    going to also find out the answers to many of these other
    issues.
        And I even point out diabetes because not only do we know
    the correlation between depression and diabetes, but I know
    that there has just been a drug approved for type 2 diabetes
    that relates to neurotransmitters in the brain. And it is
    ironic because most people think it has to do with the
    pancreas. Now we know it has to do with the brain, just to show
    the interconnections in whole health.
        So, Dr. Collins, if we could start with you.
        Dr. Collins. Well, Congressman, you put your finger on a
    very important issue, and that is the need for us to
    collaborate across agencies to try to improve health in the
    area of neuroscience, and I think it is fair to say that that
    is a topic of great interest. Certainly the topics you
    mentioned--traumatic brain injury, PTSD, Alzheimer's--have all
    been areas in which we now have developed partnerships with the
    Department of Defense and with the Veterans Administration.
        I am going to ask Dr. Insel, because he is intimately
    involved in several of those, to cite a few examples in answer
    to your question.
        Mr. Kennedy. And, Tom, if you could--by the way, I loved
    meeting Laura the other day. Anyway, I just want to say do you
    know if there is the same collaboration within VA and DOD that
    you have within NIH with respect to the various institutes, in
    terms of their neuroscience collaboration?
        Dr. Insel. Thanks for the question. I do not actually know
    what coordination goes on in terms of neuroscience between DOD
    and VA. It would be a great question to pose to each of them. I
    can tell you that for the collaboration with DOD, this is very
    tight and real, and it is a project that really came about
    because of the DOD's concern, the Pentagon's concern with the
    rising rate of suicide. As you know, there is a doubling of
    suicide amongst active duty soldiers. Last year, 160 suicides
    in the Army. That is actually more than the combat deaths in
    Iraq.
        Mr. Kennedy. Can I mention something, just if you could
    comment? Anahedalcystine. Do you know the drug that reduces
    inflammation in the capillaries, if given, in the brain,
    because it only goes to those areas where there is blood, so it
    covers the brain blood barrier? There is Defense Advanced
    Research Projects Agency (DARPA) research that shows that it
    can minimize or eliminate mild traumatic brain injury. Do you
    know about that research?
        Dr. Insel. We have a center that actually--it is a joint
    center between funded by the Veterans Administration and partly
    by DOD, but it is a joint center between the Intramural Program
    at NIH, National Institute of Neurological Disorders and Stroke
    (NINDS) and National Institute of Mental Health (NIMH), and the
    Uniformed Services University of the Health Services (USUHS),
    which is looking precisely at that issue.
        I just met with the folks from USUHS about a week ago and
    heard a little bit about their excitement about this, that this
    is perhaps a great way for an acute treatment for TBI. And they
    are also very interested in being able to visualize the changes
    using new neuroimaging techniques which are just coming online.
        So absolutely a very exciting area for science. It is not
    ready for prime time, but an area where it looks like we are
    getting some interesting advances.

                   NATIONAL CANCER INSTITUTE CLINICAL TRIALS

        Mr. Obey. Dr. Collins, as you know, the New York Times
    published an editorial about a week ago which raised serious
    questions about waste of time and money with respect to
    clinical trials, and the editorial indicated that 40 percent of
    the clinical trials sponsored by NCI are never completed, and
    it quoted the Institute of Medicine as being quite concerned
    about the entire situation.
        I would like to know what your observations are, what your
    response would be to that report; where you agree with the
    concerns they raised, where you might disagree, and what you
    think ought to happen in order to correct the problem.
        Dr. Collins. I am very concerned about the outcome of that
    report. I should tell you that is a report the National Cancer
    Institute (NCI) asked the Institute of Medicine to conduct and
    brought in experts to look at the cancer Clinical Trials
    Network and draw the conclusion that, as you have said, there
    are major difficulties in terms of not finishing trials that
    get started, in terms of trials that take very long to get on
    the ground after they have initially been designed. And they
    make a number of recommendations which NIH and NCI are going to
    now take very seriously.
        One of the problems is that the networks are complicated in
    terms of multiple centers, and that is the nature of phase 3
    trials, that they generally involve multiple centers. But there
    is so much bureaucracy involved in trying to get a trial
    started, some of that just being the paperwork, some of it
    being the human subjects effort, where every center has to have
    its own Institute Review Board (IRB) that reviews the protocol.
    We clearly need to move in the direction of more centralized
    IRBs.
        It is clear that some of the clinical trials are not
    necessarily designed in a way that takes advantage of some of
    the newer discoveries about ways that you could optimize a
    trial by identifying those most likely to respond and,
    therefore, making a smaller, more tightly focused trial that
    would give you a result more quickly; and we need to think
    about that.
        Some of this, though, I think relates to the fact that many
    of these were for rare diseases, and they simply were not able
    to enroll enough subjects to get enough power; and perhaps that
    was an unanticipated problem that should have been anticipated.
        So clearly what needs to happen--and I think the IOM
    recommendations are actually very well put and will be a great
    starting point for NIH--is to worry more explicitly about
    efficiencies that could be achieved that are not being
    achieved. Maybe we do not need to have so many centers if they
    are only enrolling a few patients each; maybe we could do this
    more efficiently with a smaller number of centers with larger
    enrollments.
        Maybe we need to prioritize what trials are really critical
    to do. And maybe we need to come up with a better way to
    encourage participation by patients, because right now only 3
    percent of adult patients with cancer participate in clinical
    trials, compared to the majority of pediatric patients; and we
    have to figure out why that is and why we have trials that we
    cannot manage to fill.
        Mr. Obey. Well, my concern is that one out of every four
    Americans is expected to die of cancer, so this is not a minor
    problem.
        Dr. Collins. No.
        Mr. Obey. And people look at clinical trials as being the
    gold standard, and when we get a report like this, it raises
    really significant questions. I would ask that you keep in
    close touch with the Committee as you review those
    recommendations and concerns, because we are talking about not
    just a lot of lives, but a lot of money as well.
        But what is the main reason why you think so many of those
    clinical trials do not finish?
        Dr. Collins. I think many of them are for conditions where
    it has just been difficult to find enough patients with the
    precise conditions that had to be present to be able to enroll
    in the trial. They cannot find----
        Mr. Obey. Would not that tell us something about what is
    going on at the front end, before those trials are ever
    started? How should that process be changed?
        Dr. Collins. I agree with you, it does tell you something
    about the inability to plan effectively about whether a trial
    is likely to be able to meet its enrollment criteria or not;
    and that is something that has to be looked at very carefully.
        Imminently, we will see the appointment of a new Director
    of the National Cancer Institute. I guarantee you this will be
    a matter of the highest importance for that individual. And I
    think, as you have said, we have to get this right, because we
    are going to see, coming forward, in the next five or ten
    years, a very exciting list of new cancer therapeutics. But we
    will only know if they work if we have a clinical trials
    network that can test them quickly and efficiently. This has to
    be the highest priority.
        Mr. Obey. My time has expired.
        Let me suggest we do a second round of about three minutes
    apiece.
        Mr. Tiahrt.

                              BIODEFENSE RESEARCH

        Mr. Tiahrt. Thank you, Mr. Chairman. This may have been
    asked by Dr. Fauci than you, Dr. Collins. Last year we ended up
    transferring $304,000,000 from the Bioshield Reserve Fund to
    the National Institute of Allergy and Infectious Diseases, and
    we justified that additional research was needed because,
    before we can purchase countermeasures for use in the event of
    a bioterrorism event.
        Now, I was opposed to this; I think that it is better spent
    at the Biomed Advanced Research and Development Authority
    (BARDA)--in their advanced development program. But if these
    funds go to NIAID, will NIAID work with BARDA to ensure that
    the research is supported by those funds that address the
    issues that we are concerned about, and that is a bioterrorism
    event? And through these applications can you ensure that the
    funding will be spent on biodefense research?
        Dr. Fauci. Thank you for that question, Mr. Tiahrt. The
    answer is we work extraordinarily closely with BARDA. In fact,
    those very funds that ultimately came to us were spent in
    coordination with BARDA; they were allocated for the biodefense
    research and development. As you, I know, well know, we have an
    issue with regard to the far-end, downstream purchase of
    something to put into the strategic national stockpile, and
    what the NIH has been doing for decades, and does very well, is
    the fundamental basic research, concept development and
    preclinical development; and then there is a gap in the middle
    which many people refer to as the valley of death. Not a very
    good terminology, but it feels that way sometimes.
        And that is really what we needed to shore up with the
    funds that were technically transfers from BioShield, but
    really went into the research and development in close
    coordination with BARDA.
        So the answer to your question is yes, it will be.
        Second question, is it used for biodefense? Absolutely yes.

                           CURES ACCELERATION NETWORK

        Mr. Tiahrt. Okay. Thank you very much.
        The valley of death, which we have referred to, I guess it
    was last authorization we put $500,000,000 in for the Cures
    Acceleration Network, or CAN, as we refer to it. Is CAN the
    best way to go about bridging this valley of death that we
    refer to, or are there other ideas that we should be
    considering?
        Dr. Collins. Well, I think CAN is a very exciting idea. The
    Institute directors will all be gathering for a retreat all day
    tomorrow to talk about this, because this is an opportunity in
    a very flexible way to try to push forward new and exciting
    approaches to therapeutics.
        The idea here is, as authorized, but not yet appropriated,
    is to provide large grants that include participation by public
    and private sector partners. It includes some flexible research
    authority to allow us, in a DARPA-like fashion, to move such
    projects forward rather quickly. And, if appropriated at a
    reasonable level, would allow multiple projects to go forward
    simultaneously with project managers that are authorized to
    both bring in resources when you need it and to kill projects
    that are failing, which is critical in this high-risk area as
    well.
        The idea here is to develop a new paradigm for how we come
    up with new therapeutic ideas, partnering in a new way with the
    private sector, where academics are de-risking projects, which,
    as soon as they become commercial viable, can then be out-
    licensed, so the companies can take them and run with them. And
    I think, from my perspective as a physician who is anxious to
    see therapeutic successes come forward, this is a mechanism
    that we very much need and hope to be able to utilize.
        Mr. Tiahrt. If I can just finish with a comment, Mr.
    Chairman. One of the things we saw in the DARPA program is that
    when we had new ideas that ended up not pursuing, failed, in
    other words, the people who were managing those programs got a
    black mark on their resume.
        And I hope that when you are pursuing new ideas, that just
    because the idea does not work out does not mean the person
    failed; it may have been a very successful way of finding out
    not to waste more money. So please look at the individual and
    not put a black mark on their record just because they happen
    to be managing a program that is not what we want to invest
    more money in.
        Dr. Collins. I agree with you, Congressman. Winston
    Churchill famously said that success is nothing more than going
    from failure to failure with undiminished enthusiasm. And one
    needs to keep that in mind. If we are not doing the kind of
    research that fails on a fairly regular basis, we are not
    pushing the envelope hard enough.
        Mr. Obey. [Remarks made off microphone.]
        Mr. Ryan. Thank you. I have been watching from my office,
    so do not feel like I have not been paying attention.
    [Laughter.]

                              BEHAVIORAL RESEARCH

        Mr. Ryan. And I know not to ask about comparative
    effectiveness research. I know that ground has been covered.
        Just briefly, I know Mr. Moran has talked about this, and I
    heard Congressman Kennedy talk about it a little bit, the issue
    of behavioral sciences, behavioral research. And last time you
    were here I talked to you a little bit about mindfulness and
    some of the other approaches that I know NIH is looking into
    doing some research. Can you just kind of update me as far as
    is there anything that you have been doing over the last year
    that I should know about?
        Dr. Collins. So, Congressman, we agree that this is a
    fruitful area for research. Clearly, the mind-body interaction
    plays a significant role in lots of illnesses, both in terms of
    their occurrence and their adaptation to those who are
    afflicted with them. Certainly, several of the institutes have
    significant portfolios in this area. I would think the National
    Center for Complementary and Alternative Medicine particularly
    comes to mind as a place that is devoted to trying to test out
    some of these what people might call unconventional therapies,
    but which clearly many people in the public are convinced are
    of value, and we need to develop the data to underscore what
    that is.
        Already those kinds of studies, for instance, have shown
    some value of yoga in terms of helping people cope with chronic
    disease, and many others are being tested as well.
        The National Heart, Lung and Blood Institute is also
    engaged in a number of these. We have a new program in basic
    behavioral and social science research called OPPNET, which we
    think also will provide some of the foundational information to
    help us understand the correlation between behavior and
    illness.
        And I might ask my colleague, Dr. Insel, at NIMH, if he has
    other comments he would like to make about the mind-body
    connection because, of course, that is a topic of great
    interest in that area of medicine.
        Dr. Insel. Well, I would say it is a topic of great
    interest across much of NIH in the same way as Mr. Kennedy
    mentioned the development of the neuroscience effort across
    institutes so that it is not balkanized in any way. We have a
    neuroscience blueprint effort across 16 institutes and centers
    who are now doing this, as Dr. Collins mentions, for behavioral
    and social science research as well.
        So OPPNET is a new project; it is just getting off the
    ground at this point. It involves all of the institutes and
    centers at NIH and it will be a new forum, as well, for talking
    about these kinds of issues and their opportunities for taking
    those into a translational study of health.
        Our own institute has been very interested in the work of
    people like Richie Davidson in Madison. We fund a center that
    he runs on the study of mindfulness, not only understanding
    what its health implications might be, but also looking at the
    brain and looking at physiology to understand the biology of
    this process as well as the psychology.
        Mr. Ryan. Well, I appreciate that. I went out last year to
    see Richie's lab, and the work he is doing there is just
    amazing. And we are talking about adding 30 million people to
    the health care system, and I think this kind of individual
    responsibility, where we are actually teaching people how to
    manage their own levels of stress. We know what stress does to
    all of us in our daily lives, but over the long term that kind
    of high stress level leads to a lot of the problems that we are
    researching and spending a lot of money trying to figure out
    and then deal with and manage over time.
        So I would just encourage you to continue to go down this
    road. I was at a conference a couple weeks ago at the
    University of Massachusetts Medical Center was sponsoring, and
    across the board recidivism, education, health care,
    prevention, right down the line. There were some cops that were
    there from Portland, Oregon, talking about being more aware in
    these kind of intense situations. There were a couple of
    colonels there. There were military folks talking about
    building up some resilience in your mind before you even go off
    to battle so that, when you come back, you are more resilient,
    you respond better, and over time I think it will prevent a lot
    of the PTSD that Congressman Kennedy was talking about.
        So I just want to encourage you to go down this road. And
    whether it is health care or education, the idea that we can
    teach kids to focus--we always tell kids pay attention, but we
    never teach them how to pay attention. And this is a real way
    for us to teach kids how to pay attention, how to make better
    decisions, how to not get caught up in the moment and prevent
    problems.
        So I just want to encourage you, because the science is
    there. It is there, and I think the more your seal of approval
    and your street cred is on some of these initiatives, the
    better off I think we are all going to be.
        So I want to thank you for--the last point I wanted to
    make, too, in the field of education with social and emotional
    learning. I talked to the Secretary of Education about it when
    he was before this Committee. They have a metastudy that they
    did with 300,000 kids. There was an 11 percentile point
    increase with social and emotional learning, with some
    mindfulness involved in it as well. Eleven percentile point
    increase. You are teaching kids how to pay attention.
        And we cannot just tell them to pay attention and not teach
    them how to pay attention; how to deal with their emotions and
    regulate. When you realize that your emotions are prohibiting
    your ability to concentrate, then we have to take step one. It
    does not matter how much money we throw--
        And I hope our friends on the Republican side, who do not
    want us to keep throwing money at problems, will join with us
    in some of this and realize we are going to teach kids how to
    concentrate, how to focus, and how to reduce their level of
    stress and save the health care system a lot of money.
        So I am glad I showed up, Mr. Chairman. Thank you.
        Mr. Obey. Mr. Lewis.

                            COORDINATION OF RESEARCH

        Mr. Lewis. Thank you, Mr. Chairman.
        The gentleman's concern about health cost and quality is
    one I share with you, and it has nothing to do with partisan
    politics. But let me say this. Years ago a couple of our
    members suffered from Parkinson's, and that led some of us to
    organize in a nonpartisan way an environment where people who
    were doing research and treatment across the country came
    together, spent like a day and a half together.
        The amazing thing to me at the bottom line was that they
    had never talked to each other in any significant level before,
    emphasizing that which has been said several ways here today,
    the need to have voices within your institution pushing the
    kind of coordination that allows for us to tap many, many
    resources.
        Years ago we specifically were interested in the proton
    therapy process. At that time, NIH was not interested in the
    proton. I do not know if it was based upon cost or what, but
    they were not interested. So we took that issue to a hearing at
    the Energy and Commerce Subcommittee of Appropriations, rather
    than this Subcommittee; and, as a result of that, that
    subcommittee had about a dozen members on it and ten of them
    had cancer in their family. They were very interested and
    initial funding went forward.
        Since that time, it has been suggested this might be a
    great item for rationing because of relative cost for
    treatment, even though initially we knew there were prospects
    for small tumors in the brain, great success with prostate
    cancer; most recently, great success with non-invasive breast
    cancer treatment. But above and beyond that, NASA is very
    fascinated with this work because of how it can help them
    understand better the effects of radiation upon man perhaps in
    space.
        Well, that sort of coordination and communication could
    cause NIH to help us very much tenor and hold back the tendency
    of wanting to cut off avenues of research, as well as
    treatment, because of cost alone. So I would urge that to
    become a priority.
        Mr. Kennedy. I would hope maybe we could work together on
    getting DOD and VA to really figure out how they are going to
    coordinate like the NIH has on their neuroscience, because,
    really, the biggest amount of additional science in brain
    research is going to happen on TBI for the veteran, and that is
    going to accrue to Parkinson's, it is going to accrue to
    epilepsy, it is going to accrue to Alzheimer's and autism, and
    everything, because once you start researching the brain--and
    the VA and DOD are going to be--those veterans are going to be
    kicking down the door, as they did overseas, to all of these
    diseases here at home.
        Mr. Lewis. Mr. Chairman, he is referring to a project that
    Mr. Kennedy and I were going to begin to work on long-range
    relative to the problems with veterans and specific problems
    like alcoholism and drugs, et cetera, leading to homelessness.
    Unfortunately, Mr. Kennedy has made a decision not to run for
    re-election.
        Mr. Kennedy. That is why I am leaving it all in your hands,
    Jerry. [Laughter.]
        Mr. Lewis. Thank you, Mr. Chairman.
        Mr. Ryan. Mr. Chairman, I would like to intervene. I would
    love to help and make sure that this project continues.
        Mr. Obey. Mr. Kennedy.

                             TRAUMATIC BRAIN INJURY

        Mr. Kennedy. I want to go back to this anahedalcystine.
    From what I understand, the DARPA showed that within the first
    24 hours of a veteran suffering a concussion--and they can tell
    from your rapid eye movement whether you have--and there are
    objective standards--whether you have suffered this--that that
    goes right through the blood brain barrier because of the
    capillaries and it can have long-term impacts in terms of the
    suffering of the consequences of TBI. And it is sitting right
    now at the Surgeon General's Office of Review or whatever at I
    guess it is the Navy, because it is the Marine Corps.
        This is something that cannot be sitting around; it has to
    get out there. We already have FDA approval for this. This
    would be off-label use of it. So I am just asking, with your
    basis of science at NIMH and coordination within your group, if
    you can offer research and support to whatever that surgeon
    general is going to have to review in terms of that DARPA
    research, please, as soon as possible, because this is going to
    help avoid a lot of that downward consequences as a result of
    TBI.
        Dr. Insel. We are on it.

                           ELECTRONIC HEALTH RECORDS

        Mr. Kennedy. And they show literally if you do not give it
    within the first 24 hours, you give it 72 hours later, the
    effectiveness diminishes dramatically.
        To go to David Obey's question about the registries and
    clinical studies, tell us about how the new health bill and IT
    with the health bill offers us an opportunity, Dr. Collins, to
    have gene banks and registries of identify data to essentially
    do a lot of this that we are currently doing through clinical
    studies, but to really do it through the new health system.
        Dr. Collins. Well, we desperately need better systems to do
    those kinds of large-scale research projects and, frankly, in
    this Country, we have been significantly impeded by the lack of
    electronic health records. It is very difficult to do thorough,
    accurate, efficient, cost-effective studies when everything is
    scribbled on bits of paper and it is very hard to sort out
    exactly what is in the medical record at all, if you can even
    find it. So having the opportunity to see our health care
    system evolve into an electronic framework is going to help
    enormously.
        But there are a number of issues that we are engaged in
    here to make sure that we get the most out of this. There is
    whole term called meaningful use----
        Mr. Kennedy. Are you consulting with those IT folks on
    this?
        Dr. Collins. Yes, we are. Yes, we are. Obviously, one of
    the hopes is that that meaningful use will be defined for the
    standard medical record so that it is optimized for research
    questions to be posed. Obviously, this needs to be done, and
    shall be done, in a fashion that protects privacy and adheres
    to standards of informed consent, but I believe that those are
    pathways that can be negotiated. And we are really looking
    forward to the chance to greatly enlarge the ability to survey
    exactly what are the causes of illness by potentially having a
    much more robust system for doing so with the electronic
    record.
        Mr. Obey. Mr. Cole.

                    BIOMEDICAL RESEARCH IN THE UNITED STATES

        Mr. Cole. Thank you, Mr. Chairman.
        Thank you, Dr. Collins. I want to ask you a series of
    questions just, frankly, will be easier if I just sort of laid
    it out, and then maybe you could educate me a little bit, since
    I am new to this Committee and certainly new to this topic, but
    very interested.
        If you could, could you compare our national effort with
    other countries? Where would you rank us, obviously? Second,
    what percent of biomedical research done in the United States
    is actually done by NIH or something you fund? And, again, what
    percentage would that be nationally, if you know? And, finally,
    is there some realistic way--you implied in an earlier question
    that obviously you are at the foundation of a lot of very
    profitable research for people--that some of the money, some of
    the profits generated down the line in the private sector
    could, in some realistic way, flow back to you for the
    continuation and the augmentation of basic research? Not
    eliminating our role, but generating additional resources for
    you to do what you obviously do very well at NIH?
        Dr. Collins. Those are great questions, Congressman, and I
    would be happy to quickly go through them.
        As far as the national effort of the United States in
    biomedical research, I think it is fair to say we continue to
    lead the world, but that leadership is certainly being
    challenged substantially now by other countries--Europe, Japan,
    and increasingly China and India. And our trajectory in terms
    of the support and the numbers of individuals working in the
    field has tended to be fairly flat, while those are going up
    rapidly.
        We were grateful to hear the President announce a year ago
    an intention to raise the U.S. investment in research and
    development to 3 percent of GDP, which would be a big shot in
    the arm, but no timetable has been set for that. The time is
    right, certainly, in terms of taking advantage of opportunity
    and of investigators who are ready to come forward with their
    best ideas and pursue them.
        In terms of research that goes on in this Country, if it is
    research done in academia, that is, in our great universities
    and institutes all over the Country, and it is biomedical
    research, almost all of that is supported by the National
    Institutes of Health, with a healthy contribution also from
    philanthropy. Certainly, the private sector--I think I
    mentioned numbers a little bit ago--invests about $56 billion a
    year in biomedical research; NIH, at $31 billion is about 40
    percent of the total, but in a good partnership.
        And your third question about profits that might actually
    be able to feed back in some way to support the research that
    goes on at NIH is something we have thought about. In this new
    model, where we might have a partnership where academic
    investigators get more involved in the front-end of developing
    new therapeutics, that will result in some identification of
    intellectual property.
        That intellectual property can then be licensed to a
    private company that is interested in taking it to the next
    step and all the way to FDA approval. And if a drug then
    actually gets approved and for which profits are made, some
    royalties stream back to the NIH would be highly appropriate,
    and most companies I have talked to are comfortable with that
    model as a good way to get the job done.
        Mr. Cole. Thank you.
        Thank you very much, Mr. Chairman.
        Mr. Obey. Mr. Ryan.

                            RECOVERY ACT INVESTMENTS

        Mr. Ryan. Thank you, Mr. Chairman.
        I just wanted to see if you can kind of outline--we put a
    lot of money into the Recovery Act, and I think you touched
    upon it a few times here. Can you just talk about, in your
    estimation, I know a lot of that money was needed to be spent
    years ago, and we were playing a lot of catch-up here in good
    measure to the leadership from Mr. Obey, but can you talk a
    little bit about how you feel the most impactful investments
    through the Recovery Act, where that went, what it is doing,
    and how we can--like you said, it is a marathon, not a sprint,
    and how we can continue to build on it over the years?
        Dr. Collins. Well, because this was such a significant
    investment, the list of projects that were possible because of
    it is much longer than I can fit into this three minutes, but
    let me give you a couple of highlights of maybe signature
    initiatives----
        Mr. Cole. I mean, things like we want to go out and there
    is a bid across the Country. Stimulus bill is not working, some
    people say. Well, all the metrics show otherwise. But if you
    could give us some tangible information on what would resonate
    with people, what they would grasp onto.
        Dr. Collins. So Recovery Act dollars from NIH in fact went
    out to all 50 States, and we are in the process--quite clear we
    are creating or retaining 50,000 high-quality jobs in the
    biomedical research enterprise, which is a significant
    contribution.
        In terms of science that this supports that is going to
    have a large impact on health, I have mentioned the Cancer
    Genome Atlas as a rapid acceleration in the ability to
    understand exactly at the molecular level what is going on in
    cancer. Similarly, with heart disease. We have the Framingham
    study, which has been going on for three generations, which
    now, because of these dollars, is possible to move into a phase
    of getting even more detailed information about the
    environmental and genetic risk factors for cardiovascular
    disease.
        In the area of HIV/AIDS--and Dr. Fauci could tell you more
    details about this--this money has made it possible to tackle a
    couple of very novel and potentially very valuable ways to
    reduce the incidence of new cases of HIV/AIDS by identifying
    individuals who are infected and do not even know they are, and
    starting them on treatment which will reduce the likelihood
    that they can transmit the virus to others.
        Autism. The effort now is funded by the Recovery Act to
    obtain the complete DNA sequence of 300 cases of autism and
    their parents to finally really understand what are the genetic
    contributions to a disease which clearly can run in families,
    so there must be something going on there.
        All of those are things that we could not have done without
    Recovery Act dollars to provide that real opportunity to tackle
    things that are risky and expensive, but are potentially
    groundbreaking.
        Mr. Ryan. I appreciate it. Kent State University, I was
    there a couple weeks ago. They got a significant amount of
    money from the stimulus bill from NIH, and I just want to say
    thank you, because there were a lot of folks there who were
    working in hiring people in Portage County, Ohio, because of
    what we did through the stimulus bill and what your work is. So
    I want to thank you for that as well. Thank you.
        Dr. Collins. And I could have mentioned the pandemic flu
    effort, which also was greatly benefitted by the Recovery Act
    dollars.
        Mr. Obey. Mr. Kennedy, you had one question?

                        HEALTH CARE REFORM AND RESEARCH

        Mr. Kennedy. Yes.
        Dr. Collins, you mentioned a new paradigm in terms of
    translational medicine perhaps working with the private sector.
    I would like to ask you, with this new health bill, the
    elimination of preexisting condition, the elimination of
    lifetime and annual caps puts a big onus on insurance companies
    now to come forward and develop models of care for different
    disease groups. How they put that together will ride on what
    the evidence-base is on how to best treat and care for groups.
    That is going to involve you talking to the President's
    assembled people who are going to roll this out, but also to
    insurers and, like is said, that public-private partnership as
    to how they best meet their obligations in the most efficacious
    way.
        And, Tom, how do you think to do that, when it is not
    necessarily medical and clinical for autism, Alzheimer's, you
    know, cognitive disorders, but functional? And how do you have
    a reimbursement system that is not based on the old model? And
    what are you doing now to help instruct them so they are not
    just blocking--which they are doing now--and suing against the
    system? But how do you help them meet their obligations by
    showing them what the evidence-base is?
        If you read this Sunday's New York Times about the veteran,
    we are not even getting it right in the DOD and VA, and we are
    supposed to have the best in cutting edge of treating cognitive
    disorders as a result of TBI and PTSD, and it is a disaster if
    you read or take anything from that New York Times cover story
    on returning warriors.
        So I am wondering--hopefully, that is not the model, and I
    do not even know whether you guys are consulting with the VA or
    DOD.
        Dr. Collins. We are. But I think your question is even
    broader in terms of the health care of the Nation, and how are
    we going to come up with systems that work in the new health
    care reform environment.
        One of the things we are doing in that regard that might be
    worth mentioning is to try to work with HMOs that already have
    electronic medical record and are effectively well set up for
    experiments that we might be able to run in a research way to
    try to understand how could you provide different kinds of
    incentives to providers to be able to improve outcomes. Because
    that is the big sort of missing piece in much of where we hope
    to go.
        It is great to have all the data, and we generate a lot of
    that data to tell you what works and what does not. But how do
    you get it implemented and how do you implement it in a way
    where you have a health care system that actually responds to
    the right incentives instead of the wrong ones?
        Mr. Kennedy. [Remarks made off microphone.] Are outcomes
    quality of life or outcomes blood pressure?
        Dr. Collins. Oh, I would think quality of life and blood
    pressure, because they are connected.
        Mr. Kennedy. Yes, but HMOs do not measure--or insurance do
    not measure quality of life.
        Dr. Collins. And you are right that we need better measures
    of whether quality of life is actually considered, and how
    would you define that in a rigorous way. Actually, we have a
    Common Fund Roadmap project on that, where patients actually
    are able to define, from their perspective, whether they are
    being benefitted by an intervention or not, which is often left
    out of the equation.
        Mr. Kennedy. Tom.
        Dr. Insel. If I may. I think you put your finger on what is
    going to be a very important challenge over the next couple of
    years. We are in a very interesting point in time for at least
    those with serious mental illness. We have the advent of parity
    for the first time as it rolls out--in spite of some suits, I
    think it is rolling out--and we have health care reform, which
    is going to have a tremendous impact for those with mental
    illness because of parity.
        What has been such a struggle for us is so much of the cost
    and so much of the challenge for those with serious mental
    illness is outside of the health care system. They are
    incarcerated, they are homeless, or there are problems that
    play out in the school system, where we just do not see them in
    the health care system and we do not think about them through
    health care dollars.
        And one of the challenges will be to figure out how do you
    throw that net so that all of those needs, as well as the needs
    of caretakers, get taken into account. We are in discussions
    with people and it has been a very interesting process, partly
    because of the parity in health care reform advances that we
    now are in discussions with payors, as well as everyone else,
    to think about what is the evidence that you need to make that
    extension? What would it take?
        So I think you know about our Recovery After an Initial
    Schizophrenia Episode (RAISE) effort, which was really
    developed almost in the reverse; started with the payors and
    said what would you need for someone with an acute psychotic
    break to cover everything, to cover all the things that we know
    are necessary for recovery? And what kind of evidence could we
    provide to you that would make you come to the table and say
    this is a good buy for us, this is worth supporting?
        And we are rolling this out; it is a large $25 million
    effort done with the Recovery Act funds, and we think this is
    actually going to be transformative for those people who end up
    being huge costs if we do not get it right on the front end.
        Mr. Kennedy. Thank you very much.
        Mr. Obey. Mr. Tiahrt.
        Mr. Tiahrt. Mr. Chairman, I ask unanimous consent to submit
    some questions for the record.
        Mr. Obey. Sure.
        Mr. Tiahrt. Thank you.
        Mr. Obey. Let me ask just two questions. Do not worry, you
    are not missing much. [Laughter.]

                              NEW STEM CELL LINES

        Mr. Obey. First of all, would you explain the significance
    of the story that appeared in the Post this morning with
    respect to stem cell?
        Dr. Collins. Yes, I would be happy to. As you know,
    President Obama, a little more than a year ago, issued an
    Executive Order indicating that stem cell lines--we are talking
    about human embryonic stem cell lines--that have been derived
    since August 2001--which is when the Bush Executive Order took
    effect--ought to now be considered for Federal funding if they
    met certain standards as far as the way in which those lines
    were developed in terms of the consent, especially, to be sure
    that that was ethical.
        NIH was charged with putting together guidelines about how
    to do that review of stem cell lines, and those went into
    effect in July, and we have been receiving the information from
    many stem cell line developers since then and, as of today,
    there are 64 lines that have been approved.
        Today's news was about two particular lines that go by the
    names H7 and H9, which were derived a long time ago, more than
    10 years ago, and were heavily utilized by researchers between
    2001 and now, and for which there was a lot of data. Those
    lines had not been submitted to NIH for review until about two
    weeks ago; there were some complications in terms of finding
    all the documentation. The materials were submitted, we
    reviewed them rigorously, and yesterday I approved them as now
    being appropriate for support by Federal funding. Those two
    lines actually accounted for a substantial amount of the
    publications that have occurred in this field up until now.
        So many people in the research community were hopeful for
    this outcome and I am glad to say we were able to get there
    with complete adherence to rigorous standards of consent, which
    were part of the Obama Executive Order.

                      DR. RUTH KIRSCHSTEIN TRAINING AWARDS

        Mr. Obey. Okay, one other long observation. As you know,
    Dr. Ruth Kirschstein visited this Subcommittee many, many
    times. She was a legendary scientist and administrator at the
    National Institutes of Health, and she died October 6th of 2009
    after a public service career that spanned more than 50 years.
    Dr. Kirschstein worked on polio research, made history as the
    first woman to head an NIH institute, and later served as
    Deputy Director and Acting Director of NIH. She was a pioneer.
        A significant part of her legacy is the way she served as a
    champion for the advancement of women and minorities in
    biomedical research. She was a strong advocate for research
    training, especially interdisciplinary pre-doctoral programs
    and programs to increase the number of minority biomedical
    scientists, physician scientists, and scientists trained in
    emerging or evolving areas.
        In 2002, as a fitting tribute to her many years of
    exceptional service, particularly in the area of research
    training, Congress renamed the National Research Service Award
    Program in her honor. The Ruth Kirschstein National Research
    Service Award is an important tool to ensure we have a pipeline
    of future investigators ready to take over as the current
    workforce continues to age and move toward retirement.
        In 2001, NIH agreed to work towards increasing entry-level
    stipends under this program to $45,000 a year. Currently, NIH
    pays just under $38,000 a year despite their advanced degree in
    specialized technical skills that would allow them to earn
    considerably more in the open market.
        I understand that the President's budget proposes an
    increase of 6 percent in stipends under that program. How does
    that fit into your efforts to ensure a robust pipeline of young
    investigators? What is the current NIH policy for cost of
    living support in this program? And, more generally, how are we
    doing in attracting and keeping the next generation of
    biomedical researchers?
        Dr. Collins. Well, Mr. Chairman, I appreciate your citation
    of Dr. Kirschstein and her role at NIH. It is impossible to
    overstate the remarkable impact that she had on the institution
    and on many of us personally, and she is greatly missed. We are
    having a symposium on May 17th, inviting many of the Ruth
    Kirschstein awardees to come back and talk about the science
    they have done in order to recognize the way in which her
    contribution has had a very specific personal effect on each of
    them, and we are expecting that to be a day of great
    celebration of her legacy.
        In terms of what we are doing about training grants, yes,
    the President's budget does propose a 6 percent increase, which
    I think is long overdue. If one looks at the stipends that have
    been proposed by NIH for such trainees, they have remained
    essentially flat for a long period of time, even as inflation
    has been eating away at the buying power. This has--I can tell
    you, because I recently met with the National Postdoctoral
    Association in Pennsylvania. This news of at least a proposed
    increase was a big morale booster for a group that has begun to
    worry about just how valued are they.
        Being in that kind of training circumstance, you can
    imagine why that might feel a little uncertain. You are not yet
    independent. You have a Ph.D., so you know some stuff, but you
    are not making much money and you are not necessarily sure
    where you are going. And to get that kind of pat on the back,
    saying we value you and we think you are a bit underpaid--
    probably a lot underpaid, but we are going to try to do
    something about it--was well received.
        How are we doing in terms of recruiting? I would say okay,
    but not great. And certainly when you look at the way other
    countries--for instance, China and India--are doing as far as
    bringing new talent into the scientific research community,
    they are surpassing us in terms of their reach and their
    ability to encourage people to find their careers in this path,
    and we are flagging a bit.
        More particularly, I am concerned about the fact that our
    trainees do not represent the complexion or the diversity of
    our Country, and we need to work harder on the diversity issue
    and recruiting more disadvantaged individuals into this area,
    because we need the best and the brightest no matter what their
    background happened to be; and some of our programs have
    succeeded at that and some have not, and we are looking at a
    new set of ideas through a Pathfinder Award to try to improve
    that outreach to groups that are traditionally not represented
    in our workforce and should be.
        So we have a lot of work to do here between the graduate
    students and the post-docs, the clinical investigators, the
    M.D. Ph.D.s who I met with this past Saturday, who are also
    concerned about their future but enormously energized about the
    scientific potential; and this is one of my personal
    priorities, to be sure that we are not passing up the chance to
    be filling our pipeline with this next generation.
        And there are risks here, because they do hear their elders
    wringing their hands and complaining about the fact that it is
    hard to get a grant funded, and that one chance out of seven of
    having your grant actually receive funding may be a bit
    discouraging to some of the young people; and a few of them who
    met with me in Chicago talked about being on the brink of going
    off to do something else because of their uncertainty about
    whether there was a place for them. We have to work hard on
    that to be sure that they do see there is a place, even in
    difficult budget times, and hoping that, in the longer term, we
    might ultimately get to a point where we have stable,
    predictable kinds of trajectories for medical research instead
    of the feast and famine up and down experience, which has been
    pretty hard on everybody, but specifically on young trainees.

                        TEN MOST IMPORTANT ADVANCEMENTS

        Mr. Obey. One last question. There is a very sour mood in
    the Country about a lot of things these days, and when that
    occurs people tend to overlook some very important things that
    have occurred in society and in government through the years. I
    mentioned earlier that I have been on this Committee since, I
    do not remember, 1973 or 1974, one of those, and the way
    politics works, I guess, if you produce something that is
    physical and tangible, like a missile or a space vehicle, a
    shuttle, people can see visibly what they get for their tax
    dollars. But in a field like health care, there is not much
    that you can put your hands on to say, yes, this is what
    improvement in cancer research looks like. I mean, you cannot
    touch it. It is very different. And I think it is important
    that taxpayers understand that a lot of times, in lots of
    places, their tax dollars do some very good things.
        The problem is also that you cannot see that in any one
    year. But if you step back and look at it over time, then you
    can see some major changes that have occurred.
        What I would like you to do--and I do not expect you to do
    it now, but I would like you, at least for the record, to do
    this. If you take a look at what has happened because of NIH
    funding through the years, what are the ten biggest
    improvements, what are the ten most important steps forward?
    What are the ten ways in which the public's health has been
    advanced because of what NIH and the researchers that it funds
    all around the Country have produced? If you can prepare that
    for the record, that would be useful.
        Dr. Collins. I would appreciate the chance to do that.
        [The information follows:]

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        Dr. Collins. Just very quickly, but not the full response
    that I know you expect, if one looks at what has happened to
    death rates, and the fact that we have seen longevity improve
    by one year about every six years, and that can be tracked to
    NIH research in a very large extent. That is a pretty good
    general indicator. Disability is dropping off.
        In this document (NIH: Turning Discoveries Into Health)
    that we left for you, we tried to capture some of these others,
    such things as, for instance, what has happened with HIV/AIDS,
    which used to be a death sentence and which now the average
    person diagnosed at age 21 can expect to live to age 70. When
    you look at something like deafness, where children born with
    congenital deafness would have cost the Country, in the past,
    $1 million of extra educational efforts and would therefore
    have had many limitations on them, now, with the ability to
    treat that, you can in fact expect, and we have seen for 50,000
    kids, that they can be mainstreamed because of the ability to
    repair the problem.
        Heart disease dropping by 60 percent in the course of the
    last 30 years in terms of the deaths is another very good one
    to cite.
        There is a lot there. But, you know, you are right, Mr.
    Chairman. I do not think that that is a story that is often
    told. It does not happen overnight; it happens over years. And
    when it does happen, people may not realize why it happened,
    and much of it is resting upon this foundation of medical
    research that this Subcommittee has supported down through the
    years.
        Mr. Tiahrt. Can you put that all in 28 seconds, please?

                               RECOVERY ACT FUNDS

        Mr. Obey. What it really amounts to is--I mean, it is 35
    years. It is a generation. And I think it is important people
    understand what has happened from one generation to another,
    what the taxpayer expenditures finally produce.
        The other question I would have is you mentioned feast and
    famine. Some people might take that remark to suggest that that
    demonstrates that we made a mistake when we put the funding in
    that we did for the recovery package. So, again, I would like
    to know would it have been better had the Committee not
    provided that money over the last two years? Is it worth the
    discombobulation that you have because it is a two-year
    temporary shot in the arm? And you know what I am getting at.
        Dr. Collins. I do.
        Mr. Obey. Is it worth it? Was it worth it? Was it a
    mistake? And is it worth the complication, I guess I would put
    it that way?
        Dr. Collins. Well, Mr. Chairman, thank you for the
    opportunity to correct any misapprehension that might have
    arisen from my use of that particular phrase. It has been a
    wonderful investment in medical research. This $10 billion came
    at a time where there was a great pent-up demand and need, and
    a whole series of innovative ideas that were not possible to
    support; and they came forth in great numbers, and scientists
    supported by the Recovery Act are doing remarkable things right
    now, and we will see the consequence of those; not overnight,
    because science does not operate overnight, but in the long-
    run, as having been a very wise investment in advancing
    research.
        It does create some stresses for the system when this comes
    forth in a two-year period and we cannot see sort of a more
    stable trajectory, and we are going to be experiencing those
    stresses, I fear, in fiscal year 2011, but it was worth every
    bit of it to get the research done that has been possible to
    support through the Recovery Act.
        Mr. Obey. Any other last questions?

                      ALZHEIMER'S FUNDING CARE VERSUS CURE

        Mr. Kennedy. On those questions that you would have Dr.
    Collins come back with, if there could be--we are spending a
    lot of money on the care of people with certain illnesses. I am
    thinking Alzheimer's is one. Lots and lots of money is going to
    continue to go and it is going to go up.
        However, if we put a fraction of the money that we are
    going to be putting into long-term care into researching the
    cure, or even researching delaying the onset of Alzheimer's,
    how does that budgetarily pay for itself by averting costs
    averted from the actual dollars that we would otherwise be
    spending in the costly care of folks with these illnesses? If
    you could try to figure out a way how we put some metrics to
    that.
        [The information follows:]

        [GRAPHIC] [TIFF OMITTED] T8233B.125

        Mr. Kennedy. And on Dr. Kirschstein, I too, David, want to
    just say what a pleasure it was working with her, and the fact
    that we were able to, with her help, put the network of basic
    behavioral research together, and encourage you to try to get
    med schools to incorporate behavioral education into their
    medical school curricula. I know that is a priority of yours.
    If you could keep the pressure going on our State boards to
    include that in their medical school curriculum.
        Dr. Collins. Point well taken.
        Mr. Obey. Thank you gentlemen. Thank you all.

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                               W I T N E S S E S

                                  ----------
                                                                       Page
    Collins, F. S....................................................   279
    Duncan, Hon. Arne................................................    59
    Fauci, A. S......................................................   279
    Insel, T. R......................................................   279
    Rodgers, G. P....................................................   279
    Sebelius, Hon. Kathleen..........................................   145
    Solis, Hon. Hilda................................................     1

                                   I N D E X

                                  ----------

                              Department of Labor

                                                                       Page
    Chairman's Opening Remarks.......................................     1
    Secretary's Opening Statement....................................   1-6
    Secretary's Written Statement....................................  7-23
    Green Jobs....................................................... 24/38
    G-20 Summit......................................................    25
    Bureau of International Labor Affairs............................    27
    OSHA Ergonomics Regulation.......................................    27
    Worker Protection................................................    28
    OSHA Staffing....................................................    29
    Racial Disparities in Unemployment...............................    29
    Ex-Offender Grants...............................................    30
    Ratio of Job Seekers to Jobs.....................................    31
    Number of Federal Employees......................................    31
    Foreign Government Subsidized Employment.........................    31
    DOL Budget Request...............................................    32
    Addressing Chronically Unemployed................................    32
    Job Sectors Facing Contraction...................................    34
    Rebounding Job Sectors...........................................    34
    Job Sector Contractors...........................................    34
    Shortages in Traditional Energy Industry.........................    37
    Continuing Education.............................................    37
    Employee Readiness To Enter Job Market...........................    39
    Extension of Retirement Age......................................    40
    Protecting Migrant Farm Worker Children..........................    42
    Exposure of Children to Hazardous Materials......................    43
    Leveraging Stimulus Funding......................................    44
    Reemployment of Highly-Skilled Workforce.........................    44
    Training for High-Growth Industries..............................    45
    Improving Job Loss Picture.......................................    46
    Conclusion.......................................................    47
    Questions of Record.............................................. 48-58

                            Department of Education

    Chairman's Opening Remarks.......................................    59
    Secretary's Opening Statement.................................... 59-66
    Secretary's Written Statement.................................... 67-75
    Pell Grant Programs Costs........................................    76
    Rising Tuitions and Cost to Students.............................    76
    Financing Pell Grants and Direct Lending Proposal................    77
    Direct Lending Proposal-Terminating Lender Subsidies.............    77
    21st Century Community Learning Centers..........................    78
    Impact of Economy on After-School Programs.......................    78
    After-School Programs............................................    78
    Competitive Grant Programs and Rural Districts...................    80
    Turning Around Low-Performance Schools...........................    80
    School Improvement Intervention Models...........................    81
    Helping Struggling Populations...................................    81
    Charter Schools in Rhode Island..................................    82
    Adult Literacy...................................................    82
    Pell Grants and College Tuition..................................    82
    Adult Literacy and Training......................................    83
    Student Loan Interest Rates......................................    84
    Even Start Program--Family and Adult literacy....................    84
    Teacher Support and Chronic Low-Achieving Schools................    85
    Holding Schools, Districts and States Accountable................    86
    Funding for Low-Achieving Schools................................    86
    Support for Teachers.............................................    86
    Increased Resources, Shared Responsibility.......................    87
    Programs Flat-Lined in FY 2011 Budget............................    87
    Indian Education.................................................    88
    Increased Funding in Consolidations..............................    88
    Graduation Rates of NCAA Athletes................................    89
    Real Estate Market Impact on School Funding......................    89
    Education Funding as Investment in Nation........................    90
    Disparities in CCAA Graduation Rates.............................    90
    National Education Policy Discussions............................    91
    Formula-Driven Stimulus Bill Funding.............................    91
    Helping Schools Not in Formula Calculations......................    91
    State Fiscal Stabilization Funds.................................    92
    Tax Credit for Privately Schooled Students.......................    92
    Fiscal Constraints on National School Districts..................    92
    Federal vs. Local Share in Education Funding.....................    93
    Addressing Low Graduation Rates of NCAA Athletes.................    94
    Native American and Alaska Native Students Education.............    94
    Common Course Standards..........................................    95
    Texas Proposed Textbook Changes..................................    95
    48 States Working Toward Common Standards........................    95
    ESEA Reauthorization.............................................    96
    Shepherd Program--Poverty and Human Capability...................    96
    Effective Teachers and Leaders Funding...........................    96
    Educational Opportunity Equity Commission........................    97
    Ensuring Educational Equity......................................    97
    Teacher and Principal Equity.....................................    98
    Schools as a Reflection of Community.............................    98
    Promise Neighborhoods............................................    99
    Shift Toward Competitive Programs and Consolidations.............    99
    Educational Technology State Grant Programs......................    99
    Income-Based Repayment of Student Loans..........................   100
    TRIO, Gear-Up, HEP and Camp Program Requests.....................   100
    College Access and Completion Funds..............................   101
    Social and Emotional Learning Programs...........................   101
    Social, Emotional Development and Decision Making Ability........   101
    Teaching Students To Understand Emotions.........................   102
    Early college Enrollment and Dual Enrollment Programs............   102
    College Pathways.................................................   103
    Pell Grant and Early College Programs............................   103
    Disproportionality in Special Education..........................   103
    Early Learning Challenge Fund....................................   103
    Even Start.......................................................   104
    Education Jobs Saved by Recovery Act.............................   105
    Education Jobs Bill..............................................   105
    Title 1, ESEA Funds for High-Poverty Schools.....................   106
    School Improvement Grants........................................   106
    Title 1 Funding..................................................   106
    Addressing Inequality in Education...............................   107
    Race to the Top Application Process..............................   107
    Focusing Increased Resources on Inequality.......................   108
    History and Civics Education.....................................   108
    Budget Increased To Promote Well-Rounded Education...............   109
    Civil Rights.....................................................   109
    Proposal for Direct Lending for Student Loans....................   109
    Proposal To Increase Pell Grant Funding..........................   110
    Student Loan Reform..............................................   110
    Individuals With Disabilities--Grant to States...................   111
    Teachers Recruitment and Retention...............................   111
    Teachers Incentive Fund..........................................   112
    Promise Neighborhoods............................................   112
    Move Toward More Consolidation and Competitive Programs..........   113
    Dropout Rate and College Completion..............................   113
    Focus on Achievement Gaps........................................   114
    Assessment of No Child Left Behind...............................   114
    Focus on Growth, Gain; Reward Success, Excellence................   114
    Flexibility and Accountability...................................   114
    Proposal To Move to Student Loan Direct Lending..................   115
    Robotics Competitions............................................   116
    Incentives and Public-Private Partnerships.......................   116
    Partnering of School Districts To Share Services.................   117
    Pell Grants......................................................   117
    Savings From Direct Lending......................................   117
    IG Audit of Reading First........................................   117
    Eliminating Conflict of Interest in Competitive Awards...........   118
    Actions To Prevent Conflicts of Interest.........................   118
    Origins of U.S. Deficit..........................................   119
    Chairman's Closing Remarks.......................................   119
    Questions for the Record........................................120-143

                    Department of Health and Human Services

    Chairman's Opening Remarks.......................................   145
    Witnesses Opening Statements....................................147-149
    Witnesses Written Statements....................................150-161
    Health Care Reform...............................................   162
    Cost of Insurance Premiums.......................................   162
    Individual Mandates..............................................   168
    Medical Loss Ration..............................................   168
    State Insurance Commissioners....................................   169
    Single-Payor System..............................................   170
    Medical Error Rates..............................................   171
    Medical Advantage................................................   171
    Diversity in Health Professionals................................   172
    High Risk Pools..................................................   175
    Prohibition on Lobbying With Federal Funds.......................   176
    Prevention and Wellness Funding..................................   177
    Reducing Caesarean Births........................................   178
    Increasing Birthing Centers......................................   178
    FMAP Formula.....................................................   179
    Health Care Fraud................................................   179
    Medicare Reimbursement...........................................   180
    Hospital Acquired Infections.....................................   181
    Medicare Reimbursements Rates....................................   182
    Health Insurance Costs...........................................   184
    Prevention and Public Health Fund................................   185
    Prevention and Mindfulness.......................................   185
    Primary Care Physician Shortage..................................   186
    Health Reform Compliance and Enforcement.........................   187
    Prevention Issues................................................   188
    Health Care Reform...............................................   190
    Unfunded Programs in Health Reform...............................   192
    Underage Drinking................................................   194
    Section 317 Vaccination Program..................................   195
    Projected Coverage Rates.........................................   195
    Physician-Owned Hospitals........................................   196
    Children's Health Task Force.....................................   196
    Forum Health Bankruptcy..........................................   197
    Food Safety......................................................   198
    Questions for the Record........................................200-277

                         National Institutes of Health

    Chairman's Opening Statement.....................................   279
    1Witnesses Opening Statement....................................281-285
    Witnesses Written Statement.....................................286-308
    Comparative Effectiveness Research...............................   309
    Adult and Embryonic Stem Cells...................................   310
    Sickle Cell......................................................   311
    FY 2011 Funding..................................................   313
    Pancreatic Cancer................................................   316
    Class B Dealers..................................................   317
    Breast Cancer Mammography Guidelines.............................   317
    Funding for Comparative Effectiveness Research...................   318
    Private Sector Innovations From NIH Investments..................   319
    Priority Setting for Resource Allocations........................   321
    Pediatric Cancer Research........................................   322
    Food Allergies...................................................   323
    Pediatric Diabetes...............................................   324
    Environmental Causes of Illness..................................   326
    Mental Illness Among Veterans....................................   328
    National Cancer Institute Clinical Trials........................   329
    Biodefense Research..............................................   331
    Behavioral Research..............................................   332
    Coordination of Research.........................................   334
    Traumatic Brain Injury...........................................   335
    Electronic Health Records........................................   336
    Biomedical Research in the United States.........................   336
    Recovery Act Investments.........................................   337
    Health Care Reform and Research..................................   339
    New Stem Cell Lines..............................................   341
    Dr. Ruth Kirschstein Training Award..............................   341
    Ten Most Important Advancements.................................343-349
    Recovery Act Funds...............................................   350
    Alzheimer's Funding Care Versus Cure............................351-352
    Questions for the Record........................................354-437