[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 7
                                                                   Page
 Combating Health Care Fraud and Abuse............................    1
  Testimony of Interested Individuals and Organizations/Labor and 
Education Priorities/ESEA Reauthorization.........................  103
 FY 2011 Budget Overview: Jobs, Training, and Education...........  230
 FY 2011 Budget Overview: Social Security Administration..........  356

                                ________
         Printed for the use of the Committee on Appropriations
                                 Part 7

      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 7
                                                                   Page
 Combating Health Care Fraud and Abuse............................    1
  Testimony of Interested Individuals and Organizations/Labor and 
Education Priorities/ESEA Reauthorization.........................  103
 FY 2011 Budget Overview: Jobs, Training, and Education...........  230
 FY 2011 Budget Overview: Social Security Administration..........  356

                                ________
         Printed for the use of the Committee on Appropriations
                                ________
                     U.S. GOVERNMENT PRINTING OFFICE
 58-234                     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

                              ----------                              

                                           Thursday, March 4, 2010.

                 COMBATING HEALTH CARE FRAUD AND ABUSE

                               WITNESSES

WILLIAM CORR, DEPUTY SECRETARY, DEPARTMENT OF HEALTH AND HUMAN SERVICES
GARY GRINDLER, ACTING DEPUTY ATTORNEY GENERAL, DEPARTMENT OF JUSTICE
DAN LEVINSON, INSPECTOR GENERAL, DEPARTMENT OF HEALTH AND HUMAN 
    SERVICES
OMAR PEREZ, SPECIAL AGENT, OFFICE OF INSPECTOR GENERAL, DEPARTMENT OF 
    HEALTH AND HUMAN SERVICES

                   Opening Statement by Chairman Obey

    Mr. Obey. Well, good morning or good afternoon or whatever 
it is. Let me thank our four witnesses for appearing here 
today, and let me simply make a few short remarks before I turn 
it over to them. We are going to have a couple of votes in 
about an hour to hour and a half, so you can bet that they will 
be timed to provide maximum ability to screw up this hearing. 
But nonetheless, we will try to have some sense of order before 
that creates chaos. This committee has a very special 
responsibility and a special meetings. And it is our job to, 
among others, to try to help meet the needs of people who 
qualify for programs covered by our appropriation bill, and 
those programs are desperately needed by millions of Americans.
    But in doing that, what else we also have a concurrent 
obligation to try to see to it that taxpayer money is used 
effectively not wasted on fraud or abuse or anything else. 
There isn't any specific line item in the budget for waste, 
fraud and abuse, so ugliness is in the eye of the beholder, I 
guess. But nonetheless, we have an obligation to try to limit 
it as much possible.
    That is why this committee increased funding to nearly $1.1 
billion for program integrity activities designed to reduce 
improper payments, fraud and abuse. That is nearly double the 
previous year's amount. The potential savings to the taxpayer, 
we are told, many times larger than the investments. A large 
part of that appropriation went to the Social Security 
Administration who worked on a backlog of continuing disability 
reviews to determine whether benefits are being properly paid. 
It is expected to provide a $6,000,000,000 return to the 
taxpayers over the next 10 years. Some went to the Labor 
Department to conduct more eligibility assessments under the 
unemployment insurance program.
    The other major use of the appropriation is in preventing, 
detecting and prosecuting fraud and abuse in Medicare, Medicaid 
and other health care programs, which is the many focus of our 
hearing today.
    The program integrity fund is in last year's Labor-HHS bill 
included $311,000,000 specifically for that purpose. The 
appropriations were provided to the Centers for Medicare and 
Medicaid Services to review and audit claims, looking for 
patterns that suggest improper payment or fraud and to expand 
program integrity efforts in areas like Medicare Advantage and 
prescription drug plans, the HHS Inspector General to conduct 
investigations of schemes to defraud Medicare and Medicaid and 
the Department of Justice for investigations by the FBI for 
criminal prosecution of wrongdoers and for civil litigation 
that recovers funds for taxpayers and the Medicare trust fund. 
Among other uses, $41,000,000 of those funds was used for joint 
HHS and Justice Department strike teams that are now operating 
in seven cities.
    We are holding this hearing to ask the agencies involved 
how they are using the amounts provided in the fiscal 2010 bill 
to combat health care fraud and abuse. What specific activities 
are being undertaken? What is being done that could not have 
been done without this increased investment, what savings to 
the taxpayers and recoveries to the Medicare trust fund can be 
expected as a result? Do the witnesses expect the savings to 
exceed the cost of the effort by any appreciable amount?
    I understand the administration is asking for a 
$250,000,000 increase in health care program integrity funding 
for 2011. That may very well be justifiable, but frankly, 
before we consider the administration's request for next year, 
this committee wants to have a better understanding of exactly 
how previously provided funds are being used and have been used 
and what benefits have accrued to the taxpayer by the prior 
appropriation of that money.
    I should also note that health care fraud and abuse covers 
a wide range of misdeeds. Wrongdoers come in all shapes and 
sizes from individuals operating out of a store front somewhere 
to large health institutions and drug companies. We need to be 
going after fraudulent schemes of all types and crooks of all 
sizes, big and small. I would hope that the primary focus is on 
the whales rather than the minnows. But they are all stealing 
from taxpayers and from patients.
    Let me say a few words about our panel of witnesses. Last 
year, the Obama administration established the Health Care 
Fraud and Prevention Task Force or HEAT, which brings together 
high level lenders from the department of HHS and the 
Department of Justice to share information and coordinate 
strategy. Our first two witnesses are the cochairs of that task 
force, Bill Corr, the Deputy Secretary of HHS and Gary 
Grindler, the Acting Deputy Attorney General. Both of their 
departments receive substantial funds from the appropriation we 
are discussing today.
    In addition, we have Dan Levinson, the HHS Inspector 
General whose investigators and auditors are on the front lines 
of the war against health care fraud.
    And finally for review from the field, we have one of those 
investigators. He is Omar Perez, a special agent from the HHS 
IG's Office and one of the leaders of the Miami Health Care 
Fraud Strike Force.
    The administration's funding requests for next year would 
increase these by 13 cities to operate in 20 cities.
    We appreciate all four of you appearing here today. Before 
we hear from you, let me first turn to the committee's ranking 
member for today, Mr. Rehberg. I expected to turn to a good 
looking fellow by the name of Todd Tiahrt, but I have been 
grossly disappointed.
    For the record, I am only kidding.
    Mr. Rehberg. That is probably because I took a shot at a 
cockroach on the way. I am sorry I did that.
    Mr. Chairman, it is always a pleasure to be in your company 
and back with you for this year's hearing.
    I am particularly interested in this topic, and I presume 
all of my colleagues are as interested as I am in rooting out 
the waste, fraud and abuse in the entitlement programs run by 
CMS. As we all know, the Federal Government is hemorrhaging 
money. Last year we tallied up by far the highest deficit in 
the history of the country. While we ran that deficit, we 
heaped another trillion dollar plus of debt on our children and 
grandchildren.
    While Republicans and Democrats can disagree on the level 
of Federal spending that has been going on recently, it is my 
hope that we can all agree that to the extent we spend money, 
it would be spent on the purposes for which it was intended. We 
must hold agencies accountable for improper payments, and we 
must identify, pursue and prosecute those who would defraud the 
American taxpayer.
    As I was preparing for this hearing, I came across a series 
of alarming statistics, many of which I am sure we will hear 
from our witnesses. According to the OMB report, Medicare 
improper payments totaled an estimate of $10,800,000,000 in 
2007. On November 16, 2009, The Washington Post reported more 
than $47,000,000,000 in improper payments were made.
    I understand that there has been a change in how these 
improper payments are categorized, but that still seems like a 
pretty substantial increase, regardless of whether or not the 
methodology has changed. I am glad to see that the 
administration is taking this problem seriously. It would be my 
hope that savings that are recovered are being used to shore up 
the Medicare trust funds and not immediately spent on something 
else. In any case, I am interested to hear from the witnesses.
    Thank you, Mr. Chairman. Again, it is a pleasure to be in 
your company.
    Mr. Obey. Thank you. Why don't we begin with Mr. Corr and 
let me ask you to summarize your statement and, we will get to 
the questions.

                     Opening Statement by Mr. Corr

    Mr. Corr. Mr. Chairman, Mr. Rehberg, thank you very much 
for the opportunity to appear today. Mr. Chairman I provided a 
rather lengthy statement. I will summarize. I realize it was 
quite long but we have a lot we wanted to tell you. As you both 
noted very clearly, the health care fraud is a national 
problem. It is a Federal and State as well as private insurance 
program problem. Fraud is on the rise and the criminals who 
perpetrate it have become more organized and more 
sophisticated. We are responding with every tool at our 
disposal, and we are asking for new tools where our authorities 
are insufficient, and additional funds where current resources 
are not enough to get the job done.
    In the last year, we have launched major new operations 
against criminal and civil health care fraud. We are employing 
new technologies to identify fraud and prevent it where 
possible, including the construction of sophisticated new 
computer databases.
    At the Centers for Medicare and Medicaid Services, we are 
consolidating program integrity functions to make them more 
efficient, and for the first time have appointed a deputy 
administrator whose sole focus is the prevention of fraud and 
other improper payments. We are shifting program operations to 
the greatest areas of waste, fraud and abuse and we are 
coordinating anti fraud programs across the Federal and State 
governments and seeking partnerships throughout the private 
sector. We are doing more than ever before, but we are just 
getting started.
    The President signaled health care fraud is a priority of 
his administration with his fiscal year 2009 budget last May 
when he established a joint task force between HHS and the 
Department of Justice to strike against fraud hot spots in 
targeted cities across the country. Our joint operation, as you 
noted, known as Project HEAT is working well and we seek your 
support to expand it.
    This subcommittee was instrumental in securing an 
additional $311,000,000 in discretionary funds to fight waste, 
fraud and abuse in the current fiscal year. We immediately 
poured that money into our program integrity operations and 
have seen immediate returns on the investment. The 
discretionary dollars funded a new approach to health care 
fraud involving innovative uses of claims data.
    First, working with law enforcement, we used new methods of 
analyzing the data to identify spikes in claims and geographic 
regions and among types of services. In some cases, we see 
spikes 1,000 percent higher than the national average. Then we 
have targeted regions and specific types of claims using 
analytic tools and concentrated law enforcement efforts 
involving the Department of Justice, the HHS office of 
Inspector General and CMS experts as well as State and local 
law enforcement agencies.
    We now have evidence that this approach works. Deputy 
Attorney General Grindler and Inspector General Levinson will 
tell you about the criminals we have put in jail, and I can 
tell you how your investments in program integrity have saved 
dollars on the front end.
    We use the funds to crack down on durable medical equipment 
fraud, one of our largest problems. For example, by enforcing 
new standards of participation in Medicare, conducting onsite 
visits and investigating the fraud itself, since October 1, 
2009, 6,000 suppliers have dropped out of the program and we 
revoked enrollment on another 10,000 suppliers. That is 16,000 
less potential abusers. With the new discretionary funds, we 
expanded site visits to high risk DME suppliers in seven 
States. The result, 265 supplier numbers pulled, two payment 
suspensions, and $5,400,000 in claims denied in the last 5 
months.
    We also used discretionary funds to focus on home health 
care fraud in high risk areas like Florida and Texas. In just 3 
months in south Florida, we conducted inspections of 300 
beneficiaries and discovered 200 of them did not meet the 
definition of a homebound patient. The added scrutiny saved 
$2,200,000 in the Miami area alone.
    We already knew targeting fraud works. Within 1 year after 
first establishing the Miami strike force, DME claims dropped 
by $1,600,000,000.
    Our contractors focusing on part C and part D of the 
Medicare program have reviewed thousands of cases and referred 
hundreds of fraud cases to Federal and State law enforcement 
agencies. If we are achieving major savings in one metropolitan 
area, we know additional investments will save or recover 
substantial sums. That is why the Obama administration is 
requesting a record $1,700,000,000 in fiscal year 2011 for 
Project HEAT and other initiatives to fight waste, fraud and 
abuse.
    The President's latest health insurance reform proposal 
includes aggressive new program integrity authorities. These 
proposals range from imposing tougher disclosure requirements 
to identifying high risk providers who have defrauded the 
taxpayers. Details of these proposals are in my written 
testimony and submitted for the record.
    As the President indicated yesterday, he is committed to 
passage of health reform in the next few weeks. Without it, 
insurance premiums will continue to increase and the deficit 
will rise. The President is committed to health reform that 
addresses these problems and fixes our broken health insurance 
system.
    Only 5 weeks ago, HHS Secretary Sebelius and the Attorney 
General convened a national summit on health care fraud. The 
summit inspired a new framework of strategic principles to 
improve our program integrity operations. Strategic principle 
one, we will tailor additional interventions toward the areas 
where fraud and abuse are greatest. We will redirect resources 
to significant areas of fraud, waste and abuse and our 
experience in Florida shows that this strategy works. Second 
principle, continuous improvement of program integrity 
operations for Medicare and Medicaid. We are already 
consolidating program integrity policies at CMS and revamping 
specific contractor functions relating to the control of 
improper payments. Our contractors process 3,600,000,000 claims 
each year.
    We need to help them do a better job of weeding out fraud 
and improper claims. The third strategic principle is to 
strengthen prevention of improper payments at the front end of 
our claims payment system. Due to prompt pay requirements in 
statute for Medicare and Medicaid, currently our systems are 
primarily focused on processing claims. Oftentimes, improper 
payments are not discovered until after expenditures have been 
made, which are required within 30 days for clean claims in the 
Medicare program.
    We are constantly in a pay and chase mode. We are steadily 
working to shift our emphasis to prevention. Part of this 
involves redesigning our computer processing networks, but it 
also involves stricter provider enrollment criteria and the 
conduct of onsite visits of providers.
    Fourth strategic principle is to establish new partnerships 
with the private sector, to share information and methods to 
detect and prevention fraud. The public and private sectors 
have many common problems, and we should find common solutions.
    As we move forward, we must keep in mind that these 
programs are designed to provide health care to needy, disabled 
and aging Americans. We also need to remember that the vast 
majority of health care providers are honest people who do the 
right thing and are able to help millions of people every day. 
So we must strive to strike the right balance between providing 
health care and preventing improper payments.
    The fiscal year 2011 budget the President includes 
$1,700,000,000 for the HCFAC or the Health Care Fraud and Abuse 
Control program, including mandatory and discretionary 
resources. Of this total, the discretionary request is 
$561,000,000, which is a $250,000,000 increase over fiscal year 
2010. The request is part of a multi-year strategy to implement 
our strategic principles and goals, and the budget assumes this 
funding level will grow each year for the next 10 years and 
save the American taxpayers $25,000,000,000.
    In summary, Mr. Chairman, across the Nation, health care 
fraud and improper payments have undermined the integrity of 
our public and private health insurance programs. As a result, 
taxpayer dollars have been stolen, fraud has driven up health 
care costs, and in a few cases patients have been endangered. 
Reversing the problem will require a long-term, sustainable 
approach. We believe we have the right approach to succeed in 
overturning fraud and abuse. We want to work with you as we 
move forward, and we ask for your guidance and support. Thank 
you, Mr. Chairman.
    Mr. Obey. Thank you very much.
    Written Statement by William Corr, JD follows:

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    Mr. Obey. Mr. Grindler.
    Mr. Grindler. Thank you, Mr. Chairman, Chairman Obey, 
Ranking Member Rehberg and other members of the subcommittee. 
Thank you for inviting me here today to testify about the 
administration's fiscal year 2011 budget request to support the 
joint efforts of the Department of Justice and the Department 
of Health and Human Services to fight and deter health care 
fraud.
    As you know, every year, the Federal Government spends 
hundreds of billions of dollars to provide health care for some 
of our Nation's most vulnerable populations, the elderly, the 
poor and the disabled. While most medical providers and health 
care companies are doing the right thing in their dealings with 
Medicare and Medicaid, it is indeed a sad fact that there are 
unscrupulous individuals who will attempt to game the system 
for their personal gain. It is for these reasons that the 
Attorney General and Secretary Sebelius have made the fight 
against health care one of paramount importance to both 
Departments.
    As referenced by the Chairman in his opening remarks, in 
May 2009 they announced the creation of HEAT, a senior level 
joint task force which I oversee along with Deputy Secretary 
Corr. This task force is designed to marshal the combined 
resources of both agencies in new ways to combat all facets of 
the health care fraud problem. The goals of HEAT are clear, to 
prevent and deter fraud through increased prepayment reviews 
and audits, to strengthen enforcement efforts through the 
expansion of the Medicare fraud strike force and expanded 
capacity for false claims cases, to leverage our partnership 
and include increasing private sector outreach, improving 
coordination with State and local antifraud efforts, and 
expanding education on health care fraud to health care 
providers, and finally, to identify and eliminate statutory and 
regulatory impediments to our health care fraud prevention and 
enforcement efforts.
    I believe that our two agencies have a proven track record 
of success and the HEAT program, as we will discuss in the 
question session, has been very successful. Through fiscal year 
2008, we have returned more than $15,000,000,000 to the Federal 
Government with $13,100,000,000 of that amount being returned 
to the Medicare trust fund. And the remaining amounts----
    Mr. Obey. Would you say those numbers again.
    Mr. Grindler. $15,000,000,000 returned to the Federal 
Government through fiscal year 2008, with $13,100,000,000 of 
that amount being returned to the Medicare trust fund, with the 
remaining amounts primarily being returned to Federal agencies 
in the form of restitution and compensatory damages.
    Since January of 2009, we have recovered more than 
$2,300,000,000 in health care fraud matters brought under the 
False Claims Act. As important as these recoveries to Medicare 
and other Federal health programs are, equally important is the 
significant deterrent effect that our enforcement efforts have 
had. For example, 12 months after we started and launched our 
first Medicare fraud strike force operation in the Miami area 
in 2007, there was an estimated reduction of $1,750,000,000 in 
durable medical equipment claims submissions. And this is an 
example of success that isn't measured in terms of getting 
dollars back. This is an example of success where fraud going 
forward, we believe, was stopped as a result of the strike 
force efforts. In addition to these strike force activities, 
our other enforcement efforts run the gamut from a solo 
provider who bills Medicare for services not rendered to more 
sophisticated and far reaching schemes.
    Just last week the former owner of City of Angels Hospital 
in Los Angeles was sentenced to more than 3 years in jail and 
ordered to pay more than $4,000,000 in restitution for scamming 
our Medicare system by preying upon homeless people.
    In my written testimony I have outlined our fiscal year 
2011 budget which includes an increase to the Department of 
Justice of $60,000,000 in discretionary HCFAC resources 
bringing the total fiscal year 2011 discretionary request for 
DOJ to $90,000,000. The Department intends to use this funding 
to increase the number of strike forces from the current seven 
cities to as many as 20 locations throughout the Nation. In 
addition to the strike forces, these additional discretionary 
dollars will be used to focus additional attention on illegal 
activities, including alleged fraud by pharmaceutical and 
medical device manufacturers. Of course the largest expenditure 
of funds by the Department of Justice in the area of health 
care fraud enforcement funding is on our people. The expertise 
and commitment of our litigators, prosecutors, strike force 
team members, and analysts are the reasons the Department of 
Justice's health care fraud strategies have been so successful 
and why we expect them to be successful in the future. The 
return on investment we have achieved with those resources is 
approximately $4 per every $1 spent from the HCFAC account. And 
this is testament to the hard work and dedication of the career 
professionals in the Department of Justice. Our ability to 
effectively investigate and prosecute health care fraud is 
directly related to our ability to retain personnel year to 
year.
    Mr. Chairman, my written testimony outlines in much greater 
detail the important work of the Department of Justice and its 
various components to bring justice to those who would prey on 
vital government programs. I thank you and the subcommittee for 
inviting me to testify today and I look forward to your 
questions.
    Written statement by Gery Grindler follows:

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    Mr. Obey. Thank you. Mr. Levinson.
    Mr. Levinson. Good afternoon Mr. Chairman and members of 
the subcommittee. Thank you for the opportunity to appear 
before you today and for your commitment to furthering OIG's 
mission to protect the integrity of HHS programs and the health 
of their beneficiaries. Medicare and Medicaid fraud, waste, and 
abuse cost the taxpayers billions of dollars each year and put 
the programs' beneficiaries at risk. You have asked me to 
discuss our efforts in fighting fraud and to address how we 
utilize our resources to protect American taxpayers and 
beneficiaries.
    OIG combats fraud and abuse through a nationwide program of 
investigations, audits, evaluations, and enforcement and in 
compliance activities. OIG invests in people. Our new funds are 
used to hire the professionals who enable us to expand the 
scope and depth of our work.
    Two thousand and nine marked the first year that this 
subcommittee increased funding through the HCFAC discretionary 
allocation. The $19 million supported approximately 140 full-
time staff. This year, we received an additional $11 million in 
HCFAC funding. With these funds we are hiring 45 new staff.
    Currently, our office employs over 1,500 people comprised 
of over 45 percent audit, 34 percent investigations, 10 percent 
program evaluators; legal technical and other support making up 
the rest. New staff will array similarly except for a higher 
percentage of investigators to expand our Medicare fraud strike 
forces. Based on historical production rates, these 45 new 
staff will investigate an estimated 165 more health care fraud 
cases and conduct approximately 20 more Medicare and Medicaid 
audits and evaluations.
    Our program integrity activities are a sound investment. 
Last year, OIG investigations yielded $4 billion in settlements 
and court ordered fines, penalties and restitution. OIG audits 
identified nearly $500 million in receivables. We uncovered 
scores of program vulnerabilities and recommended effective 
remedies. So far this year, OIG work is producing billions of 
dollars in expected recoveries as well as improvements to 
program integrity and fraud deterrence.
    Based on early successes in Miami and Los Angeles, we 
launched strike forces in two new cities, Detroit and Houston, 
last May. In December, we extended our strike force coverage to 
Brooklyn, Tampa and Baton Rouge. With the enhanced funds, we 
are doubling our strike force staff to 42.
    Collectively, the strike forces have resulted in about 270 
convictions, indictments of more than 500 defendants, and more 
than $240 million in court-ordered restitution, fines, and 
penalties.
    Miami is ground zero for Medicare fraud. There we have 
uncovered rampant fraud among durable medical equipment 
suppliers, infusion clinics and home health agencies.
    Early results from our Detroit and Houston strike forces 
demonstrate that this model is successful in other fraud hot 
spots. In the 9 months since we launched in Detroit and 
Houston, these teams have secured indictments of more than 100 
defendants.
    For 2011, the increases in funds requested by the 
President's budget would enable OIG to expand our strike force 
presence from seven to 20 cities, supported by 130 new staff. 
We fully expect our new strike force teams to root out fraud 
with similar success as our existing teams. We also direct our 
HCFAC resources to investigate civil fraud cases. In our 
biggest settlement to date, in September, as the deputy AG 
noted, Pfizer agreed to pay $2.3 billion to resolve its 
liability for illegally promoting its drugs; the largest 
criminal fine in American history.
    In January, FORBA agreed to pay $24 million to settle 
allegations that its Smiles Dental Clinics were performing 
unnecessary and often cruel treatments on children to maximize 
Medicaid reimbursement. Criminal investigations of individual 
dentists are underway.
    Investments in OIG also help prevent fraud and waste. Our 
HCFAC-funded evaluations this year will recommend improvements 
to Medicare contractor operations, services provided to nursing 
home residents and reimbursement for drugs. We are also 
auditing payments to hospitals, home health agencies, and 
Medicare Advantage and Part D plans leading to potential 
recovery of misspent funds and actions to improve payment 
integrity.
    Unfortunately, fraud persists. Continuous strong monitoring 
results show us there is a need for more oversight and more 
enforcement.
    Each year, we turn away viable allegations that we do not 
have resources to investigate. The funds provided by this 
subcommittee and our proposed increase for next year will 
enable us to expand our efforts to continue to protect these 
important programs.
    Thank you for your support for this mission, and I welcome 
your questions.
    Mr. Obey. Thank you very much.
    [Written statement by Daniel R. Levinson follows:]

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    Mr. Obey. Mr. Perez, we will hear from the field.
    Is it Perez or Perez?
    Mr. Perez. However you like to pronounce it.
    Mr. Obey. With me it is either Obey or Obey.
    Mr. Perez. I did make that mistake earlier. I pronounced 
your name obey.
    Mr. Obey. It is O-b-e-y just like the stop sign.
    Mr. Perez. Ranking member Rehberg and distinguished members 
of the subcommittee, my name is Omar Perez. I am a special 
agent with the U.S. Department of Health and Human Services, 
Office of Inspector General. And I am a member of one of the 
Medicare fraud strike force teams in Miami, and I am honored 
for the invitation and the opportunity to discuss our efforts 
in combating Medicare and Medicaid fraud. I am here to share my 
experiences as a criminal investigator on the front line in the 
fight against health care fraud. And in Miami, Medicare fraud 
is not only perpetrated by independent scattered groups but 
also by competitive organized businesses complete with 
hierarchies and opportunities for advancement.
    Medicare fraud is discussed openly on the streets and is 
accepted as a safe and easy way to get rich quick. The money 
involved is staggering. People from all walks of life are 
gravitating toward Medicare fraud. I see high school dropouts 
making anywhere from $100,000 to $1,000,000 a year.
    Typically, we would see business owners, health care 
providers, doctors, and Medicare beneficiaries participating in 
the fraud. But now, we are seeing that drug dealers and 
organized criminal enterprises are also joining in.
    Today I will describe the typical fraud scheme, provide an 
agent's perspective of the strike force investigative approach; 
I will share some examples of some success stories and, 
finally, discuss the evolution of fraud in south Florida.
    Now prior to the strike force, south Florida was riddled 
with sham DME companies, and the owners of those companies had 
one idea in mind: steal from Medicare. In order to perpetrate 
these frauds, nominee owners are recruited. And these owners 
place their names on corporate documents, lease agreements, 
corporate bank accounts, and in exchange, receive between 10- 
and $20,000. They obtain lists of stolen patient information 
from corrupt employees of hospitals, physician offices and 
clinics, and they also obtain stolen physician information. 
With these two key pieces of information, fraudulent claims are 
submitted to the Medicare program for equipment that is never 
provided.
    Once the money is deposited into the account, it is 
withdrawn within days using multiple check cashers. The idea is 
to deplete the account before Medicare discovers that 
fraudulent billing is occurring, and this way there is no money 
left in the accounts. These DME schemes are executed within a 
matter of months.
    By the time traditional investigative referral methods come 
to fruition, criminals have absconded with millions of taxpayer 
dollars. And so we developed a streamlined investigative 
approach for strike force investigations. Now the model 
includes the following steps: obtain and analyze Medicare 
claims data, obtain the corporate documentation, identify and 
obtain banking information, and identify the medical billing 
agents.
    To highlight the successes of this strategic model, I offer 
the following examples. My team discovered an aberrant billing 
pattern for City Wide M.S. Corp, a DME company. 2\1/2\ Weeks 
after Rodolfo Gonzalez purchased this company, he submitted 
$1,800,000 in fraudulent claims. And this included claims for 
42 deceased beneficiaries. We contacted the bank and learned 
that over $100,000 was still in the account.
    One day later, we were advised that someone was at the bank 
trying to deplete that account. So we rushed to the bank. We 
didn't find the person there. So we went to Gonzalez's home. We 
found him there and on our way we spoke with the highest 
referring physician who told us that they had never seen any of 
the patients nor had they prescribed any of the equipment that 
City Wide had billed on behalf of this physician. So Gonzalez 
admitted he owned the company and he was the signer on the 
account and that day City Wide ceased to submit any claims to 
Medicare.
    Gonzalez voluntarily forfeited the money that was still 
remaining in the account, and he was subsequently indicted and 
found guilty of conspiracy to commit health care fraud. He was 
sentenced to 48 months incarceration and ordered to pay over 
$300,000 in restitution.
    In yet another example, my team received a phone call from 
a bank advising that Reinel Pulido was at the bank inquiring 
about a hold that had been placed on his account. Soroa Medical 
was another DME company this time submitted over $15 million 
and had been reimbursed over $1.5 million. We immediately went 
to the bank and interviewed Pulido, who admitted to being 
recruited to place his name on the company documents and was 
paid approximately $50,000 to do this. So we arrested him 
immediately.
    He voluntarily forfeited the money that was remaining in 
the account and subsequently he was sentenced to 36 months 
incarceration and ordered to pay $1.5 million in restitution.
    We are finding that criminals have shifted their schemes 
from purchasing DME companies to establishing store front 
shams. The store fronts are set up by criminals who have the 
required equipment to pass the Medicare onsite inspections, but 
once the provider number is obtained, they simply pick up their 
equipment and all that remains is an empty store front. We have 
also found that criminals are now migrating to other services 
within the Medicare program to perpetrate this fraud. The other 
services impacted include home health agencies, community 
mental health, physical therapy and occupational therapy.
    Now historically, Medicare beneficiaries and physicians 
were not involved, but we are now finding that in many cases 
they are getting paid to participate in this fraud.
    Thank you for the opportunity to discuss strike force 
operations in south Florida and the strategies and 
investigative methods that we have utilized to protect taxpayer 
interests and I would be happy to answer any questions that the 
committee would have.
    Mr. Obey. Thank you all very much.
    [Written statement by Omar Perez follows:]

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    Mr. Obey. Mr. Rehberg.

                   RECOVERY AUDIT CONTRACTORS (RACS)

    Mr. Rehberg. Mr. Chairman, as I recall, Congress is part of 
the Medicare Modernization Act, and later through the Tax 
Relief Health Care Act of 2006, established a program where 
recovery audit contractors assisted CMS in identifying and 
recouping improper payments under the Medicare program. My 
understanding that of that legislation is that CMS was required 
to implement a permanent and nationwide recovery audit 
contractor program by January 10 of this year. Are these RACs 
now fully operational? If not, what additional steps need to be 
taken to ensure all States are covered? And can you tell me how 
much funding in improper payments has been recovered to date by 
these RACs?
    Mr. Corr.
    Mr. Corr. Mr. Rehberg.
    Mr. Rehberg. By the way it is Rehberg. I don't care either. 
It is a silent H.
    Mr. Corr. Mr. Rehberg, there are four Recovery Act 
contractors that are responsible for taking post payment data 
and reviewing it to be sure that we have identified any 
improper payments. The focus is not so much fraud as it is on 
improper payments. Focus is oftentimes on hospitals to assure 
that the payments included on, claim forms that have been 
submitted were properly, those services were actually provided, 
there was no upcoding and no improper work done.
    The four RACs are up and running. We still have, I will I 
have to get you a more thorough report. I apologize I don't 
have exactly where we are with each of the four. They are in 
place. We have consulted with each of the 50 States talking 
about what the Recovery Act contractors will be doing. They 
will be looking at both part A and B claims under the----
    Mr. Rehberg. Do you know how much has been brought back by 
the RACs that are in place?
    Mr. Corr. The initial, I believe, it was seven States 
produced, I think it was $60,000,000 in savings in FY 2010. We 
are projecting substantially higher savings as we expand the 
program because the initial savings were developed from pilots 
that were done. We are projecting what will happen nationwide, 
but we expect within a couple of years to have hundreds of 
millions of dollars in savings.
    Mr. Rehberg. Is there a report that is available as a 
result of the January 10 deadline?
    Mr. Corr. We will develop one for you. We will give you an 
update. That would be the best way for me to give a more 
thorough report on exactly where we are with each of the four.
    [The information follows:]

                   Recovery Audit Contractors Program

    Deputy Secretary Corr. CMS is in the process of finalizing the FY 
2009 status report, which focuses on the implementation efforts CMS and 
the RACs undertook in FY 2009 to implement the national RAC program. 
Section 302 of the Tax Relief and Health Care Act 2006 made the RAC 
Program permanent and required the Secretary to expand the program to 
all 50 states by no later than 2010. CMS expects this full report to be 
released soon. The CMS website and presentations given to various 
stakeholders have released most of the information that will be in the 
report. Additional information on RACs can be found at www.cms.hhs.gov/
RAC.

    Mr. Rehberg. Anybody else? Of the strike teams that are 
going to be created to get up to the twenty sites, what is the 
criteria you are using? I was listening to the testimony. I 
read the testimony. But I didn't see anywhere where it 
established where the criteria was going to be. In looking at 
places like my colleague's community of Baton Rouge, I would 
not have thought of that as a hot bed of Medicare fraud. So 
what goes into decision making?
    Mr. Grindler. Congressman Rehberg.
    Mr. Rehberg. You are a quick study. You must be a lawyer.
    Mr. Grindler. The approach in identifying these cities is 
really a data-driven approach where data that has been 
developed by the Department of Health and Human Services is 
analyzed by a group of people both from the Department of 
Justice and from HHS to determine whether there are trends, 
there are aberrational billing.
    Mr. Rehberg. Could you use Baton Rouge as an example, since 
it is established, it is in place, what in the data told you 
that that location more than Houston or Seattle or Boston?
    Mr. Grindler. I can't give you----
    Mr. Rehberg. I could tell you why but he won't appreciate 
it.
    Mr. Grindler. I can't give you all the specifics now other 
than to say that we are looking at cities in which the 
aberration of billing patterns seem to be most pronounced. For 
example, we are looking at trends that involve billing in a 
certain category that may exceed 1,000 percent of the national 
average or we may be looking at a DME provider----
    Mr. Rehberg. Are you going to share with us then before 
they are established, the Congress, of where they are going to 
be established or are we just going to pick up the newspaper 
one day and find out where the new locations are?
    Mr. Grindler. I think there are law enforcement reasons why 
we wouldn't be discussing our analysis of all the cities, but I 
will tell you it is a rigorous process and as part of the HEAT 
program, we actually have a committee that has that 
responsibility in order to analyze it. And that is how, 
initially Miami and then you have heard the other cities, 
Houston, LA, Brooklyn, Detroit and now Tampa and Baton Rouge, 
so we are looking at, and there is a ranking, but there are a 
lot of categories to look at. And then I will say even beyond 
that, there needs to be some interaction with people in those 
jurisdictions to try to get some specifics as to what the 
agents think is going on there. It is not totally number driven 
where you can just rank them by a data analysis and know what 
those cities are.
    Mr. Rehberg. Mr. Chairman, if it is possible maybe we can 
have a classified briefing on how they use their, if they are 
looking for additional money from us.
    Mr. Obey. Are you cleared?
    Mr. Rehberg. No but I have staff that is. It would just be 
interesting to know if they are asking for additional money, I 
don't know if they would get it or not, it would be nice to 
know ahead of time what criteria you use to establish----
    Mr. Obey. We will talk about it.
    Mr. Rehberg. Thank you.
    Mr. Obey. Ms. McCollum.
    Ms. McCollum. Thank you. Medicare and Medicaid serve 79 
million Americans. Fraud, waste and abuse in these programs 
cost taxpayers billions of dollars. And according to an article 
in Health Affairs by the Chief Counsel of the office of 
Inspector General at HHS, Louis Morris, ``The FBI estimates 
that fraudulent billings to public and private health care 
programs are 3 to 10 percent of total health care spending at 
$75,000,000,000 to $250,000,000,000 in fiscal year 2009.''
    This is an unbelievable amount of money being stolen or 
swindled from both the taxpayers, private companies and that 
costs every American family. So Chairman Obey, I thank you for 
having this hearing today. This is important. It is important 
to protect taxpayers dollars and the future of Medicare.
    Now you have talked today about the success of the health 
care fraud and abuse programs, and I commend this 
administration for making fighting waste, fraud and abuse a 
priority.
    My concern is that we need to get smarter and tougher in 
beating crooks and the companies that cheat taxpayers. A lot of 
attention was paid by my colleagues on the other side of the 
aisle, when one small nonprofit that assists those in poverty 
was accused of wrongdoing, it made sure that they would not 
receive one single penny of Federal funding.
    Now Mr. Grindler, you discussed in your testimony Pfizer. 
Pfizer pled guilty to a felony violation of intent, intent to 
defraud or mislead Medicare or Medicaid, and they agreed to pay 
$2,300,000,000. This was cited as the largest health fraud 
settlement in the history of the Department of Justice. But for 
Pfizer, is it was the equivalent of 3 weeks worth of sales.
    Now the attorney general for Massachusetts said Pfizer 
violated the law over an extended period of time. The director 
of the defense criminal investigations service and I quote, the 
off-label promotion of pharmaceutical drugs by Pfizer 
significantly impacted the integrity of TRICARE. And that is a 
program for our servicemen and women. This illegal activity 
increases patients' costs, threatens their safety, and 
negatively affects the delivery of health care services to over 
9 million military members, retirees and their families who 
rely on that system.''
    Assistant Attorney General for Civil Division said 
``Illegal conduct and fraud by pharmaceutical companies puts 
the public health at risk, corrupts medical decisions by health 
care providers and costs the government billions of dollars.''
    Do you gentlemen agree that these quotes are accurate?
    Mr. Grindler. Ms. McCollum, I have to caveat my statements 
and extend my apologies that while the ethics experts allow me 
to state the outcome of the Pfizer matter, I am actually 
recused from the matter. So I can't give you more details. But 
on a more general level, I will tell you that we have 
tremendous focus on prosecuting both companies and individuals. 
And I think that the sentencings that we have been getting have 
been greater by at least 10 percent than what you have seen in 
the past. So we agree that it is a very high priority, and we 
need to be aggressive in this area.
    Ms. McCollum. Mr. Chair, I will put into the record then 
the Justice Department announces the largest health care 
settlement in history in the record to back up my words here.
    A corporate analysis described the Pfizer settlement and 
criminal penalties by saying, it ain't chicken feed, but it is 
affordable. Crime against the American people cannot continue 
to be affordable. In the Pfizer case, could you please tell me 
how many officials went to jail?
    Mr. Grindler. I can't, but I will get someone to get you 
that information.
    [The information follows:]

            Pfizer Officials Who Received Federal Sentences

    In May 2009, Thomas Farina, a former district sales manager at 
Pfizer, was found guilty of obstruction of justice for altering 
documents on his computer during a federal investigation of off-label 
sales of Bextra. Mr. Farina was sentenced to six months of home 
confinement with electronic monitoring and three years of probation.
    In March 2009, Mary Holloway, a regional sales manager, pled guilty 
to violating the Food, Drug, and Cosmetic Act by inappropriately 
selling Bextra. In June 2009, she was sentenced to pay a $75,000 fine 
and twenty-four months of probation after pleading guilty to an 
Information charging her with distribution of a misbranded drug.
    Ms. McCollum. I believe, I could be proven wrong, but I 
believe we will find no one went to jail.
    Mr. Grindler. I believe the settlement to which you refer 
to where you quoted assistant Attorney General Tony West was 
settlement with the civil fraud section of the Department.

                          CONTRACT ELIGIBILITY

    Ms. McCollum. Civil, not criminal. So Pfizer was not found 
guilty of any criminal charges. Is Pfizer still eligible for 
government contract to be reimbursed by Medicaid and Medicare?
    Mr. Corr. I am not aware of any change in, I don't know 
that they sell directly to the Federal Government, but I will 
find that out for you Congresswoman.
    [The information follows:]

                          Government Contracts

    Deputy Secretary Corr: CMS has no direct contracting relationship 
wit Pfizer Inc.

    Ms. McCollum. Well, Mr. Chairman, I bring this up because 
if we really are going to get tough on small crooks and 
swindlers and organized crime, we have to get tough on 
corporate crime. We cannot make it so 3 weeks of sales becomes 
a cost of doing business.
    So getting a Federal contract is a right, if you are taking 
that contract and you are using it to serve the American 
people. But it is not a right, it is a privilege for the most 
part. It is a privilege and white collar crooks need to be 
punished.
    And I said that backwards, Mr. Chair. I am just so 
passionate about this. It is not a right to get a contract. It 
is a privilege to get a contract. And if you defraud the 
Federal Government, you should not even have that privilege. No 
one should expect to come in and just get a contract from the 
Federal Government, then turn around, defraud hundreds, 
billions of dollars, and then turn around and ask for a 
contract again.
    So Mr. Chair, as we move forward, I would like to hear the 
recommendations where Congress can be tougher, what we need to 
do to change the level of penalties of fraud, to send a signal 
to small time crooks and corporate crooks who use fraud as part 
of their business plan that it will not be tolerated. And Mr. 
Chair thank you.
    [The information follows:]

                          Contract Eligibility

    Ms. McCollum: I would like to hear the recommendations where 
Congress can be tougher, what we need to do to change the level of 
penalities of fraud, to send a signal to small time crooks and 
corporate crooks who use fraud as part of their business plan than it 
will not be tolerated.
    Deputy Secretary Corr: Many of the most important actions or 
authorities needed to identify and prevent fraudulent activity in 
federal health care programs require statutory changes that would 
strengthen the Medicare and Medicaid programs. As a result, many new 
authorities have been sought within health reform.
    For example, CMS does not prosecute crimes, but is seeking 
additional staff for Medicare Integrity efforts that will enable the 
Agency to create rapid response teams to investigate the highest 
priority leads received and support law enforcement as they pursue 
appropriate follow-up action.

    Mr. Obey. Thank you. Mr. Alexander.
    Mr. Alexander. Thank you, Mr. Chairman.
    Fellows, when you were going through your numbers a while 
ago, I don't have a calculator with me, but I would think that 
the numbers that you mentioned about fraud would total a 
gazillion dollars anyway. Some of you used the words organized 
crime. I know Mr. Perez did. You know I have watched some of 
the movies, Godfather and stuff and usually ``organized'' means 
more than one, you know, two at least.
    So the question is, all these problems that we have 
encountered, do we ever catch anybody on the inside? I mean, if 
somebody on the inside has to write that check and when they 
see that a physician in Miami has charged for the same 
procedure 6,000 times in one day, do they just write a check 
and say boy this guy is good or does a bell ever ring and say 
something is wrong out there?
    [The information follows:]

                           Health Care Fraud

    Mr. Alexander: So the question is, all these problems that we have 
encountered, do we ever catch anybody on the inside?
    Deputy Secretary Corr: To successfully conduct investigations into 
health care fraud, HHS/OIG uses all means available, including 
undercover agents, informants, and cooperating individuals. However, 
not all situations lend themselves to agents being active participants 
in the organizations. These decisions are made on a case-by-case basis.

    So, it is good that we can pat ourselves on the back about 
all these people on the outside that we are catching. But 
somewhere on the inside, do we ever find anybody that is 
playing footsies with those out there?
    Mr. Grindler. I think the answer to that is yes, we do. And 
I think in the investigations we are talking about, we have 
prosecuted a variety of people, categories of people, including 
individuals who are involved with the sham companies that are 
stealing information about patients and physician numbers. But 
we are also pursuing providers and physicians. So I think we 
are trying to pursue as many different categories of people as 
we can. We are certainly using cooperators in an effort to get 
as high as we can in whatever entity that may be involved in 
this so that is our goal.
    Mr. Alexander. Well, for instance, we were talking about 
Baton Rouge. And that is fine. If we find somebody down there 
breaking the law, let's put them in jail. But I would also like 
to know if there are people inside this department that are 
working down there if they get caught we need to know about 
those too, the public needs to be aware. And names need to be 
brought to the attention of the public, insiders if they are, 
in fact, found guilty.
    That is all, Mr. Chairman. Thank you.
    Mr. Obey. Mr. Ryan.

                   INFORMATION TECHNOLOGY INVESTMENTS

    Mr. Ryan. Thank you, Mr. Chairman. I think they are going 
to call votes here in a second, just a couple of questions. One 
is, is there any technology that we can use, computer 
programming that you currently use now or that we should be 
considering as an investment? As great of as a job as you do, 
it is very expensive to put people in the field as opposed to 
maybe having a computer program that could analyze a lot of 
this data that is coming in, suspicious patterns that may 
exist, is there any of that going on? Are you making any of 
those investments and is that something that we should be 
looking into?
    Mr. Corr. Mr. Ryan thank you for that question. Because as 
we talked earlier, pay and chase, we can do that and we are 
doing it very well. You have heard stories about it. But what 
is very important is that we get on the front end of this with 
prevention tools, much better enrollment practices that stop 
people from joining, from getting into the program. And it is 
HHS' responsibility to move our database to a point where it is 
of maximum use to law enforcement officers.
    The ideal that we are working towards, and our plans have 
us by the end of 2011, having the capacity to have a single, 
integrated database for the entire country, for all benefits, 
for all beneficiaries, and for all providers, so that law 
enforcement officers will be able to see trends that develop as 
claim forms are filed with Medicare and Medicaid. And in this 
case, I am talking about the database that we run for the 
Medicare program. It is imperative that we develop that 
database. It substantially improves the law enforcement 
officers' ability as investigators to identify fraud, and it 
allows us to begin to take advantage of new technologies, new 
analytical tools, that will enable us to identify aberrancies 
in the billing as they are occurring so that we don't wait a 
month to find out that someone has billed us $6,000,000 and 
closed up his shop and moved on.
    Mr. Ryan. How far along is that database? What is your 
projections of getting that to a spot that it is going to be 
beneficial?
    Mr. Corr. With the discretionary funds that this committee 
and the Congress have provided to us in fiscal year 2009 and in 
fiscal year 2010, we have been building that database. We 
currently have access, law enforcement has access, for post 
payment data.
    By this summer, we have been able to do this in stages. It 
is a massive undertaking to organize this data and to develop 
the software so that law enforcement can take advantage of 
this. Our current target date is by the end of FY 2011 to have 
that single database developed. Right now we have parts A and B 
and D and DME, in a post payment database. We have beneficiary 
information in another database that law enforcement has access 
to now. We have just begun to develop these resources. We are 
working very closely with our Inspector General and with the 
Department of Justice.
    This is the number one request that law enforcement and our 
Inspector General have had of the Department is develop a 
database and give us access as files, as claims are filed, so 
that we can immediately take advantage of technology and 
analytical tools that allow us to identify.
    Mr. Ryan. How much money are you putting behind this 
effort?
    Mr. Corr. Our estimate this year is that we will be 
spending $14,500,000--let me just be sure of my numbers, an 
additional $15,000,000 to $20,000,000 this year that would 
continue to build this database. And I will get you some more 
precise numbers so you will know exactly what it will take.
    [The information follows:]

                          Integrated Database

    Deputy Secretary Corr: The Administration recognizes that to meet 
the challenges of our evolving health care system, CMS needs to make 
substantial investments in its overall information technology 
infrastructure. CMS' data infrastructure, security apparatus, and 
claims processing systems are antiquated. They can neither meet the 
demands for ``real-time'' data needed to fight fraud, waste, and abuse, 
nor facilitate innovative solutions that reward quality instead of 
quantity of care through initiatives such as value-based purchasing and 
comparative effectiveness research. The President's FY 2011 Budget 
Request proposes a five-year investment, called the Health Care Data 
Improvement Initiative (HCDII), which will revamp its data 
infrastructure, making it possible for CMS to meet these future 
challenges. The requested $110 million investment would fund initial 
planning, designing the architecture, and laying the foundation of this 
multi-year effort. A more complete estimate of the total needed funding 
will be provided in the HCDII Strategic Plan in late spring 2010.
    The One Program Integrity (One PI) tool provides an easy way to 
search and access CMS's vast repository of data. Much like Google and 
Bing allow us to navigate the massive repository of information within 
the Internet, and provide us with the tools needed to secure data to 
assist with our everyday lives, the One PI portal will allow CMS and 
its law enforcement partners to navigate through the data within CMS's 
databases, providing a better tool to effectively combat fraud, waste, 
and abuse.
    While One PI improves our ability to search for data, HCDII takes 
the next step in improving the underlying data and its frequency. Past 
experience demonstrates that current, relevant data is a highly-
effective tool in detecting and preventing fraud, and prosecuting 
individuals who commit fraud. HCDII will play an integral part in CMS 
and our law enforcements' efforts to prevent fraud by providing One PI 
with a data infrastructure that makes near ``real-time'' data 
monitoring and analysis possible. The President's FY 2011 Budget 
Request builds on this concept and requests an investment of $32 
million to accelerate the development and final implementation of the 
One PI portal. The budget also requests continued funding of the 
Integrated Data Repository (IDR) at $7 million in FY 2011, a vital 
interim step to revamping our data infrastructure, to serve as One PI's 
data backbone. It is anticipated that the addition of prepayment claims 
data and new data sources will be of great value to CMS and its law 
enforcement partners in combating fraud, waste, and abuse.
    It is important that we continue to invest in our data systems and 
the analytical tools that go on top of them not only today, but in the 
future in order to best equip the government to catch fraud on the 
front end and enhance program integrity activities.

    Mr. Ryan. That doesn't seem like all that much money for 
that large of an endeavor.
    Mr. Levinson. I would like to add that as a result of this 
committee's funding, the discretionary dollars have been 
devoted in large part to training. We have been able to train 
130 of our investigators and our evaluators in claims database 
training. That would not have happened without the funding that 
has been made available as a result of this committee's 
approval.
    So it not only requires getting the systems up and running, 
but then understanding them. We have a level of complexity that 
is unusually substantial because of the volume that we deal 
with. And it is especially valuable for our investigators and 
our evaluators to have this kind of training because they use 
it both to identify fraud and then to be able to do the 
investigation in a proper and a safe way and I think it is, I 
would like to just drop a footnote about organized crime 
because that is an issue because of the significant dollars 
that have been in play, in these programs, organized crime is a 
serious issue and that involves safety.
    And one of the many reasons to admire the work of Special 
Agent Perez and his colleagues is that they not only supply 
knowledge, skill, and ability to their investigative work, they 
put themselves in harm's way, and the strike force work in 
particular is dedicated to some of the street level kinds of 
issues in which one actually puts his own life in danger. There 
are people out there who would just as soon try to kill you as 
to try to cure you. So I think the strike force dollars 
especially are valuable at that level.
    Mr. Obey. Thank you. Perfect timing. We are going to have 
two votes, and we will take about at least half an hour maybe 
45 minutes before we reconvene. So I am frankly not sure 
whether we should continue the hearing or not. But let me ask a 
few questions before we absolutely have to leave to meet the 
clock on the vote.
    I get nervous when I hear all of this discussion about 
databases and computers, because unfortunately I have the 
experience of watching the FBI on three different cycles, screw 
up their computer modernization program. How do we know that 
the same thing isn't going to happen to you and that we will 
wind up wasting a huge amount of money building that system?
    Mr. Corr. Mr. Chairman, we have that process underway. We 
would welcome the opportunity to bring in the people that are 
building the database and sit down with your staff or with you 
if you prefer and walk you through exactly what we are doing. 
We, as a part of the national summit, we are talking with 
technology experts, we are talking with the private sector, we 
are talking with credit card companies.
    [The information follows:]

                          Integrated Database

    Deputy Secretary Corr: CMS will schedule a meeting for the 
Committee with appropriate program experts to discuss the integrated 
database and existing information technology initiatives in more 
detail.

    Mr. Obey. So was the FBI. They still got it wrong.
    Mr. Corr. I certainly appreciate your concerns and your 
skepticism. And we are going to do everything in our power to 
get it right, and we would welcome the opportunity to keep you 
apprised of the steps we take as we go.

                       HCFAC DISCRETIONARY FUNDS

    Mr. Obey. Two questions relating to the funds that we 
provided last year. One, what wouldn't you be able to do today 
that you are doing if we hadn't provided additional increase?
    Mr. Corr. Mr. Chairman, the funds that this committee has 
provided in fiscal year 2009 and 2010 have all added to the 
activities that were occurring only with the mandatory funds, 
so everything that we have used these additional moneys for are 
new activities that expand our capacity.
    In 2010, we have $311 million as you know. About half of 
that is creating for the first time a comprehensive oversight 
program, program for parts C and D. With our fiscal year 2009 
money, we began new systems for the first time and we are 
completing it this year.
    Mr. Obey. Let me interrupt you because Mrs. Lowey came in 
and what I would like to do is make sure that she can get a 
couple of questions in before we go vote, and then I am going 
to ask you to stay if you don't mind so I can go back and toss 
a few questions of my own at you.

                          PERFORMANCE MEASURES

    Mrs. Lowey. You are very gracious. And my absence has 
nothing to do with the significance of this hearing, but we 
have had several hearings scheduled at the same time. Let me be 
quick and I thank you.
    As I understand from looking at the testimony, all of the 
witnesses, almost all, said there is no single estimate as to 
the total cost of fraud. Inspector General Levinson stated that 
7.8 percent of Medicare fee for service claims paid in fiscal 
year 2009, did not meet program requirement. Sounds like the 
same tune we have been hearing for many years. So my question 
is, if Congress were to fully fund the budget request, how much 
of a decrease would we see on the 7.8 percent figure, and in 
addition to difficulties in determining the overall level of 
fraud, I am curious to how HHS, DOJ and others measure success?
    So if you can describe the metrics that you are going to 
use and how you can tell us that by investing this money we are 
really going to do something about this because the American 
people are angry. They feel we spend too much money and we want 
to be sure that when we are spending money, we are going to get 
some results.
    Mr. Corr. Thank you, Congresswoman. And I will be brief 
because I realize there is very little time. The most recent 
improper error rate is 7.8 percent for the Medicare program. We 
estimate that about half of that has to do with improper 
documentation by providers and with physicians not signing 
forms properly. Our rules require that they have proper 
documentation in their medical records so when we come back and 
do the survey to determine the error rates, I am just trying to 
explain to you that half of those may very well be appropriate 
services but they weren't properly documented or they weren't 
properly signed.
    The other half we believe are payments that could very well 
be fraud or otherwise are improper, and the data systems that 
we are developing, the contractor review of claim forms as they 
come in, we have, the moneys this committee has provided to us 
have been used in parts A and B with our contractors and in 
parts C and D to do a much more thorough job of oversight on 
providers to try to bring that rate down as low as we possibly 
can.
    Mrs. Lowey. So you have evidence that expanded government 
enforcement has deterred and prevented fraud?
    Mr. Corr. Fraud and improper payments. In the funds for 
fiscal year 2010 that we have received, the CMS actuary and the 
Congressional Budget Office have projected a return of about 
$1.50 for every dollar spent. Previous estimates of spending 
through our health care fraud, waste and abuse program have 
return on investment of $6 for every dollar spent. It depends 
on whether you are talking about an administrative service that 
can be implemented through technology or whether it requires a 
great deal of staff to actually go out and evaluate records as 
to how high those returns are.
    But we believe these efforts all have a significant return 
on investment and that additional funds will be put to good use 
and will bring down both improper payment and fraud.
    Mrs. Lowey. Now, the strike force teams appear to be 
successful and you have asked to expand those. At first glance, 
this seems to be a good idea. But I want to make sure that the 
existing strike forces which created in the cities with the 
highest levels of fraudulent claims continue to receive the 
support they need. Could you respond?
    Mr. Grindler. Yes. The existing cities that have the strike 
forces, our plan is to continue receiving the support for their 
effort. In addition, though, part of what the strike force 
concept is to take the people that are experts in this sort of 
enforcement strategy and train assistant U.S. Attorneys in 
these cities so that as time goes on, the U.S. Attorney's 
offices, on their own, can be continuing this effort in 
perpetuity to the extent that it is needed. And then those 
resources will be extended to another 13 cities we hope through 
2011. And in terms of the metrics there we not only have what 
has been a 4:1 ratio where the money collected--this is civil 
and criminal--is $4 per every dollar spent.
    But the other part of it is, and it is really important is 
the deterrent value and sometimes that is hard to measure and 
that is why the strike force that has real time prosecutions 
with sentences that are significant we think have a deterrent 
value and we have one example in Miami which I mentioned in my 
opening remarks that where if you look at what was being billed 
for durable medical equipment the year after the strike force 
had done its initial effort that billing and that category went 
down over $1,000,000,000.
    Now that isn't money collected, but that is deterrent, that 
is a measurement of deterrent and I think we can look at that 
kind of metric in other cities as the strike forces move 
forward.
    Mrs. Lowey. Thank you, Mr. Chairman, for your 
consideration. I will submit other questions for the record.
    Mr. Obey. I am going to suggest that we go and vote and 
those who can come back, God bless you, and those who can't, 
well, we will see you in a few minutes.
    Mr. Obey. Well, frankly I have forgotten where I was when 
we stopped the questioning. You have been talking today mostly 
about fraud affecting Medicare and Medicaid and other Federal 
programs. What about private insurers and private health care 
plans? What kind of problems do they typically face as far as 
fraud and abuse? Are they just as susceptible to fraud as the 
public programs and to what extent do your agencies get 
involved in investigating and prosecuting that kind of fraud?
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T8234A.048
    
    Mr. Grindler. Well, I don't have data to tell you what the 
difference is. I think there is probably a lower prevalence of 
fraud in that category, but certainly we do to the extent that 
we can identify insurance companies that may be engaged in 
fraudulent activity, we have and will--I just don't have the 
numbers for you, but I can try to get them for you.
    [The information follows:]

   Investigation and Prosecution of Private Sector Health Care Fraud

    The Department of Justice is involved in the investigation and 
prosecution of many types of private sector health care fraud and 
abuse. While the Department of Justice participates with the Department 
of Health and Human Services in investigations of Medicare fraud, the 
Department also works with other federal agencies such as the 
Department of Labor's Employee Benefits Security Administration and 
Office of the Inspector General by assisting their anti-fraud and abuse 
enforcement programs involving privately funded health care plans. 
Private insurance companies, self-funded health care arrangements and 
employer or union-sponsored employee health benefit plans are often 
defrauded together with the Medicare program in false billing 
fraudulent and provider scams. While fraud and abuse of private sector 
health plans may not create direct losses to federal governmental 
programs, such criminal activity places a financial burden on the whole 
health care system which raises the cost of health care coverage for 
all Americans.
    In addition, some schemes which target private sector group health 
plans may result in the collapse of the group's health care coverage 
leaving victimized participants in these plans with devastating 
hardships such as personal liability for unpaid medical bills, denial 
of future medical treatment and the inability to obtain insurance from 
other carriers for pre-existing conditions. Particularly egregious are 
those persons who fraudulently operate unlicensed insurance companies 
and sell health care coverage to group health plans with no ability to 
ultimately pay medical claims as promised. Such entities evade state 
insurance regulation by falsely claiming federal preemption from state 
regulation under provisions of the Employee Retirement Income Security 
Act of 1974 (ERISA) governing employee health care plans in the private 
sector. These corrupt unlicensed insurers target employers, unions and 
professional associations offering group health care coverage for their 
employees and members at attractive prices which underbid legitimate 
insurers by falsely claiming to be exempt from costly state regulatory 
requirements such as minimum claims reserves and premium taxes intended 
for state funds guaranteeing benefits of insolvent insurers.

    Mr. Levinson. Mr. Chairman, although HCFAC has jurisdiction 
only over Medicare and Medicaid, Special Agent Perez has some 
special experience that might shed some light on your question.
    Mr. Perez. One of the impacts that I think the strike force 
teams have had in Miami is that we have pushed some of the 
criminal enterprises into other segments of the Medicare 
programs. And one of them is the Part C or the Medicare 
Advantage Plans. And while those plans are private insurance 
companies that have been awarded contracts that treat Medicare 
beneficiaries, what we have seen are the HIV infusion therapy 
schemes that have now been perpetrated against Part C plans and 
the scheme is very easy to do. They de-enroll Medicare 
beneficiaries from their Part B plan and they enroll them 
without their knowledge into a Medicare Advantage Plan, usually 
using the Internet to do that.
    Once they have done that, they basically just bill for 
services that these patients are really not receiving. Now, 
unfortunately the patients in some instances are actually 
taking part in this fraud in that they are receiving kickbacks 
to go to the clinics and sign as though they have received some 
services. The payments range from anywhere between $100 per 
visit up to $300 per visit. So we have seen that and we 
actually indicted several companies and individuals that have 
perpetrated the HIV-infusion fraud under the Part C plan.

                          MEDICARE TRUST FUND

    Mr. Obey. That was my next question. So you took care of 
that nicely. Thank you. The health care bill that passed the 
House, I don't want to comment on the Senate bill because I am 
supposed to keep my language clean. But if you take a look at 
the House bill, here that bill contains over $400,000,000,000 
in intended reductions and cost in Medicare over the next 
decade. My understanding is that Medicare will spend over the 
next decade somewhere between $7,000,000,000,000 and 
$8,000,000,000,000. So that would indicate it would seem that 
the savings that we are talking about achieving in Medicare 
would be somewhere around 5 percent of what the program will be 
outlaying over the next 10 years. You have been talking today 
about some pretty large numbers in terms of waste and fraud in 
Medicare.
    Would you explain to us how increased screening and 
background checks on enrollment of medical providers and 
equipment used by Medicare will help, the revised payment rules 
such as requiring face-to-face encounters between patient and 
physician to prescribe durable medical equipment, some of those 
changes. Can you quantify what you expect to see saved over a 
decade with actions like that? The reason I ask this question 
is because when you talk about ``Medicare cuts,'' people think 
you are talking about benefits. We are not talking about 
cutting benefits.
    We are talking about trying to eliminate waste, 
duplication. And so it would be useful if we could quantify 
some of the pieces of that so that people get a more accurate 
understanding of what it is we are talking about.
    Mr. Corr. Mr. Chairman, let me give you an overall number 
and then we will see if we can find estimates that are as 
refined as you just asked for by service. That may be hard. But 
just to give you one example of the returns in terms of a money 
to the trust fund, in 2008 with just mandatory spending before 
this committee provided additional resources, the actual 
returns to the Medicare trust fund were $12,500,000,000, and 
there was $1,100,000,000 spent in terms of the mandatory funds. 
Those monies were focused on the basic program integrity 
program at CMS as well as a focus on fraud. But that focus is--
has been expanded significantly by the discretionary resources 
that the committee has made available to us.
    The return on investment that I mentioned earlier, while 
the mandatory funds back in 2008 have been estimated to return 
$6 for every dollar spent for law enforcement activities and 
$14 for every dollar spent for administrative activities, in 
part that larger number happens because the administrative 
expenses are significantly lower than the cost of standing up a 
strike force and those activities. So that is the level of 
return that we have seen historically. Being conservative, our 
actuary and CBO have projected savings from the increases that 
we are now spending of anywhere from 1.5 to 1.8 dollars to 
every dollar spent. And we think it is going to turn out 
larger. But those are the conservative projections. So what 
those do is they take into account the comprehensive range of 
activities that we are pursuing. It is very hard to take one 
piece out and say--except anecdotally.
    For example, because of the strike force work in Miami-Dade 
County and because of some of the on-site work we were doing 
with DME providers and other activities. The billings from DME 
providers in Miami-Dade County went down $1,600,000,000. So 
that is sort of a cost avoidance if you would. $1,600,000,000 
less was paid out because of the work that the strike forces 
were doing and the attention we were bringing to the issue.
    So it is hard, again, to pull out one piece of this. We 
view this as a comprehensive effort. We need investigators and 
law enforcement. We need the prevention work that you just 
described. But we need to do a better job with physicians and 
other providers enrolling and we need to do a much better job 
with our database as credit card companies and others do, we 
need to bring in the absolute latest technology so that when 
claim forms come into CMS, we can see any kind of aberrance 
that is occurring across the country. And all of that together 
will produce these substantial returns.
    Mr. Obey. Any other comments? Senator Bill Proxmire, who 
used to represent Wisconsin, was a crusader against unnecessary 
spending at the Pentagon. And he used to be criticized by his 
opponents who said he was trying to weaken our defenses by 
cutting military budgets. And his response to that would be 
that he would simply ask in any audience, he would ask how many 
people in the audience had ever served in the Armed Services, 
and then he would say okay, now let me ask you, is there anyone 
here who has never seen any example of waste in the Army and 
the veterans would start to laugh because they obviously had 
seen a lot of it.
    I would suggest the same thing in the medical area. Anybody 
who has ever filled out the same forms two or three times in a 
doctor's office or anybody who has ever seen some of the 
strange charges on some hospital bills would never again say 
that there wasn't significant waste in the health care system. 
Mr. Perez, would you tell us, is there anything that you think 
that people like you in the field need that you are not getting 
or that you wouldn't get even under the administration's budget 
request increase for next year?
    Mr. Perez. Thanks for the question. I need to echo what I 
think some of the other panel members have already said in 
terms of access to data. And I will highlight the reason why I 
mention that with some examples. We need real-time data. We 
know that there are buildings or strip malls that house nothing 
but fraudulent companies. And I think any strike force team 
member should be able to drive and park across the street and 
see the name of XYZ medical billing company, open a laptop, 
plug in a wireless card, enter the data and actually see if XYZ 
has submitted any claims today or yesterday, who the physicians 
are that are attached to that claim, who the beneficiaries are 
that are attached to those claims, how much has already been 
billed, how much is sitting on the payment floor about to be 
paid out or how much has already been paid out. That would 
allow us to then contact the contractors or maybe even CMS and 
say here is what we have got, this particular provider needs to 
be placed on prepay review, while we create enough probable 
cause to actually do some enforcement action.
    The reason why prepay review, I think, in that type of 
model would work is that the provider would have to submit 
documentation to justify the claims. These individuals aren't 
providing any service. So there is no documentation, so we are 
preventing monies from going out for fraudulent claims. So I 
think aside from that, we would--we would love to see in the 
field additional bodies to help support what we have currently 
got. And I think that one of the things that the panel is 
looking to get, aside from reaching out to 13 new cities, is 
actually beefing up the strike force teams that we currently 
have on the ground now.
    Mr. Obey. Ms. Roybal-Allard.
    Ms. Roybal-Allard. Thank you, Mr. Chairman. And I apologize 
for being late. Mr. Corr, I understand that you discussed the 
audit contractor--the Medicare recovery audit contractor 
program with Mr. Rehberg earlier in this hearing, but I want to 
come back to this issue because when I have met with my 
hospitals in my district a few weeks ago, they identified 
several major problems that they had experienced during the 
demonstration project in California and these problems included 
reviewers who lack sufficient medical background to understand 
the claims that they were reviewing, perverse incentives such 
as rewarding all denials of coverage and consequently 
encouraging oversampling of cases and an extremely laborious 
and costly appeal process.
    Now that this program is being rolled out across the 
country, what has HHS done to address these issues? And for 
example, is there some standardized certification or training 
for new reviewers to ensure that these reviewers have adequate 
skills and background to properly review the records?
    Mr. Corr. There certainly is the latter, Congresswoman. And 
as well an effort for CMS to be clear about what the standards 
are that will be applied as we review the expenditures of 
providers. I don't have personal knowledge of the specific 
complaints, but we certainly will look into those and find out 
how we--I assume we have heard that back in our work with--
through our contractors and we will find out. And maybe Mr. 
Levinson, the IG has heard more. But we will find out about 
those specific problems and whether we have addressed them 
properly.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T8234A.049
    
    Ms. Roybal-Allard. I will be happy to put you in touch with 
my hospitals. Also during the demonstration, a round of audits, 
my hospitals have also told me that when a claim was 
challenged, that funds were immediately taken out of their CMS 
payment even while the claim was still in dispute and that some 
hospitals reported that when an appeal had been settled in 
their favor and often that took several months, that most but 
not all of their money was returned to them.
    This has created a very difficult budgetary problem for 
California hospitals, I am sure other hospitals that are 
already operating with very limited funds. And I would like to 
know why hospitals are being considered guilty until proven 
innocent basically and especially given the difficult economic 
situation this creates for them, what possible justification is 
there for not returning every penny of the original billed 
amount when an appeal is settled in the hospital's favor?
    Mr. Corr. I cannot answer the question about why if the 
appeal is settled in the hospital's favor, the money is not 
returned immediately. But I will certainly get you an answer.
    Ms. Roybal-Allard. I appreciate it and I will be in touch 
with you in terms of the hospitals, I am talking about. Thank 
you, Mr. Chairman.
    Mr. Obey. Mr. Grindler, I know you have to go. So let me 
ask one more question to wrap it up. We have been talking about 
what has been happening in the last 2 or 3 years. How do all of 
you see this problem changing over the next 5 years or so? What 
fraud opportunities do you think are likely to grow? Which do 
you think you are going to get a better handle on?
    Mr. Grindler. Well, I mean, it is very clear from what we 
have seen so far that when we prosecute in one area, people 
move to another area and that is why the real-time data is so 
important. For example, now you see people going into the home 
health care area. Once we were focused on DME and HIV infusion 
and you are also seeing movement from one city to another city, 
so we saw people involved in one of our strike force cities 
move to another of our strike force cities before we went into 
that city. So these are the kinds of ongoing changes that I am 
not sure we can predict, but that is why the importance of the 
real-time data is there. And I know work is being done on that 
challenge because then we can see it because it is an 
identification of an abnormal billing pattern that allows us to 
say in this city, this location; here is a new way that people 
are engaging in fraud and we have got to be able to attack 
immediately.
    Mr. Obey. Any others?
    Mr. Levinson. I would certainly echo that. I mean, we see 
in the migration of these issues in Miami, DME, infusion 
therapy, home health, all of the sudden we also have it in 
Detroit, we have it in Tampa, Houston's DME problems shortly 
thereafter become Baton Rouge's DME problems. The Brooklyn 
strike force has important connections to what is going on in 
Florida as well. So these are viral issues that really require 
a national approach and therefore getting this real-time data 
straightened away and being able to stay on top of the data is 
crucial now and in the years ahead.
    Mr. Corr. Mr. Chairman, may I add one thing very quickly?
    Mr. Obey. Sure.

                          PROVIDER ENROLLMENT

    Mr. Corr. Just to give you a sense of--on the prevention 
end where we are trying to screen providers better, just to 
give you a sense, every month 18,000 new provider enrollment 
applications are submitted to Medicare and 900 DME supplier 
applications are submitted to Medicare. The statutes require us 
to allow any willing provider to provide services to Medicare 
beneficiaries, but even though these numbers are large, it is 
just all the more reason why we have to do much more effective 
prevention work. We have to do better screening with--in the 
enrollment process. And we have to, through computer 
technology, take full advantage of our ability as providers to 
immediately understand and track what they are doing. So as Mr. 
Perez said, when some aberration occurs, we are immediately on 
it. So we need both the prevention side and we need the 
capability to go after people once they start fraudulent 
activities. And that is the approach that the administration is 
taking, as I said earlier, all of the discretionary resources 
that we have received in 2009 and 2010 and are proposing in 
2011 add to the work that was being done with the mandatory 
resources that has been available the last 13 years. So 
everything is add on and we are all trying to get to the place 
where we have a comprehensive prevention system as well as an 
investigation and enforcement system in place.
    Mr. Obey. Thank you.
    Mr. Grindler. If I could add one other point on that. It is 
not just the mandatory money and the supplemental money, there 
is a base amount of money at the Department of Justice has to 
allocate to all of its enforcement priorities, terrorism, 
drugs, white collar crime, et cetera. And with the Department 
of Justice, United States attorneys offices already are 
allocating money out of their base to health care. So that is 
how important the Department feels about this effort. So it is 
not just what we get under mandatory funds and the supplement, 
it is our existing base that we are taking--a part of that to 
fight health care also.
    Mr. Obey. Mr. Rehberg.
    Mr. Rehberg. Thank you, Mr. Chairman. It just seems like 
the numbers you are throwing out of the number of new providers 
is inordinately large. Are people getting into the business 
because it is an easy business to get into? And wouldn't it 
seem from a regulatory standpoint you would apply some business 
principles as auditors to go in and prioritize based upon the 
amount of time the people have been in business? When I go to 
like a restaurant in business since 1922, chances are they are 
going to pass the health inspection, but a restaurant that 
opened last week, maybe not. Do you prioritize within 
communities or is there not a flag that----
    Mr. Corr. In terms of the number of new providers that can 
enroll and provide service?
    Mr. Rehberg. Well, certainly we will want to have as many 
people providing services because we want to provide the 
services. We don't want the beneficiaries to have to sit and 
wait. It just seems like--is that a flag to you all that when 
somebody establishes the business and they have been in 
business for less than a year, they ought to be audited 
immediately and constantly until such time as they are in 
business. I would think with the hospital situation, chances 
are they are not going to want to lose their hospital 
franchise, their license, their business. The same with a 
doctor. We don't want to punish doctors that have been in 
business for 20 years. It is the new ones that are coming out 
that are maybe scamming the system. Maybe that is wrong.
    Mr. Corr. There are some benefits, Medicare benefits like 
durable medical equipment, infusion therapy, home health where 
there are much lower barriers to entrance.
    Mr. Rehberg. That is my point. Why wouldn't we as 
regulators establish a little higher standard to be in the DME 
business so that me or you can't just get into the business 
because I don't know anything about crutches or--I do actually, 
but for other reasons. It just seems like you make it too easy 
to get into the business. It certainly is not government's job 
to try to keep people out, but it seems like there ought to be 
a little bit of a higher standard. You have to go to law school 
to become a lawyer. You ought to have some kind of standard to 
get into the provider business.
    Mr. Corr. Well, we do have criteria by which----
    Mr. Rehberg. But it doesn't seem to be working.
    Mr. Corr. That is correct. And as special agent Perez was 
talking earlier about criminals coming in and buying up 
legitimate medical equipment suppliers.
    Mr. Rehberg. You can establish a standard there that makes 
it very difficult to transfer the old business to the new 
owner.
    Mr. Corr. We need to look carefully at our criteria. And in 
some States, there are restrictions on the number of providers 
that can exist. For instance in Florida, there are none. So we 
have thousands upon thousands of durable medical equipment 
suppliers. And part of the problem is----

                    WORKING WITH THE PRIVATE SECTOR

    Mr. Rehberg. Well, punish the State of Florida for that. It 
would seem like it would be fairly easier to get to--let me ask 
another question real quickly. I apologize, Mr. Chairman. You 
walk faster than I do. It is because of my crutches. Private 
insurance, I think it was your testimony that talked about a 
conference or a summit or something that was held and you are 
not able to establish that Medicare fraud is any greater than 
private.
    I don't want to say I don't believe it, but I have got to 
believe that private industry should be a little smarter 
because they are paying a little closer attention. Is there no 
way to establish any private sector improvements that they are 
doing within GEICO on insurance--car insurance fraud? I see 
most of your background is either government or law.
    Do you have any business people that are actually working 
with you in your task forces to use business practices to try 
and crack down on insurance? Or maybe they are just as 
inefficient and bad.
    Mr. Corr. Congressman, one of the goals of the summit that 
the Department of Justice and HHS held was to involve with the 
private sector. They face many of the same problems, there were 
extensive conversations. We will continue those conversations. 
We think there is a lot to learn from the private sector. They 
tell us they have many of the same problems. And together we--
since they are facing the same things and as was mentioned 
earlier, as we shut down providers in Medicare and Medicaid, 
they are shifting. So we are in this together with the private 
sector and we want to work very closely with them and will.
    Mr. Rehberg. Thank you, Mr. Chairman. I would like to work 
with you on that. I just happen to have a new hire as of 
Monday. I won't call him a senior intern, but he is 71 years 
old. And he was formally the president of the National 
Association of Independent Insurers. And his background is 
GEICO and Allstate and all the rest of them. And he is a 
plethora of information. He just came most recently from the 
insurance industry in Florida, the number three in the minority 
auto insurance. And he tells me that they do have practices 
that could be applied to the government that are not being 
readily accepted by the agencies at this time. So I would like 
to----
    Mr. Corr. We would welcome that conversation.

                           STATE COOPERATION

    Mr. Obey. Thank you. Just one last question. States, which 
States--with which States do you have the most cooperative 
relationships in terms of dealing with waste, fraud and abuse, 
whether you are talking about Medicare and Medicaid or any 
other avenue?
    Mr. Corr. Mr. Chairman, just from a prevention standpoint, 
I would have to get back to you and let you know what our folks 
think in terms of their relationships possibly from a law 
enforcement perspective.
    Mr. Grindler. What I can tell you, which doesn't give you 
all the details, but in some of the cities where we have the 
Medicare fraud strike forces, we have representatives from the 
State attorneys general offices that sometimes are assisting us 
in that effort both from an investigation point of view. So in 
that sense, we are trying to cooperate with States. And to the 
extent they are able to give us--provide us with resources that 
will help, we take advantage of that.
    Mr. Obey. I just know it has been my experience that some 
States are aggressive in dealing with problems like this and 
others are a good imitation of sleepy hollow. And I am just 
curious if you can provide for the record a more detailed 
analysis of where we have strong players and where we don't.
    Mr. Levinson. Certainly we really count on the States when 
it comes to Medicaid fraud enforcement to be the frontline and 
there are many strong units around the country. For an on-the-
ground look, I don't know whether the special agent might want 
to add something about Florida in particular.
    Mr. Perez. I know we participated in investigations with 
the Medicare fraud control units which are part of the State 
Attorney General's office. But in the State of Florida, they 
also have the Florida Department of Law Enforcement or FDLE and 
we work investigations with that entity, as well as local 
police precincts in other parts of Miami-Dade County. So we do 
have a collaborative effort in the State of Florida to do as 
much as we can to try to curtail this fraud.
    Mr. Obey. I understand you have one question.

                          PROVIDER ENROLLMENT

    Ms. Roybal-Allard. Yes. Thank you, Mr. Chairman. Just very 
quickly. My understanding is that under the new requirements 
that were issued for the suppliers, that 17 health--medical and 
health professionals were exempted, but pharmacists were not. 
And what I am being told by my pharmacists, especially those in 
the neighborhood pharmacies, is that the cost of the redundant 
licensing, the requirements, the surety bonds really outweigh 
their profits and many of them are thinking of just not having 
these products in their neighborhood pharmacies altogether.
    Could you explain to me why pharmacists which have to go 
through licensing, like some of the other professionals that 
were exempted, why they were not exempted?
    Mr. Corr. Congresswoman, I believe you are speaking of our 
requirement that durable medical equipment providers be 
recertified?
    Ms. Roybal-Allard. Yes.
    Mr. Corr. It was an attempt to get a handle on who was 
providing services and to be sure that people were--met our 
enrollment criteria. What we could do is again take some 
specifics and see if we can give you some answers as to why 
they didn't meet the requirements. It was voluntary. The vast 
majority of pharmacies did seek recertification under the 
durable medical equipment program and our sense was that we 
were providing coverage throughout the country that we weren't 
going to wind up with communities without access to durable 
medical equipment, but there were a number of pharmacies across 
the country that did not seek to be recertified. But I would be 
happy to take a look at the specifics and give you an answer.

                          Provider Enrollment

    Deputy Secretary Corr: The Medicare Improvements for Patients and 
Provider Act (MIPPA) allowed CMS to exempt ``eligible professionals'' 
that were specifically defined in statute and ``other persons'' as 
specified by the Secretary. However, pharmacists bill as pharmacies, 
and pharmacies are considered ``organizational entities.'' As a result, 
pharmacists are not eligible for exemption from this important quality 
requirement.
    HHS and CMS value the contribution that the pharmacists give to 
Medicare beneficiaries. However, we also have to make certain that the 
services and items that beneficiaries receive are always of the highest 
quality and meet all standards for safety, efficacy and timeliness. Our 
experts at CMS believe that it was Congress' intent to legislate 
quality standards for all DME providers in order to achieve these 
positive outcomes. To date, the vast majority of pharmacies have 
already been accredited. As such, beneficiaries will be able to 
continue to obtain their durable medical equipment and supplies from a 
local or national chain pharmacy.
    I assure you that we are closely monitoring the implementation of 
the accreditation requirement so Medicare beneficiaries, especially 
those residing in rural areas, have access to needed items and 
supplies.

    Ms. Roybal-Allard. All right. Thank you.
    Mr. Obey. Gentlemen. Thank you all for coming. I appreciate 
it.

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                                         Wednesday, March 17, 2010.

    TESTIMONY OF INTERESTED INDIVIDUALS AND ORGANIZATIONS/LABOR AND 
               EDUCATION PRIORITIES/ESEA REAUTHORIZATION

                               WITNESSES

KAREN LEE, PRESIDENT, NATIONAL ASSOCIATION OF STATE WORKFORCE AGENCIES
EVELYN GANZGLASS, DIRECTOR, WORKFORCE DEVELOPMENT, CENTER FOR LAW AND 
    SOCIAL POLICY
BRIAN JOHNSON, EXECUTIVE DIRECTOR, ALLIANCE FOR WORKER FREEDOM, A 
    SPECIAL PROJECT FOR AMERICANS FOR TAX REFORM
PEG SEMINARIO, DIRECTOR OF SAFETY AND HEALTH, AFL-CIO
NANCY DONALDSON, DIRECTOR, WASHINGTON OFFICE, INTERNATIONAL LABOR 
    ORGANIZATION

                   Opening Statement by Chairman Obey

    Mr. Obey. I think my partner in crime, Mr. Tiahrt, is stuck 
in traffic somewhere, but we will get this started anyway. 
Cannot be late on St. Patrick's Day.
    Today we have two panels who will present their prospectus 
on the budgets for the Department of Labor and the Department 
of Education. The first panel will address Labor Department 
issues, including job training and worker protection programs 
to high priorities for this Subcommittee.
    Our witnesses this morning include Karen Lee, President of 
the National Association of State Workforce Agencies and also 
the Employment Security Commissioner of Washington State. Ms. 
Lee represents the State and local agencies responsible for 
implementing many of the job training and employment programs 
being discussed today.
    She is joined by Evelyn Ganzglass, Director of Workforce 
Development at the Center for Law and Social Policy, who is an 
expert on workforce investment programs and led the Employment 
and Social Services Policy Studies program at the National 
Governors Association, prior to joining CLASP.
    The panel also includes Brian Johnson, Executive Director 
of the Alliance for Worker Freedom, which is a project of the 
Americans for Tax Reform. Mr. Johnson is here at the invitation 
of Mr. Tiahrt on behalf of our minority members.
    Next is Peg Seminario, an expert on workplace safety and 
health issues. Ms. Seminario has led the AFL-CIO's program on 
safety and health for the past 20 years and served on numerous 
Federal agency and scientific advisory committees.
    Finally, we have Nancy Donaldson, Director of the 
International Labor Organization's Washington Office. Ms. 
Donaldson has served as an advisor to the ILO since 2005 and 
has spent the past 25 years working to improve labor standards 
for both domestic and international workers.
    I would ask each witness to limit your testimony to about 
five minutes. We will place your statements in the record. And 
after all five of you have made presentations, we will have 
time for questions from the Subcommittee.
    I am going to forego any additional opening statement 
because we have two panels that we would like to finish this 
morning.
    Mr. Alexander, did you want to say something before we 
begin?
    Mr. Alexander. I am glad to be here.
    Mr. Obey. Well, we are glad you are here too. All right. 
Did you flip a coin or should I? All right, why do you not go 
ahead?
    Ms. Lee. Thank you, Chairman Obey and members of the 
Subcommittee. My name is Karen Lee and I am the Commissioner of 
the Washington State Employment Security Department. Today I am 
testifying in my role as President of the National Association 
of State Workforce Agencies, known as NASWA.
    Years ago, after I graduated from West Point, I had the 
honor serving my Country and the military, and today it is my 
honor to serve our Country by helping workers and businesses in 
my State weather the great recession that we are in. And that 
is what State workforce agencies do; we help our Nation's 
workers and businesses turn hard times into better times.
    We serve people through programs like the Workforce 
Investment Act, the Trade Adjustment Act, Wagner-Peyser, 
Unemployment Insurance, and so on. But the titles of those 
programs are not important; it is the people that we serve. And 
Americans are turning to us in record numbers.
    In fiscal year 2009, 37 million job seekers sought 
assistance from State workforce agencies. That is a 40 percent 
increase. Some lost jobs they had held for decades, and they 
need help planning a new future. And some are recent military 
members returning from the war who need help translating their 
military training into civilian work.
    Some customers have skill gaps or barriers, such as people 
of color, the disabled, and the poor; and these individuals 
will continue to struggle unless they get training and career 
guidance. Still others have great skills, but their confidence 
has been shaken after months of not being able to find a job.
    State Workforce staff are part teacher, coach, counselor, 
and friend. We are the human face of government for millions of 
Americans at a time when people need government to be there for 
them, now more than ever. So on behalf of NASWA I thank this 
Committee for the Recovery Act funding that you provided. It 
would have been impossible to serve the record number of job 
seekers who came through our doors without additional money.
    Using our stimulus dollars, we have substantially increased 
enrollment in worker training programs through WIA, adult and 
dislocated worker programs. We have expanded the capacity to 
provide unemployment services to the unemployed. The numbers 
are staggering: job search assistance to more than three 
million claimants in the first six months of the Recovery Act. 
Getting them back to work faster reduces benefit pay-outs, 
supports business, and improves our economic situation, so it 
is a smart investment.
    The Recovery Act also increased funding for Wagner-Peyser 
employment services programs by 30 percent. And although our 
customer growth has outpaced the funding increase in many 
States, stimulus funds provided welcome relief. And I must also 
mention the summer youth program, which gave thousands of young 
adults who were disadvantaged their first chance at a paying 
job.
    As you prepare the 2011 budget, NASWA has four requests. We 
first recommend a $500,000,000 increase for Wagner-Peyser 
employment services. Last year, in Washington State, we 
conducted a study on the effectiveness of Wagner-Peyser. It was 
rigorous and peer reviewed. And those results showed that 
unemployed workers who used their job services found work 
faster than those who did not, and they earned more money than 
those who did not. That is good news for workers and our 
economy.
    NASWA also requests $500,000,000 for intensive re-
employment services to put unemployment claimants back to work. 
The job market will not recover by September 30th, and we know 
we will not be able to meet the demand that we expect will be 
there.
    And, lastly, you probably heard about unemployment benefits 
being delayed because of antiquated computer systems, and that 
is true; many of our systems are over two decades old. NASWA is 
therefore requesting $500,000,000 to help States modernize 
their unemployment insurance computer systems.
    Lastly, NASWA is concerned about the ongoing confusion 
regarding expenditures versus obligations, and this confusion 
has been caused by out-of-date information from the Department 
of Labor, and it has already cost us $250,000,000 last year, 
and it was money that we could not afford to lose. We would 
appreciate your help in working with you and our cabinet agency 
so that we can resolve this issue on behalf of our job seekers.
    In closing, our workforce system is a lifeline for millions 
of hardworking Americans who are searching and hoping for a 
brighter future. We appreciate the confidence that you have 
shown in us and we are working on your behalf. We thank this 
Committee for your appropriations and for all of your support. 
Thank you.
    [Written statement for the record by Karen Lee follows:]

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    Ms. Ganzglass. Thank you for the opportunity to testify as 
well. I am Evelyn Ganzglass, and I am Director of Workforce 
Development at CLASP, the Center for Law and Social Policy. 
CLASP is a nonprofit organization that develops and advocates 
for policies at the Federal, State, and local levels that 
improve the lives of low-income people.
    In my written testimony I focus on four points: why it is 
important to invest in workforce programs at this point in the 
economic recovery; how increased funding for the WIA system 
under the Recovery Act has laid the groundwork for economic 
recovery; what we know about the return on investment of 
workforce programs; and CLASP's recommendations for both 
funding and increasing the effectiveness of workforce programs.
    In my brief five minutes, I will speak to two points: how 
the WIA system has used Recovery Act funds and CLASP's 
recommendations regarding the fiscal year 2011 appropriations 
for DOL.
    The infusion of new money under the Recovery Act has 
enabled the WIA system to expand access to training, increase 
services to low-income adults, and augment one-stop services to 
meet unprecedented need for retraining and re-employment 
services during the economic recession.
    The WIA system quickly mounted a summer youth employment 
program in 2009 that served more than 300,000 young people. A 
study by the Center for Economic Development and Business 
Research at Wichita State University found that for every $1.00 
of wage expenditures in that State, $1.64 was returned to the 
regional economy.
    In addition to providing much-needed income to these young 
people, the communities in which the program was operated gave 
them exposure to a wide variety of work environments and 
connected them to a host of skill-building opportunities. For 
example, in Sonoma County in California, Recovery Act funds 
were used to employ 330 community youth in environmental 
projects throughout the county. In Philadelphia, participants 
in the summer program were required to complete an academic 
project, for which they could receive credit. Philadelphia also 
piloted a GED to College program.
    There is limited national data on the use of Recovery Act 
funds in WIA beyond the summer program, but indications are 
that the system has helped unemployed workers find new jobs and 
has helped low-income, low-skilled workers find skills and 
improve their long-term job prospects.
    The number of participants in the adult program increased 
by 10 percent in the first quarter of program year 2009, 
compared to the last quarter of 2008, just when the Recovery 
Act funds came online; and the number of participants receiving 
training increased by 13 percent. Examples of what the system 
has done:
    In Illinois, Illinois used discretionary Recovery Act WIA 
funds for a competitive grants program to upgrade the skills of 
incumbent workers in key sectors of the economy, such as health 
care, with a priority given to programs that combined basic 
skills remediation and occupational training. The State also 
issued guidance encouraging the use of needs-related payments, 
which was part of the Recovery Act.
    In 2009, New York City more than doubled the number of 
people who received training through individualized training 
accounts.
    California's Workforce Investment Boards used Recovery Act 
funds to increase on-the-job training contracts in key 
industries, and provide work experience for people who had 
exhausted their unemployment benefits. They mounted new 
programs for disadvantaged and at-risk populations, and tripled 
the amount of support of services to those in training. They 
used new contracting authority provided through the Recovery 
Act to partner with community colleges and State colleges for 
training in clean and green occupations.
    Regarding the budget, we welcome the Administration's focus 
on increasing investments in training and improving services 
for low-income youth and adults. We support the proposed new 
investments in innovation, transitional jobs, on-the-job 
training, and research. But we do not think that the 
President's budget goes far enough to support the workforce 
system's role in our Nation's recovery or to address the 
particularly devastating effect the recession has had on the 
employment prospects of young people and low-income workers.
    We call on Congress to sustain the level of Recovery Act 
investment in workforce programs. We urge you to increase 
funding for youth programs to $3,000,000,000 for expanded 
summer and year-round programs, and for targeted grants to 
high-poverty communities to build pathways for youth to 
opportunities in growing sectors of the economy.
    We believe this level of funding is warranted after years 
of disinvestment in the workforce system to meet skyrocketing 
demand for services. Failure to invest in America's workforce 
will undermine our economic recovery and put us at a 
disadvantage with other nations that invest more strategically 
in workforce training.
    Thank you for the opportunity to testify.
    [Statement for the record by Evelyn Ganzglass follows:]

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    Mr. Johnson. Good morning, Chairman Obey, Mr. Alexander. 
Thank you for being here. I appreciate the opportunity to 
appear before this Subcommittee today to discuss the Department 
of Labor's priorities.
    Since the era of the New Deal, the United States has been 
ransacked with Federal laws and regulations that burden free 
enterprise and businesses, while promoting the labor agenda. 
Despite the Obama Administration's claims to be the most 
transparent presidency in history, their actions speak louder 
than words. It is clear this Department of Labor's priorities 
are to protect organized labor at the expense of worker freedom 
and increase the regulatory burden facing American businesses 
today.
    The Department of Labor is set to receive $117,000,000,000 
with ``the majority to be used for unemployment insurance 
benefits and Federal workers'' compensation.'' USA Today 
reported Federal employees, on average, make $11,091 more than 
their private sector counterparts. For the first time in 
history, more than 50 percent of all union members work for the 
government in some level. This parallel is not a coincidence.
    The majority of the $117,000,000,000 will extend the 
unemployment insurance program so that workers in States with 
high unemployment now qualify for a maximum of 99 weeks of UI 
benefits. That is almost two years. By reducing the need to 
look for work, extended UI benefits cause unemployment workers 
to take longer to find new work. Heritage Foundation 
macroeconomic modeling shows that previous extensions of UI 
benefits from 26 to 46 weeks increased the unemployment rate by 
0.22 percentage points. Roughly one-third of workers receiving 
UI benefits find work immediately once their benefits expire. 
This happens both when unemployment is high and low. Economic 
research shows that each 13-week extension of UI benefits 
increases the average length of time workers receiving benefits 
stay unemployed by approximately two weeks.
    A real stimulus this Committee could provide would be an 
immediate freeze on any new regulations which cost businesses 
money and workers their jobs. No funds shall be used to create 
any new regulations for the Department of Labor and any other 
agencies.
    Additional waste and lack of accountability occur within 
the Wage and Hour Division at DOL, which was given 
$244,000,000, an increase of almost $20,000,000 from the 
previous year. Wage and Hour is charged with determining the 
Davis-Bacon prevailing wage rate for federally-funded projects 
and is grossly inaccurate and irresponsibly managed. The Davis-
Bacon survey is not a statistically random sample, like the 
Bureau of Labor Statistics' unemployment or wage surveys. 
Rather, the survey results indicate the prevailing wage is most 
often equal to the union wage, meaning unionized construction 
companies can decide the rate of any Federal project.
    Current Wage and Hour Division methods raise public 
construction costs by $8,900,000,000 per year and inflate 
wages, on average, 22 percent. Additionally, investigators from 
the Office of Inspector General found that ``one or more errors 
existed in 100 percent of wage reports they reviewed.''
    While the only agency dedicated to monitoring union 
financial reporting fraud and abuse, the Office of Labor 
Management Standard, convicted 929 union officials and restored 
$93,000,000 in union dues to date, had their budget increased 
by only $2,000,000, and several reporting and transparency 
forms were retracted. This $20,000,000 increase to the Wage and 
Hour should be used to expand the statistically sound and valid 
methodology of the Bureau of Labor Statistics National 
Compensation Survey and the Occupational Employment Survey to 
more accurately reflect market rates.
    Additionally, efforts to rescind worker freedom lie in the 
$25,000,000 the budget appropriates to investigate independent 
contractors by adding 100 contractor cops, because this Labor 
Department deems them ``misclassified.'' Currently, if someone 
with a certain skill, trade, or experience is in demand, this 
person may work for more than one company using their skill as 
an independent contractor. Since the contractor enjoys the 
benefits of flexible work, setting their own schedule, and 
determining when, who, and where they work, they are often not 
given certain benefits and many do not require such. Not 
$21,000,000 or one penny should be spent to outlaw a work 
classification these individuals freely choose.
    The budget also completely zeroes out the funding of OSHA's 
Voluntary Protection Program, VPP, a partnership where private 
companies voluntarily comply with various regulations to avoid 
inconvenient yearly OSHA audits. Created in 1982 with mass 
bipartisan support, VPP has grown to 2,284 work sites, covering 
921,000 workers, resulting in illness and injury rates are more 
than 50 percent below the industry average. In 2007, Federal 
VPP participants saved the Government more than $59,000,000 
avoiding injuries, and the private sector VPP saved more than 
$300,000,000. Now, by defunding this program, OSHA wants to 
charge companies to participate, thus providing additional and 
unnecessary burden.
    Additionally, new OSHA record-keeping rules are a backdoor 
attempt to implement ergonomics, further costing employers 
millions of dollars in compliance.
    The priorities of this Labor Department seem clear: more 
government, more regulations, more burdens, and less 
transparency. Thank you.
    [Written statement by Brian Johnson MPA follows:]

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    Ms. Seminario. Thank you, Chairman Obey, Ranking Member 
Tiahrt, Representative Alexander. My name is Peg Seminario. I 
am Director of Safety and Health for the AFL-CIO, and I 
appreciate the opportunity to testify today to present the 
views of the AFL-CIO on funding for the Nation's safety and 
health worker protection programs.
    And I would like to thank you, Chairman Obey, for your 
strong continuing support for programs to protect workers from 
injuries, illnesses, and death on the job.
    I am happy to report that after years of neglect and 
erosion under the previous administration, that under the Obama 
Administration the job safety and health agencies and worker 
protection agencies have returned to their mission of 
protecting workers and ensuring that their basic rights are 
enforced.
    The President's budget request last year reflects the 
Administration's commitment to strengthening the job safety and 
health agencies with a proposed increase in funding to return 
these and the other DOL worker protection programs to their 
fiscal year 2001 operating levels; and the current budget 
request in 2011 continues this commitment, and it focuses on 
strengthening job safety enforcement and the regulatory 
programs.
    At OSHA, the budget proposes a modest increase of 
$14,000,000, with 25 additional FTEs. And, again, this proposal 
that is coming forward would undue the erosion since 2001, but 
it is important to point out that, with respect to the OSHA 
agency, that the erosion has been going on for decades, and 
today the agency is still at much lower levels than it was at 
its high point in fiscal year 1980; it has nearly 600 fewer 
staff onboard today at the agency than it did in 1980, and the 
workforce is 40 percent greater. So the agency really has had a 
great erosion over time, at a time when the kinds of hazards, 
the kinds of problems that workers are facing, that employers 
are dealing with tremendously. So the rebuilding of the agency 
will take a multi-year commitment to increase funding and 
staffing.
    In the regulatory area, for the eight years of the Bush 
Administration, we saw a total neglect and inaction, with the 
agency refusing to set standards. The Obama Administration is 
now moving forward first to deal with those hazards that were 
neglected by the Bush Administration--standards on silica, 
beryllium, a standard to protect construction workers with 
respect to cranes and derricks--so trying to deal with the 
unfinished Bush agenda that they refused to take action on; and 
the budget appropriately calls for an additional $4,000,000 on 
regulation. But we remain concerned that that may still be 
inadequate. Again, this returns OSHA to a level of funding that 
it had in 2001.
    In fiscal year 2009 and fiscal year 2010, the Congress, 
including this Committee, provided OSHA, BLS, and NIOSH funding 
to address the issue of injury under-reporting, because studies 
had shown that injuries and illnesses were not being recorded 
on the OSHA log, and with reporting missing anywhere from 33 to 
67 percent of all injuries. And we would encourage the 
Committee to continue that funding and OSHA to continue its 
efforts to provide oversight in this area.
    Another program at OSHA that needs additional resources and 
deserves them is OSHA's Worker Safety and Health Training 
Program, which is the only program at OSHA that is directed 
specifically to workers. It is a small program. For this year, 
the budget would bring the funding to $11,000,000. Again, that 
is about the level it was in 2011, but it is way less than it 
was when the program was first started in 1977 and 1978, when 
there were $18,000,000. So this is an area that we think needs 
more attention.
    Turning to the sister agency, the Mine Safety and Health 
Administration, it too has an ambitious agenda to strengthen 
protection for workers, and the agency has made the reduction 
of mine fatalities a top priority. It is moving forward with 
important rules on silica and rules to limit exposure to coal 
dust because, in recent years, for the first time in decades, 
we see an increase in those respiratory diseases in miners.
    In 2006, this Congress strengthened the Mine Safety Act 
after the terrible tragedies at Sago and the other coal mines. 
As a result, penalties have increased, but so has a contrast 
rate with respect to these violations. And there is a huge 
backlog that needs to be addressed, and we would ask the 
Committee to look at this and provide adequate funding to 
address those needs.
    And, lastly, let me just turn briefly to the Wage and Hour 
Administration. The AFL-CIO strongly supports the Labor 
Department's initiative to enforce Federal laws governing 
misclassification of employees as independent contractors. This 
involves Wage and Hour, OSHA, the Solicitor Officer, as well as 
the Treasury Department. Currently, we have a vast 
misclassification of employees; employees not being provided 
proper wages, the Government not being provided proper 
compensation with respect to unemployment and other taxes. So 
we think this is a very, very important initiative to level the 
playing field with those employers that indeed are meeting 
their obligations.
    [Written statement by Peg Seminario follows:]

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    Ms. Donaldson. Good morning. I am Nancy Donaldson, the 
Director of the Washington Office of the International Labor 
Organization, ILO, which is a specialized agency of the United 
Nations.
    Chairman Obey, Ranking Member Tiahrt, and Representative 
Alexander, I would like to wish the top of the morning to you 
and thank you for this invitation to testify.
    The U.S. Government is, and has been for some time, the 
single largest supporter of the ILO's worker's rights 
protections and technical cooperation projects around the 
world. The ILO has a longstanding and productive partnership 
with the Department of Labor's Bureau of International Labor 
Affairs. With more than 50 projects actively underway now, the 
ILAB-ILO collaboration continues to be a large-scale global 
undertaking. These project combat child labor, fight HIV/AIDS 
in the workplace, end forced labor and trafficking, advance 
workers' rights and protections, and promote better work.
    As this Committee is well aware, the global recession 
provoked U.S. and global jobs crises. In January, the ILO 
reported an increase of 34 million unemployed workers 
worldwide, with an estimated total unemployed of 212 million 
workers in 2009, the highest ever recorded. The global jobs 
crisis reminds us once again that good quality jobs and decent 
work are essential to the lives of women and men everywhere. 
Decent work is a source of personal dignity, family and 
household stability, and peace in the community. It increases 
trust in government and business, and the overall credibility 
of institutions.
    Labor is much more than a cost of production. As stated in 
the ILO Constitution, labor is not a commodity. Last June, the 
ILO International Labor Conference of 183 member countries 
adopted a Global Jobs Pact. The Pact's policy intervention 
strategies focus on reducing the time lag between economic 
recovery and the recovery of good and decent jobs. Last 
September, the ILO's Director General, Mr. Juan Somavia, 
reported to the G-20 leaders that between 11 and 12 million 
jobs had been created or saved in G-20 countries due to 
stimulus packages like the American Recovery and Reinvestment 
Act in the U.S., and other targeted policy interventions.
    The G-20 leaders gave strong support to the ILO Jobs Pact. 
The leaders agreed that to assure that global growth is broadly 
beneficial, we should implement policies consistent with ILO 
fundamental principles and rights at work.
    President Obama requested the ILO to develop a 21st century 
training strategy for workers to develop job skills they need 
to succeed in an evolving global economy with input from the G-
20 labor and employment ministers. And let me just mention the 
G-20 are the counties with the 20 largest economies in the 
world, so China, Brazil, U.S., and so forth, India.
    One month from now, U.S. Secretary of Labor Solis will host 
a G-20 labor and employment ministers meeting in Washington to 
collaborate on labor and training policies and practices, and 
develop recommendations. The ILO is working closely with Deputy 
Under Secretary Polaski and the president's G-20 team to assist 
preparation.
    These combined efforts have enormous potential to improve 
labor and employment policies, create more jobs in all 
countries, and lift the global economy.
    The ILO's daily work is the Decent Work Initiative. Today, 
in every region in the world, ILO member States, workers, and 
employers have crafted and are in the process of implementing 
decent work country programs utilizing ILO technical assistance 
programs supported by USDOL. To highlight a few:
    Combating child labor. This is the largest technical 
assistance program of the ILO. Seventy-five percent of the 
total U.S. Government contribution to ILO programs has been 
earmarked to combat child labor. The U.S. truly has a lead in 
supporting this work. Since 1992, ILO has assisted over 90 
countries in direct action programs.
    Two, the ILO is a partner with the USDOL to advance the 
capacity of countries to oversee, monitor, and implement core 
labor standards. These projects are designed to ensure 
sustainable results through labor law reform, building the 
capacity of labor administrations and inspectorates, 
strengthening employers and workers' organizations dispute 
prevention and settlement and advocacy in education.
    Three, Better Work. Building on this approach for 
implementing core labor standards, the Better Work program was 
created. It is a unique and innovative partnership between the 
ILO and The World Bank's IFC. The USDOL was the initial 
supporter of this approach through the Better Factories 
Cambodia program 10 years ago. The program is now in Vietnam, 
Jordan, Lesotho, and Haiti. Better Work supports partners to 
address workplace issues and makes the results of factory 
inspections public. International buyers order from factories 
that support workers' rights and protections. This serves the 
goals of better jobs, more reliable supply chains, and helps 
enterprises to be more competitive. Scaling up to new countries 
and industries, Better Work expects to benefit 1.2 million 
workers within two years.
    Fourth, combating forced labor. ILO works in many sectors 
to stop trafficking and forced labor.
    Fifth, HIV/AIDS in the workplace. The ILO has adopted a 
Code of Practice and has programs called SHARE that today is 
the standard for enterprises to manage HIV/AIDS in the 
workplace. It is translated into 60 languages. Twenty-four 
countries, and more than a million workers have been assisted.
    All of these programs have been realized with U.S. 
Department of Labor support and the support of this Congress 
and this Committee. The President's fiscal year 2011 budget 
proposes $40,000,000 to combat child labor and an additional 
$26,500,000 to implement technical assistance and monitoring 
programs to improve worker rights.
    In this time of unprecedented crisis, the ILO welcomes the 
Labor Department's leadership efforts to make labor markets 
more stable and to promote decent work for more women and men 
in the U.S. and around the world. Thank you.
    [Written statement by Nancy A. Donaldson follows:]

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    Mr. Obey. Thank you.
    Mr. Tiahrt.
    Mr. Tiahrt. I apologize for being late, Mr. Chairman. It 
was surprisingly slow.
    Mr. Tiahrt. When we have sunshine delays, I am always 
curious about that. I understand rain delays and accident 
delays, but sunshine delays always puzzle me.
    Mr. Obey. We never had that in Wisconsin. I understand it 
is a Kansas affliction.
    Mr. Tiahrt. It comes from riding into the sunset.
    Mr. Obey. We are both pretty bad. Go ahead.
    Mr. Tiahrt. I apologize for missing the first part of some 
of these testimonies, but I did read through the written 
testimony. I am curious about the tradeoff between increasing 
regulations and the loss of jobs, particularly union jobs. In 
south central Kansas we build airplanes, and I think it is very 
important this Country make things. We cannot survive as a 
service economy alone. So, as Mr. Johnson was saying, I would 
advocate a freeze of regulations and forcing all of them 
through a simple formula: the benefit has to be great than the 
cost of implementation. I think that would lower the cost of 
making things. And if we cannot make things, then I just think 
we will be continuing on our jobless recovery.
    One of the things that I have noticed is that our stock 
market has rebounded, but the companies that are doing well are 
the ones that make things overseas; and I am worried about jobs 
in America. So I am wondering is there a willingness with like 
the AFL-CIO or with Ms. Lee to trade off increased regulations 
for fewer jobs? Or do you think there is a correlation? Do you 
think that more regulations mean more jobs? I am a little 
curious as to how we move forward with this economy when we 
have approximately 10 percent of the people laid off, we have 
another 5 percent that have given up looking for jobs right 
now, and we have aerospace workers now working at Lowe's Lumber 
Company and Wal-Mart. They are under-utilized.
    So I am advocating a freeze and putting all our current 
regulations through that formula: the benefit has to exceed the 
cost of implementation. Is that a fair tradeoff, Ms. Lee, or do 
you think that we should--how should we approach this, growth 
and regulations versus getting people back to work, basically?
    Ms. Lee. That is an interesting question, Congressman. I 
would say as an operating agency at the State level, when we 
are implementing, I would say, rules that impact businesses and 
the public, we work very, very hard to manage the bureaucracy, 
and we put that issue to the test through the rulemaking 
process that I think occurs in most States. One of the things 
that we try very hard to do is balance what we are trying to 
achieve with the impacts on the public or the businesses.
    Mr. Tiahrt. What I have noticed is many times through the 
enforcement process we have set up this adversarial 
relationship between regulators and the people who are in the 
private sector, and I think most people understand that the 
Government does not create wealth; the private sector creates 
wealth. And as a byproduct of creating wealth, we have jobs. So 
in order to enhance that process, I think we need to change our 
philosophy.
    As an example, in south central Kansas we had OSHA target 
one county, Sedgwick County, and literally shut down the 
homebuilding industry. I went back and met with the 
homebuilders. They said we need to have a conference with OSHA, 
so I got them together in Topeka, Kansas, and they came up with 
a scenario where they would invite OSHA to come to their job 
sites. They would walk through the job site together and make a 
list of potential violations. Then OSHA gave them six weeks to 
comply. Everybody went back to work. The workplace safety went 
up. But they advocated for a safe workplace rather than be an 
adversary, where they just come in and the contractor has to 
immediately reach for his checkbook because he knows he is 
going to get fined.
    So would you be open to a different change in philosophy as 
far as regulatory body is concerned? I think if we have an 
adversarial relationship, we know that that does create strife 
at the workplace and fewer jobs, but an advocacy is what I 
would like to see. Is that something that you think we could 
philosophically do?
    Ms. Lee. Certainly. Actually, a lot of times businesses 
will ask us to make sure that State agencies are doing their 
job to ensure there is a fair and equitable playing field. So 
they will come to their regulatory agency and say can you make 
sure that businesses, for example, that do not pay their fair 
share of taxes pay their fair share. So certainly we always try 
to have a high quality relationship with business, because we 
understand that we are all here to support them.
    Ms. Seminario. If I may. You have spoken to the issue of 
worker's safety and OSHA. Generally, when OSHA will target an 
industry, it is because people are being killed. And in the 
homebuilding industry and in construction, unfortunately, we 
have seen a major increase in fatalities, from falls, over 900 
in the Country in the last couple of years. So the targeting is 
done in response to there being a problem, not because they 
want to go out and harass a particular industry. And I think 
there does have to be a balance. I mean, absolutely there needs 
to be a balance. But you cannot really have compliance 
assistance and voluntary compliance if it is not backed up 
strong enforcement.
    And this Administration clearly has a different view than 
the last one that they need stronger enforcement, and we at the 
AFL-CIO would agree with that approach. That is not to say that 
there should not also be the outreach, the compliance 
assistance to employers, particularly small employers, as well 
as to workers. So, again, it does have to be a balance, but you 
will not get any kind of compliance unless it indeed is backed 
up by strong enforcement.
    Mr. Tiahrt. I think that is what Mr. Johnson was advocating 
with the Voluntary Protection Program. And what we did in 
Kansas, if a contractor did not comply after having this 
opportunity, then all these sanctions and penalties and fees 
were available to the agency to enforce the regulations. But 
what we found out is that many of the workers were Hispanic and 
it was simply a language barrier the ladder cannot be 45 
degrees, it has to be 60 degrees. Explaining that when you do 
not have the language skills sometimes is difficult. So the 
building community actually hired somebody from the insurance 
industry that was a specialist in workplace safety, and they 
went around to all the job sites with an interpreter and took 
the opportunity to educate their workers. That was more 
productive than all the enforcement they had been doing 
beforehand.
    So I would just like to reinforce what Mr. Johnson said. 
The Voluntary Protection Program is going to be the most 
productive thing we can do at this point in time to get people 
back to work in a safe work environment.
    Ms. Seminario. The only point I would like to make is just 
a clarification on VPP versus the other compliance assistance 
programs. The compliance assistance programs for small 
businesses, specifically, are run through OSHA grants to the 
States. That program is increasing. The Voluntary Protection 
Program is a program that has been directed for decades largely 
to big employers. If you look at who is getting the benefit of 
it, it is Monsanto, it is GE, it is the high performing 
companies that are really doing a good job.
    I mean, you should speak to the Department about this, but 
I think what they are faced with here is having to make 
choices, because you cannot fund everything. And if you are 
going to be funding compliance assistance, it should be those 
programs that are targeted to small employers; and that 
Monsanto, GE, you know, who are really doing a good job--and 
this program, VPP, is about the best performing employers--that 
to look at a different way of funding it because they have the 
ability and the money to take care of it and to fund it 
themselves.
    So it is really a choice: do you put your resources into 
helping the small employers or the big employers. In this case, 
the Obama Administration is deciding they want to help the 
small employers.
    Mr. Tiahrt. How much more time do I have?
    Mr. Obey. Two minutes.
    Mr. Tiahrt. Two minutes? Okay. Thank you for being so 
generous with the time.
    Mr. Obey. Ten minute rule this morning.
    Mr. Tiahrt. Okay.
    Mr. Obey. Unless more people show up.
    Mr. Tiahrt. I am concerned that the tradeoff that I see 
coming of increased regulations versus getting people back to 
work, and there is a clear correlation in my mind. So that is 
my biggest concern. We are going to hire 153,000 people in the 
Government this year at the Federal level. They are going to 
have to do something. My concern is that they are going to be 
writing more regulations, slowing down our economy even 
further, and we want to get people back to work. I mean, I 
think we can all agree 10 percent unemployment is not 
acceptable.
    So how do we enhance that process? I think you do it 
through making opportunity and working with big and small 
companies to have a safe place as an advocate for safety rather 
than an adversary I think would be much more productive.
    Thank you for being generous with the time. I yield back.
    Mr. Obey. Thank you.
    One of the advantages of being around here as long as I 
have is that you remember some things from back in the stone 
age. And I was here when OSHA was first created. Its main 
sponsor was probably my closest, or one of my two closest 
friends in the Congress at that time, Bill Taggart, who was a 
Republican member of the House. We went to college together, 
served in the legislature together, and were out here. Then he 
unfortunately died at age 40. But he was the driving force 
behind the creation of that agency.
    And when it was created, one of the problems is that the 
Congress required OSHA to adopt the consensus standards that 
had been developed by some of the biggest companies in this 
Country and, as a result, you had regulations which were 
understandable to a PhD working for one of the large companies 
in the Country, but if you were a small businessman trying to 
comply, those regulations were often not user-friendly.
    So Silvio Conte, who was then the Ranking Republican on 
this Subcommittee, and I worked together to try to develop a 
more understandable method of inspection and to provide for a 
reasonable degree of voluntary compliance; and I am all for 
that. What I am not for is emphasizing that to the exclusion of 
virtually every other responsibility in the Labor Department 
and in OSHA. So I think the question, as you say, is simply one 
of balance, and I hope we can find it.
    Let me ask a couple of questions before I turn to Mr. Honda 
and then we move to the next panel.
    We have a tough budget situation. The President has 
proposed what he describes as a domestic discretionary freeze. 
The Appropriations Committee will meet that, but, in doing so, 
because there are some actions that the Administration's budget 
takes that I think have been overly stingy, if we want to react 
to that, we are going to have to find some places to cut. Are 
there any of these training programs that you believe should be 
considered the lowest priority or should be considered for 
reductions? Are there any you think are redundant or 
ineffective? Where would you go? Anybody want to volunteer?
    Ms. Ganzglass. Can I turn that around and talk about what 
is effective? Our approach has been that the workforce system 
needs reform. WIA reauthorization is up this year once again, 
and it has been delayed and delayed and delayed and we think 
that increased funding needs to go together with some changes 
in the system.
    But I would suggest that some of the more ineffective 
practices in the workforce system are a direct result of under-
funding and of a system that is stretched so thin so that there 
is----
    Mr. Obey. Example.
    Ms. Ganzglass. For example, there has been a steady decline 
in the amount of--before the Recovery Act funds came out, 
steady decline in the number of people who get training. There 
has been a steady decline in the share of people who are low 
skill, low income who have access to training. So the 
investment has been thinner and thinner. There has been, 
through the WIA, more an emphasis on individualized training 
accounts, which are basically vouchers to go buy what is out on 
the market, so that has also limited the ability of the system 
to really develop these customized more tailored solutions that 
combine work and education that provide the kinds of support 
that enable low-skilled people to succeed.
    So I guess my answer is that I think there are some 
ineffective practices because the interventions have been so 
shallow that they really have not added enough value to the 
long-term employability of people. But what I was trying to say 
through the testimony was, with additional money, there has 
been a tremendous increase in training. And that is just the 
little bit of data I was able to collect. I hear anecdotally 
that there is much more, much more support being given and much 
more investment in the kinds of more tailored, if you will, 
holistic approaches to training and re-employment than existed 
before.
    So I do not think there is redundancy in the system; I 
think that all of the numbers that have been used about all of 
these little training programs--and we actually have a project 
at the moment counting all of these--they are little pieces 
within a larger umbrella, and there really is not redundancy in 
these programs. So that is my answer to that.
    I would say that the dire straits of young people, and 
especially minority young people, really need attention and 
have long-term consequences for this Country. And I know that 
that does not necessarily go through the appropriations process 
there have been attempts to deal with summer youth and year-
round youth programs, and those have failed up until now, at 
least, but those investments I think are particularly 
important. And for high impact communities that has long-term 
consequences that cannot just be turned around, so it is a 
really important investment.
    Mr. Johnson. $1,500,000,000 is the cost that regulations 
took out of our economy last year. The average American worker 
will have to work 65 days in 2009 to pay for the cost of 
government regulation, which consumes 17.7 percent of national 
income. This is up from 61 days and 16 percent in 2008. So the 
trend is not to cut and trim, it is actually bloating and 
expanding.
    To save money, cut programs. You could save $9,000,000,000 
nationwide by fixing the Davis-Bacon Act. I am not advocating 
for a repeal of a 1931 prevailing wage law that is completely 
outdated; I am saying if you are going to implement a 
prevailing wage, it should be used statistically the same 
across the board. Every other agency that is under the Service 
Contract Act, et cetera, gets their wage data from BLS. Wage 
and Hour is the only one that uses the antiquated, outdated, 
self-reported survey, which is not statistically valid.
    That $20,000,000 increase should have been shifted to BLS, 
where everyone gets market wage data from period to expand our 
National Data Compensation Survey. Economists globally will 
agree that they have the most statistically sound and valid 
methods, not a self-reported survey.
    Another way to save $50,000,000 is to get rid of the State 
paid sick leave fund. There is a $50,000,000 mandate to study 
this, basically, to see how it implements. Well, if three 
States already do it--California, New Jersey, and Washington--
actually, Washington passed it but has not implemented it 
because they realized they would have to raise taxes to do so. 
So you could call California or New Jersey, who raised taxes to 
implement this program, and ask them how they are doing it. 
There is no reason to appropriate $50,000,000 to figure out how 
to do it.
    All this program is is an unfunded mandate, and when the 
Government forces employers to give a fringe benefit, which is 
time off, the employer is forced by the Government to shift 
within their compensation pool from something else, which is 
going to come out of wages and benefits. So, overall, wages are 
going to decrease; and we see that under these programs. They 
just take it right out of the compensation pool they already 
have.
    So $9,000,000,000, $50,000,000, just a few cuts ideas.
    Ms. Seminario. If I may just address the issue of 
regulation. There is the proposition here that somehow 
regulation costs businesses all this money and has no benefit. 
I think in the area of worker safety it is important to point 
out that there are real costs of not protecting people. We had 
5,000 workers killed on the job last year; we had millions 
injured; tens of thousands die from occupational diseases. The 
estimated cost of just the injuries is $150,000,000,000 to the 
economy, and most of that, much of that goes back to employers.
    So I think we have to look at here that there is a point to 
regulating: not only to protect people, but to protect the 
economic welfare. And if you go back to the Occupational Safety 
and Health Act and its original statement of purpose, it was to 
look at the fact that we were basically killing workers, 
workers were being made sick; but it was having a terrible toll 
on the economy.
    So I think we cannot lose sight of the fact that the 
regulatory programs that are in place are for the purpose of 
protection, but also look at the lack of regulation that we 
have seen in the financial sector in the last number of years 
and the cost that that has had on the economy. So I think we 
have to take a broader view here of what the needs are and what 
the impacts are overall.
    Ms. Lee. Chairman Obey, if I may. On page 6 of your written 
testimony, NASWA, we have a proposal of how to save 
$840,000,000 in unemployment insurance benefit payments, and 
that is an investment in re-employment services. And we talk 
about that in our testimony. What we know is that as you--even 
in a recession with 10 percent unemployment, there are still 
areas in the Country that go without their needed labor supply, 
and what we do in employment services is we provide 
transparency to all of that. It can be State-to-State.
    And we help workers and we try to match them up at the 
lowest price possible to get them to where they are needed to 
help jump-start the economy and help weather this time. That is 
what happens in your employment service and your re-employment 
service programs and they are proven to save money for the 
Country, and that is part of what is in our proposal.
    Mr. Obey. My time has expired. I will come back for a 
couple comments afterwards.
    Mr. Honda.
    Mr. Honda. Thank you, Mr. Chairman.
    I thank the members here for testifying.
    Mr. Chairman, I do not have any questions, just a comment, 
and that is when I was a principal of an elementary school, I 
ran the school based upon certain kinds of standards of safety 
and standards of educational attainment. The other piece was 
the classroom environment. When we had portables come in, that 
was a nice thing because it was new, it was air-conditioned. 
But there were always complaints that children had headaches 
and teachers had headaches when they were in, and I was going 
to say stop complaining.
    But rather than doing that, just called a couple of 
agencies and had them test the air over the weekend, and we 
found that there was not anything wrong, but there was a 
persistence of illness or complaints. We did it again; only 
this time we turned up the heat, tested the air and closed it. 
We found that formaldehyde was coming off the rugs that were 
used as part of the chemicals for keeping it down.
    That information was critical for me to say you are right, 
we should not be using it until we get rid of that chemical and 
have it come out of the glue. That helped our youngsters' and 
the teachers' health and their ability to teach and learn.
    Fast forward to Katrina, when we are looking at all these 
trailers that are going in. My concern is that if we are going 
to provide these things, that we ought to make sure that the 
folks who are going to use those trailers will not get sick 
because of the glue that may be used. And I think that that is 
the kind of standards we want to find.
    So I appreciate the kinds of information that does come 
through and helps us to become more thoughtful about the health 
and safety not only of workers, but of our families and our 
children wherever we go. The idea of having standards is good, 
but it is also economical in the sense that you do not lose 
time, you do not spend money on things that you do not have to.
    So I appreciate this kind of discourse.
    Thank you very much, Mr. Chairman.
    Mr. Obey. Mr. Tiahrt, two or three minutes before we move 
on to the next panel.
    Mr. Tiahrt. Thank you, Mr. Chairman.
    The cost of regulations is something that I think we have 
to deal with in this economy in order to try to get people back 
to work, and nobody advocates a complete abolition or 
abolishment of regulations. I think that there is a need for 
work safety. I think there is an incentive for employers, 
especially small businesses.
    There is a roofing contractor that was talking to me about 
OSHA and using harnesses on roofs. Before this education 
program went around, they did not realize they had to use these 
harnesses, and one of his brother-in-laws who was working for 
him fell off a roof and he had to explain at the next family 
reunion why his brother-in-law got injured at the workplace.
    Many of these small employers employ their friends, their 
family. They do not want people to get hurt. That is why I 
strongly advocate this education program, because these 
regulations are hard to understand. As the Chairman pointed 
out, at first they are worse; now they are better, but they are 
still hard to understand, and small companies do not have the 
resources to dedicate somebody to just interpret these for them 
or keep track of them.
    So I think whether it is at the small business level or at 
a larger level, advocating for a safe work environment and a 
clean environment and a fair work environment is much more 
productive in the long-run, and I would like to see us work 
together to change the philosophy from an adversary to an 
advocate for these general workplaces.
    So thank you, Mr. Chairman.
    Mr. Obey. Well, as long as we are philosophizing instead of 
asking questions, which all three of us seem to be doing, let 
me tell you a story that I think illustrates why it is 
necessary to sometimes have some pretty tough regulation.
    A number of years ago, in Superior, Wisconsin, we had a lot 
of grain elevator workers who were having a hell of a time 
simply breathing on the job, and I know about that because I am 
allergic to grain dust; I just close up like I am having an 
asthmatic attack. So I was asked by those workers if I could 
get some people in there to examine what was going on in those 
elevators. So I got Dr. Irving Selikoff to come in. He was the 
great scientist who made the major discoveries about asbestos 
and mesothelioma. So we got Selikoff to go up there and deal 
with those workers' problems.
    The manager of one of the grain elevators was mad as hell 
at me, and he said to me there is no problem out there. He 
said, it is good, healthy conditions. He said, none of these 
people really have a problem, they are just trying to hassle 
us. So I simply said to him, I tell you what. Why do you not go 
out there and work out there for three days, and then see if 
you have any problems.
    The point of the story is simply that when we talk about a 
cost-benefit ratio, cost to whom, benefit for whom? The costs 
and the benefits often do not accrue to the same party. So it 
seems to me that we have to be very careful. If we are going to 
use any device like that, we have to be very careful so that we 
measure the human impact.
    As far as regulations are concerned, the assumption is 
often made by some, I guess, that regulations routinely cost 
the Country. I would say it costs the Country greatly when we 
did not have sufficient regulation of the financial sector of 
our economy. We would not have been going through this 
recession if we had had better regulation of the big banks in 
this Country, if we had had better regulation of credit default 
swaps and other derivative hair-brain schemes like that.
    So I am one who confesses to be very suspicious about a 
wholesale attack on regulation. That does not mean that some 
agencies do not drive me crazy by their nitpicking. OSHA often 
has, and will continue to do so, I assume. But I wish we could 
strike a balance so that we do not have this constant yinging 
and yanging.
    When the Clinton Administration was in, we had good support 
for these programs. The Bush Administration comes in, we wind 
up going to the opposite ends. I wish we could find a way to 
meet somewhere in the middle and have a consistent policy over 
time. Even if it is a little tougher than business wants, even 
if it is a little weaker than labor wants, at least people 
would know what the rules of the game would be over a long 
haul; and that, I think, would be better for everybody.
    Just one basic question about training. People will always 
say, look, we are in a recession. We do not have enough jobs to 
go around. Why are you training people for jobs that do not 
exist? Why are you putting so much money in training? Why do 
you not wait until the economy is recovering? That is what I 
get from people a lot.
    What is your response to that?
    Ms. Lee. Chairman Obey and members of the Committee, when 
the economy starts to recover, we think that business should be 
able to have immediately the skilled workers that they need. So 
in order to have that, what we have to do is to be able to 
interact with workers who are unemployed, be honest with them 
about what their skills are, what their ability to compete in 
the labor market--which is competitive--and up-skill them if 
necessary, re-skill them if necessary, so that when businesses 
are taking off and are coming out of the recession, that at 
very low fees we can find them the workers that they need.
    And this happens cyclically. And, at the same time, during 
a recession, when many businesses start, they still have 
difficulty finding certain skill sets in certain locations; and 
what the workforce system has to be able to do is to make that 
match occur. And as you know, many of your constituents, 
American citizens, they are not realistic when it comes to 
their marketability in the job market, and being unemployed is 
a very, very difficult time for them.
    So without our public workforce system and all the parties 
working together, you will have many Americans that honestly 
cannot assess their skills and then wonder why can I not get a 
job? Why can I not become re-employed? And then that is very 
bad for the Country.
    Ms. Ganzglass. Just to add to that. I would argue this is a 
really good time to invest in training. The opportunity cost of 
training, meaning the loss of foregone wages, the fact that 
people are on unemployment insurance, so there is income 
support that is coming through that allows them to take part in 
longer-term training. We know that people who have families, 
who go to school at night, who work full-time, who works split 
shifts, it is very difficult to complete education. So, 
actually, periods when they are working less than full-time, 
when they are unemployed and getting some income support is a 
really good time to up-scale the workforce.
    And people who are skilled in one field who have lost their 
jobs in manufacturing, in other fields, they are not going back 
to those same jobs. The jobs that are being created now and 
will be created in the recovery are all going to change 
dramatically and require different and enhanced skills. So 
people need retraining, and you cannot just swap people from 
one field to another. They are not going back to the exact jobs 
that they have had.
    One last point. In the written testimony I include data 
from a number of training programs that are really tied to 
economic development in California and Kentucky. Those have had 
really strong evaluations and have shown that actually the 
training has a larger impact on job creation, on earnings, on 
employment than other investments or tax credits in job 
creation. So when you ask about where to cut, tax credits for 
job creation, in fact, have less return than a good solid 
investment in improving the productivity of workers who are 
there and helping companies upgrade what they are doing.
    Mr. Obey. Is that it? Do you want to say something?
    Ms. Donaldson. Just a word from the global side on both 
standards and training. At the ILO we have--employers are our 
partners, along with worker associations, and what we encourage 
is a dialogue, which both Mr. Tiahrt and Mr. Obey have talked 
about; and through that dialogue we have learned that they can 
come to agreements, and that is what the standards are that 
have happened over the last 90 years.
    I would like to say that the Better Work program that I 
mentioned is supported by the industry; they have committed 
money, hundreds of thousands of dollars. And they believe in 
standards, they believe in getting rule of law. There are 
places in the world where there are not standards. There are 
places in the world where you can find what you are looking 
for, and they are not pretty for employers or workers.
    Mr. Obey. Would you do me one favor? Last question from me, 
then I will ask Mr. Cole if he has any.
    I think a lot of people really are not very familiar with 
how the ILO works and, because of that I think they wonder 
whether they have any significant impact. Let me ask you how 
does the ILO work? Let me back up. Yes, I am interested in not 
seeing child labor around the world. Yes, I want foreign 
workers treated fairly. But even more than that, I am 
interested in protecting American workers from unfair pressures 
that lower wages.
    How does the ILO work to effectively enhance countries' 
abilities to track the problem and to do something about it 
when they find a problem? What is the mechanism? What is the 
way that they go about, in essence, protecting American wages 
in a legitimate way?
    Ms. Donaldson. Well, let me just say I am an American, so 
speaking from that perspective as an ILO official, as well, the 
United States has free trade agreements with our trading 
partners around the world, and we have systems of preferences, 
as you know, with 140 countries that are less developed; and 
those trade relationships in essentially a free trade world 
require that our trading partners meet core labor standards. 
And what does that mean?
    Mr. Obey. And how do you go about making sure that they do?
    Ms. Donaldson. Yes. So the way that we work, the ILO, we 
work with our partner countries, partner employers, and partner 
workers, and we bring technical assistance programs to help 
countries meet these goals that they have agreed to meet. So it 
raises the living standards where there are better jobs there, 
and it does not compete by drawing our good jobs out of the 
United States. And we think in a world where there are better 
jobs and better work everywhere, including in the U.S., means 
there are better consumers and there are better trading 
partners.
    So we want to help with standards, with our partners to 
make economies less dependent on sweatshops and slave labor and 
products that are produced and put into the system, not 
violating the laws of the United States and others. At the same 
time, we want to hold other countries accountable.
    So I would just say the ILO, which has been in existence 
since the end of World War I and was created by the Versailles 
Treaty to promote peace--because labor strife and economic 
instability is a result of a lack of working together--they 
have passed standards year after year that the employers 
discuss, as well as the employees, and then there is a 
transparent reporting system that is participatory.
    Complaints can be filed, experts look at the issues. We 
change standards. We try to adjust with the world of work as it 
evolves. It is a very dynamic process. It is a parliamentary 
rule, in a way, that the countries participate in. So it is 
slow sometimes, as happens here as well, but it is a very open 
dialogue because peace, stability, strong economies, 
productivity and jobs for people as livelihoods is at the core 
of this.
    I hope that addresses the question in some way.
    Mr. Obey. Thank you.
    Mr. Cole.
    Mr. Cole. Thank you, Mr. Chairman. I just want to quickly 
apologize to the panel, apologize to you and Mr. Tiahrt for 
coming late, but I have been in Interior, so I have been doing 
other work and look forward to participating a little bit later 
in this session. Thank you.
    Mr. Obey. All right.
    Well, thank you all very much. I appreciate your 
participation today.
                              ----------                              --
--------

                                       Wednesday, March 17, 2010.  

    TESTIMONY OF INTERESTED INDIVIDUALS AND ORGANIZATIONS LABOR AND 
               EDUCATION PRIORITIES/ESEA REAUTHORIZATION


                               WITNESSES

GENE WILHOIT, EXECUTIVE DIRECTOR, COUNCIL OF CHIEF STATE SCHOOL 
    OFFICERS
DANIEL DOMENECH, EXECUTIVE DIRECTOR, AMERICAN ASSOCIATION OF SCHOOL 
    ADMINISTRATORS
GREG RICHMOND, PRESIDENT, NATIONAL ASSOCIATION OF CHARTER SCHOOL 
    AUTHORIZERS
RANDI WEINGARTEN, PRESIDENT, AMERICAN FEDERATION OF TEACHERS
DENNIS VAN ROEKEL, PRESIDENT, NATIONAL EDUCATION ASSOCIATION

                   Opening Statement by Chairman Obey

    Mr. Obey. Is that a vote? It will take probably 20, 25 
minutes, so I would like to get started with panelists' 
comments. I apologize for the interruption that will occur, but 
we cannot do much about the House setting votes when they are 
inconvenient for committees.
    Sorry to do this to you. I know it is going to be 
discombobulated, but that is the Congress.
    We will now turn to our second panel this morning, which 
will focus on Federal education policy and related funding 
issues.
    We are pleased to have with us today a panel of experts who 
represent the professionals on the ground with our kids, 
working day in and day out to educate the Nation's students. 
You are here on behalf of teachers and leaders at both the 
State and local levels. We are eager to hear your perspectives 
on how decisions made in Washington translate into the 
classroom across America.
    Our witnesses are Dr. Daniel Domenech, Executive Director 
of the American Association of School Administrators. Dr. 
Domenech has more than 36 years of experience in public 
education, 27 of those as a school superintendent.
    We also have Ms. Randi Weingarten, President of the 
American Federation of Teachers and a former history teacher.
    At the invitation of the Minority, Mr. Greg Richmond, 
President and Chief Executive Officer of the National 
Association of Charter School Authorizers.
    Mr. Dennis Van Roekel, President of the National Education 
Association and a former math teacher.
    And, finally, we have Mr. Gene Wilhoit, Executive Director 
of the Council of Chief State School Officers from 1994 to 
2006. He led State education agencies in Arkansas and Kentucky.
    I would ask our witnesses to limit their remarks to five 
minutes, then we will proceed to a round of questioning when we 
get back from the floor interruption.
    Mr. Tiahrt, any comments? Thank you.
    You want to begin?
    Mr. Domenech. Certainly. Well, Mr. Obey, Mr. Tiahrt, thank 
you so much for inviting me here this morning. It is a pleasure 
to be here this morning. Thank you for the invitation. I am Dan 
Domenech and I am the Executive Director of the American 
Association of School Administrators, and, as Chairman Obey 
indicated earlier, a superintendent of schools for 27 years. My 
last tour was a superintendent of schools here in Fairfax 
County, Virginia, right across the way.
    We are indeed grateful for the support that we have 
received from Congress, and certainly from the members of this 
Committee. The recovery funds have gone a long way in our 
Nation's schools to preventing what would undoubtedly have been 
a great disaster in our public school systems. Jobs were indeed 
saved; programs were indeed saved that would otherwise have 
been cut.
    We are also very appreciative of the work that you are 
doing relative to the Jobs for Main Street and specifically the 
$23,000,000,000 that would be advocated for the State fiscal 
stabilization funding, which will certainly help in the current 
economic environment that faces our schools.
    We pretty much see every day, as you pick up a newspaper, 
that every school district in the Country is going through the 
process of eliminating positions which might result in 
increases in class size, eliminating programs, eliminating 
summer programs, after-school programs. You read about a school 
system like Kansas City, where they are closing half of their 
schools; Detroit also closing a great number of schools. So we 
see that there is a significant economic issue facing our 
schools and that they need help. And certainly the Jobs for 
Main Street and the $23,000,000,000 that the House has already 
acted upon would be a tremendous, tremendous help.
    We also urge you, as you move forward not only with the 
Jobs for Main Street, but also for the budgetary allocations, 
that you look at, in essence, what happened this year with the 
stabilization dollars to a great extent, and that is the fact 
that in many, many cases the dollars were sort of hijacked at 
the State level and were used to supplant what would otherwise 
have been State support for education, and even local support 
of education. So that, unfortunately, in spite of this great 
record year for education in terms of Federal support, most of 
our school districts around the Country wound up with a total 
of less dollars than they would otherwise have had had the 
State and local support remained at the same levels.
    And, indeed, when we ask our members--and we survey them on 
a regular basis, we find out that 88 percent of them have 
reported to us that indeed that was the case, that their local 
and State allocations wound up being less than it was supposed 
to have been, so that in spite of the increase of Federal 
dollars, in many cases almost doubled, they still have huge 
budget issues.
    We are also seeing that 83 percent of our members are 
reporting that as they are putting their budgets together for 
this coming school year, that they are looking at reductions 
again in workforce and reductions in staff. So this is going to 
be a huge problem.
    I want to now focus on the budget that the President has 
put forth and that you are now considering for the 2011 year.
    We are very much concerned with what we see as a shift from 
formula funding to competitive funding, and we frankly are very 
much against that. ESEA historically we consider to be the kind 
of program that was put in place to level the playing field. 
Recognition of the fact that we have children of poverty in our 
schools and recognition of the fact that there is substantial 
evidence that supports the fact that children of poverty are 
our underachievers. They are the ones that are at the bottom 
end of the achievement gap. They are the ones that are in all 
of our failing schools; and that ESEA dollars have 
traditionally gone to help these youngsters.
    Whereas we understand the strategy behind competitive 
grants, we think of what Secretary Duncan has said in terms of 
education is a civil right for our children, and we believe 
that a child's civil rights should not be subject to 
competition and that we should not be doing things that will 
defer dollars that are very much needed by these children to 
just those few districts who happen to have adults that are 
able to write the kinds of grants that will win them the 
competition.
    So we are not in support of that and we specifically point 
to our small and rural school districts across America which 
are the majority of school districts in America, and the fact 
that these districts do not have the capacity, do not have the 
time and often the skills to write the type of grants that 
would provide them with the kinds of monies that we are talking 
about.
    We are also looking at Title I and concerned about the fact 
that even though the President's proposal calls for an 
increase, total increase, and most of that increase is going to 
these competitive grants. So we are concerned that, in essence, 
Title I becomes level funded at a time when we see that there 
are great economic needs in our schools.
    So there needs to be, if there are going to be increases, 
increases in the Title I allocation, that it is not level 
funded, because we see, as we have looked at the blueprint that 
was recently released by the Administration, that there are 
things in there--and I will point specifically to the 
requirements for the development of new assessments, the 
collection of data, the analysis of that data, the reporting of 
that data--that basically amount to an unfunded mandate, 
because there is nothing that would, in essence, finance the 
collection and the use of that data in our local school 
districts.
    So knowing that, in all probability, the passage of ESEA 
will result in some unfunded mandates, there is a need, then, 
for greater formula funding in Title I.
    And same thing with IDEA. Our organization has long been 
advocating the need for IDEA to be funded at the level that it 
was promised, and that is 40 percent. Currently, the budget 
that is being proposed is funding IDEA at 17 percent and this 
is a huge economic issue for school districts. As you know, we 
are required to provide for the needs of our special ed, and 
that is the only area where a district has absolutely no 
flexibility. We have to provide for the needs of these 
children, irrespective of cost, irrespective of the budgetary 
problems that a school district may be having. That is where it 
has to go.
    So, at times like this, what happens is that we are robbing 
Peter to pay Paul. We are taking money away from the general 
education program to fund the needs of our special ed students; 
and, thus, why funding IDEA at the promised level is 
significant.
    Finally, I want to point to the Rural Education Achievement 
Program, REAP, which is something that our organization also is 
very much supportive of, and this is because this program is 
focused on our rural schools in America, recognizing the needs 
that they have. And, again, we are concerned that the budget 
talks about a set-aside of REAP dollars for the Secretary to 
use for competitive grants, and here again we propose the same 
argument.
    So thank you, Mr. Obey, for this time, and rest assured 
that all of us in our schools will do, irrespective of what 
happens, the very best that we can on behalf of our children.
    [Written statement by Dr. Dan Domenech follows:]

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    Mr. Richmond. Good morning, Chairman Obey, Ranking Member 
Tiahrt, and members of the Subcommittee. Thank you for inviting 
me to speak with you today.
    The National Association of Charter School Authorizers, or 
NACSA, is a membership organization not of charter schools, but 
of the agencies that oversee charter schools. Our members are 
school districts, State education departments, universities, 
and others; and we work with our member agencies to grow the 
number of high-quality charter schools across the Nation by 
setting professional standards and providing technical 
assistance directly to authorizers.
    Allow me to point your attention to a picture that appeared 
earlier this month in the Chicago Tribune under the headline 
Every Urban Prep Charter School Senior is College-Bound. One 
hundred percent of the first senior class at this all-male, 
all-African American charter school has been accepted into a 
four-year university. Take a moment to look at the joy in the 
faces of those boys and imagine the pride of their mothers, 
fathers, and grandparents.
    Tim King, the founder of this charter school that opened 
three and a half years ago, says, ``There were those who said 
you can't defy the data. Black boys are killed. Black boys drop 
out of high school. Black boys go to jail, they don't go to 
college. They were wrong.''
    One hundred percent of graduates admitted to college would 
be a terrific achievement for any school in America, but in the 
inner-city of Chicago, this achievement is truly remarkable. 
But it should not be remarkable; it should be the norm. All 
children--white, black, and brown--in every community in 
America should be able to attend a school that prepares them to 
go to college and to succeed in life.
    This Committee has the ability to make this type of 
opportunity available to millions of more students by acting 
boldly in support of Federal efforts to expand educational 
opportunities and by demanding results. To that end, I urge you 
to continue to support the start-up of new charter schools and 
to include provisions that promote quality as you do so.
    This boldness was evident in fiscal year 2010, when the 
Committee appropriated $256,000,000 to support the start-up of 
over 1300 new charter schools. The 2010 appropriations bill 
also included new accountability measures, supported by my 
association, to ensure that new charter schools are held 
accountable. And I would like to thank you, Chairman Obey, and 
Congressman Tiahrt for your leadership which ensured that these 
new accountability measures were included in the final bill.
    In the Administration's proposed reauthorization of ESEA, 
we support the proposal to expand the range and quality of 
educational choices available to students by increasing the 
number of high-performing charter schools. Yet, we also know 
that public oversight of charter schools is highly variable 
across the Country, leading to excellent charter schools in 
some communities and unacceptably weak schools in others.
    Any Federal effort to increase the number of charter 
schools should be accompanied by an equal effort to ensure 
quality oversight that maintains high standards, preserves 
school level autonomy, and safeguards student and public 
interests.
    To that end, we recommend that Congress explicitly reserve 
at least $5,000,000 in fiscal year 2011 for the purpose of 
improving oversight of charter schools, which will ensure that 
Federal funds are supporting only quality schools. 
Additionally, we would recommend that language in last year's 
bill outlining three quality control standards be repeated 
again this year.
    My members, the agencies that oversee charter schools, 
recognize that there is nothing automatic about being a charter 
school. For every urban prep success story, there may be 
another school with weak academic results or poor financial 
management. These poorly performing charter schools need to be 
held accountable. Yet, all too often oversight of these schools 
is weak and poorly performing charter schools are allowed to 
stay open.
    Just last week, for example, the FAME Charter School in 
Fremont, California, had its charter renewed for five years by 
the Alameda County Board of Education, despite a State audit 
that identified dozens of irregularities, including an 
unusually high salary of over $336,663 for the school's 
principal, for whom the school also bought a $75,000 Mercedes.
    These types of abuses are a disservice to children and 
taxpayers, and they tarnish the achievements of the thousands 
of good charter schools, like Urban Prep, that play by the 
rules and provide quality educational opportunities for 
hundreds of thousands of children.
    Authorizers are your partners in assuring charter schools 
provide more high-quality educational opportunities for 
children, while playing by the rules and serving the public 
interest. Authorizers who follow professional standards set by 
my organization are more likely to thoroughly evaluate 
proposals for new schools, approving good proposals and denying 
weak proposals. They are also more likely to provide proper 
oversight that respects the autonomy of charter schools while 
holding them accountable for results.
    Yet, for many years the role of authorizers in the charter 
school sector has not been understood, nor supported by policy 
makers. Over the past 15 years, the Federal Government has 
allocated $2,000,000,000 to support the creation of new charter 
schools. During that same time, less than $2,000,000, or only 
one-tenth of one percent, has been invested to ensure that the 
schools are held to high standards and properly monitored by a 
competent authorizing agency.
    Last year, you began to remedy this lack of Federal support 
for quality oversight thanks to the leadership of this 
Committee that I mentioned earlier. In fiscal year 2011, I urge 
you to continue that leadership by allocating $5,000,000 
directly for quality authorizing so that many more children 
have that opportunity, like the boys at Urban Prep Academy, to 
attend a great school that prepares them to go to college and 
succeed in life.
    Thank you.
    [Written statement by Greg Richmond follows:]

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    Mr. Obey. Thank you.
    I think we
    Mr. Obey. Okay, this job would be great if we did not have 
to interrupt it to go vote.
    Mr. Wilhoit, why do you not go next?
    Mr. Wilhoit. Chairman Obey and Ranking Member Tiahrt, it is 
my pleasure to be a member on this panel this morning, and I 
thank you on behalf of the Chief State School Officers across 
the Country who are the State-to-public officials representing 
elementary and secondary education in the States and D.C. 
Department of Defense and the five extra State jurisdictions.
    My remarks this morning are focused on what I think is an 
emerging potential that exists between the Federal Government 
and the States to advance education in this Country, and also 
to address what we think are some targeted areas where the 
Federal Government could enhance education development across 
the Country.
    First, though, I want to echo Dan Domenech's respect and 
admiration for and thanks for the Recovery Act funds. It has 
shored up disastrous situations in States. Teachers are now 
teaching that would not have been teaching; programs are 
underway that are essential for children that would not have 
been. So we appreciate that help. Again, we are supportive of 
the House action to continue some funding under this next 
fiscal year, if possible, the $23,000,000,000 appropriation 
that has gone through the House.
    Your commitment to Title I and to IDEA, as well as some of 
the reform initiatives, sort of set a context for my comments. 
You were able to shore up--the programs have stabilized 
education in our history.
    But you also put some resources in some new programs that 
have shown some real promise, things like the Longitudinal Data 
Systems that build State capacity for transparency and 
reporting; the issues around Race to the Top, where we have 
some innovation occurring in the States; the Teacher Incentive 
Fund. Those are areas where we are beginning to see some real 
excitement and energy around them. So you have stabilized and 
continued some State funding, but you have spurred some 
innovation out there that is beginning to take place.
    Our budgets are still tight. Our projections are for 
increased difficulties in the next fiscal year, so we need this 
continued support.
    I would just say that as we look forward, though, we get 
through this crisis and we move ahead, we really do believe 
that American education is experiencing some really significant 
reflection and transformation. I hope you can sense that. I 
hope you can have witness to some of the actions that are 
occurring in the States. First, States are stepping forward and 
ratcheting up their standards and assessment policies. We are 
beginning now to put data systems in place that are much more 
coherent and thoughtful and robust than we had in the past so 
that teachers in the classroom, administrators can make better 
decisions, and that we at the State level can inform policy.
    We are talking about new forms of individualizing and 
supporting education that we have not talked about in the past 
and we are opening up better support systems for educators. An 
example of that is the National Governors Association and our 
association combining on an effort for developing common core 
State standards which are, for the first time, States are 
coming together across the Country in agreement about what 
students should know and be able to do. I think the Race to the 
Top, we had 41 States. And knowing that this can be highly 
competitive, yet interested in stepping back, reflecting on who 
they are and what they have done and what they might do in the 
future; developing road maps for innovation.
    So this idea of hopefully, in the future, of ESEA policy 
and funding that would support both innovation and continuation 
of the good models that we have had is something that we are 
really interested in supporting.
    We think that, as we move forward, there are some critical 
needs. We need to change. We need to improve in public 
education. We are not getting done what our public expects of 
us. We are not delivering as we should. We all know that on 
this panel. There is a commitment, but it will take a concerted 
effort around better technical assistance to our districts and 
capacity-building for those districts; higher quality 
professional support for our teachers; better information 
systems and research around what we are doing so that we can 
make adjustments as we move ahead; and really, most 
importantly, more aggressive interventions with these lowest 
performing schools that we have continuing in many of our 
districts.
    So we are really pleased with some of the recent efforts 
around support for these, particularly the Longitudinal Data 
Systems, the School Improvement Grants, are good examples of 
the kinds of policies that are helping the States move 
aggressively forward.
    We think a greater investment is needed, and I just 
mentioned three of them: one, in the area of student 
assessments. We appreciate the $400,000,000 program you have 
for assisting States to develop assessments. We know those 
assessments must improve in the future; they have to be better 
indicators of student progress. We have to expand our work 
beyond the summit of assessments. We have to move beyond the 
multiple choice kinds of decisions that we are making. A good 
partnership between States and the Federal Government there 
could be very helpful.
    We appreciate the $350,000,000 Race to the Top fund that 
would get us started with innovation, but we need greater 
support as we move ahead.
    Secondly, the School Improvement Fund would focus a lot of 
attention on these lowest performing schools and help States 
and Federal Government move together.
    And then, third, we request that you not step aside from 
ESEA and IDEA. These are critical programs for us. At the same 
time, we think these innovative programs need to be 
complimenting those.
    Finally, I would just say that we are supportive of the 
Department's proposal for consolidation into these 11 strands 
programs. Moving from sixty-some programs to 11 makes sense. We 
are not losing the integrity of those. We are not backing away 
from accountability. We think that States could better allocate 
our Federal resources. We could reduce some major repetitive 
actions in the States, and we would be held more accountable.
    We think a part of that means that you all need to be very 
clear as we move toward these kinds of consolidation programs 
that you state the purposes very clearly. We are ready to lead 
on those. We are ready to be held accountable.
    Thank you.
    Mr. Obey. Thank you.
    [Written Statement by Gene Wilhoit follows:]

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    Mr. Obey. Ms. Weingarten.
    Ms. Weingarten. Thank you, Chairman Obey. Thank you, 
Ranking Member Tiahrt. Thank you, former member of the AFT, Mr. 
Honda. I want to thank profoundly Chairman Obey for both your 
leadership on moving the Recovery Act last year and your 
commitment to move the jobs bill this year.
    My colleagues have both talked about it, but ultimately, as 
a result of ARRA, more than 325,000 teachers, professors, and 
other education staff who were in danger of being laid off are 
educating our students in our schools nationwide. ARRA funding 
has enabled schools to continue providing education opportunity 
and stability to children who are in the midst of this economic 
turbulence that is still swirling around them and, in addition, 
thousands of essential State and local public employees whose 
jobs were also at risk are still delivering critical services 
in their communities. And I do not think that there has been 
enough thanks about the stability that you and the President 
provided, the Congress and the President provided in the worst 
of all times.
    We also want to thank you for really pushing on the Jobs 
Act, because now, with the Recovery Act winding down, States 
are facing an additional budget gap of up to $180,000,000,000 
next year; and unlike--I think I may disagree respectfully with 
my colleague from the Chiefs, because what we are seeing is 
massive State budget cuts could threaten and undermine all the 
good work that the Recovery Act has done to strengthen and 
improve our public schools and to save jobs. Let me give you a 
couple of examples that have happened in the last few days.
    California. There are over 23,000 pink slips that were 
mailed to educators statewide on Monday, including nearly 2300 
teachers in LA and about 900 teachers in San Francisco.
    New York State is considering eliminating a wide range of 
Regents examinations, which is New York's traditional measure 
of high school student achievement. So at the same time as we 
are trying to raise standards, New York is going to pull out 
those world-class standards that it has because of monetary 
issues.
    Our locals are reporting that districts are attempting to 
reduce the number of school personnel, including 
paraprofessionals working with students with disabilities, in 
order to avoid paying for the services that those students 
need. So, for example, a child with Downs Syndrome or another 
disability will not stop needing assistance from a para or from 
a trained special educator.
    You know about the hundreds of districts that are now 
reporting contemplating four-day work weeks. You know these 
kinds of stories are coming in all across the Nation.
    We need the help. Forget about us for a second. The kids, 
our kids need the help. They do not get to be five years old 
twice. They need the help from their educators, and the crunch 
time is now.
    So I again thank you profoundly for trying to push on the 
jobs bill, and we are making the same case as we are today in 
the Senate.
    In terms----
    Mr. Obey. Where? [Laughter.]
    Ms. Weingarten. You know, that other house.
    Mr. Obey. Oh, yes. Oh, yes.
    Ms. Weingarten. As a former history teacher. [Laughter.]
    Ms. Weingarten. But similar to the funding provided by the 
Recovery Act, there are many things to applaud in President 
Obama's proposed budget, including the increased funding for 
childcare assistance for Head Start and the maximum Pell Grant. 
But just as my colleagues have said, we are concerned about 
some of the policy implications attached to the budget 
proposal, and let me just talk about two very quickly.
    Number one--and Dan Domenech said this already--Title I 
needs to be a formula-driven program. We believe that Title I 
funding should not be based on the outcomes of political fights 
at the State level; it should be based simply on what is needed 
to ensure that students are well prepared for college, work, 
and life. And, as a result, it should also not be based upon 
how well a district can write a grant. We need it to be 
formula-driven. Again, not us, but our kids.
    And let me just end with a few points about SIG, which is 
what we are very, very concerned about. Ultimately, it is very 
good news that the budget proposal proposes a significant 
increase in funding for the School Improvement Grants for our 
lowest performing schools. But, at the same time, we are 
concerned that it has focused SIG use only a rigid, narrow list 
of unproven options.
    The bottom line, as Gene Wilhoit has said, we all need to 
change. Our schools need to change. But no single factor causes 
a school to struggle. Rather, it is a combination of factors. 
And, bottom line our struggling schools need a line curriculum; 
standards and assessments; workable strategies for teacher 
recruitment, induction retention and professional development; 
differentiated instruction; extended learning and enrichment 
time; family and community engagement; and community schools in 
which the services that children and their families need are 
provided in a school building.
    I end on that point because I have watched and I have 
engaged in school turnaround. But it is not simple stuff. It 
takes proven programs and money, and people working together to 
do it. We are willing to do it. We need the help to get that 
done. Thank you.
    Mr. Obey. Thank you.
    [Written statement by Randi Weingarten follows:]

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    Mr. Van Roekel. Thank you, Chairman Obey, Ranking Member 
Tiahrt, and members of the Committee. I am Dennis Van Roekel, 
President of the National Education Association and 23-year 
high school math teacher with the honor of representing some 
3.2 million people who spend their professional life each day 
in public schools across America, from pre-K to graduate.
    Fulfilling the promise and the purpose of public education 
requires a solid foundation of resources, and, in that respect, 
the President's budget is a mixed bag. While it correctly 
reflects an understanding that education fuels our national 
success and calls for an overall funding increase, those 
increases will not reach all students, districts, and States.
    Historically, thanks to the leadership of this Committee, 
funding increases have always gone to formula-based programs, 
so that all students and staff and States benefit. Now more 
than ever, from both an educational and a jobs perspective, 
this needs to continue. And that is why, as my colleagues on 
the panel have mentioned, the trend toward competitive grants 
is very troublesome.
    A dramatic shift away from formula grants can have serious 
consequences in this economy. Providing certainty to States and 
local school districts is a must in these times of incredibly 
difficult fiscal environment. The funding levels proposed for 
core programs like Title I and IDEA are less than what is 
necessary. Poverty is still very much an issue in this Country, 
and we have schools that lack the resources, committed and 
effective leadership, and enough great teachers and education 
support professionals to deliver what every student needs. 
Federal Government must be engaged in these issues starting by 
fully funding Title I and IDEA.
    I also want to take an opportunity to address the 
Administration's blueprint for ESEA reauthorization. We know 
that Congress is eager to right the wrongs of No Child Left 
Behind, and no one could be more eager than America's 
educators. For the last 10 years, each and every day their 
professional lives have been impacted by that law. But they 
cannot support the blueprint in its current form.
    The blueprint calls for prescriptions before the actual 
problems are diagnosed, even though struggling schools need a 
wide range of targeted actions to ensure that every student 
succeeds. The blueprint leaves out students' first teacher, 
their parents. In fact, the President's budget would eliminate 
funding for the Parent Information Resource Center, the only 
Federal program dedicated to increasing family engagement. 
Without this funding stream, parent education and outreach 
programs in low-income and Title I communities would be lost.
    The blueprint also continues the narrow focus on tests, 
these narrow do-or-die high-stakes tests. We know the results 
of these current tests: it is narrow the curriculum. We have 
seen elimination of programs that should be there, and we have 
seen the kind of educational practice that we know is wrong for 
students. They ignore those who are already proficient; they 
ignore those that are a long ways away, and tend to focus on 
the golden band, as one principal called it, of those just 
below proficiency.
    It also fails to address the current rules that undermine 
local decisionmaking around school improvement models. As we 
look at the lowest performing schools, 50 percent are in urban, 
20 percent suburban, and 30 percent in rural. And when you look 
at the four models, the first three do not apply to a rural 
area at all. I grew up in one of those small towns of 1700. You 
could not close my high school and go to another one; it was 
the only one that was there. And we need to have models that 
work for all. And to think that the current system only allows 
one alternative for 30 percent of those impacted just does not 
seem right.
    Finally, the blueprint makes a faulty connection between 
tests and teacher evaluation and compensation. On the one hand, 
we say we do not want to micro-manage; we want more 
flexibility. Tight on goals, loose on means. And yet it 
mandates more to than 15,000 school districts how to evaluate 
and pay their employees. I cannot imagine Federal funds going 
to a State or to a mayor with strings attached that say and 
this is how you will pay your employees in order to get the 
resources.
    We are sharing this movement broadly with our members to 
ensure that this reauthorization reflects their voices, and we 
look forward to engaging with Congress as we continue to do 
this.
    Finally, I mentioned the need for additional investment 
education jobs. The American Recovery and Reinvestment Act, as 
Randi mentioned, created more than 300,000 education jobs that 
would have been gone. But more needs to be done. Incredible 
layoffs and program cuts are facing across the Country. North 
Carolina, 6,000; Randi mentioned California, more than 20,000; 
Indiana up to 5,000. And I think what is most important is when 
all of those tens of thousands of adults leave, there is not 
one less child who needs a healthy breakfast or lunch, who 
needs a clean and healthy environment, or needs a caring adult.
    And I would just add my thanks to the tremendous work of 
the House in passing the Jobs for Main Street Act, especially 
to you, Chairman Obey, for your work.
    So the road to our economic stability and prosperity as a 
Nation runs through America's public schools, and every student 
deserves the best we can offer, and I hope we deliver right 
now. Thank you very much.
    [Written statement by Dennis Van Roekel follows:]

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    Mr. Obey. Thank you.
    Mr. Tiahrt.
    Mr. Tiahrt. Thank you, Mr. Chairman.
    Thank you all for coming to the panel.
    Mr. Richmond, I want to thank you for not only talking 
about the success of charter schools, but the realism that some 
charter schools have troubles as well; and I appreciate that, 
that you brought up both sides of it.
    There has been research that looks at the performance of 
charter schools compared to those who attend what is called 
traditional public schools. Are there any of those lessons 
those traditional public schools can learn from the charter 
school industry and the success they have had, keeping in mind 
that there has been both success and lessons learned in 
failure?
    Mr. Richmond. Absolutely. I think from the research studies 
themselves, but then also just from our practices in the field 
for the past almost 20 years the charter schools have existed. 
We are seeing a set of things that are true in charter schools 
and, frankly, I think they are true for any school, about 
school quality, the kinds of things that are happening at the 
Urban Prep school that I mentioned, and it begins with high 
expectations.
    And that cannot just be a slogan, that we have high 
expectations; it is actually very hard work every day to 
communicate among all the faculty, all the staff, all the 
adults, all the children that we actually do expect you to 
succeed and go on to college.
    But then you have to follow that with flexibility at the 
school level, flexibility that allows those educators in the 
building to understand what their students need and to deliver 
an educational program that meets their need; flexibility 
around time, around curriculum, around budgeting. So that 
flexibility at the school level for the educators is important.
    But then it has to be followed, then, by a measure of 
success. Not every school is going to be successful, and that 
is where the measures of school quality, standards. If you want 
to boil it down to a few phrases, standards and meaningful 
assessments. But we need to have measures of school quality 
that let us know which schools are doing well. Let us know as 
policy makers, but then also let the folks in the schools know 
if the things they are doing are working.
    Those are activities--high expectations, school level 
flexibility, quality standards and assessments--that you heard 
talked about at this table, you heard talked about in the 
blueprint for ESEA, and many of those ideas are ideas that 
really percolated, in many cases, from charter schools, where 
charters have been the research and development function that 
many folks wanted them to be when the idea first came about in 
the 1990s. So we are seeing those kind of ideas get tested, 
tried out, and learn and pick the ones that are working.
    Mr. Tiahrt. How do you, as authorizers, hold schools 
accountable like charter schools? How do you hold them 
accountable? We have talked about No Child Left Behind, and 
that was an attempt at accountability that I think has been 
very burdensome through the regulations involved. How do you 
guys do it?
    Mr. Richmond. Well, you have to begin with multiple 
measures of quality. So not just an achievement or a status 
score, but also look at gains. So that is an improvement in 
this blueprint, that we are looking at gains now over time. And 
for authorizers, we recommend that authorizers also look at a 
relative comparison: How good is the charter school relative to 
the other schools the kids would go to?
    So if you have those three types of multiple measures, then 
that starts to inform that authorizing agency about whether 
that school should be renewed.
    Then, frankly, though, you have to be willing to act if a 
school is a low quality. And I mentioned the school in 
California that has both academic and financial problems, where 
that authorizer was not willing to shut down a failing school. 
And that is a very difficult thing to do; it is not easy. Easy 
to say; very hard to do. But in order to be successful at this, 
we have to have the will to do it, and it begins with quality 
measures of school quality.
    Mr. Tiahrt. One of the things that concerns me now--all of 
you want the kids to get educated and, listening to your 
testimony, I think everybody mentioned the burdensome 
regulations that are involved with the process today. If you 
look at wasted effort, I think we can make a case that some of 
this regulation is wasted effort; that we have better ways of 
measuring progress, better ways of administering to see that 
schools are effectively run.
    And at a time when we have overspent by more than 
$1,500,000,000,000 last year--this year we are already 
$655,000,000,000 behind; we have had to borrow that much 
money--these five-year-old kids that Ms. Weingarten mentioned, 
how much are we willing to burden them with future debt in 
order to carry this out? Should we not be doing this in a most 
effective means necessary? We want them to be educated. How do 
we overcome the burdensome regulations that you all have spoken 
about? How do we make it more streamlined?
    Mr. Domenech.
    Mr. Domenech. Well, to your point, sir, about what lessons 
have been learned from the successful charter schools, it is 
exactly that, the flexibility to waive some of the rules and 
regulations that tend to stand in the way of progress. We see 
charter schools as a viable option, but we wonder why that 
flexibility cannot be applied to all of our public schools so 
that we have the opportunity to be freed.
    Mr. Tiahrt. That is my point. How do we--is not that what 
we should be pursuing? You guys are educators.
    I am sorry, I am running over here a little bit, Mr. 
Chairman, but----
    Ms. Weingarten. Part of the reason that we are concerned 
about conditioning things like professional development, which 
we know teachers really need, or class size reduction, which we 
know that kids actually need, to things like teacher 
evaluations that have not been created yet in a meaningful way, 
is that all of it looks like the Federal Government is doing a 
lot more management of schools as opposed to creating a lot 
more flexibility.
    There are times when oversight is important, meaning if we 
could actually get funds for early childhood education into 
schools in a real way, then we would actually save a lot more 
money later on down the line. If kids have early childhood 
programs, what we have seen by research is that every $1.00 
spent there saves $7.00, $8.00, $9.00 later on in life.
    So----
    Mr. Tiahrt. Sorry to interrupt you. I think the concern I 
have now is that we do not have the funding today. Those are 
good plans. How do we streamline it today so that we can save 
enough money to make sure our kids are educated?
    Ms. Weingarten. When you actually listen to the voice of 
teachers in schools and you actually have--one of the things 
that costs no money whatsoever, sir, is when you create a real 
collaborative learning environment where the voices of those 
who actually are on the front lines are listened to, we have 
seen tremendous school success; and what we see is that they 
will tell you, if they are empowered to do so, where there is 
waste.
    Mr. Wilhoit. Just three areas of suggestions. First, be 
cautious in starting new programs and layering them on top of 
existing programs. It seems like the solution thus far has been 
let us hold on to everything we have and let us add more on top 
of it; and a lot of it does not make sense, it is not coherent.
    Mr. Obey. Sounds like our existing health care system.
    Mr. Wilhoit. A few parallels here.
    In order to do that, you have to know where you are going, 
you have to know what to hold people account for, you have to 
do research and development around that.
    The second idea, there is not a whole lot of Federal 
research going into this dynamic learning environment that is 
out there. We need a lot of those resources, IES resources, 
targeted to finding best solutions, gleaning from the work that 
is going on in classrooms and in school districts, and feeding 
that back to the Nation. We do not have that kind of feedback 
loop that is enriching. We are not learning from the struggles 
and gaining from the best models.
    The third area is the one I mentioned. You could streamline 
a lot of the Federal programs by putting them into some 
consolidated programs. You would not have to eliminate the 
general purpose of those, but look at the duplication of 
effort, and the small programs, many of them, end up being a 
very small amount of money and having limited impact. So, 
again, I would encourage you to look at those.
    Mr. Tiahrt. Thank you, Mr. Chairman.
    Mr. Obey. Mr. Honda.
    Mr. Honda. Thank you very much, Mr. Chairman.
    I appreciate the information shared and its impact on 
budgets and everything else like that, and I appreciate the 
thoughtfulness of us moving away from No Child Left Behind and 
to the Race to the Top, and I assume that race to the top means 
that there are no losers. As school teachers, we always say 
there are no losers, it is just when you cross that line. So 
hopefully that is the mind-set that we have when we do this.
    I had some questions about charters and stuff like that, 
but I think I am going to go off on a different tangent, if I 
may. It may not even be relevant to budget, but bear with me.
    A few years ago we, in this Country, went off on a path to 
equalize education in terms of looking at segregated schools, 
and we went through the efforts to determine which schools are 
segregated and then deemed them segregated schools; and it is 
an untenable situation to have. And now it seems like after we 
have gone through them all, in the interim we had IDEA; before 
that we had ESEA; and prior to that we had this battle of 
trying to equalize the ADA in different States. Big battles. 
And this is all, I think, in the name of equity for the 
children.
    What have we learned up to now in terms of addressing 
equity for the children and what should we be standing back on 
in order to look at how to approach the basic question, the 
needs of the child? I would be really interested in what the 
thoughts are of our stakeholders, knowing that students come to 
school with only one currency, and that is time. You mentioned 
that. But we cannot take time and bank it, then withdraw it 
later, when it is convenient.
    So if desegregation was an effort on the civil rights of 
youngsters, is there a case to be made by stakeholders on 
behalf of children on their civil rights to access to equity, 
whether it is a local or Federal level? Is there a way to 
reshape the paradigm of public education and States' rights or 
States' responsibility and the Federal Government's 
responsibility.
    The Constitution was written at a time when the Federal 
Government just began to shape itself, so they said education 
was a State issue. I just wonder what thoughts may have come to 
your mind based upon just what I have sort of laid out.
    Mr. Van Roekel. Mr. Chairman, may I respond?
    Mr. Obey. Sure.
    Mr. Van Roekel. Mr. Honda, I think you raise a very 
critical point, and I think where we often get into debates and 
discussions about activities and programs, and I think there is 
a point that you are making that we have to come back and ask 
ourselves what is the purpose of public education in America 
for the 21st century.
    I picture a circle and, for convenience, just make it into 
four quadrants. I think one of those quadrants is about 
academic achievement, and it ought to be a rich curriculum, 
with math and science and history and so on. But then another 
one is the equity of an equal opportunity. That has to be a 
purpose of public education in America, to provide that 
opportunity to every single person, student, in America. I 
think another quadrant has to do with our responsibility as 
citizens and civics, and that should be part of the purpose of 
this educational system. And the fourth one I would say would 
be about the whole child; that I hope we are not just preparing 
someone to work. I think there is more to the purpose of 
education, so that, as an adult, they are a citizen, an engaged 
citizen, but they also know how to balance work, family, faith, 
community.
    And if we get to a consensus and agreement on the purpose 
of what it is we need as a Nation for public education, I think 
then the answers become clear about what we need to do. And if 
equity means that every student has a shot, then we ought to 
say is that currently available in our State. And if the answer 
is no, what do we do to make it so. I think it is a question of 
purpose and common purpose, and working together to make it a 
reality.
    Mr. Honda. So the answer to the question is?
    Mr. Van Roekel. The answer, I believe, is that we have to 
begin that discussion and say what do we, as policymakers, as 
parents, as community members, want from our public schools; 
and build on that. If you do not start with that question, I 
think it is hard to know which program or which activity is the 
right one now.
    Mr. Obey. Did you want to say something?
    Ms. Weingarten. I would just say a short answer is what 
both Dan Domenech and I and I think Gene said as well, which is 
Title I needs--if we are looking at equity, Title I needs to be 
more robustly funded in a formula way to the kids who need it 
the most to ensure that they have a level playing field. And 
that is part of the reason that we are concerned about the 
competitive grants.
    Mr. Honda. Mr. Chairman, do I still have time?
    Mr. Obey. No, you are done.
    Mr. Honda. Oh, okay.
    [Laughter.]
    Mr. Cole. Well, I will yield the gentleman a minute if he 
wanted to respond.
    Mr. Honda. Thank you, Mr. Cole.
    So it sounds like there is a need for a national dialogue 
on the issue of equity and asking that question of ourselves, 
is there equity. Would the policy be differently shaped if we 
moved from talking about equal opportunities for all children 
and say each child has a right to the pursuit of happiness and, 
in order to achieve equity, would there be a policy difference 
when you say each child rather than all children?
    Mr. Wilhoit. Absolutely. Each individual has a right to a 
high quality education, and my sense is that, in all respect, 
we know we do not have that right now. So the real issue for me 
is how do we wrestle with this as a society and how do we make 
a commitment to do something about it. And it is going to 
require an outstanding teacher in front of every child, each 
child in this Country; it is going to require resources to take 
that child to a level of education that we are expecting them; 
it takes, as Dennis was saying, a clear sense of what that goal 
is for each of those children; and holding ourselves, as 
adults, accountable for that. And all of those areas need 
dramatic improvement.
    Mr. Honda. Thank you, Mr. Chairman.
    Thank you.
    Mr. Cole. Thank you, Mr. Chairman.
    I have a couple questions for you, Mr. Richmond, and then 
just some broader questions I want to put to different members 
of the panel.
    In a lot of places, local schools are effectively the 
authorizing agents for charter schools. Other places in States, 
there is a variety of different people that get to authorize 
whether or not there is going to be a charter school. Is that a 
good system, bad system? Should we have more uniformity?
    Mr. Richmond. There are some real weaknesses in how 
authorizing is structured around the Country, to be honest. So, 
number one, my organization always believes that it is 
desirable to allow a local school district to authorize charter 
schools. We think that that is always an appropriate role for a 
local school district and a local school board.
    But we also have to be honest that many of those 
organizations do not necessarily have the interest or the 
capacity to delve into that work. In those situations, then, it 
is important and it is helpful to have another entity. 
Oftentimes that is a State level entity, the State Department 
of Education or a university or a State level board focused 
just on chartering. So that that level entity can develop the 
expertise, is interested in doing the work, and can put in 
place the right practices and the right policies that lead to 
quality. So we believe that mix is what you want to achieve, 
and that mix is actually in place in some States, but not in 
others.
    Mr. Cole. Give me an example, because that kind of mix, 
frankly, somebody has to make the final call.
    Mr. Richmond. Sure.
    Mr. Cole. So where should the final authority rest?
    Mr. Richmond. An example, Colorado has this system in place 
right now, and other States. You can go to your local school 
district. If you are someone who wants to start a charter 
school, you can go to your local district and they can act on 
you and approve you to exist. Or you can go to the State 
charter level board and apply to them.
    So we think having both of those avenues is desirable. But 
we want to make sure, at both levels, that there are some 
quality practices in place so good schools are being approved 
and good schools are staying open.
    Mr. Cole. This question probably more appropriately goes to 
Ms. Weingarten and Mr. Van Roekel.
    We have had a lot of discussion, we are going to have a lot 
of discussion about No Child Left Behind, what good, bad. I 
very seldom hear anything good. But just from your experience, 
over the time that that program has been implemented, have test 
scores gone up, down, stayed the same? And, more importantly, 
from my perspective, has some of the differential between some 
of the subgroups, particularly disadvantaged groups and the 
main population, if you will, narrowed? What kind of progress 
have we made?
    Ms. Weingarten. So it very much depends, Congressman, 
whether you are looking at things like the NAPE schools or 
whether you are looking at individual assessments that States 
give. I think that there is a uniform agreement that the 
individual assessments by States have been varied and have 
actually been a situation where States may be looking good, but 
it is a question about whether there has been proficiency for 
children.
    In terms of NAPE, things have gone up incrementally, but 
not the gallops that I think everybody on this panel would 
want; and I think that is part of the reason why we are very 
pleased to be working with--we, the AFT--with the Chiefs and 
with the NGA on the common standards. And I think Gene will 
talk about how we have done that with them, because we know we 
need higher standards so that those standards are aligned to 
what kids should know and be prepared for to succeed in life, 
college, and work.
    In terms of the achievement gap issue, which is a very 
serious issue, in some places it has narrowed; in some places 
it has not, dependent on different States. I think what No 
Child Left Behind did was, most importantly, it created 
transparency and it created a notion of accountability and 
holding all of us, all of our feet to the fire; and I think 
that is a good thing.
    Mr. Cole. Are you comfortable, in the President's 
proposals, that those principles remain?
    Ms. Weingarten. The difficulty is those--what No Child 
didn't do for us was that because the accountability system was 
very rigid and stagnant, the issue that--just to cut to the 
chase--the issue that we all have is how to build capacity and 
how to grow capacity so that every child, each child, every 
child has an opportunity to learn.
    What will happen now under the President's blueprint is 
that all the rules will change again, and there will be a lot 
of pieces that are moving, some of which will be higher; some 
of which will be waiting to see what the new assessments are; 
some of which start immediately, like much more rigid and 
inflexible accountability in terms of teachers.
    So the real question, in my judgment, my judgment alone, is 
how do we get to that place of ensuring that every child has 
the chance to learn. So a lot of the pieces in the blueprint 
are very valid, have lots of--are very important to do, but how 
are we going to create the coherence that we need of a maligned 
system in a State or in a district that really ensures not just 
individual children learn, but every child does.
    Mr. Van Roekel. Let me add just something very briefly. 
Randi hit it on the head. There is such a contradiction because 
you are measuring different things between State systems that 
their highest achieving and on the national system failed to 
make adequate yearly progress.
    From an educator's point of view, I think what is really 
critical is the work that the Chief State School Officers are 
doing with the 48 States and common core standards. They need 
to be clearer, less of them, well written. That is the first 
step. From the education point of view, I have to know what it 
is you want students to know and be able to do.
    To me, the second step is then, at the local and State 
level, they have to have a curriculum that matches those 
standards. If you give me a curriculum that is totally 
different, my choice is either to teach the students something 
that you did not want, because it is not on the standards, or 
to develop all of my own materials to be able to have a 
curriculum that addresses the standards.
    And the third step, then, is to have an assessment system 
that actually measures whether or not a student is learning 
what you asked them to know and be able to do in the standards. 
And you cannot reverse the order of those. You cannot start 
with the tests and then develop standards or curricula; and I 
think sometimes we do that. There are so many tests. Like we 
are starting this new blueprint and they want to retain the old 
testing system. Does not make sense.
    We need to know what those standards are, then develop a 
curriculum, and then have assessments that actually measure 
real solid student learning and whether they are progressing. 
And if we do not do it in the right order, or if we try and 
skip one of those steps, we will fail.
    Mr. Cole. Thank you, Mr. Chairman.
    Mr. Obey. Thank you.
    Let me go for a moment to the recovery package. Despite 
assertions to the contrary by virtually every governor, every 
local school district, the Executive Branch of government, 
despite all of that, you have people who continue to insist 
that because unemployment has not moved down and because we 
still have some job losses each month, that the recovery 
package has not created a single job.
    You have indicated that about 325,000 teachers are working 
today who would not be working had the recovery package not 
passed. What do you base that on?
    Ms. Weingarten. We base it on a number of sources, but we 
have attempted to align our data with the data from the Federal 
Government. What we have seen is--remember, normally in 
February, March, April of each year, that is when school 
districts know what their budgets or try to predict what their 
budgets are supposed to be for the next year. So what we were 
getting from last February, March, and April was what the 
predictions would be after the Recovery Act.
    So we were able to start counting what the cuts to 
instructional programs would be and equate that in terms of 
full-time equivalents, and that is how we started counting. And 
the counting that we have done, we have done, as I said, in 
conjunction with the Department of Education and in conjunction 
with the Vice President's Middle Class Task Force.
    Mr. Obey. Well, some people will say, well, that is just 
teachers, that is just public jobs; you are not really doing 
anything for the average taxpayer. What is the benefit to the 
average taxpayer if those 325,000 teachers are still working?
    Ms. Weingarten. Mr. Chairman, I--and maybe this is simply 
anecdotal and, therefore, maybe it does not count for anything, 
but I grew up in New York State, and I witnessed in New York 
City, when this type of action was not done and when, in 
September of 1975 15,000 school teachers were cut from the City 
of New York education system because of very bad budget 
situation, that school system did not recover for children for 
the next 10, 20 years. They essentially invited 10,000 people 
to come back, of which 3,000 did.
    But the devastation to that city is of public record. 
Whether it was people who fled the city to the suburbs, whether 
it was the change in the city that was a once proud city to one 
that felt like it was on its last legs, whether it was the 
devastation to kids, you saw that devastation clearly and 
convincingly in New York City in the 1970s.
    Mr. Obey. Yes.
    Mr. Domenech. Our most recent survey indicates that our 
superintendents state that, on the average, districts in 
America saved about 10 positions per district. And, in addition 
to that, as you know, school systems generally tend to be the 
largest employer in their communities. I was a superintendent 
of schools here in Fairfax County, where I had 27,000 
employees. Not only was I the largest employer for Fairfax, but 
for the State of Virginia.
    So what happens to our employees and our ability to hold on 
our employees has a significant impact on the local economy.
    Mr. Obey. You mentioned that you have some concerns now 
that the Recovery act is scheduled to wind down. It is supposed 
to wind down. The whole idea of the Recovery Act is that it is 
not supposed to be permanent spending; it is supposed to be 
temporary bridge spending that gets us from point A to point B.
    We are going to have a huge deficit this year because 
revenues as a percentage of our total national income have 
dropped to 14.5 percent. We have never had a balanced budget 
when revenues have dropped below 19.6 percent.
    So it is supposed to be temporary, but it is not supposed 
to be immediate, which is why we tried to pass the supplemental 
jobs bill in December, the $27,000,000,000 that you have been 
talking about.
    Tell me what kind of problems you expect school districts 
to experience if the Congress does not pass something like that 
$27,000,000,000 package that the House passed earlier, or late 
last year.
    Mr. Domenech. Well, it is exactly what we see happening 
right now in terms of the cuts that are being projected in 
school systems around the Country that will take place and will 
have significant impact on school systems and community if the 
$23,000,000,000 that we are so grateful for that the House has 
passed does not become a reality, because, as you know, school 
systems lag behind the general economy. We are going to have to 
wait for local real estate values to begin to increase, before 
assessment values begin to increase, because that is 80 percent 
of the revenue that most districts in America get; it is that 
local effort that is so important for us.
    So we really are looking really to be bridged to that point 
where we can begin to see a turnaround in local economies in 
terms of that real estate tax that will begin generating the 
revenues that will make districts whole. In the meantime, the 
concern is that we are going to begin doing irreparable damage 
to programs and services at the district level that have taken 
years to put in place. That if they go away, it will take years 
again to get back into, and it is going to affect this issue of 
equity, because the kids that are going to be hurt the most are 
the poor children of America.
    Mr. Obey. Well, I think that the Recovery Act is not being 
given sufficient credit for jobs that have been retained, just 
as Mr. Cole pointed out yesterday that the action of President 
Bush in stabilizing the financial sector with that very 
unpopular, but nonetheless needed, Wall Street rescue package. 
Nobody here that I know of liked that Wall Street rescue 
package. We certainly did not like the people who caused the 
problem to be created in the first place. But when you have an 
epidemic, you do not just take care of people you like; you 
have to take care of everybody or the society still gets pretty 
doggone sick. And that is what I think President Bush was 
trying to do on that piece, and that is what we were trying to 
do with the stimulus package.
    Let me turn to the President's budget. I voted for No Child 
Left Behind for two principle reasons. First of all, it was 
George Bush's first major effort out of the box and I am old 
school, I guess, but I have assumed that we ought to try to 
give every president some help at the beginning of his term; 
and so that is what I did.
    Secondly, because I felt that we needed to have pressure 
for reform, pressure for accountability and evaluation, even 
though a lot of us complained at the time about the rigidity 
and the specificity of that package.
    So I believe in the principle of trying to prod districts 
to higher levels of performance. But I think it has some 
perverse results.
    Mr. Van Roekel, you said you were a math teacher, so I am 
probably asking the wrong guy. [Laughter.]
    Mr. Obey. But one of my frustrations with No Child is that 
it has such attention to math and reading, and it leaves 
history and civics behind. I think that is a danger to the 
Country, because with the collapse of the journalism industry, 
with the collapse of newspapers, the public is getting less and 
less material that educates them on a daily basis about how our 
system works and what the realities are in our society and yet 
we are also, I think, short-changing history on the social 
sciences, and I think we are running a danger of creating an 
entire generation of societal illiterates in that sense.
    So I know you are a math teacher, I do not mean to knock 
mathematics, although it did scare the devil out of me when I 
was in school.
    Mr. Van Roekel. As a math teacher, I agree with you 100 
percent. I think it is an overemphasis, and all of those other 
subjects are absolutely critical, especially as we look at the 
skills and knowledge that are needed for the 21st century. And 
even as a math teacher, I can say that the overemphasis on the 
standardized tests did such harm to the teaching of 
mathematics.
    I visited a middle school and I saw a teacher with a very 
thick three-ring binder, and it was filled with worksheets that 
were all multiple choice; and she said that was what they had 
adopted as the math curriculum for sixth, seventh, and eighth 
graders. And it was all done in worksheets that were multiple 
choice because that would prepare students best for the test. I 
said, how in the world do you teach geometric concepts, direct 
or indirect proof, or coordinate geometry? How do you do that 
and only ask multiple choice questions? She said, well, we are 
focusing on that test.
    So it is not just the narrowing in the subject matter, but 
it is the narrowing of how you assess student learning and 
success. So that is one of the things that we really must 
change; that there ought to be multiple measures. And that does 
not mean three or four tests instead of one; it means multiple 
ways of measuring. When you are thinking about a student who is 
learning to write, to show demonstrations or examples of their 
work in first part of the year and the last part of the year, 
you will see dramatic differences. You cannot show that on a 
multiple choice test.
    So it is really critical that we identify the different 
ways of measuring student learning in a variety of ways. One of 
the reasons I believe NAPE scores have stalled is because when 
you look at all of the things they measure, we are not doing 
those things anymore; we are narrowing that curriculum.
    So as important as I know mathematics is,--I told that to 
my students all the time--knowing English grammar and doing 
well in mathematics just sets you up. No matter which test they 
give you, you are going to score well and open up 
possibilities. But as much as I believe that, I also know--and 
for my own children and my grandchildren, I want them to have 
that broad, broad expanse of curriculum, because you do not 
know where the student's passion lies.
    I am amazed at five-year-olds who have this incredible 
interest in space. Where did they get that? Why does this one 
have that and another one is so into music or athletics or 
whatever the subject may be? We need to find those passions and 
give them a broad, good, solid education, but also allow them 
to go their way of where their passion will be for the rest of 
their lives.
    Mr. Obey. Well, there is such a need for public education 
or education about public affairs. I remember being in a 
classroom a few months ago with a State assemblyman and, I 
swear to God, half these kids could not have told the 
difference between a State assemblyman and a third baseman for 
the Chicago cubs. I mean, I was amazed at how little they 
understood about the basics. Admittedly, the Cubs are 
irrelevant most of the time. [Laughter.]
    Mr. Obey. Go ahead.
    Mr. Wilhoit. Just to look at this from a lense at a State 
level, I applaud the Congress and the Administration for 
drawing attention to public education; we do need dramatic 
improvements. So the focus on each child, every child is really 
important and so the system has, at this point, paid more 
attention to all children.
    But I think NCLB was a good example of a wrong-headed kind 
of design, and by that I mean it was very prescriptive about 
how one would act at a State level, the kinds of procedures you 
would set up, the rules and regulations, and how it would be 
implemented at the local level. It was very, very loose on the 
outcomes expectations. And I think a good Federal law is very 
clear about those expectations, the accountability structure to 
be put in place, and leaving latitude for implementation and a 
bit of diversity and innovation as we move forward.
    I think, really, one of the--and there were limited 
opportunities for latitude in the law, and States took 
advantage of every one of those limited latitude opportunities. 
So we got into multiple disputes about calculation formula 
procedures rather than the really important issues about 
student learning.
    I think it really did hamper and limit the innovative 
States. So what I saw at a point when we began to ratchet up 
expectations for all States at a minimum level of performance, 
what happened in that process was a pulling down of those 
States that were leading reform in the Country, and I have seen 
a lack of that in the last few years. I will give you a couple 
of examples.
    As a commissioner, we had in our State a requirement that 
students would be exposed to the broad curriculum, including 
the arts, as a regular requirement of the program. When we went 
to NCOB, we were forced to give those up in our assessment 
system. They did not count. In our sense, if we had been able 
to hold on to that, we would have had a lot of development in 
the arts in terms of program opportunity across all the genre 
of arts, and we would have required that kind of development. 
It has lost its attention.
    Secondly, we were asked to turn the test around within just 
a month's time frame, and it led us to the point of giving up 
really robust kind of assessment items that Dennis was talking 
about. We could not do portfolios any longer because we could 
not turn them around. We could not do the kinds of open 
response kinds of questions. We could not engage our questions 
in the process of making judgment against those because we had 
to give something, get it back in return for accountability 
purposes.
    So what we saw was a sort of ratcheting down of some of the 
innovative ideas that were coming forward. I hope in the next 
round, as we look at the blueprint, we look at how it plays out 
in ESEA reauthorization, that we hold on to the ideas about 
high accountability, clear structure, but allowing some 
latitude at the local and State level for implementation 
policy.
    Mr. Obey. Just two last questions. First of all, to all of 
you who are supportive of the recovery package and who are 
trying to make the Congress understand what will happen if we 
do not provide additional help to school districts, I would 
just ask one favor. With all due respect to my friend, Mr. 
Honda, please do not use California as an example. [Laughter.]
    Mr. Obey. Because, again, with all due respect, I know of 
no State that is more irresponsible in terms of its political 
structure. They require a two-thirds vote in order to get 
permission to leave the room, and they have amended their 
constitution 500 times. Every time they have a proposition, it 
is a great idea that spends money; they put money behind that 
proposition, it passes, but the propositions always neglect the 
question of how you are going to pay for it. So that squeezes 
out everything else in the base budget.
    So I think we need to be armed with more relevant 
statistics than the problems that are--I view many of 
California's problems as being of their own making, so I 
would--I am not unsympathetic to people who live there, but 
they have to do something about their own political structure 
and fix that first.
    And then with respect to reform, I like to sail, but I 
would not, while the sailboat was sinking, be focused on 
putting another coat of varnish on the deck. And, to me, at a 
time when all school districts are in big trouble because of 
the economic situation in the Country, I think that to be 
focused as much as we are on the reform aspects of the 
Administration's budget is a mistake.
    I might support what they are doing two years from now, 
when so many school districts are not drowning, but I was 
greatly disappointed to see that they tried to cut Title I last 
year in order to finance the reforms. This Committee stopped 
that, and I would hope that we would pay more attention to just 
keeping local school districts' and local taxpayers' head above 
water until the economy more fully recovers.
    Mr. Tiahrt, any last thoughts?
    Mr. Tiahrt. Yes, I have one request from Mr. Wilhoit.
    You talked about a consolidation process from 60-plus 
programs to 11. I went through your testimony; I really could 
not find much detail about that. Could you provide us with the 
detail? And you talked about removing some of the layers and 
not just compressing them to 11 programs from 62, so I would 
find that interesting.
    Mr. Wilhoit. I would be pleased to that.
    Mr. Tiahrt. Thank you.
    Mr. Obey. Mr. Honda, any last comments?
    Mr. Honda. Yes. Thank you very much. Just a real quick 
comment about the role of the Federal Government and the role 
of States in terms of education as defined back in 1787. This 
is 2010, going on 2011. It seems like we should probably step 
back again and redefine what our role is again, because since 
we are well developed now as a Nation, funding barriers to 
equity seems should be a shared thing if we believe in equity 
and civil rights for each person. And that may take a massive 
national effort for us to sit down and starting to talk very 
seriously about this; otherwise, we should end up suing 
ourselves.
    But I know that this Country can do it. When we identify a 
national crisis, we sometimes forget about the costs; just move 
ahead and solve the problem. I do not think we can do it this 
way with education; we have to be thoughtful and very, very 
analytical and looking at what it is and what we need to do, 
and then recognize those barriers.
    And I would end with this, that somewhere along the line 
our schools will have to challenging local government in how 
our schools are created and how communities are created, 
because what we learned from deseg was that schools reflect the 
neighborhoods they come from. If we know that, there is one 
major area major area that we should be looking at.
    Thank you, Mr. Chairman.
    Mr. Obey. Mr. Cole.
    Mr. Cole. Thank you, Mr. Chairman. I always find this the 
most frustrating. I say this as a former educator. I used to 
say, when I was a college prof and you deal with higher 
education, that the bad thing about smart people is they make 
everything complicated; otherwise, what good is it to be smart. 
[Laughter.]
    Mr. Cole. And there is a lot of that that goes on. So I 
want to throw out one clay pigeon here, because I am very 
bothered by--I was at Aspen Institute, one of our seminars last 
year that really concerned me. They were looking at high school 
graduation rates and student performance historically, insofar 
as you can even judge that; and we were about where we have 
always been, which at one point was the best of the world. If 
you are my age, you really are a member of the best educated 
cohort in the world. If you are my son's age, in his twenties, 
he is about eighth or ninth.
    So it was not so much that we had changed. Frankly, the 
argument would be, in terms of outcomes, we really had not 
changed very much at all. We were not worse than we had been; 
we were about where we were. Other people had moved pretty 
dramatically ahead of us.
    And one of the reasons, and certainly not the only one--I 
am quite familiar with all the complexities. You have to have 
parents that care. Not every kid gets to start at the same 
place, from the same neighborhood, from the same funding base, 
et cetera. But one of the common themes in the groups and other 
countries that seem to be outperforming us was simply time on 
task. You know, they actually were in school longer every day, 
and they were in school more every year.
    How much could we do just by looking at that problem? 
Because I think it is very hard for us to do lots of small 
things, but providing money that extended the school year--and 
I am not saying do this for free--and put students in school 
longer, I would just be interested in knowing your opinion as 
to how helpful that would be, or is that another one of these 
sort of one idea panaceas?
    Mr. Domenech. Time on task is one of the secret ingredients 
behind education. I think it is common sense. The more that a 
child has the ability to be exposed to good learning and 
instruction, the more that the children will learn. That is why 
many of us have moved to year-round schooling. That is why many 
of us have moved to expand the school day.
    The problem is that it is expensive. It is expensive to do. 
It is one of those resources. And, unfortunately, what we see 
happening in this economy is a move in the other direction. The 
number of districts now that are going to four days of school, 
as opposed to five days of school, the number of districts that 
are cutting back on the length of the school day or eliminating 
summer school, eliminating after-school programs.
    Mr. Cole. Let me just add, and I would like you to respond 
to this real quickly because I am abusing my time here.
    Remember, too, the other thing I would add, I mean, 
resource-wise, we can always do more. Okay? I accept that. We 
do more than anybody else in the world on a per kid basis, 
pretty much. So there has to be some efficiencies in here as 
well with additional money. We clearly are not running this 
system as efficiently as other people if you just look at 
dollars behind kids, behind teachers, behind administrative 
structures.
    Ms. Weingarten. So we are in favor of more time on task. We 
have to figure out, as everyone on the panel said, we have to 
make sure that we are not just doing more of the same. The 
engagement for children is very important in terms of how we 
engage kids in a robust, broad curriculum, so that we take them 
where they are, not where we want them to be.
    But the other thing that is interesting about the 
international comparisons, particularly the two countries that 
do very, very well compared to us, Japan and Finland, is that 
Japan actually has less time in instructional endeavors of 
teachers and children. But what they have, both in Japan and 
Finland, is more time that teachers work with each other to 
differentiate instruction. So that teachers are spending more 
time in school with each other, but they are polishing the 
stone, they are making sure that they are instructing in a much 
deeper way.
    So there is much more R&D in these countries that we 
compete with that have outflanked us than we have here.
    Mr. Van Roekel. I will quickly echo that. We have learned 
in the charter sector that more time on the same model will 
simply give you more of the same, and that more time has to be 
accompanied by giving more flexibility to the educators in the 
school to use that time better, to provide a richer curriculum, 
to set higher expectations. You have to do both.
    Mr. Cole. Thank you, Mr. Chairman.
    Mr. Obey. I guess I would simply say that in my district I 
have been a strong supporter of after-school programs for a 
variety of reasons, but one because it does help to provide 
some additional enriching experiences for kids. It does give 
them more time and some of them do a better job than others. 
But I have been impressed by how much more of an academic focus 
those programs have now versus what they had before when they 
started out as field trip heavens, you know, five or six years 
ago, and they have become much more rigorous.
    The other point I would simply make, going back to the 
reform--and I mentioned this yesterday--we are not just talking 
about problems at K through 12; we are also talking about what 
happens to kids when they graduate from high school. And the 
most appalling statistic I know is this one: among students who 
scored in the top quarter on eighth grade math tests, a child 
of a wealthy family graduated from college 74 percent of the 
time; while the child who came from a poor family graduated 
only 29 percent of the time, even though they had demonstrated 
the same ability. That is an appalling result for all the money 
that we are spending.
    Thank you very much. I appreciate it.
                                          Thursday, March 25, 2010.

         FY2011 BUDGET OVERVIEW: JOBS, TRAINING, AND EDUCATION

                               WITNESSES

JANE OATES, ASSISTANT SECRETARY FOR EMPLOYMENT AND TRAINING, U.S. 
    DEPARTMENT OF LABOR
RAYMOND JEFFERSON, ASSISTANT SECRETARY FOR VETERANS' EMPLOYMENT AND 
    TRAINING SERVICES, U.S. DEPARTMENT OF LABOR
MARTHA KANTER, UNDER SECRETARY, U.S. DEPARTMENT OF EDUCATION
ALEXA POSNY, ASSISTANT SECRETARY FOR SPECIAL EDUCATION AND 
    REHABILITATION SERVICES, U.S. DEPARTMENT OF EDUCATION

                           Opening Statement

    Mr. Obey. Well, good morning, everybody.
    Today, this subcommittee will focus on challenges in this 
difficult job market, especially the challenge of training and 
educating our workforce for a high-skilled career path in the 
new economy.
    This really is a rescheduled hearing. We got 
discombobulated and had to cancel. And I hope that we don't get 
hit with too many roll-calls that will screw up the hearing 
this morning, but that is the normal condition up here this 
time of year.
    According to the Bureau of Labor Statistics, the most 
substantial job growth over the next decade will be in careers 
that require associate degrees or a vocational certification, 
including health care, high-tech manufacturing, and clean 
energy. In my home State of Wisconsin, half of all job growth 
in the next decade is expected to involve jobs that require 
more than a high school education but less than a bachelor's 
degree.
    The Labor Department's job training programs have an 
important role to play in helping workers to get the training 
and skills they need to get those jobs as they become 
available. We need to be making sure that any business looking 
to expand has as little trouble as possible in locating highly 
qualified workers right here in the United States to meet its 
needs.
    That is one reason we included approximately $4,000,000,000 
in the Recovery Act for job training, effectively doubling the 
resources available to local workforce agencies. This 
investment has enabled a record number of unemployed and 
disadvantaged workers to enter job training programs so that, 
as our economy continues to recover, more American workers have 
the necessary skills to drive sustainable economic growth while 
sharing fairly in the benefits. That means that job training is 
a key tool for addressing the longer-term stagnation of wages 
and living standards that have plagued the middle class.
    As I have mentioned frequently, and I am sure Members of 
the subcommittee may be getting sick of hearing me say it, but 
as I have said in the past, the earnings disparity between the 
wealthiest workers and the middle class has been growing for 
three decades. Since 1979, real median income has grown by less 
than one-half of 1 percent. More recently, between the late 
1990s and mid 2000s, incomes from the top fifth of families 
grew by over 9 percent, incomes from the middle fifth of 
families grew by a little over 1 percent, and incomes for the 
bottom fifth declined by over 2 percent.
    One tool for addressing these disparities is better job 
training. It is not the entire solution, by any means, but it 
can be part of the solution. Study after study has shown a 
direct link between job training and increased long-term 
earnings, boosting living standards for middle-class American 
families. That is also true about education.
    One of the most important links between our education and 
job training is our network of community colleges. More than a 
third of individuals receiving job training through the 
Workforce Investment Act are served by community colleges. And 
studies have repeatedly shown that those individuals with a 
year or 2 of post-secondary education earn higher wages than 
their counterparts with only a high school education.
    Which leads me to Pell Grants. As college tuition continues 
to rise, Pell Grants are a necessary lifeline for modest-income 
students to continue their education. Nearly 80 percent of 
high-income students attend college immediately after high 
school, compared with a little over 50 percent of low-income 
students. That is not a level playing field. It is not fair to 
the individuals; it is not healthy for the country. Pell Grants 
are pivotal to closing the college opportunity gap for low- and 
middle-income students.
    In fact, when I became chairman, the maximum Pell Grant 
award had been frozen since 2003. Both parties have 
congratulated themselves repeatedly on how much we have done 
for Pell Grants through the years, but the fact is that when 
the Pell Grants first started back in the 1970s, they paid for 
over 70 percent of the cost of a 4-year college education; 
today they pay for less than 40 percent. So before either party 
gets all too excited about the wondrous job that we have done 
on Pell Grants, they need to understand that there is a long 
way to go before we match our performance with rhetoric on that 
front.
    I know that today's witnesses are actively engaged in 
addressing some of these issues, and I look forward to hearing 
the testimony this morning. This morning's panel includes 
senior officials of the Labor and Education Departments who 
have responsibility for job-related training and education.
    From the Labor Department, we have Jane Oates, who is the 
Assistant Secretary for the Employment and Training 
Administration, and Ray Jefferson, Assistant Secretary for 
Veterans' Employment and Training Services. From the Education 
Department, our first witness will be Martha Kanter, who is the 
Under Secretary and who has responsibility for career and adult 
education and higher education. Also, we have Alexa Posny, who 
is the Assistant Secretary for Special Education and 
Rehabilitation.
    I will ask our witnesses to summarize their remarks in 5 or 
10 minutes, and we will place the entire written statement of 
all of you in the record.
    But, first, I would yield to Mr. Tiahrt for whatever 
comments he might have.
    Mr. Tiahrt. Thank you, Mr. Chairman.
    And welcome, panel. And a special welcome to Alexa, who is 
a fellow Kansan.
    Ms. Posny. That is correct.
    Mr. Tiahrt. Good to see you again.
    Mr. Obey. Now, wait a minute. I thought she was originally 
from Wisconsin.
    Ms. Posny. I am.
    Mr. Tiahrt. Mr. Chairman, if you drive down I-70, we claim 
you.
    Well, thank you, Mr. Chairman. I want to thank our 
witnesses, as well.
    And with unemployment hovering around 10 percent and the 
prospects of a jobless economic recovery on the horizon, I 
think there is a cause for some concern. I am reminded about an 
episode of the ``West Wing'' television series where Alan 
Alda's character is being asked in a debate how many jobs he 
would create as President. ``None,'' he replied. 
``Entrepreneurs create jobs. Businesses create jobs. The 
President's job is to get out of the way.''
    The government does not create wealth. And, in the long 
term, the government does not create jobs. What really creates 
jobs is the creation of wealth. And as a byproduct of the 
creation of wealth, jobs result in that process. What 
government can do is create opportunity, and it does by 
fostering an atmosphere that is conductive to the private-
sector innovation. Specifically, government can get out the 
way, and by that I mean by lower taxes, reducing burdensome 
regulations, rewarding entrepreneurial behaviorship, and 
becoming energy-independent.
    I would argue that a jobless recovery is what we are seeing 
right now, and it is a product of what we have seen over the 
last 2 years. While I agree with the chairman's comment before 
the Secretary of Labor that job loss has slowed--and that is 
good news--the nearly $800,000,000,000 spending spree we call 
the American Recovery and Reinvestment Act not only missed its 
intended mark to create jobs, it has piled another 
$300,000,000,000 in interest payments on to the American 
taxpayer.
    The reality is that much of the bill was not stimulus, and 
whatever part can be argued was stimulus has largely run its 
course. However, all that money now has to be paid back, which 
will create more of a drag on the recovery of jobs than it has 
in the stimulus in the first place.
    For my part, I would say that if we are serious about 
putting adults back to work--and I think everybody in this room 
is serious about that--we need to stop throwing good money 
after bad by growing government programs that are unlikely to 
have the impact and start focusing our efforts on creating an 
environment that will create opportunity and spur private-
sector growth.
    Thank you, Mr. Chairman.
    Mr. Obey. Thank you.
    Why don't we begin with you and just run the table and see 
what happens?

                 EMPLOYMENT AND TRAINING ADMINISTRATION

    Ms. Oates. Thank you, Mr. Chairman, for this opportunity. 
And, Mr. Tiahrt, as the ranking member, thank you for this 
opportunity to come before you to testify on our fiscal 2011 
budget at the Employment and Training Administration.
    As the ranking member said, we are in challenging economic 
times, and job creation is critical to our recovery. And we 
think, at ETA, that having the best-prepared skilled workforce 
is something that we can do to impact the acceleration of the 
recovery.
    The overall fiscal year 2011 budget for ETA is 
$12,800,000,000, of which $10,900,000,000 supports 
discretionary programs and $1,900,000,000 is for mandatory 
programs.
    The 2011 budget request is guided by Secretary Solis's 
vision of ``Good Jobs for Everyone''. To make this vision a 
reality, individuals must have the skills and education 
necessary to compete for the good jobs of today and of the 
future to help them stay in the middle class or enter the 
middle class.
    Therefore, the request and its proposed initiatives will 
support transformational efforts to improve the effectiveness 
of the public workforce system. It will build upon both the 
$4,700,000,000 investment in the Recovery Act, Congressman 
Obey, that you mentioned and the appropriations that you 
provide to us every year, including fiscal year 2010. It will 
focus on helping job seekers gain portable, industry-recognized 
credentials and degrees and to leverage partnerships to align 
education and training programs at the Federal, State, and 
local levels.
    And I might say to this Committee that, in this 
administration, we are actively doing that alignment at the 
Federal level. It is one of the things that we are most proud 
of. And we really are thankful that you allowed us to testify 
together. We wish that our other friends were here from HHS, as 
well. We mean partnership.

                              PARTNERSHIPS

    The Department of Labor is working collaboratively with our 
Federal agencies. You see Education here. We have done 
wonderful work with them, coming together on the Workforce 
Investment Act; coming together to align the kinds of 
strategies that help adult learners--adult learners who are 
older workers, adult learners who are dislocated in their 30s, 
and adult learners who face other barriers.
    And we are specifically looking to target those populations 
that have been persistently at the bottom of the rung. They 
have persistently been unemployed, recession or good times. And 
we need to find the strategies that work for them.
    Not only have we worked with Education--and we are going to 
do more of that--we have also worked in partnership with our 
friends at HHS. You may have seen the guidelines that we have 
put out allowing TANF subsidy money to be used for summer youth 
and for our system, the public workforce system, to make sure 
they don't have to create redundant programs for either 
recruitment or placement as well as resume-building and the 
soft skills. Those TANF recipients who are going to use the 
subsidy money should be able to come in seamlessly and use our 
one-stops so that they can get the help that they need to find 
the good jobs and maybe be retained in those jobs after the 
subsidy is over.
    And we have worked with Ag, USDA, an unlikely partner, to 
make sure that every unemployed person knows if they are 
available for food stamps, for the SNAP program. We think that 
many people in this recession have not been accustomed to using 
Federal programs. We want to make sure that no unemployed 
worker and their family go without food when the food stamp 
program is there.
    We are also very excited about the work that we have begun 
with Commerce and SBA. Because, as all of you realize, we don't 
create jobs either, and if we are working through our one-stops 
with the Small Business Administration, through Import-Export 
Bank, and through our friends at Commerce, our one-stops can 
provide small- and medium-sized businesses access to government 
services that they may not have had before.

                        RECOVERY ACT INVESTMENTS

    Our 2011 request will help the ETA programs build on our 
partnerships and our Recovery Act investments and also help us 
address some training needs that have become apparent over the 
last year. Secretary Solis has gone over a lot of those 
investments with you, so I won't bore you with that in my oral 
testimony, but I am happy to take questions on that.
    I do want to talk a little bit about our recovery money. 
The $720,000,000 that we put out through competitive grants 
created an unusual response. I am sure the Secretary reported 
to you that we had thousands of applications in the five 
programs that we ran, incredibly high-quality applicants, and 
were only able to fund a fraction of applicants.

                        PATHWAYS OUT OF POVERTY

    One of the things that I am most proud of is that, in our 
Pathways Out of Poverty grants, we were able to target PUMAs 
(Public Use Microdata Areas) you know, a word that didn't mean 
anything to me before. When someone first brought it up to me, 
I thought they were talking about the African cat, and that was 
not what they were talking about. Instead, it is a census track 
that targets poverty levels. Fifteen percent or more of the 
population in that PUMA are at the poverty level. That is 
something that helps us get to those disadvantaged workers, who 
have been lost in our grants sometimes in the past.
    We will continue to work with you to figure out innovative 
ways that we can do better at reaching the people that we 
haven't been able to reach. We think that partnerships, not 
only the ones at the Federal level but our close partnerships 
with Governors, with local elected officials, with our good 
friends at all of the associations, to figure out how do we get 
them the technical assistance that we need. We need help in 
figuring out, not just doing more of the same, but doing 
better, more efficiently, and more effectively.
    And, with that, I will turn it back to you, Mr. Chairman, 
and wait for your questions. Thank you.
    [The information follows:]

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    Mr. Obey. Thank you.
    Mr. Jefferson.

                                  VETS

    Mr. Jefferson. Thank you, Mr. Chairman, Ranking Member 
Tiahrt, distinguished members of this subcommittee.
    About 2 weeks ago, I had the privilege of meeting some of 
our Nation's World War II survivors at an Honor Flight landing 
at National Airport. I shook the hand of a Pearl Harbor 
survivor. It was an inspiring example of the privilege we have 
at VETS to serve this inspiring community and the importance of 
providing them with the very best possible programs and 
services. And I am honored to be here testifying before you 
today with my colleagues at Labor and other government 
agencies.
    VETS proudly serves the veterans and transitioning service 
members by preparing and assisting them to obtain meaningful 
careers, to maximize their employment opportunities, and to 
protect their employment rights. And we do that in 
partnership--in partnership with Congress, by working very 
closely with the Department of Veterans Affairs, Department of 
Defense, Housing and Urban Development, HHS, other government 
agencies, our veterans service organizations, the nonprofits, 
and the private sector.
    Our programs are an integral part of Secretary Solis's 
vision of ``Good Jobs for Everyone'' and of keeping veterans 
and their families in the middle class. For fiscal year 2011, 
the Department is requesting our budget of $262,494,000 for 
VETS. That is an increase of 2.4 percent above the fiscal year 
2010 budget.
    Three words symbolize the approach that we are taking to 
our programs: excellence, innovation, and transformation. I 
would like to share six examples of how we are doing that at 
VETS.

                          UNEMPLOYED VETERANS

    First, to help our Nation's unemployed veterans, we fund 
2,000 employment representatives around America. These 
employment representatives work with our unemployed veterans to 
prepare them to find meaningful careers and provide them with 
training and services. However, we are not satisfied with how 
this program currently works, and we are presently innovating 
it. Three examples of that innovation are as follows:
    Number one, we are refocusing our Disabled Veteran Outreach 
Program specialists on serving the disabled veterans. This 
population is one of the hardest to employ, and we are going to 
focus them specifically on that community.
    Number two, our local veterans employment representatives 
are going to be doing more employer outreach. And a key part of 
that is a new employer outreach and engagement initiative that 
we are launching. We are working with the largest private-
sector associations to open up the doors to their members so 
our State directors and our local veterans employment 
representatives have access to those CEOs and senior executives 
and can communicate directly to them the value of hiring a 
veteran.
    And, finally, through our partnership with Jane Oates, we 
are ensuring that veterans have priority of service in all 
Department of Labor programs, number one.

                         TRANSITION ASSISTANCE

    Number two, we are working to help and better serve our 
Nation's transitioning service members. We have a 3-day 
employment workshop called TAP, Transition Assistance Program. 
I am really focusing on that becoming an acceleration program.
    Right now, it is 240 slides over a 3-day period. You can 
imagine how exciting that is. For the first time in 17 years, 
we are transforming that program. We are making it more 
economically relevant, immediately useful, and engaging for the 
service members who go through it.
    We have reached out to leadership experts, from Harvard to 
the private sector, to bring in transition best practices, such 
as stress resiliency training; mental health stress-reduction 
techniques; templates; career and life and work planning; how 
to develop one's network and how to actively succeed once you 
are in a career; how to transition to a civilian environment.
    So, transforming that TAP program is a second example of 
what we do. We serve roughly 142,000 of the 165,000 
transitioning service members through that program right now. 
And because of the importance of that program, in our fiscal 
year 2011 budget we have a separate budget activity for that.
    We have also requested an increase of $1,000,000 to 
emphasize spouses. Spouses have access to this program. Right 
now, the vast majority do not know that. We want to make sure 
they are aware that they have access to this program to 
increase military spousal employment and also to provide the 
training in languages other than English.
    Number three, helping our Nation's homeless veterans. We 
have the Homeless Veterans' Reintegration Program. It is the 
only federally funded program that provides employment services 
for homeless veterans.
    Right now, this year, we are serving about 21,000 people. 
One of our metrics, the entered employment rate, we are at 67 
percent. We provide 6 months of ongoing support once they find 
a job. Our retention rate is roughly 80 percent.
    But we are still not satisfied with that. We are going to 
take $5,000,000 of the 2011 requested increase and we are going 
to use it to identify the best practices to better serve 
homeless women veterans. It is a totally different model of 
what is required to serve this population. We are going to 
identify the best practices this year, do funding of about 25 
grantees, and embed and disseminate those best practices next 
year.
    Number four, to help our Nation's incarcerated veterans, we 
are going to take $4,000,000 of our requested increase for 2011 
and serve about 1,500 incarcerated veterans through 12 sites. 
This is one of the hardest populations to serve. As you know, 
there is a tremendous risk of them becoming homeless and also 
returning to jail. We want to prevent that. And we are working 
very closely with the Department of Veterans Affairs on that 
initiative.
    Finally, for all of our Nation's veterans, we want to 
continue preparing them for what is called traditional 
industries and traditional careers, but we want to also prepare 
them for industries of the future and green jobs. So we, 
through our Veterans' Workforce Investment Program, have 
requested an increase of $2,000,000 to that, and we expect to 
serve 4,600 veterans with our fiscal year 2011 budget.
    We are honored to be here. We are very excited about what 
we are doing at VETS. And We have a long ways to go, but we 
feel we are making significant progress.
    And I look forward to your questions.
    [The information follows:]

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    Mr. Obey. Thank you.
    Ms. Kanter.

                   Opening Statement of Martha Kanter

    Ms. Kanter. Thank you, Chairman Obey and Ranking Member 
Tiahrt. I am delighted to be here.
    Let me talk about several elements of the President's 
proposed fiscal year 2011 budget that will leverage the 
educational resources that we have through the States and our 
local communities to move America toward social and economic 
prosperity.

                    PRESIDENT OBAMA'S GOAL FOR 2020

    Investing in education is more important than ever. When I 
step back and recall what President Obama said in April, his 
goal is that by 2020 we will have the best educated, most 
competitive workforce in the world.
    When I look at all of the things we are doing, whether it 
is Pell Grants, Public Service Loan Forgiveness, the programs 
in the Reconciliation Act, the programs for historically black 
colleges and universities and other minority-serving 
institutions, and the program for community colleges hopefully 
through the TAA--Trade Adjustment Assistance--when taken 
together, will contribute toward reaching the President's 2020 
goal.

                   HIGHER EDUCATION AND THE WORKFORCE

    We are expecting somewhere between 10 million and 13 
million more undergraduates to enroll in higher education. We 
need them to be well-trained. We need to give them 
opportunities to obtain the jobs that are going to be 
available. We are working very closely with the Department of 
Labor. Since I came in July, Jane Oates and I have had many 
meetings. We are really trying to think this through carefully.

                 SPECIAL POPULATIONS AND THE WORKFORCE

    Alexa Posny, on my other side, is very attentive to special 
populations, especially people with disabilities, veterans, 
especially disabled veterans, and homeless veterans. We are 
discussing how we can map Education and Department of Labor 
resources to serve those most needy populations in our country.

                   ELEMENTARY AND SECONDARY EDUCATION

    The backdrop of higher education obviously rests in early 
learning and K-12. We have 27 percent of students not 
graduating from high school. Across the urban parts and some of 
the rural parts of America, the rates are much higher. We look 
at those students who could and should graduate. We want to put 
in place all of the work that Secretary Duncan told you about 
last week and let that serve as the foundation.
    When you have kids who are not ready for kindergarten, 25 
percent of children, especially those from the poorest 
families, who aren't ready for kindergarten, the result is the 
4th-grade reading scores that were released from NAEP this 
week. I think you, Chairman Obey, showed the chart last week 
that shows what happens with the disparity between wealthy and 
poor, the opportunities for young people and how they do and 
don't have access.

                              PELL GRANTS

    The Pell Grant is central to this. It gives families of 
young children the hope that there will be a college slot ready 
for them. I know at Foothill-De Anza Community College 
District, where I was chancellor for many years and president, 
we had a program called KinderCaminata that distributed 
diplomas to graduating kindergarten children. We did this to 
educate the parents, many of whom didn't speak the language as 
I am speaking it, many of whom are from poor families, many of 
whom are from under-represented groups in K-12 as well as in 
higher education--and those groups are becoming the majority of 
our country.
    It is very important for us to have a vision, which is the 
President's goal and your efforts, to save jobs through ARRA--
the American Recovery and Reinvestment Act. We are grateful for 
that, but to have Pell Grants as a centerpiece of opportunity 
for American families is critical to our success. This also 
drives much of the partnership between the Department of Labor 
and Education so that we can have opportunities for both 
education and training for Americans who need it so much.
    We know that there is a shortfall in the Pell Grants 
program. We are working very closely with OMB--the Office of 
Management and Budget--through our budget office to find 
solutions and work with Congress to meet that shortfall. 
Students, as you have seen, are knocking down our doors. I met 
with over 500 students this week on the National Mall, who may 
be coming here to tell you their stories.
    It was all about Pell. I asked them, do you know about the 
Public Service Loan Forgiveness? I said, those are some new 
provisions in the Reconciliation Act that are going to keep 
college more affordable. If you want to become a police officer 
in a community college or you want to get workforce training 
through a one-stop shop and become an energy management 
technician, all of those resources are going to be available. 
And we want to get you into not only the private sector but 
into public-sector opportunities.

                         COLLEGE ACCESS GRANTS

    We are excited that the Reconciliation Act is hopefully 
going to double funding for college access grants. This will 
allow outreach to those families I talked about, to let 
students know that college will be there for them, as well as 
workforce training opportunities that are tied to the work 
being done in internships and apprenticeships.

                CAREER AND TECHNICAL EDUCATION TRAINING

    We have a number of new programs that have been in place 
with unions and other organizations. For example, at the 
University of Texas at Brownsville, Texas Southmost College has 
a partnership with unions where students start as an apprentice 
in construction technology, and they can move up the ladder to 
construction management at higher and higher levels while 
getting their apprenticeship, move on to journeyman, all the 
while getting their 2-year and 4-year degrees. It is this kind 
of innovative partnership that we are hoping to leverage with 
the Department of Labor if funds become available in the 
Reconciliation Act.

            REAUTHORIZATION OF THE WORKFORCE INVESTMENT ACT

    When I step back and look at the big picture, we have more 
than 90 million adults with low skills and who have not had 
access to college. We are just at the beginning with our 
workforce career and technical education training. We are 
serving about 2.4 million adults. So we have, as you said, 
Chairman Obey, a long way to go with all of this, but we have 
to reach more Americans. And that is why we are doing so much 
work to reform Title II of the Workforce Investment Act, to 
figure out how we can assess and provide eligibility to 
individuals who didn't have the opportunity.
    We are very much committed, with these funds, to advance 
career ladders for people, so that education and training are 
both the opportunity and the expectation. Education, training 
and workforce planning should be a coordinated system. People 
need jobs to live, and they need education to get the jobs and 
further advance. This is a very critical philosophy. We should 
not be preparing students for careers or for education; we 
should be preparing them for life. Students need both education 
in a lifelong context and training at different times in their 
lives so they can move up the ladder.
    You can train someone for 40 hours a week to be a solar-
panel installer, but maybe that person could be an energy 
management technician. Maybe that person might want to have an 
opportunity to get a baccalaureate degree and go into climate 
science. We should leave those opportunities open for people to 
make the choices they need and have ``family-sustaining wages'' 
to move forward as the economy recovers.

              COLLEGE- AND CAREER-READY STANDARDS PROGRAM

    The Administration has requested $14.5 billion, as you 
heard from Secretary Duncan, for the College- and Career-Ready 
Standards Program. We want students ready for college and 
career when they graduate from high school. This is a 
generational agenda. The States have come forward to say, we 
need to raise our standards, but we need to also look at a 
growth model so that we know students have the skills they need 
to be ready for college.
    We don't want to divorce higher education from K-12. In 
fact, we want to have stronger connections there. We also want 
to look at early learning as a part of that connection, so 
that, for example, the community colleges and 4-year schools 
will train the child care providers, provide baccalaureate 
degrees for entry-level programs and Head Start programs. We 
should look at this as a continuum, which I think will be very 
important to our success.
    We have been working, as Jane said, with the Department of 
Labor, but we have also been working with the Department of 
Energy, the Department of Health and Human Services, and the 
Regional Innovation Clusters effort that you have supported to 
have the education components really embedded in these career 
opportunities for people.
    I look forward to answering all your questions and I 
appreciate your having me to this committee.
    [Prepared statement of Under Secretary Kanter follows:]

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    Mr. Obey. Thank you.
    Ms. Posny.

                    Opening Statement of Alexa Posny

    Ms. Posny. Thank you very much.
    Chairman Obey and Ranking Member Tiahrt, I just want to 
clarify for the record, I was born and raised and lived in 
Wisconsin for 33 years and have had the great opportunity to be 
in Kansas for the last 22. So, know that I split my----
    Mr. Obey. It sounds like Wrong Way Corrigan to me.
    Ms. Posny. Badgers and Jayhawks and everything else, they 
are equal, believe me.
    Mr. Tiahrt. She likes warm weather.
    Ms. Posny. Thank you very much for this opportunity to talk 
with you on behalf of the 2011 budget.
    Ensuring that people with disabilities have access to a 
high-quality education and then the career and vocational 
development services they need for participation in our economy 
are top priorities, not only for us in our Administration but I 
know it is for all of you, as well.

                 AMERICAN RECOVERY AND REINVESTMENT ACT

    Our 2011 request will build on the work that has been 
currently supported by the American Recovery and Reinvestment 
Act--ARRA. Under the ARRA funds, States and LEAs have received 
an unprecedented amount, $12.2 billion, for special education 
programs under IDEA--the Individuals for Disabilities Education 
Act--and an additional $680 million for vocational 
rehabilitation and independent-living services.
    In terms of how some of those dollars were spent, for IDEA, 
States used the funds to pay for the salaries of over 50,000 
personnel. For vocational rehabilitation--VR, the funds were 
used to serve almost 39,000 consumers and assisted 1,800 of 
them achieve competitive employment. And approximately 27,000 
of our consumers have been removed from our waiting lists.
    In Wisconsin, some of the VR funds were used to offset 50 
percent of individuals with disabilities in terms of their 
salaries and benefits for their first 90 days of employment 
while the employees were getting up to speed.
    In Kansas, Wichita has a great example of how the funds 
were used, and it is now being replicated in several other 
districts. The Wichita public school district provided students 
with disabilities work experience in real jobs for real pay, 
and the VR counselors were assigned full-time to each high 
school.

                   SPECIAL EDUCATION GRANTS TO STATES

    We know that a strong educational foundation, as Martha 
said, for youth with disabilities leads to better career and 
employment opportunities. It is absolutely a must. So, 
therefore, our 2011 budget request contains $11.8 billion for 
special education grants to States. This is an increase of $250 
million serving, over 6 million students across the United 
States ages 3 through 21. This level of funding maintains the 
excess cost of special education at approximately 17 percent or 
the national average per pupil expenditure, and provides an 
estimated average of $1,750 per student.

             VOCATIONAL REHABILITATION STATE GRANTS PROGRAM

    We are also requesting $3.6 billion to support 
rehabilitation and independent-living services.
    The State-Federal program of vocational rehabilitation, a 
Workforce Investment Act partner program, is the flagship 
program for providing job training and employment to 
individuals with disabilities. The VR program is a ``go-to'' 
agency within a local workforce system to which clients with 
special disability-related needs are referred to from other 
partner programs.
    What has been achieved so far? Over 2 million individuals 
with disabilities have achieved employment through the VR 
program over the last 10 years. This is almost 200,000 
individuals who are gainfully employed each year. And the VR 
State Grants Program currently serves approximately 1 million 
customers each year.
    We know that we have to raise our expectations for our 
customers and counselors alike and focus our resources on 
helping individuals with disabilities attain high-quality 
employment and careers that will lead to self-sufficiency, not 
just to jobs, but so that they can sustain themselves.
    We are committed to working with our Workforce Investment 
Act partners to ensure that individuals who do not need the 
comprehensiveness of the VR program still have access to 
appropriate services through our WIA one-stop partners.
    We also know that a major emphasis on our level, in terms 
of K-12, should focus on transition planning for students with 
disabilities as they move towards postsecondary education, 
training, and employment. VR agencies play a major role in this 
endeavor, as nearly 22 percent of our transition-age youth 
received postsecondary education as a service under the VR 
program in 2008 and over 65,000 achieved employment outcomes.

         NATIONAL ACTIVITIES AND THE WORKFORCE INNOVATION FUND

    I am really excited, as has been referred to, about a 
request for $30 million to support a Workforce Innovation Fund. 
Combined with $30 million requested under the Adult Education 
National Leadership Activities to support a partnership with 
our colleagues at the Department of Labor, this project will 
serve to support and validate effective strategies for 
improving service delivery and outcomes for individuals served 
under WIA.

      SUPPORTED EMPLOYMENT FOR YOUTH WITH SIGNIFICANT DISABILITIES

    Additionally, we have asked for $25 million for 
discretionary grants that would be awarded on a competitive 
basis. This would expand supported employment opportunities 
that allow us to extend the support that some of our people 
with the most significant disabilities require in order to stay 
on the job and be retained in employment.

                               CONCLUSION

    In closing, I just want to thank you for continuing to 
support the critical services and programs that have enabled 
millions of children and adults with disabilities to not only 
learn but also to be gainfully employed. Our culture and 
economy are stronger when the diverse talents of people with 
disabilities are developed through education and training and 
used in the workforce.
    Thank you very much.
    [Prepared statement of Assistant Secretary Posny follows:]

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    Mr. Obey. Thank you.
    Mr. Tiahrt.
    Mr. Tiahrt. Thank you, Mr. Chairman.
    I can tell you are very passionate about your work, and I 
appreciate that very much.

                               CARRYOVER

    In my opening remarks, I said that the government doesn't 
create wealth but it can create opportunity. And I have to say 
that the programs on employment and training at the Department 
of Labor provide many Americans with opportunity. But, as 
appropriators, we have to make sure we follow the money and are 
accountable for this budget.
    The fiscal year 2009 carryover was about $1,400,000,000. 
Now, some of that, $500,000,000, was stimulus money. The fiscal 
year 2010 carryover was about $544,000,000, as an estimate. And 
the estimate on fiscal year 2011 carryover is about 
$574,000,000.
    So, if we look at the fiscal year 2010 budget, the current 
budget year, because of the carryover, $5,400,000,000 is 
available for fiscal year 2010. And you expect the end of the 
year to be $4,200,000,000. That is a $1,200,000,000 difference. 
And I think we are still spending 2007 money and some 2008 
money, fiscal years, and we are running a 3-year revolving 
balance of about $1,000,000,000.
    Can you explain, Ms. Oates, how come such a large balance 
carryover is required?
    Ms. Oates. Congressman, I will try.
    First of all, the Workforce Investment Act, which governs 
these appropriations, is a complicated Act. Local areas are 
given 2 years to expend their appropriated yearly money, and 
then the third year it is recaptured by the State and can be 
redistributed or used for statewide activities.
    So the expectation in the underlying authorization is not 
to spend out every year. It is to do longer-term planning. That 
may be revisited when the Act is reauthorized. And I share no 
good or bad with that.
    I do want to explain one thing about where locals are 
going, not only in your State, in Kansas, but nationwide. They 
are moving toward longer-term training. And that creates a 
battle that has been going on since the day after this bill was 
passed in 1998, the battle of obligated versus expended.

                       OBLIGATED VERSUS EXPENDED

    Let me give a very simple example. If I send Ray through 
training--which he doesn't need, by the way--but if I send him 
to training and that training is three semesters to get an 
industry-recognized credential or degree, when I put him into 
that training the first day, I have to obligate the money for 
the three semesters of that training.
    Now, our local areas, we are always working with them to 
say, you know, make sure that they are making satisfactory 
progress, make sure they haven't dropped out. And I think they 
do a reasonably good job of that. But that longer-term training 
obligation is exacerbating the problem that you are referring 
to of these pots of money looking like they are unspent. They 
are not unobligated; they are truly obligated.
    There are two pots, at the Governors level, that have been 
the traditional slowest of the spend-downs, and that is the 
Governors' 15 percent reserve and the rapid response money. The 
rapid response money is there for emergencies: large-scale 
dislocations or, heaven forbid, Katrina-like disasters. So a 
Governor has a pot of money to send people out to provide 
information so that they can put forward the most appropriate 
response to dislocation.
    The 15 percent money, having gotten to know many Governors, 
I mean, they really are trying to use that strategically to 
look at economic development opportunities in their State, and 
that takes longer to do. This is not an excuse; I am trying to 
provide an explanation.
    And, again, if this committee feels strongly that the 3-
year spending provision, whose guidelines are included in the 
Workforce Investment Act, we can work with you and with 
authorizers to address your concern about giving a governor 
that third year and giving locals 2 years to spend their annual 
appropriation.
    Mr. Tiahrt. I think some of these funds are still 
unobligated, so I am a little concerned about some of that 
carryover.

                             GREEN JOBS ACT

    I have limited time here, so I want to move on to the Green 
Jobs Act. To compress the question, basically the Green Jobs 
Act only applies to entities that coordinate with labor 
organizations, which covers about 12 percent of the working 
population.
    What about the other 88 percent? Shouldn't we change the 
application so that it is not just labor organizations but the 
rest of the private sector also has access to the Green Jobs 
Act funding? Do you follow my question?
    Ms. Oates. I am not quite sure. Are you talking about our 
competitive grants that we put out under Green Jobs or the 
underlying statute, the Green Jobs Act?
    Mr. Tiahrt. The Workforce Investment Act was amended by the 
Green Jobs Act. But in there, it sort of cordoned off the funds 
to just be used with entities that coordinate with labor 
organizations. That population is about 12 percent of the 
working population. There is 88 percent of the working 
population out there that is not qualifying for these funds.
    Would it take a legislation action to open it up for the 
other 88 percent, or can you do that through your abilities?
    Ms. Oates. You know, I would have to get back to you on 
whether there needed to be legislative action. But the term we 
use, Congressman, is ``labor-management partnerships.''
    I make no secret that I am a friend of organized labor. I 
was an AFT member as a teacher. So, you know, I joined a 
teachers union, you know, in Philadelphia and in Boston when I 
was there.
    But our purpose is to get labor-management partnerships. 
Because we think, when labor and management work together, they 
can make sure that the workers continue to get the skills that 
they need and that management can get the loyalty that they 
need from their workforce.
    So, in all of my comments and implementation, we have many 
labor-management partnerships that we have funded through our 
Recovery Act grants that don't actively engage with a member 
organized labor, a union.
    So I would be very reluctant and try to change your mind 
about that term, ``labor-management partnership.'' You know, I 
wouldn't disagree that, if you are in a right-to-work State, 
that you want to move away from organized labor.
    But I will get back to you, if I may, through the Chair, on 
whether you need legislative correction.
    Mr. Tiahrt. To make myself clear, I am not trying to move 
away from organized labor. I am saying that it should be open 
to all labor. And I think that is what you told me.
    Ms. Oates. Yes, and labor-management partnerships.
    Mr. Tiahrt. The ``labor'' part doesn't necessarily mean 
organized labor?
    Ms. Oates. In the term ``labor-management partnership,'' 
no, sir, it does not.
    Mr. Tiahrt. All right.
    Thank you, Mr. Chairman.
    Ms. Oates. But I will get back to you through the Chair 
the--because I am not familiar with that language in the Green 
Jobs Act, and I will certainly get back to you on it.
    [The information follows:]

    Yes. The Green Jobs Act, in amending the Workforce 
Investment Act (WIA), indicates specific activities where 
certain entities should be engaged as a partner in the grant 
application, including labor-management organizations. In order 
to be eligible to receive a grant where a labor-management 
partnership is required, an entity must be a nonprofit 
partnership that includes the participation of industry and 
labor organizations, including joint labor-management training 
programs. The Employment and Training Administration does not 
have the authority to waive eligibility requirements under WIA.

    Mr. Tiahrt. I appreciate it.
    Mr. Obey. Ms. Lee.

                HUGE DISPARITIES IN COMMUNITIES OF COLOR

    Ms. Lee. Let me ask you, Secretary Oates, a couple of 
things in terms of your testimony. And you mentioned--and I 
think this is what needs to happen, is a statement of fact. 
``American Indians and Alaska Natives make up the most 
impoverished group in the Nation, with unacceptably high 
unemployment rates on or near rural or isolated reservations.'' 
And then you go on to talk about the budget request, 
$55,000,000 for Indian and Native American programs. You should 
do this, this makes sense, and I really want to commend you for 
that.
    I am looking through your testimony and can't find any 
statement of fact as it relates to the African-American 
unemployment rates and the Latino unemployment rates.
    And let me just call to your attention the Joint Economic 
Committee's report, chaired by Congresswoman Carolyn Maloney. 
She lays out what the facts are in the African American 
community, and her comment is, ``By better understanding the 
unemployment challenges facing specific communities, Congress 
can design and enact innovative policies that effectively 
address these challenges and help people get back to work.''
    What concerns me is, for some reason, you guys just don't 
want to acknowledge these huge disparities in communities of 
color. And we are not talking about developing race-based 
solutions, but we are talking about acknowledging a fact that 
communities of color have long-term chronic unemployment. And, 
until you acknowledge that, it is going to be hard to develop 
specific solutions, which, of course, will make our country 
stronger and put people back to work. So I want to know why 
that is always left out.

                       SUMMER YOUTH JOBS PROGRAM

    Secondly, in terms of the summer youth jobs program, thanks 
to Chairman Obey, yesterday we passed $600,000,000 for our 
summer youth jobs program, 300,000 to 400,000 jobs. Young 
people, unfortunately, as it relates to the recession, have to 
help their families now pay the rent and buy food because their 
parents are unemployed.
    But this is an emergency. And we have to jump through a lot 
of hoops to just put people back to work because we haven't 
declared an emergency and we haven't seen the unemployment in 
our country as an emergency. And if you look at this report--
and, Mr. Chairman, I am going to ask you if I can put this 
report into the record, if possible. Could I ask for unanimous 
consent to insert this into the record?
    Mr. Obey. Without objection.
    Ms. Lee. Thank you very much.
    [The information follows:]

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    Ms. Lee. If you look at this and if you look at what has 
taken place in the Latino community--The Urban League just 
presented its State of Black America and Hispanic America--an 
emergency exists.

                EMERGENCY STATE OF MINORITY UNEMPLOYMENT

    And so, you know, somehow we have to see this as an 
emergency. I don't know if it is the White House, if it is your 
agency, if it is us. How do we get the country to designate and 
declare a state of emergency as it relates to the job crisis?
    Ms. Oates. Well, Congresswoman, I couldn't agree with you 
more. The reason that I, in my testimony, in my written 
testimony, highlighted the Native American unemployment was 
because I was justifying our request for more money in that.
    Ms. Lee. And you should. And, I mean, that is the right 
thing to do.
    Ms. Oates. Yes. I think the situation right now with 
minority unemployment, particularly young people of color, is 
just immoral. We have to do something about it. My reference to 
the PUMAs was one of the ways we try to direct those grants 
specifically to those areas of poverty.
    And, in everything that we do, we are going to try to bring 
more attention into those communities that have been 
persistently poor, good times and bad. The recession has only 
made their condition worse, but they were double-digit 
unemployed before.
    Ms. Lee. Well, why don't we say that?
    Ms. Oates. Unfortunately, I didn't say it in this 
testimony. I assure you that I say it wherever I am. I was with 
Job Corps all week, where we basically have young people, 16 to 
24, the majority are from these poor communities, many of them 
minority. And they are looking to get the skills they need at a 
residential Job Corps facility because they couldn't get them 
if they stayed where they were in their community.
    I commit to you that I will say it more often and louder, 
but it is certainly something that you can see directed in our 
programming at the Department of Labor. And I publicly 
apologize if you don't think we--Secretary Solis says it loudly 
and often. But if you don't think we are saying it enough, I 
will commit to you that we will say it more often and continue 
to point out to you and the staff of this committee ways that 
we think we are targeting to help respond to that immoral 
situation.
    Ms. Lee. Thank you.
    And what about the emergency state that we are in, in terms 
of the crisis of unemployment throughout the country?
    Ms. Oates. In fact, we think that there is a critical need 
to make sure that employers are presented with those folks who 
have not had the opportunities that other folks have had. And 
we need to work with those employers to create jobs and 
publicly list those jobs----

                       COMPREHENSIVE JOBS PACKAGE

    Ms. Lee. No, I understand that. But I am just talking about 
us here trying to pass a comprehensive jobs package. We can't 
seem to do it. We spent $50,000,000,000 to rebuild Iraq, but we 
can't get $1,000,000,000 for summer youth jobs. And I am just 
saying, unless we declare it an emergency, we can't do it.
    Ms. Oates. Well, I was remiss in not thanking this 
committee for all the work on summer jobs. I got to see a lot 
of those kids last summer. That $600,000,000, even though it is 
not the amount that any of us wanted, is a huge downpayment. 
And it is going to make sure that people can start talking with 
employers about those jobs.
    It is an emergency, Congresswoman. It is an emergency when 
I go out, when you go back to your districts, I am sure, when I 
see those people that are saying, ``What am I going to do? I 
can't find a job.'' And it is particularly disheartening when 
you hear people on national television saying, if they wanted 
to work, they could.
    I can tell you, in the communities that I have visited, 
there are hardworking people looking for a job every day. 
Thanks to the UI benefits that you provided, they are making 
probably less than one-third of what they took home before, but 
at least it is keeping a roof over their head and food on their 
table.
    It is a crisis. I don't know why we are afraid to call it 
that. And we should do something about it.
    Mr. Obey. Mr. Rehberg.

                                  H-2A

    Mr. Rehberg. Thank you, Mr. Chairman.
    You win the lottery today.
    Ms. Oates. Uh-oh.
    Mr. Rehberg. All the questions are yours.
    Ms. Oates. I did have a bet on this before, and I was 
totally wrong. I am going to have to buy everybody lunch.
    Mr. Rehberg. Where are we going?
    H-2A, you have a new regulation in place that took effect 
on March 13th. And I am not going to get into the politics of 
hourly rates and all. You know, that is for another day. But 
the difficulty is my farmers in Montana--as you know, it is a 
very specific group of people that need H-2A. Not all small 
businesses qualify nor need it. You usually associate it with 
sometimes herding, sometimes fruits and vegetables and such. So 
it is a unique arena.
    In the development of the regulation, it seems as if you 
have to do, by law, a flexibility study, according to the SBA. 
And rather than look at the impact it was going to have on the 
H-2A visa applicants, a unique group of farmers, you made the 
determination that the H-2A applicants would be compared 
against all small businesses. And you came up with the 
determination a flexibility study was not necessary because it 
only affected 2 percent of all small businesses in the country. 
The problem is, it affects 98 percent of the H-2A applicants.
    Why the change in philosophy? What rationale is there? And, 
as you know, you are going to end up in court over the thing. 
Why even put yourself through the pain and suffering of 
changing a determination when, clearly, it affects 98 percent?
    And for my poor farmers in Montana, they didn't see this 
coming. This is their third hourly wage increase in 3 years. 
And they are coming in and applying and being told once again--
in one particular case, it is a $1.57-an-hour increase. They 
don't have the ability to pass the cost along. They have had to 
make business determinations, decisions, going up to this 
point.
    So could you explain to me why the change in philosophy?
    Ms. Oates. Mr. Rehberg, as you mentioned, we are in 
litigation against this, so I am really restricted in what I 
can say.
    But let me say this: There are some things in this change 
that are positive changes. Before, under the old rule in 
Montana, one county versus another had to pay different rates. 
At least now we have gone to statewide rates.
    And in respect and trying to understand the needs of the 
businesspeople who are going through this change, actually, as 
we are speaking, there is a webinar going on for businesspeople 
that takes them line by line through the application to make 
sure they understand the application process and to give them 
some of the other instances on this.
    That webinar, by the way, the reason we used a webinar--
because your response to me would be to say your farmers are 
awake, but they are milking the cows or doing whatever----
    Mr. Rehberg. Well, first of all, my response would have 
been, could you have warned them ahead of time, all the H-2A 
applicants from the past, warned them this change was coming? 
And I have looked at the comments, and virtually 100 percent of 
the comments were in opposition to what you are doing--what you 
did, the way you interpreted the flexibility study.
    And, again, you know, I am not going to argue the politics 
of increasing salaries, but it is the way you are skirting the 
SBA and its impact on the small businesses as a result of the 
change in the regulation.
    Ms. Oates. I would be happy to revisit with you after the 
litigation is finished when I could give you a clearer idea of 
what we went through. But, as you can imagine, all of that is--
--
    Mr. Rehberg. Is it happening in other areas? Am I going to 
start hearing from other entities, small businesses within my 
State, that you have changed the way you look at impacts, 
whether they have the ability to implement the rule or whether 
it is going to make them less competitive? Because those are 
really the two standards on the flexibility study.
    Ms. Oates. The bureaucratic answer would be to tell you 
that, every step of the way, when we do a process change, it is 
in the Federal Register. The reason I say ``bureaucratic'' is, 
people in my home State of Pennsylvania didn't read the Federal 
Register daily.
    So, therefore, what I would say to you is what we can make 
available to this committee is notifying, through the Chair, 
notifying you when any changes are happening. I don't see any 
changes on our horizon that would impact that, but I am not a 
small-business owner.
    But I would be happy to make sure that the committee staff 
is aware of any changes that are coming up so that you could 
highlight for your constituents. It is not our intent to do 
anything behind closed doors.
    Mr. Rehberg. Could I just suggest, you know, I would 
communicate, but you already know who the past applicants are, 
especially in something as specific as H-2A. It would make 
sense, bureaucratically and from an executive branch 
perspective, to make contact with them, to tell them that, 
``The regulation will be implemented on March 15th. We know you 
have already made your planting decisions, you have already 
made your hiring decisions based upon your calving and such. 
And this is coming down the pike, and this is what you are 
going to foresee.'' You can do that as a courtesy, I would 
think.
    Ms. Oates. We do that now, sir, but obviously we don't do 
it well enough because your constituents weren't aware of that. 
We always have room to improve, so I take your suggestions, and 
we will make sure that we make those improvements in the 
future.
    Mr. Rehberg. Thank you.
    Ms. Oates. Thank you.
    Mr. Obey. Ms. McCollum.
    Ms. McCollum. Thank you, Mr. Chair.

                             WOMEN VETERANS

    First, I want to make a comment on the veterans program 
that I heard. It is fabulous. Women veterans have long been--I 
am going to just say ``neglected,'' because the numbers weren't 
there and they didn't seek out for help because they didn't 
feel welcome. And we had a hard time getting many of our male 
veterans to feel welcomed home, to ask for assistance and 
things. So I am very pleased you are doing that.
    I represent Minnesota. We have done some work with our 
homeless veterans that we are very excited about, but there was 
an inclusion of women veterans in the process.
    Also, Mr. Chair, we heard the testimony talking about 
reaching out to those veterans coming out of detention. But we 
are working with some innovative programs to keep them from 
going into detention in the first place in the special courts.
    And, at some point--and you would probably be the person to 
understand that or know the counterpart--but I think we need to 
put this all together and look at it as a package. So if 
someone could maybe contact my office so that I understand 
better how the special courts, the homeless interventions that 
you are doing, as well as the early interventions as the 
gentlemen and -women are coming out the system, how we bring 
everybody back home.

                            VETERANS COURTS

    Mr. Jefferson. I would be very glad to do that.
    And we are working very closely with the Department of 
Veterans Affairs right now in this partnership. So they have 
the veterans courts--as you know, the first one is in Buffalo, 
New York--to look at how we can give people different 
opportunities. Then with the incarcerated veterans program, 
improving the content so we get even better results from that 
going forward.
    So we would be honored and excited to come by and explain 
that.
    Ms. McCollum. Thank you.
    I think one of the things that we found out sometimes in 
our drug courts or alcohol courts, that we had a lot of 
veterans in them. And so it might even be taking some of those 
courts that are already in existence and helping the judges 
with specialized training in that.

                            EMERGENCY GRANTS

    I would like to focus on emergency grants. And I think Mr. 
Tiahrt kind of talked about how we have pots of money that 
sometimes are set aside until they are spent, but they are 
fully accounted for. They are encumbered.
    I held a hearing in St. Paul on workforce and labor 
programs that was funded by this subcommittee. And issues with 
the National Emergency Grant requirements came up time and time 
again during the hearing.
    Minnesota Local Workforce Systems has made an efficient and 
effective use of Workforce Investment Act formula and Recovery 
Act funding, serving three times the number of people that they 
did in the previous year. They are now seeking additional 
funding through the special National Emergency Grants that have 
been made available to them by the Department of Labor that 
serve dislocated workers.
    Here is the policy problem. Currently, the policy in place 
is making it difficult to access this grant funding. 
Regulations currently in place require 95 percent of the funds 
to be disbursed before the applicant requests more funding.
    So, without taking into account obligations or these 
encumbrances, is the Department of Labor willing to consider 
some of these policies to ensure that funding provided by 
Congress is accessible to the severely dislocated workers in 
Minnesota who are currently on a waiting list to access these 
training programs?
    In other words, we can't add any more on because those that 
are on haven't spent all their educational dollars. But the 
money is set aside, so at the end there is a diploma. So we 
have intention here of wanting to do the right thing by setting 
aside the funding to make sure that the diploma, the 
certificate is achieved at the end, but there is grant money 
out there for other people who would be eligible, but they 
can't access it because the money hasn't been fully disbursed 
for the others.
    So I think, Mr. Tiahrt, you and I could maybe work together 
on this to find out an accounting mechanism with great 
transparency, great accountability in it, but something that 
doesn't hurt individuals from applying for grants, when we are 
just trying to do the right thing to make sure the dollars are 
there for the educational services.
    Is this something you are working on?
    Ms. Oates. Absolutely.
    I would say that the requirements--as of 3 weeks ago, when 
this came to my attention, Congresswoman, when we put forward 
these requirements that we were posting, there would have only 
been three States who would be eligible to apply for the money. 
That, to me, is not being fiscally responsible; that is being 
silly.
    So we are in the process of looking at a new set of 
frameworks where you can apply for National Emergency Grants 
without looking at your 2008 spend-down, your 2009 spend-down, 
your Recovery Act spend-down at these high levels, and to look 
at cases more on an individual base.
    I mean, the nature of National Emergency Grants is not to 
supplement the dislocated worker formula; it is to respond to 
incredible need. So, while we just don't give States more money 
because they say they are out of formula money, we do look at 
incredible need. Having a waiting list and employers ready when 
those people have the skills and credentials necessary is an 
emergency. So we want to make sure that we are responsive to 
that.
    I am happy to share where we are right now on those numbers 
and figuring out the kinds of numbers. But it really is moving 
to looking at a case-by-case basis.
    [The information follows:]

    The purpose of National Emergency Grants (NEGs) is not to 
supplement the Dislocated Worker (DW) formula program, but to 
respond to incredible need. The 95 percent disbursement of 
funds requirement only applies to one of the several types of 
NEGs known as Formula Funds Replenishment, an American Recovery 
and Reinvestment Act (ARRA)-funded NEG that is designed to 
provide local areas in dire straits with a bridge until their 
next allocation of DW formula funds becomes available. 
Eligibility for other types of NEGs call for a state to have 
spent 70 percent of its Program Year (PY) 2008 DW formula funds 
and 50 percent of its ARRA DW formula funds. The purpose of 
these thresholds is to ensure that states are expending their 
DW formula resources quickly and efficiently before requesting 
additional resources, and to ensure that excessive amounts of 
carry-over do not occur.
    Minnesota has been successful in securing additional 
resources through NEGs, as evidenced by the state having been 
awarded three other NEGs for up to $6,875,701. Minnesota has 
also submitted an additional NEG application for $2,635,901 
which is currently moving through the approval process. In 
total, Minnesota will have been awarded nearly 50 percent of 
the amount of funding received through the PY 2009 DW formula 
process in NEG awards alone, before considering the Formula 
Funds Replenishment NEG. The Department has also been working 
with Minnesota to examine its obligations and commitments and 
is in the process of developing a methodology to project when 
the 95 percent threshold will be met. If projections show that 
the threshold would be met within this quarter, Minnesota will 
be considered as having met the 95 percent threshold and thus 
eligible for a Formula Funds Replenishment NEG.
    States all across the country continue to experience 
incredible need. On April 12, 2010, the Department announced 
the availability of up to $90 million in funding for On-the-Job 
Training (OJT) NEGs in recognition of the widespread scope of 
recession-related layoffs across the country. The Secretary of 
Labor has recognized the impact of the recession on the 
national workforce as a significant dislocation event for 
purposes of this one-time ARRA targeted NEG assistance. Due to 
the unique nature of this assistance, there is no formula funds 
usage requirements associated with applying for OJT NEGs.

    Ms. McCollum. But I agree with Congressman Tiahrt; if there 
is funding out there that is not going to be spent, that needs 
to be accounted for, this committee needs to know about it, so 
that we can be more effective.
    Thank you, Mr. Chairman.
    Mr. Obey. Mr. Cole.
    Mr. Cole. Thank you very much, Mr. Chairman.
    Secretary Oates, you probably need a break, so I am going 
to give you one. 
    Ms. Oates. Thank you.
    Mr. Cole. And you have been the political pinata. It is 
somebody else's turn.
    If I may, Secretary Kanter, I wanted to focus on three 
areas where the administration has chosen, basically, to sort 
of flat-line the funding, and I wanted to get the reason why, 
because I think these are important programs.

                         FEDERAL TRIO PROGRAMS

    Mr. Cole. The first one is TRIO. And my concern here is, we 
are very appropriately expanding Pell Grant money, and we are 
trying to make financial access better, but a lot of the 
students that are served by TRIO, frankly, need the support and 
need additional preparation, additional support. So just giving 
somebody a check isn't going to be enough, in these cases.
    And, particularly, we lost, I think, about 40,000 TRIO 
students last year due to absence of funding. We know that this 
is a population that we have never, under anybody, come close 
to serving.
    So why the decision to flat-line TRIO?
    Ms. Kanter. Frankly, we were working on the assumption that 
there may be College Access and Completion funding available 
through the American Graduation Initiative. We were expecting 
that grantees in the TRIO and GEAR UP programs, either in 
collaboration with one another or as a partnership program with 
different colleges and universities, would be able to apply for 
those funds on a competitive basis. We are very interested in 
using the evidence of what has been working so well with GEAR 
UP and TRIO.
    But that is why--we can't ask for everything--we flat-lined 
that budget. It is $910 million for Federal TRIO programs and 
$323 million for GEAR UP. We thought funding from the SAFRA Act 
would meet that need and make it a little more competitive so 
that others could accomplish some innovative kinds of things 
that they couldn't do in the current program. They would be 
able to put some of the best practices and lessons learned into 
place to do more.
    Those programs are reaching out to the underserved students 
I talked about. Some TRIO projects spend as much as $7,000 per 
student. I came from a college district where we received 
$5,000-$5,500 per student. So the TRIO investment more than 
doubled what the cost per student would be, in California at 
least, for a 2-year college student. And we were very excited 
that those competitive grant funds would enhance the programs 
that we were able to support for these years.
    Mr. Cole. And you touched on this partly in your answer, 
because I have, again, exactly the same concern for GEAR UP. I 
mean, when I used to be a college educator many years ago, I 
saw a lot of kids just show up and they were just not ready. 
And it is because they didn't know how to get ready, in many 
cases. And, frankly, in many cases, their families didn't know 
how to get them ready. Nobody had gone to college, nobody knew 
much about it.
    And the competitive grant approach is good, but it doesn't 
give you certainty. And, you know, funding these programs at a 
higher level is something that I hope we look at, Mr. Chairman, 
if it is possible.

                     CAREER AND TECHNICAL EDUCATION

    Last area, and I know our time here is very, very limited, 
but I wanted to ask you basically the same sort of question 
with respect to Carl Perkins money. Again, in our State, the 
emphasis on technical education is very high. We have a career 
tech system that--probably there is not one or two like it in 
the country. This is a really important part of doing exactly 
what I know all of you want to do, which is give those students 
that aren't necessarily going to 4-year institutions training 
opportunity, give workers that are temporarily displaced an 
opportunity to again come back, pick up an additional skill, 
move back in the workforce.
    So what is the thinking there? Because, again, the funding, 
if I am correct, is basically sort of flat-lined.
    Ms. Kanter. Right. It is flat-lined. But we really want to 
deliver and expand career and technical training to give high 
schools, community colleges, and universities more chance to 
align what works. We see college and career readiness as a dual 
condition for success in education. And we have to work on ways 
that that curriculum can be tightened up.
    The Perkins Act funds will let us do that. We didn't ask 
for an increase for the Perkins Act, but we think it is really 
essential in order to move forward. And we have the career 
pathways and programs of studies research out of the Perkins 
Act that we are using as a backdrop to how we are thinking 
about the Workforce Investment Act reauthorization. And we know 
Perkins Act Reauthorization is down the line. So we want to 
bring all of this together.
    And, certainly, a lot of the Perkins Act lessons learned 
tell us that we have to upgrade our programs, for example, for 
green jobs. Or I can tell you about automotive technology if 
you want to hear about that moving to alternative fuels and 
hybrid vehicles. It is a high-cost program. I had to put in 
lifts in my school. We were hoping the SAFRA Act would have 
construction or facilities funding available to upgrade these 
programs. We had a high-speed link into Chrysler so the 
students could really learn the numerical controls and the 
automotive technologies needed to be an auto mechanic and then 
move up, hopefully, over time, as I said, through the career 
ladders.
    But the Perkins Act allows us to look at that curriculum. 
In my experience, we had a great partnership with the regional 
occupational program, where they had the high school graduates 
and we streamlined the curriculum and were talking about 
accelerating those programs.
    So we see Perkins programs as critical. We want to build 
off of that. We can't do everything. You know, we chose to 
really focus on the Workforce Investment Act because that is up 
for reauthorization now.
    And we are also hoping, in the College Access and 
Completion Fund, to be able to look at occupational training. 
We have been working with the Department of Labor for the last 
8 months, so we can actually bring this together and hopefully 
not only upgrade those programs and give the faculty more 
training but also look at new methods of acceleration so 
students could go through more quickly. For example, students 
could go through the summer, do the year-round kind of training 
that really drills down on the curriculum, so we could get more 
students trained for the jobs.
    Mr. Cole. If I could just make a point in conclusion, this 
is an area--and, again, the President has been very generous in 
the budget here. It is one of the few areas that, in any of our 
committees, we have seen a major expansion in funding. And I 
hope we look very carefully at some of our existing programs, 
like TRIO, like GEAR UP, like Carl Perkins, that have done very 
well and, frankly, I think, fit the objectives of what the 
administration wants to do, and think twice about some of the 
newer things, whether or not we can afford them. Because we 
have some proven products here that I think we have 
consistently underfunded.
    So, anyway, thank you, Mr. Chairman.
    Mr. Obey. Mr. Ryan.

                     EARLY COLLEGE AND PELL GRANTS

    Mr. Ryan. Thank you, Mr. Chairman.
    I want to first thank Assistant Secretary Oates for coming 
to Ohio and being a great presence there for some of the issues 
that we had to deal with. And, also, congratulations. I know 
you worked for Senator Kennedy for a long time, and this was a 
historic week for his legacy and those of you who worked for 
him for such a long time.
    I want to say thank you, also, to Mr. Jefferson. Thank you 
for all that you do. We had a great meeting a few months back, 
and I look forward to working with you, as well.
    I have a question, you know, kind of based on what Mr. Cole 
was saying to Secretary Kanter regarding--he was talking about 
TRIO and some of the--Upward Bound and all the great programs. 
And they are terrific programs.
    One of the issues we have in my district, and I think 
across the country, is the issue of early college. And we have 
an early college program in Youngstown that has now been 
basically zeroed out by Youngstown State University because of 
budget cuts. This is an award-winning program across the State 
for the city of Youngstown, when the rest of the school 
district is collapsing.
    Long story short, I think we can find a compromise position 
here. These kids who want to go to college, early college, do 
not qualify for the Pell Grant. And I mentioned this to the 
Secretary of Education when he was here last week, because I 
think it meets all of the goals that he has set out for the 
Department of Education, I think what the President is saying. 
These kids want to go to college, they are going to college, 
but yet they don't qualify for the Pell Grant. And I think we 
should work very hard at figuring out how we allow these young 
kids to qualify for the Pell Grant.
    From our vantage point, you know, watching the dollars 
here, I would much rather pay for them to go to college when 
they are 17 and 18 than pay for them to go to college when they 
are 21 and 22, just because of inflation, so we can get this 
money in on the front end and create the kind of pipeline that 
you are talking about in getting these kids in.
    It is a transformational program, and I think it does a lot 
of things similar to what TRIO does. They want to go, and here 
we have programs getting cut. And I think we can increase that 
pipeline.
    So, if you could just comment on that.
    Ms. Kanter. I can tell you, we need to explore all the 
ramifications about opening the doors wider for Pell Grants. We 
are very interested in working with the Congress to look at 
what options we might have. I understand from the research that 
I did that we looked at this a couple of times in the past, and 
we had some challenges that we need to really delve into and 
explore.
    So I don't have an answer for you----
    Mr. Ryan. Do you remember what those were? I mean, 
obviously, there would be some----
    Ms. Kanter. I don't really have the specifics on that, but 
I would be happy to come over to your office and walk through 
what happened in the past, give you a report on what we found, 
what we learned, and look at what some options might be to look 
at this.
    Mr. Ryan. Okay. Yeah, I mean, I think if we look at the big 
picture here, these are kids who otherwise, you know, may never 
end up in college, but they walk on--and Youngstown State is, I 
think, the prime example, Midwestern university in an 
industrial town. But when you walk on the campus, you don't 
think, ``I am in Youngstown, Ohio.'' You think you are on a 
college campus. And these kids' eyes light up, and they end up 
meeting the kind of level of expectation that the school has 
for them and our community has for them. So I would look 
forward to working with you on that.
    Also, I wanted to mention one other thing that I mentioned 
to the Secretary and have been talking about here for a couple 
of years. I think I even mentioned it to Secretary Oates a year 
or so ago: the movement in education toward social and 
emotional learning. And I see your background is in clinical 
psychology a little bit.
    Ms. Kanter. I am ready for this hearing. It comes in handy.
    Mr. Ryan. Congress needs it, believe me.
    Ms. Kanter. I need it.
    Mr. Ryan. I may ask for an additional 5 minutes, just for 
some personal therapy.
    Ms. Kanter. I will come over to your office.
    Mr. Ryan. Okay, very good. I have a couch there and 
everything. We will be good to go.
    The move toward social and emotional learning, I mentioned 
it to Mr. Duncan. I think the evidence backing this up, the 
brain science backing it up, recognizing that the emotional 
situations that these kids have to deal with are directly 
prohibiting their ability to learn. And we know it now from 
brain science. It is not because we want to, you know, be 
sensitive. I mean, yes, we do, but, at the same time, the brain 
science is backing this up now.
    And the beneficiaries of this are teachers, as well, who 
learn how to self-regulate and make sure that they are coming 
into the classroom with a positive attitude and creating an 
environment to learn.
    And I want to continue, through this committee, to push for 
more investments into social and emotional learning. I know 
there are effective teachers and leader grants, Teacher and 
Leader Innovation Fund, those kind of things. But I would like 
to work with you to help us design programs and create little 
pots of money where we can continue to push social and 
emotional learning.
    The evidence is there: 11 to 17 percentile point increase 
in test scores; closes the achievement gap; increases the 
positive mood of the school; decreases the negative aspects of 
what is going on in the school; builds a community in the 
school. So, there is no question there.
    The red light is on, and my chairman is staring at me. But 
I want to work with you on this and continue to work with the 
Secretary on this, as well.
    Thank you.
    Mr. Obey. Mr. Alexander.
    Mr. Alexander. Thank you, Mr. Chairman.
    Secretary Oates, Mr. Rehberg said you won the lottery, so 
let's celebrate by another question.

                                  H-2B

    He brought up a point about the A program, H-2A. Would 
those same concerns drift over into the B program?
    And I don't really understand why we have to have two. You 
have the As that harvest the food, but As can't process the 
food; it has to be B. Is that correct?
    Ms. Oates. B is non-agricultural, yes, sir.
    Mr. Alexander. Okay. Some of those same concerns that he 
brought up would apply to the H-2B program also.
    Ms. Oates. The H-2B regulation is--the regulatory changes 
are just beginning. So it is open. You know, we are just 
getting things out there. Yes, some of the same issues will 
come up, in terms of worker protection and worker housing. But, 
in our budget proposal, as you will recognize, we also ask to 
impose a fee on this. Because your neighbor, the Governor from 
Mississippi, I think I was 3 days on the job, brought up to 
me--took me out to the port and said, ``Look at that.'' It was 
an oil rig. He said, ``How many workers, do you think, out 
there are from Mississippi?'' I said, ``I don't know.'' He 
said, ``None. They are all from Eastern Europe on visas.'' And 
they were welders.
    So he really woke me up to the fact that we need to beef up 
programs that have been atrophied, used to be funded under Carl 
Perkins, used to be funded under the old way community colleges 
worked when they were technical colleges. Now, he told me that 
he couldn't get people from Mississippi--and I am sure, you are 
so close there in the Gulf port.
    So the idea of our using those fees to beef up 
apprenticeship programs so that we have American workers that 
do those kinds of jobs rather than having to be dependent on 
foreign labor.
    But, again, we will be much more clear with committee staff 
as the H-2B process begins, so that you are aware. We will take 
Congressman Rehberg's comments and make sure that we are 
getting out to people in a deeper way than we did before. But 
that process is beginning now. And we are going to probably 
suggest changes to the H-2B ranks, as well as we did to H-2A.
    Mr. Alexander. Okay. Well, so I can better understand, if 
you harvest the food or fruits or vegetables, that is A.
    Ms. Oates. A. That is agriculture.
    Mr. Alexander. But once it goes to canning, that is not A 
anymore, that is not agriculture anymore.
    Ms. Oates. That is correct.
    Mr. Alexander. Thank you.

                PUBLIC SERVICE LOAN FORGIVENESS PROGRAM

    Ms. Kanter, we know that government only exists because of 
the taxpayers. So you were talking about Pell Grant a little 
bit ago. We understand the need there and the expansion of it.
    But I was concerned about something you said, encouraging 
participants to sign something saying that, if you are going to 
school at the expense of the government, if you will sign 
saying, ``I will work for the government,'' then your loan will 
be forgiven. Is that correct?
    Ms. Kanter. This is the Public Service Loan Forgiveness 
Program.
    Mr. Alexander. Okay.
    Ms. Kanter. That was passed last year, and that is what I 
was talking about. If you get a loan, you would pay it back. If 
you go into public service, to be a teacher, a policeman, a 
government worker, or a community college staff member, you 
would pay back the loan at 10 percent of adjusted gross income 
when you get that job. As you are working forward, you pay it 
back within 10 years.
    Mr. Alexander. Well, I understood you to say that it would 
be forgiven. I don't know, maybe I misunderstood.
    Ms. Kanter. After 10 years of employment, your loan debt is 
forgiven.
    Mr. Alexander. Okay. Well, I just find it odd that, at a 
time when a great percentage of the public out there is already 
mad because they see every day where government employment is 
rising and private sector is falling, that we would encourage 
young men and women that are participating in the Pell Grant 
program at the expense of the taxpayers, would be told that if 
you will go to work now for the government, we will forgive 
some of your loan. It just seems like that is kind of poking 
the public in the eye with a sharp stick.
    Ms. Kanter. Maybe I need to differentiate between Pells 
Grants and loans. The Public Service Loan Forgiveness is not a 
payback on the Pell, it is when you need a loan. If you had a 
tuition to pay, for example, under the Stafford loan program, 
you will pay that back over 10 years. We will have a huge 
number of replacement jobs in government, because many of us 
are over 60, unfortunately, and we will have to replace those 
staff.
    I did a lot of work with emergency physicians in the county 
hospital. They could not get people to come into those jobs. 
The Public Service Loan Forgiveness will allow those 
individuals to take those loans. If they qualify for Pell, they 
will get the Pell Grant. However, if they take the loans, then 
they will pay those loans; but after 10 years, the remaining 
loan debt will be forgiven. And we will have had benefit of 10 
years of a county doctor in a county hospital with a long 
waiting list for service. So that is the example.
    Mr. Alexander. Thank you, Mr. Chair.
    Mr. Obey. Ms. Roybal-Allard.

           ELIMINATION OF THE CAREER PATHWAYS INNOVATION FUND

    Ms. Roybal-Allard. Ms. Oates, in September of 2009, the 
Bureau of Labor Statistics commissioner, Keith Hall, announced 
that 544,000 new jobs were added to the health care sector 
since the recession began. The commissioner also projected that 
this growth will continue, and in the next decade we will need 
to fill an additional 3 million jobs in the health care field 
just to meet the Nation's demand.
    And he stated that registered nurses will account for 
hundreds of thousands of these health care positions, adding to 
an already very serious nursing shortage, projected to grow to 
260,000 registered nurses by 2025.
    In light of this critical and growing demand for nurses, I 
was surprised that the Career Pathways Innovation Fund, which 
is a competitive grant program intended to prepare workers for 
careers in high-demand industries, has been eliminated from the 
fiscal year 2011 budget.
    How does the Department plan to address shortages such as 
the nursing shortage if it eliminates training programs that 
prepare Americans to fill these critical health care positions?
    Ms. Oates. Congresswoman, you have heard my friend, Martha 
Kanter, talk about this before. In preparing our budget 
request, we were hoping that the American Graduation Initiative 
would happen and we would have dollars to deal with the Career 
Pathways issues through AGI, and that didn't happen.
    Ms. Roybal-Allard. And that didn't happen.
    Ms. Oates. Right. But we do--just so you know, we agree 
with you. This is the most resilient sector in the recession. 
It is important for us to keep focused on allied health and, in 
particular the area of nursing, work closely with our friends 
at HRSA so that we are working in concert, not in duplication.
    So we will use H-1B funds to continue the health care 
initiative because it does match the needs for H-1B visa fee 
funds. So that was our backup plan.
    We will also continue to, if indeed we are able to maintain 
the $2,000,000,000 that is to be used for community college 
program expansion, I think both Under Secretary Kanter and I 
would agree, along with our friend Mary Wakefield, that we need 
to do something to address the nursing faculty shortage. We 
can't get nurses who can make more working three 12-hour shifts 
to come in and be a career person in a higher-ed facility. And 
we need more faculty. We also want to work with our colleges 
that are preparing nurses to make sure that--you don't need a 
nursing faculty to teach biology. The regular biology, A&S 
department can teach biology. You don't need separate staff.
    Where we do need nurses and nursing faculty particularly 
are in those areas where they are so specifically nursing-
centric and in the clinical supervision. And there are really 
promising models across the country, where hospitals and health 
care providers have partnered with the colleges to provide the 
clinical supervision with their own paid staff, not the 
college's paid staff.
    We think that the new investment over 4 years in building 
the capacity of community colleges will help us invest in those 
kind of innovative processes, as well as helping to look at 
other ways to address the nursing shortages.
    We know that there are other areas coming up, like health 
IT, that there is going to be little help through competitive 
grants through HHS. But nurses are really--especially the RNs, 
the 2-year-degree nurses, they are our responsibility, so we 
are not going to ever walk away from that, as are the other 
entry-level allied health careers, you know, like the med 
techs, like all the assistants, the CNAs, and like the pharmacy 
techs. I mean, the local pharmacy, CVS and such, have such 
great need, and those are great entry-level jobs for folks who 
could then continue on to be nurses.
    So we are going to be working on all of that 
simultaneously, believe it or not.

                               JOB CORPS

    Ms. Roybal-Allard. Okay. Because I run out of time, very 
quickly I want to talk a little about Job Corps. And I will go 
straight to the question. I think we know what a great program 
that is and how it fills a tremendous need, but it is facing a 
$40,000,000 shortfall. And my question is, how do you plan to 
address the shortfall to avoid staff layoffs, staff attrition, 
and disruption in student services?
    And, also, Job Corps asked me to raise another issue, and 
that is, because our young people are facing record 
unemployment, the demand for Job Corps far exceeds capacity. 
Yet our Job Corps classrooms sit empty every evening. And Job 
Corps estimates that, with a modest investment of $15,000,000, 
they could train 965 additional nonresidential students in 
their existing facility each evening. And not only would 
additional youth be served, but additional jobs would be 
created to teach and train these students.
    And the second question would be, would the Department of 
Labor consider maximizing the use of Job Corps facilities and 
expanding the program capacity by creating evening classes?
    Ms. Oates. This is the first time I have heard that 
suggestion, Congresswoman. I think it is a great suggestion. I 
mean, we know that we are always pushing our community colleges 
to do weekends and evenings to fully utilize. So, I mean, I 
will come back to you on that. I think it is a great 
suggestion.
    Ms. Roybal-Allard. Okay. We will follow up. We will follow 
up.
    Ms. Oates. But on the money piece, we do recognize that the 
Recovery Act gave us a unique one-time opportunity to go down 
our list, in terms of repairs and renovations. So we are 
hopeful that we can fill this shortfall, number one, through 
efficiencies. We do think that there are some--I have only been 
responsible for Job Corps and ETA for 24 days. So I am learning 
about Job Corps as we speak. But I think there are some 
efficiencies we can put into place.
    And if we do run short, we can reprogram a little bit with 
our construction funds, because the recovery money did let us 
do so much of the construction that was on the wait list.
    [The information follows:]

    Job Corps is not planning staff layoffs, nor will services 
to students be impacted. In order to maintain base operations 
and pursue initiatives such as increasing instructor pay, 
opening the Ottumwa, Iowa center in FY 2011, and expanding the 
Licensed Practical Nurse training program, Job Corps is 
pursuing a reform agenda that we believe will create savings 
through operational efficiencies. These reforms could include 
energy conservation practices to reduce utility and fuel costs, 
maximizing center slot capacity, and taking advantage of 
economies of scale for targeted on-center services.
    As a responsible contingency, the Department has requested 
authority to transfer funds from Construction to Operations in 
case these operational reforms do not result in savings as 
quickly as expected. This will have a negligible impact on the 
Construction budget for the FY 2011, as the majority of shovel-
ready projects have been funded through the Recovery Act.

    Ms. Roybal-Allard. Okay, thank you. We will get back to you 
on the evening classes.
    Ms. Oates. Yes, thank you. That is a great idea.
    [The information follows:]

    The Department is open to this suggestion, understanding 
that evening classes can complement daytime training for 
current Job Corps students and open up opportunities for new 
students to participate in the program. Currently, Job Corps 
centers take advantage of after-hours instruction in a variety 
of ways, including life skills classes on personal finance and 
independent living, extended computer lab hours and English 
Language Learner (ELL) classes, and recreational activities 
such as yoga classes and intramural sports.
    The suggestion of evening classes, however, assumes a more 
structured delivery of academic and career technical training 
similar to daytime instruction. This would provide additional 
students, including local non-residential students, with the 
prospect of attaining their GED or High School Diploma, and/or 
achieving a certification in a high-growth industry. Further, 
current students could supplement their daytime training by 
taking additional academic classes or enrolling in a 
complementary career training class.
    Job Corps has already begun to collect information on the 
availability of facilities and current evening offerings at its 
centers. The program will then need to determine the 
feasibility of offering academic and career technical training 
at its sites, and any net costs associated with doing so. This 
will include an analysis of high-growth, high-demand trades 
that should be offered at each site, the demand for such 
services, and the costs and benefits of such an approach.

    Mr. Obey. One of the things that becomes apparent to me, as 
I sit through these hearings, is how many things we are trying 
to do and how few resources we have to do them.
    We were talking earlier about Pell Grants, the percentage 
of college costs that had been paid for by Pell Grants in the 
1970s versus today. We have a much smaller percentage of 
college costs being met by Pell Grants. Title I, we have a very 
small percentage of eligible kids actually being sufficiently 
served by that program. Mr. Cole mentioned TRIO and GEAR UP. 
You can run down the committee and everybody will have their 
favorite example.
    Then you get to job training. I think Congress has a split 
level, when it comes to job training. You have a lot of people 
who they think that these programs aren't worth a hill of 
beans, and you have others who think that we are falling far 
short in meeting the need.
    You were talking about nurse training. One of the few 
bright spots in the national economy in terms of job growth, 
even through this recession, has been the health care sector, 
which actually grew by about 600,000 jobs between December of 
2007 and December of 2009. That is an average of about 25,000 
jobs per month--a whole lot better than the rest of the economy 
was performing.
    The Department of HHS estimates that by 2020 we are going 
to need 2.8 million nurses, 1 million more than the projected 
supply. In the much maligned Recovery Act, we included 
$250,000,000 to fund job training for careers in high-growth 
industries, with an emphasis on the health care sector.
    Now, I understand that DOL received an overwhelming 
response of more than 800 applications for those grants. The 
Department was only able to fund 55; is that correct?
    Ms. Oates. That is correct.
    Mr. Obey. What does that tell us about the sufficiency of 
this effort, especially given the fact that we have just passed 
the health care proposal, which is going to add some 30 million 
people to the lines of people who want to get in and see 
doctors and nurses and other health professionals? What are we 
going to have to do to really meet the need in that area? And 
what does that tell us in terms of additional resources we need 
to apply to it?
    Ms. Oates. Well, I think if you had community colleges 
sitting before you, they would say that they are constrained 
and they have to build their capacity. And part of that is what 
I was referring to when I was responding to the congresswoman's 
question. I mean, I think it has to be a multi-pronged 
response. We have to get them to think differently, in some 
cases, and we have to use our private-sector partners.
    But, Congressman, I would be remiss if I didn't tell you, 
we need more money to help these community colleges get the 
capacity to attract the faculty. You know, as I go around--and 
I am sure you have been to a million of these training 
facilities--but when you go around and you think how you train 
young students, not-so-young students for these jobs, the 
computer stuff is great. You know, you have SimBaby, who can 
teach you how to hold a baby correctly so you don't endanger a 
newborn infant the first time you think about holding that 
newborn baby. But they cost, like, $150,000. For a community 
college, they are thinking, do I buy SimBaby or do I get a 
faculty member?
    So we need to continue to help them. And, you know, some of 
the things that Congressman Cole said about Perkins directly 
impact these training programs, because Perkins is the only way 
these community colleges have really been able to have a 
Federal source to get the equipment they need, whether it is in 
allied health and nursing or whether it is in advanced 
manufacturing.
    So, at some point, while I do try to be fiscally 
responsible and talk about efficiencies and removing 
redundancies, at the end of the day I have to agree that there 
are certain times when I am going to have to come to you and 
say, ``We need more money.'' We thought we were going to be 
able to use AGI. It went away. We are going to use any money 
that we are given collaboratively and in the best vein. But we 
certainly may need more money to create the skilled workforce 
to fill these health care jobs over the next 3 to 5 years.
    Mr. Obey. So much is impacted by intangibles. You know, I 
hear an awful lot about how the economy needs to have an added 
dose of consumer confidence before it begins to grow. But I 
also see another huge gap in confidence, and that is the 
confidence demonstrated by a lot of people in the workforce who 
are out of work and have become very unsure of themselves.
    I was at a community college branch campus in a town called 
Antigo in my district a couple of months ago. And I was struck 
by the fact that there were a number of people in their 
training program from the same employer in my hometown. And 
that employer had for years been regarded as one of the best 
employment opportunities for anybody in the area. And then they 
laid off over 200 people, and they laid off some more.
    And you could just see, not just the resentment, but the 
lack of confidence on the part of a lot of those people. They 
were in that program, but their confidence had been shattered 
because they thought they had the world by the you-know-what, 
and then, all of a sudden, everything fell out from under them.
    And I guess my question is, there are going to be those who 
still have enough built-in confidence to actually make it 
through, but there are a lot of others who are going to be so 
afflicted with self-doubt that, even if they get training, they 
don't have real confidence in their ability to actually put it 
to use.

                            ONE-STOP CENTERS

    What tools do we have available with these programs in 
order to deal with that problem?
    Ms. Oates. In one respect, we have been trying to give 
professional development opportunities to our frontline workers 
at the one-stop. Because, clearly, many of the clients coming 
to one-stop centers today are people who never thought they 
were going to be unemployed. They were the kind of folks who 
left high school with or without a diploma, went with the same 
employer, maybe the employer that you are talking about in your 
area, and stayed with them for a lifetime, were a loyal 
employee and never thought--layoffs were something for lazy 
people, that wasn't going to happen to them, they are 
hardworking. And they don't understand that the economy has 
dealt them a KO. I mean, they are really in trouble.
    So the professional development that we have been trying to 
give to one-stop operators is understanding and trying to 
listen to the point where you help build--you listen to what 
their concerns are and build their self-esteem.
    From the Federal level, what we are trying to do is create 
some electronic tools. So we did an electronic tool challenge 
of job aggregators, because these folks haven't looked for a 
job in a long time. So we put up over 300 different things for 
free on our Web site and told--65,000 people did it--come in 
and tell me what you liked about it and what you didn't. And 
for some of them, it was not using Monster.com with a million 
jobs; it was going to look for jobs in their specific sector.
    So we are trying to respond to that, so as job seekers are 
looking for something, not to overwhelm them with a thousand 
jobs that they are not qualified for, so they get put down, 
even if it is just by the computer. So we are trying to tailor 
it so that they can look for jobs for which they have 
qualifications.
    And, finally, on that electronic tool front, we fully 
intend to put the SGA out at the end of this month to build a 
virtual one-stop, so somebody can look at what is available to 
them at a low-level reading so it doesn't put somebody off, but 
they go into the one-stop knowing what they are qualified for 
because they have already pursued it a little bit. And we will 
give grants to community-based organizations so that they can 
support the use of that tool, not just a public workforce 
person.
    But, Congressman, this is an area where we need to reach 
out to our community-based and faith-based partners because we 
need help with this. Because, I will tell you something that 
someone, not in Congressman Ryan's district, on another trip to 
Ohio, a one-stop worker said to me, ``You know, I have been in 
this system since CETA.'' And, you know, I nodded my head. And 
she said, ``It is different today.'' And I nodded my head. And 
there were 500 or 600 people in the audience. And she said, 
``In the 1970s or 1980s, if somebody came into my office and 
said, `If I don't get a job this week, I am gonna blow my 
brains out,' I would have said, `Oh, honey, sit down, have a 
glass of water, have a cup of coffee.' Today, when somebody 
comes into a one-stop and says that''--this is that woman 
saying it--``I am looking for the gun.''
    So my folks at the one-stops feel the sense of hopelessness 
that their customers are feeling. They are looking for ways to 
deal with it. But we need to get faith-based and community-
based organizations to help us. Because I am worried not just 
about the mental health of these folks, but about the safety in 
some of these areas.
    People are really hopeless out there, and we need to do 
more to restore a sense of hope by giving them real tangibles 
about what their skill sets can mean in terms of getting a good 
job.
    Mr. Obey. Thank you.
    Ms. Oates. Now that we have left that on a depressing note.
    Ms. Kanter. Well, let me----
    Mr. Obey. Usually, I am the person that leaves everybody 
depressed.
    Ms. Oates. From pinata to, like, I am ready to sit and cry 
now.

         RECONCILIATION ACT AND FUNDING FOR COMMUNITY COLLEGES

    Ms. Kanter. I think every organization, whether it is a 
one-stop, a community college classroom, or a counseling 
office, is reeling from the recession. And people are 
depressed.
    What is exciting and gives us a sense of momentum is, if 
the amount in the Reconciliation Act for the community colleges 
holds, our equal partnership with the Department of Labor--we 
have done a lot of work together, as I said.
    Part of it addresses the one-stops and how we can ramp up 
the human element. If you are depressed, the last thing you 
want to do sometimes is sit down at a computer and try to 
figure out what is right for me. You want somebody there who is 
motivated to say, ``Look, I am going to take you through this. 
I am going to show you the way.'' If you enter a community 
college, we have supportive services.
    We are hoping with that $2 billion--$500 million every year 
for 4 years--we can really incentivize. We are not sure whether 
the regulations are going to allow us to do as much as we want 
to do, that maybe the AGI--the American Graduation Initiative--
would have allowed us to do. But we are going to incentivize 
getting those students, those clients, into the right program 
with the support that they need.
    So, for example, if they need to visit a counseling group 
that is available to them through a community college, they 
could take a class that would be called ``Career Training'' or 
``Career Preparation.'' They may be taking an English class. 
One of the innovations is, can you put these real-life 
challenges into the classroom and support the faculty to adjust 
the curriculum to acknowledge what the students need?
    I know we have had a program called ``Puente'' for many 
years. It has combined counseling and teaching so that students 
are learning English, are finishing the requirements for that 
literacy level they need, but are getting the support along the 
way and have a human being to talk to while they are in the 
program.
    So I think we can build on some of the lessons learned over 
the last 10 years to really use that money well to get these 
people into jobs and lift their confidence moving forward.
    Mr. Obey. Why don't we take one more question from any 
Member who wants to ask one before we shut this down.
    Mr. Tiahrt.
    Mr. Tiahrt. Thank you, Mr. Chairman.
    And I don't want to end on a bad note either, but I do 
see----
    Ms. Oates. I hear a ``but'' there.

                          COST OF REGULATIONS

    Mr. Tiahrt [continuing]. I do see great opportunity in our 
community because of the American people and the innovation 
they have provided over and over. And, you know, I think we do 
all try to live out what we believe will work.
    And my view of how the economy works is, we have to, in a 
world economy, be able to make things here less expensively 
than we do today. We have been the number-one economy because 
we are the most productive economy. And the things that draw 
away from that productivity are the things that concern me.
    And that is why I bring up, you know, the cost of 
regulations now, which are almost 18 percent of anything we 
make. And our corporate tax structure is now 35 percent. It is 
the second-highest in the world. Our liability costs, because 
of the tremendous litigation we have, are the highest in the 
world. And, in energy, we send $700,000,000,000 overseas every 
year.
    So, in order to take on those burdens of higher costs, we 
try to make our employees very productive and give them the 
ability to move freely in the workplace and bring their own 
innovation to their own job. And that is where I think we are 
different than the rest of the world, and it has helped us. But 
one of my goals is to try to keep us from burdening up those 
jobs with things that distract away from being productive and 
making things.
    You mentioned the one-stop center. The one-stop center in 
Wichita is the next building over from my office. And, in 
talking with the people that work there, they have good ideas 
and they do good work, but I am not sure they know of all the 
funding streams that are available to them.
    So I am going to, kind of, ask you. I know we have the WIA, 
Workforce Investment Act. And I know that we bumped some money 
in with the stimulus bill. And there is in some mandatory 
spending that is available in the Trade Adjustment Act. Are 
there other funding streams available? Could you provide me 
with a list of those funding streams that are available to 
them?
    Ms. Oates. Sure. Sure.
    [The information follows:]

    One-Stop Career Centers provide access to a wide range of 
services covering many federal agencies and programs. Several 
partners are required to be physically or virtually present in 
the One-Stop Career Centers, while other programs are optional 
partners. The degree to which funds from partner programs are 
available for One-Stop operations or to One-Stop customers is 
often the subject of Memorandums of Understanding between the 
partner programs.
    Mandatory One-Stop Partners:
    -- WIA Adult, Dislocated Worker and Youth
    -- Wagner-Peyser Employment Services
    -- State Unemployment Insurance
    -- Job Corps
    -- Youthbuild
    -- Trade Adjustment Assistance
    -- Senior Community Service Employment Program
    -- Migrant and Seasonal Farmworker Program
    -- Indian and Native American Program
    -- Veteran's Workforce Investment Program
    -- Local Veterans' Employment Representative Program
    -- Disabled Veterans' Outreach Program
    -- Adult Education
    -- Postsecondary Vocational Education
    -- Vocational Rehabilitation
    -- Community Services Block Grant Employment and Training 
Programs
    Optional One-Stop Partners:
    -- Temporary Aid to Needy Families (TANF)
    -- Supplemental Nutrition Assistance Program (SNAP)
    -- Higher Education, including community colleges
    -- Youth Corps
    -- Other appropriate Federal, State, or local programs, 
including programs in the private sector

    Mr. Tiahrt. And if I may ask for a couple of other things 
for the record--by the way, this is confusing, the budget is 
confusing, because we have budget authority, and then we have 
outlays, and then we have obligated and unobligated. In the 
budget for fiscal year 2010, it does refer to the 
$1,400,000,000 that I talked about as an unobligated balance 
carried forward.
    So I want to know, how is this impacting--specifically with 
the WIA funding, could you tell me, like, since 2007, how many 
people are taking advantage of this program on a year-by-year 
basis?
    And then, also, could you tell me, when we get people out 
of the programs, how many have held a job for, like, 2 years or 
so, 1 year and 2 years?
    Ms. Oates. We can do 6 months and 12 months. That is what 
we collect.
    Mr. Tiahrt. Okay. That would be good. All right. Thank you. 
I appreciate that.
    Ms. Oates. We will get that to you. Thank you.
    [The information follows:]

    Workforce Investment Act programs served 1.662 million 
adults and 357,890 dislocated workers in PY 2006; 2.803 million 
adults and 396,150 dislocated workers in PY 2007; and 5.171 
million and 671,790 dislocated workers in PY 2008. These are 
the number of participants in the programs, as reported by 
states in their WIA Annual Reports. The number of adults has 
increased in recent years due to changes in reporting to 
include self-service participants as significant resources are 
utilized to provide resource rooms and access to services via 
the Internet. The increase in the number of dislocated workers 
is likely due to the down turn in the economy in calendar year 
2008/2009.
    The employment retention rate for the WIA Adult program was 
82% in PY 2006, 84% in PY 2007, and 83.5% in PY 2008. For the 
WIA Dislocated Worker program, the employment retention rate 
was 88% in PY 2006, 87% in PY 2007, and 86.0% in PY 2008. These 
results are obtained by looking at the percentage of those 
program completers (known as exiters) who were employed in the 
1st, 2nd, and 3rd quarters (3, 6, and 9-month intervals) 
compared to all who exited the programs. Additionally, states 
report annually the employment retention rate at 12 months. For 
the WIA Adult program, the 12-month retention rate was 80.4% 
for PY 2006, 83.8% for PY 2007, and 82.3% for PY 2008. For the 
WIA Dislocated Worker program, the 12-month retention rate was 
85.9% for PY 2006, 86.8% for PY 2007, and 84.8% for PY 2008.

    Mr. Tiahrt. Thank you, Mr. Chairman.
    Mr. Obey. Ms. Roybal-Allard.

      CONSOLIDATION OF REHABILITATION SERVICES EMPLOYMENT PROGRAMS

    Ms. Roybal-Allard. I, like other Members, have been 
concerned about the consolidation of a lot of programs and the 
shifting it to, you know, competitive grants. And that is 
certainly true with the consolidation of several of the 
Rehabilitation Services Administration employment programs, 
which you have put a lot of vocational rehabilitation State 
grants into that whole consolidation.
    And my question is, in doing that--without these dedicated 
resources, these services programs may not necessarily receive 
funding under the larger State grant program. So my question 
is, what plans does the Department have to ensure that the 
unique needs of, for example, disabled individuals will 
continue to be met by the Vocational Rehabilitation State 
Grant? How do you guarantee that?
    Ms. Posny. When we are talking about the consolidation, 
some of the consolidations are the migrant workers, for 
instance, or supported employment. So----
    Ms. Roybal-Allard. That is the one I had in mind.
    Ms. Posny [continuing]. Those are the ones that we were 
talking about.
    What we want to do is put the money in the base. So those 
populations are still going to be served, and the way we will 
know they will continue to be served are the performance 
outcomes. They will still have to indicate to us and provide 
the data to us that these populations are being served and how 
well they are being served.
    What this allows us to do is to streamline the services. 
Right now, we are duplicating services because we serve those 
populations within what I refer to as the base as well as in 
the separate programs. With the consolidation, we are going to 
streamline and make sure they are still going to continue to be 
served; they are just going to be part of the base.
    Ms. Roybal-Allard. But what happens is--I mean, you will 
have to find that out because they will be reporting back to 
you.
    Ms. Posny. That is correct.
    Ms. Roybal-Allard. But in the meantime--and I don't know 
what the length of time would be, when you find out, well, gee, 
that we are not reaching this particular population--in the 
meantime, these people are not getting the services.

         CONTINUATION OF SERVICES UNDER CONSOLIDATION PROGRAMS

    So I guess my question is, or the concern I have is, that 
there shouldn't be a gap. We shouldn't be waiting to see, gee, 
all these people over here have been suffering, have not gotten 
services, so now we need to do something about it, particularly 
when we have programs in place that ensure that there will not 
be a break in services.
    Ms. Posny. I look at this as being a continuous flow. You 
are correct. For right now, they are being served as separate 
programs. Under the consolidation, they will continue to be 
served, but it will be within the larger program. There will 
not be a break in service at all. They are going to continue to 
be served, and they will continue to provide the data to us, 
just not as separate entities. It will be part of the program 
in its entirety.
    Ms. Roybal-Allard. Okay. I will have to look and see a 
little bit more on how that is going to work.
    Ms. Posny. Okay.
    Mr. Obey. Mr. Cole.
    Mr. Cole. Thank you, Mr. Chairman.
    And thank all of you. It has been a very interesting 
hearing.

                    BUSINESS INVESTMENT IN TRAINING

    I think, if my notes are right, Secretary Kanter, you had, 
actually, I thought, one of the most dreadfully depressing but 
maybe important statistics in your testimony. You mentioned 
that there were, if I got it right--I may have it wrong--90 
million or so people with low training, no access to college, 
and we are only reaching 2.4 million or something like that.
    Ms. Kanter. Actually, 93 million.
    Mr. Cole. Gee, thanks, I really appreciate that correction. 
But it does, back to Chairman Obey's point, give us some idea 
of the dimensions of the challenge.
    I don't know the answer to this, but I am curious as to--
just to pick up on a line of questioning that Mr. Tiahrt had, 
too--that is almost too big for government to do, and that is 
beyond a multiple of our resources to deal with.
    What are the kinds of things that we are doing to 
incentivize private businesses who are employing these people, 
in many cases, somewhat, some of them, to come back and 
reinvest? What should we be doing in terms of tax credits for 
people that will do additional training for their workforce or 
that will give them the time off they need, in many cases, to 
actually go back and pick up the skills they need, and to, 
again, incentivize those companies to, in a cooperative way 
quite often, work with us in technical training and what have 
you?
    Ms. Kanter. We are working very closely with the Department 
of Labor, as both Jane and I have said. I hope you come away 
with the understanding that we have a commitment to work as 
equal partners to reach out to the public and private sectors.
    Mr. Cole. And that is good. But, again, to Congressman 
Tiahrt's point, we have a big labor force, so you really have 
to bring businesses directly into this. And I am really more 
interested in incentivizing the employer to train the worker 
that they need than not. I mean, they know their needs. And, 
quite often, you know--and they can provide some of the 
capital. They are going to need to provide some of the time, 
some of the support services. What are we doing to incentivize 
them to do that sort of thing?
    Ms. Kanter. I will give you an example. If you look at 
Cisco Systems, they are a great employer. We have regional 
training academies at our 2-year colleges, at our 4-year 
colleges, and in our high schools with a common curriculum that 
is giving access to people at different levels. So, for a high 
school student, they get access. I went to a community college 
class where there was a laid-off worker who came back and 
received the Cisco training. Cisco provides the curriculum; and 
our faculty adopted the curriculum. It is very high-quality 
training, it is internationally benchmarked. I have even talked 
to CEO John Chambers about it.
    I think an added value we could ask business to do is to 
let their workers know that we have the largest tax college 
credit now available, the American Opportunity Tax Credit, 
which is going to be put toward the cost of tuition, fees, and 
course materials, where taxpayers could actually have that 
benefit while they are working in a job. I think there is a lot 
of communication that we can do.
    We also are excited about having that $2 billion in the 
Reconciliation Act to look at ways that we can partner and 
incentivize the private sector to work more closely with higher 
education. We also had private-sector folks on our P-16 
community regional task forces advising us.

                          PROMISING PRACTICES

    So we have new roles for business where I think they will 
have, hopefully, a more motivated and more excited set of 
people coming in as we move forward.
    Ms. Oates. And, if I could impose, we have some real 
examples of promising practices. I mean, in Mr. Tiahrt's 
district, you know, where it is aviation, a lot of those 
aviation employers have site-based education that is not 
directly aligned with their current job but helps to move them 
up, because that is an industry that is always changing.
    But we see great benefit in employers who have site-based 
adult basic ed courses or site-based adult English-learning 
classes for employees who don't yet have the English skills 
they need to do their job at 150 percent or to move up the 
ladder.
    So I think you have a great idea with this idea of a tax 
credit. I mean, the one problem that I think we see is that a 
small employer has a very difficult time giving their employee 
time off during work because it stops their productivity. But 
if they allowed them to stay an hour, things like travel time 
and child care and things like that are really abated.
    So, if there is some--I don't know what the dollar amount 
would be because I really don't understand corporate tax 
credits. But I think if you put some incentive out there for 
people to think about doing that--and it might not have to be a 
big incentive, you know, to pay the light bill or whatever, or 
to pay the janitor to stay an extra 2 hours in some cases--I 
think you would get a lot more businesses to say, ``Oh, that 
makes sense. I would do that.''
    But, again, remembering for that small employer, it has to 
be, I think, at the end of the workday or before the workday 
begins, because they just can't give up a worker if they only 
have 30 employees. It really does impact the phone not getting 
answered or something not moving down the line.
    But I think it is a terrific idea. I think most of the 
businesspeople that I meet with are always trying to figure out 
what they can do. They are not big enough to do tuition 
reimbursement; they don't have that kind of cash. But if you 
went to them and said, ``We will have a community college 
provide the adult basic ed instructor if you provide the 
room,'' I think they would be open to that. And if you put a 
little sweetener in it, they would probably be wide open to it.
    Mr. Cole. Thank you.
    Thank you, Mr. Chairman. Appreciate that.
    Mr. Obey. Thank you.
    Did you want to say something?
    Mr. Jefferson. Yes.

                      WORK OPPORTUNITY TAX CREDIT

    Representative Cole, just make sure that the veterans are 
also represented in the dialogue. We actually have a Work 
Opportunity Tax Credit that provides a tax credit of $2,400 for 
veterans hired and also $4,800 for disabled veterans, as well. 
And we are making sure that our employment representatives and 
our State directors raise awareness of that when they are 
talking to employers and to CEOs.
    Mr. Obey. All right. Thank you all for coming. Appreciate 
it.

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                                         Wednesday, April 14, 2010.

        FY 2011 BUDGET OVERVIEW: SOCIAL SECURITY ADMINISTRATION 

                                WITNESS

MICHAEL J. ASTRUE, COMMISSIONER, SOCIAL SECURITY ADMINISTRATION

                        Introduction of Witness

    Mr. Obey. Well, good morning, everyone.
    This morning we will hear from Michael J. Astrue, who is 
the Commissioner of Social Security.
    One big problem facing Social Security is long delays in 
processing applications for disability benefits. It is now 
taking an average of about 3.5 months to get an initial 
decision. If the application is denied, as more than 60 percent 
are, there is a right to appeal to an administrative law judge. 
However, almost 700,000 such appeals are pending, and they take 
an average of 15 months and much longer in some cases.
    These appeals are important because more than three-fifths 
of people who do appeal wind up winning on appeal. Overall, it 
takes almost 2 years from filing an application to receiving a 
decision on appeal. That can be disastrous for someone who is 
disabled and unable to work and urgently needs the benefits 
that they have earned in order to help pay the mortgage and buy 
groceries.
    The challenge of keeping up with disability claims is 
getting bigger. In part, that is because Baby Boomers are 
getting older and into the most disability-prone years. An even 
bigger problem is that applications are up 29 percent as 
compared to 2 years ago, as normally happens during a 
recession.
    The workload challenge goes well beyond disability claims. 
As the population ages, applications for retirement benefits 
are rising. Also since we now use Social Security numbers for 
so many things, including verification of eligibility to work, 
the issuing and tracking of those numbers has become a critical 
function.
    During much of the last decade, Congress tended to 
appropriate less than the administration requested for Social 
Security operations. But in the last 3 years, we have tried to 
do the opposite in order to help keep up with workloads. We 
added $148,000,000 above the request in fiscal 2008 and 
$127,000,000 above the request in 2009. Further, the Recovery 
Act included $500,000,000 for SSA to use over 2 years to 
accelerate hiring, pay more overtime and do other things to 
reduce backlogs and keep up with the new claims driven by 
recession.
    It appears that this funding having an effect. Social 
Security hired 8,600 new employees in fiscal year 2009, the 
largest hiring in 35 years. Just last week, Commissioner Astrue 
announced that another 900 people would be hired for field 
offices to reduce waiting times. The disability hearing backlog 
has actually begun to come down.
    Also, while we want to make sure that people get the 
benefits they need and have earned, we also need to make sure 
that people do not continue receiving benefits they no longer 
need or aren't entitled to. Two years ago, we resumed providing 
dedicated funding for Social Security program integrity. These 
funds were used to conduct continuing disability reviews to 
determine whether recipients remain eligible for benefits and 
to check for changes in earnings and assets that could affect 
payments to SSI beneficiaries. Last year, we appropriated 
$758,000,000 for program integrity, a 50 percent increase. This 
investment is expected to yield $6,000,000,000 in savings over 
10 years.
    Our witness today, as I said, is Michael Astrue who has 
been Social Security Commissioner since 2007. Interestingly, 
the Commissioner is one of the few top-level officials who do 
not leave office when Presidential administrations change. 
Rather, although he was appointed by President Bush, Mr. 
Astrue's 6-year term will continue until January of 2013.
    Mr. Commissioner, welcome to the subcommittee. Your full 
written statement will appear in the record. We would ask you 
to give us an oral summary for about 7 minutes or so. Please 
proceed. And as I say, we will put your full statement into the 
record.
    Before we proceed, however, I would like to ask Mr. Tiahrt 
if he has any comments.

                   INTRODUCTION OF WITNESS CONTINUED

    Mr. Tiahrt. Thank you, Mr. Chairman.
    I will be brief. I want to thank you, Commissioner Astrue, 
for appearing before this subcommittee to testify regarding the 
Social Security Administration's fiscal year 2011 
administrative budget request. As your testimony highlights, 
the Social Security Administration's discretionary budget funds 
its operations of Social Security and Supplemental Security 
Income program that affects virtually every American.
    Moreover, the agency provides a range of important services 
associated with administering these big programs, including 
disability reviews and eligibility redeterminations. Again, 
these are important activities to millions of Americans. You 
are requesting an overall fiscal year budget of $12,500,000,000 
your budget request is well focused on continuing to improve on 
your core functions, increasing staff productivity, as well as 
making needed investments in technology and infrastructure.
    However, I suspect you may be understating what your 
resource needs are actually going to be this year. Congress 
recently passed and the President signed into law the health 
care reform package that may have added new responsibilities 
and activities to your existing workload and increasing your 
funding needs starting this fiscal year. Hopefully you will 
tell us whether this is true or not.
    And of course, these budget and funding decisions are 
taking place in a fiscal environment that is difficult. As 
everyone agrees, the current fiscal path that we are on is 
unsustainable both in the short term and long term. In the past 
several years, we have seen a massive increase in debt and 
spending with deficits over $1,000,000,000,000.
    As an example of the magnitude of the problem in the short 
run, under the President's fiscal year 2011 budget, if fully 
implemented, deficits would never go below $700,000,000,000 in 
any year and would climb to above $1,000,000,000,000 by the end 
of the next 10 years, and that assumes a recovered economy and 
a wind-down of the wars in Iraq and Afghanistan.
    It is worth pointing out that these projected deficits are 
not the results of an inherited policy about which the 
administration is helpless but policy choices made in the 
President's budget. Nor is it a revenue problem. The 
President's budget proposes to raise taxes by 
$1,800,000,000,000 over the next decade.
    Hopefully Congress can do better to get spending and 
deficits under control without large tax increases. But 
regardless of which budget is used and who is in political 
control, it will require tough budget choices across the board 
if we are going to get a handle on the unsustainable fiscal 
path. Resources are limited.
    Let me close by saying, thank you for coming. I look 
forward to your testimony on your fiscal year 2011 budget 
request and your insights on the issues and challenges you face 
in your agency today and down the road.
    Thank you, Mr. Chairman. I yield back.

                           opening statement

    Mr. Astrue. Chairman Obey, Ranking Member Tiahrt, members 
of the subcommittee, thank you for this opportunity to discuss 
our fiscal year 2011 budget request. We greatly appreciate the 
vital support that you have given us over the last several 
years. We have made substantial improvements because of 
increased funding and because of employee productivity, which 
has risen by an average of 4 percent each year during my 
tenure.
    The President's 2011 budget request of approximately 
$12,500,000,000 is essential to our continued progress. While 
we had expected that workloads would increase due to the aging 
Baby Boomers, the recession has resulted in over a million more 
Americans filing claims this year over what we were projecting 
just a few years ago.
    Nevertheless, we are improving service across the agency, 
despite soaring workloads. In fiscal year 2009, we reduced the 
hearings backlog, improved DDS quality, improved our program 
integrity efforts, and reduced waiting times for callers to our 
800 number and visitors to our field offices.
    This progress is in sharp contrast to the state of the 
agency 3 years ago. Years of funding below the President's 
budget had undermined the hard work and dedication of our 
employees and had damaged our services and important 
stewardship activities. We committed to fix those problems, and 
today I am happy to highlight some of our accomplishments.
    We are wisely using your investments to produce measurable, 
positive results for the American people. Over the last 15 
months, despite the recession, we have reduced pending hearings 
by over 10 percent after a decade of steady and troubling 
growth. We now have under 700,000 cases pending for the first 
time since 2005. Even as we have eliminated the oldest cases 
first, we have reduced the time it takes to make a decision by 
more than 3 months from a monthly high of 532 days in August 
2008 to 437 days in March 2010.
    Our greatest improvements are in the most backlogged 
offices. For example, processing time in the Atlanta North 
hearing office, which used to be approximately 900 days, has 
dropped nearly 45 percent since February 2007, and it will drop 
yet again when the Covington office opens in the fall. By 
fiscal year 2011, we will increase our administrative law judge 
corps to 1,450. These additional ALJs and the opening of 25 new 
hearing offices, including our fifth national hearing center, 
which only works on backlogged cases around the country, will 
dramatically decrease the backlog and processing times over the 
next 2 years.
    For all our success, I know that our hearings backlog is 
unacceptable. With your support, we will eliminate it by the 
end of fiscal year 2013. While this backlog remains our number 
one priority, we must address other workloads and deliver high-
quality services across the agency. We are maximizing the 
hiring and overtime authority in the State DDSs to handle the 
steep increases in initial disability claims. In four States 
with the capacity to hire, train, and house additional 
employees, we are creating teams that will help the most 
overwhelmed States. We are also expanding our Federal 
disability units to assist those States as well.
    Unfortunately, our progress is impeded when a State 
furloughs DDS employees whose salaries we fully fund. These 
unconscionable decisions do not benefit anyone. Furloughs only 
delay benefits to our most vulnerable citizens. For many of our 
most vulnerable citizens, we have recently expanded our fast 
track disability processes by adding 38 new conditions to our 
compassionate allowances program. This fiscal year, between 
compassionate allowances and the QDD program, we expect to 
approve about 140,000 claims in 2 weeks or less for applicants 
with the most severe disabilities.
    Soon we should be able to move all cases much faster. Our 
health IT pilots in Massachusetts and Virginia have 
demonstrated that electronic medical records can substantially 
reduce disability processing times. We used over $17,000,000 in 
Recovery Act funding to expand health IT to 15 additional 
providers across 12 States. We also now have the top three 
online services in the private and public sectors as rated by 
the American Customer Satisfaction Index.

                      OPENING STATEMENT CONTINUED

    Our creative marketing campaign, starring Patty Duke, has 
made our new easy-to-use online retirement application a huge 
success. In fiscal year 2009, over 30 percent of retirement 
applications were filed online, more than doubling the number 
from fiscal year 2008. I would be describing a very dire 
situation indeed in our field offices if we did not have this 
new application.
    We reduced our 800-number wait times by 25 percent with the 
help of additional staff. Our 800-number service should 
continue to improve with the opening of our first new 
teleservice center in Jackson, Tennessee, in over a decade. 
2011 is a critical year because the President's budget would 
allow us to reduce the hearings pending by another 50,000 
cases, to complete 236,000 more initial disability claims, and 
to increase our program integrity efforts through 31,000 
additional medical CDRs.
    To sum it up, we need your continued support to continue 
this kind of progress. Thank you, and I am happy to answer any 
questions you may have.
    [The prepared statement and biography of Commissioner 
Astrue follow:]

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    Mr. Obey. Mr. Tiahrt.

                           NEW SUPPORT CENTER

    Mr. Tiahrt. Thank you, Mr. Chairman.
    In the Recovery Act, there was $500,000,000 set aside for a 
new site. The GSA is trying to select--I guess they have to be 
within 40 miles of the headquarters in Woodlawn, Maryland. 
There was a hearing about it in Ways and Means. And I guess 
what I would like to know is, when will you select the site? I 
don't think one has been selected.
    And secondly, the GSA IG did an analysis to determine if a 
new facility and new site was actually required because there 
is an impact on your employees and some security questions. 
Would you bring us up to speed on this? Do you have a selection 
site? Is it really justified?
    Mr. Astrue. First of all, let me clarify that under the 
statute, I don't actually get to decide. I get to kibitz and 
provide notice to Congress, but it is a GSA responsibility with 
the approval of OMB.
    We certainly have been working very actively to support GSA 
in this endeavor. We are very eager to get this facility up and 
running. Aside from the Recovery Act aspect--and this would be 
the largest project in the greater Baltimore area--under the 
Recovery Act for the security of our data and having adequate 
backup in case there was a catastrophic interruption, the 
sooner we get this facility up and running, the better it will 
be for the American public.
    We have had some delays from the original timeline. It took 
a couple months to answer the questions from the joint 
committee hearing in December. I believe that the staffs have 
been briefed fully now on all the questions that came out of 
that hearing, and the GSA is moving forward and hoping to pick 
a site some time later this spring.

                     SUPPORT CENTER SITE SELECTION

    Mr. Tiahrt. Okay. But it was due in March. It is not going 
to be ready in April. It is going to be May you think?
    Mr. Astrue. I think it is unlikely it will be in April. I 
think there is a real possibility, I would say it looks to me, 
and I try to keep as close to this as possible, but it is a 
probable May-June time frame, but it is not an automatic 
process because they don't automatically go to the--as I 
understand the GSA process, it is not like other forms of 
government contracting where it automatically goes to the lower 
bidder. They model best demonstrated practices in the private 
sector, and they go out and do a negotiation with the most 
highly ranked candidates. So there is a little bit of 
unpredictability in the timeline because there is not sort of 
the set cutoff date that you would see in a standard government 
procurement. At least that is the way I understand the process.
    Mr. Tiahrt. Okay. Well, I guess since you don't get to make 
the final choice, we will give you a little slack on that.

                  EFFECT OF HEALTH CARE REFORM ON SSA

    Mr. Astrue. Thank you.
    Mr. Tiahrt. The health care reform bill has been signed 
into law.
    Mr. Astrue. Yes.
    Mr. Tiahrt. It has a lot of impact on a lot of government 
agencies. Even though the benefits really don't start until 
2013, we have a taxing impact; we have other changes that are 
going to come to your agency. Could you explain what impact the 
health care reform bill will have on the Social Security 
Administration?
    Mr. Astrue. Sure. I have a 10-page chart with all our 
obligations under the new Health Care Reform Act. The good news 
is that there are really only two that I would characterize as 
fairly substantial. I want to thank members of this committee 
and all our committees of jurisdiction for realizing that we 
get in a typical year two to four additional statutory 
responsibilities. Often that is not compensated. That has made 
it difficult sometimes with our core mission.
    And as the bill evolved, there was less impact on us than 
what we anticipated. So the two primary impacts are the means 
testing of Medicare part D. We will need to have a new business 
process and systems coordinating with CMS by the end of the 
calendar year in order to fulfill all our responsibilities 
under that. We also have a substantial new number of 
verification responsibilities. I think we are expecting--I will 
provide detailed numbers for the record. But if I remember 
correctly, about $52,000,000 of impact for this year and next 
year. In fact, the fact that that number came in lower than 
what we had budgeted was a factor in allowing us to release the 
900 FTE for the frontline staff.
    [The information follows:]

                           Health Care Reform

    The new health care reform legislation imposes two main obligations 
on the Social Security Administration with deadlines this fiscal year 
or next. These obligations are high-risk pool verifications and means 
testing of Medicare Part D claimants. The new law also requires us to 
provide verifications for the new health insurance exchanges beginning 
in 2014.
    The administration is still formulating final cost estimates for 
the health care reform legislation. These estimates will be available 
at a later date.

                               NEW HIRES

    Mr. Tiahrt. So you are releasing 900 FTEs?
    Mr. Astrue. We released another 900. What we did is, when 
the appropriation came through, if I remember correctly, in 
December, we released most of our money immediately. But then 
because it is a big complicated agency and there are a lot of 
contingency factors, we do one or two--I think one year, 
three--releases a month, 2 months, 3 months later as we see how 
things are going.
    A couple things broke well for us. The health care bill had 
less impact than we anticipated. One of our big systems 
projects that was required by court order came in on the low 
end of the spectrum. So that was one of the reasons why we felt 
comfortable releasing as many FTEs as we did. We weren't sure 
when we got the money in December that we would be able to do 
that responsibly.
    Mr. Tiahrt. So this is an expected growth that you are not 
able to hire on? Or are you laying people off?
    Mr. Astrue. No. We added another 900 over what we had 
released in December. And I think this is a good thing from a 
service delivery point of view. What we did try to do that was 
different this time--we did just a little bit of 
experimentation with it last year. I have come to the 
conclusion that the longstanding metric that we have used to 
deliver staff shortchanged offices of certain profiles. And 
when you went around and looked around the offices, you saw 
inner city offices and border offices struggling a lot more 
with wait times than offices with other profiles. So while not 
all the additional staff is going to offices of that profile, 
we did decide this time around to invest disproportionately in 
about 200 offices that met our new standard of most stressed.
    Mr. Tiahrt. Thank you, Mr. Chairman. Thank you.
    Mr. Obey. Ms. Lee.
    Ms. Lee. Thank you, Mr. Chairman. Thank you for your 
testimony and also for your service.
    Mr. Astrue. Thank you very much.
    Ms. Lee. Social Security really is the most successful 
antipoverty program in history. The Social Security 
Administration ensures that millions of American seniors have a 
secure retirement and work to give the disability and other 
vulnerable populations the support that they need to live 
independently and pursue meaningful careers. Especially for 
women and women of color, Social Security has really been their 
lifeblood. So just thank you for helping to shepherd this 
important program through.
    Mr. Astrue. Thank you. Well, it is an honor to be a part of 
it. It really is.

                    PRIVATIZATION OF SOCIAL SECURITY

    Ms. Lee. Yes, it is really great. I oftentimes think about 
what would have happened several years ago had we privatized 
Social Security, given what happened to the outrageous collapse 
of Wall Street and the largest investment banks. Personally, I 
think that we would have been, or at least Social Security 
would have been dismantled had we privatized it. And I don't 
know how you see that in looking back now, given what happened 
with the financial markets and still the lack of effective 
regulation, if we had privatized that. I would like to get your 
thoughts on that.

                   EFFECT OF RECESSION ON RETIREMENTS

    Secondly, let me ask you about when retirees are retiring, 
given the recession, given the high rate of unemployment, are 
you finding that more people are deciding to retire? What is 
it, at age 62 rather than--or at least get their benefits at 62 
rather than--what is it now, 66, 65?
    Mr. Astrue. It is interesting. When we get media inquiries, 
there is often a perception that more people are delaying 
retirement because of the 401(k) being the 201(k) effect. And 
there is clearly an identifiable group of people who are 
delaying retirement because their private savings are not what 
they had hoped that they would be.
    But those numbers are dwarfed by the number of people that 
are retiring early really out of desperation. And a person laid 
off in their 60s typically finds it much more difficult to find 
new employment than someone who is much younger. So we are 
looking at roughly--and we will provide the detailed numbers--
but roughly in the range of 300,000 to 400,000 more retirement 
claims than what we were projecting a couple years ago.
    [The information follows:]

     Applications for Retirement Benefits and the Economic Downturn

    Based on the most recent economic assumptions, we estimate that in 
FY 2010, we will receive over 375,000 more retirement, auxiliary, and 
survivors claims and over 730,000 more disability claims that we had 
estimated for FY 2010 only two years ago.
    Preliminary data suggest that the age distribution for total 
applications we received in FY 2009 was not substantially different 
from prior years, suggesting that there were increases across all ages 
62 through 70.

    Ms. Lee. You mean at age 62 versus those who have been 
working?
    Mr. Astrue. Those are certainly before the age of 70. Most 
of those are early in the sense that if they are not 62, they 
are 63 or 64.
    Ms. Lee. When does it kick in, at 62 you are eligible?
    Mr. Astrue. Yes.
    Ms. Lee. And then the next is what, 65, 66?
    Mr. Astrue. Well, it is not a cliff. It gets complicated. 
But there is a gradation, and basically, the longer you wait, 
the higher your benefit is.
    Ms. Lee. Right.

                      ONLINE RETIREMENT ESTIMATOR

    Mr. Astrue. One of the things we are trying to do is 
provide people much more detailed information about that. So we 
communicate with them in advance of retirement about that. We 
now have an online estimator that, in contrast with the past, 
ties in with your own record. So if you want to see how much 
you will get on a monthly basis if you retire at 62 or 64 or 
68.5, you can run those numbers. It is particularly important, 
in my opinion, for women because you have the advantage that 
you are going to live a lot longer, typically about 7 years on 
average. So a lot of women in particular tend to underestimate 
how long they are going to live and what their benefits will 
be. We are trying to provide a lot more information.

                      UNEMPLOYMENT AND DISABILITY

    Ms. Lee. I understand that. What I am trying to get at is--
for example, given the nature of this recession and given the 
huge unemployment rates, if a person becomes unemployed at 61 
or 60 and had had planned to apply for benefits at 65 or 66, do 
you see the 60- or 61-year-old saying, Uh-oh, I probably won't 
get another job, or I can't afford to wait, and I am desperate. 
I need a check, so I am going to apply now versus wait.
    Mr. Astrue. Right. If they are 60 or 61, they can't apply 
for retirement because there is a sharp line at 62. Where we do 
see them is, and in fairly high numbers, they apply for 
disability. That is why the disability claims are up, again, 
approximately 700,000 a year from what we were projecting just 
a few years ago. And some of those people do end up qualifying. 
But most of them, because the motivation for applying is 
economic and not medical, most of them will end up probably 
being denied, I would believe.

                           DIVERSITY OF STAFF

    Ms. Lee. Okay.
    And finally, if you could get the committee a breakdown of 
the diversity of your staff in terms of by ethnicity and 
gender, job category for clarification as well as if you do any 
contracting out, I would like to see how you contract with 
small businesses, small and disadvantaged businesses, women-
owned businesses and what have you. We would like to see that.
    Mr. Astrue. I would be delighted to provide that for the 
record.
    [The information follows:]

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    Ms. Lee. Thank you.
    Thank you, Mr. Chairman.
    Mr. Obey. Mr. Cole.

                  REMOVAL OF ADMINISTRATIVE LAW JUDGES

    Mr. Cole. Thank you, Mr. Chairman.
    I have got a particular problem I want to highlight and get 
some suggestions on. You have got a great staff. There are 
great people all the way through the system. They do a 
wonderful job. I know the ones in my area and in my State quite 
well, and I am pleased with all but one. We have a particular 
case where we have a judge who literally sits on cases for 
years. So what are the procedures whereby--and I could get 
multiple congressional offices that would tell you the case 
workers have the same problem, just over and over and over 
again.
    When you find a case like this with a judge who is 
literally not making a decision--I don't care what the decision 
is, but literally, we are talking years, not months, for 
people--what procedures do you have to identify and remove 
somebody like that?
    Mr. Astrue. We have somewhat limited authority in this 
area. I think the chairman and I had some discussion about this 
the last time I was here. There are restraints on what we are 
allowed to do because of some of the excesses from the 1980s. 
Typically in these types of cases, we try to do everything we 
can through counseling and try to identify issues, and if there 
are legitimate issues, try to provide the support that we can. 
In order to move along a case like that, it really has to be 
extraordinarily extreme before the Merit Systems Protection 
Board will allow us----
    Mr. Cole. This one really is extraordinarily extreme.
    Mr. Astrue. Well, by extreme, I am talking more years 
rather than months. I understand your situation. I am 
sympathetic to it. We have relatively few judges in that 
category, but we do have some. We had one who did, I think, no 
cases for 6.5 years. And if you want us to have more tools 
there, you do need, I think, as a----
    Mr. Cole. I would love to get suggestions from your office 
as to what the appropriate tools from your standpoint you would 
need to act. Because again, I do recognize you are limited as 
to what you can do. This is not a complaint addressed at you, 
and it is certainly not a complaint addressed at the 
overwhelming majority of people and certainly the great 
majority of judges that we work with. But again, I talked to 
other Members from my State, and it is just unbelievable. It 
has been going on for years.
    Mr. Astrue. I do know who you are talking about.
    Mr. Cole. I suspect you do.
    Mr. Astrue. And I do concur that it is a serious problem, 
and I think that Judge Cristaudo and his staff have been trying 
to do everything they can to turn it around for you.
    Mr. Cole. They have.
    Mr. Astrue. But it is one of those situations where there 
is a tension between judicial independence and timely service 
to claimants, and that is a balance that, to a large extent, 
the Congress has drawn. If the Congress would like a different 
balance, the Congress will need to change the law.
    Mr. Cole. Again, if you have any suggestions as to the type 
of tools that would be helpful to you, I would certainly like 
to consider them.
    Mr. Astrue. We would be happy to talk to you to go through 
what the statute requires.

                      SOLVENCY OF THE TRUST FUNDS

    Mr. Cole. That would be very helpful.
    If I might, let's move to something, I don't know if it is 
more pleasant, but it is interesting to say the least. 
Obviously, for 2011, we have had payouts now exceed pay-ins 
earlier than we anticipated. We all know we have a serious 
problem. We all agree very much with what Congresswoman Lee had 
to say. This is a very important program, a great program, a 
program that has to be sustained.
    If you were making recommendations to Congress, what are 
the things that you would suggest we do to ensure the long-term 
solvency of the Social Security fund?
    Mr. Astrue. I am a little stuck on that question. One of 
the things when I was nominated that was negotiated between the 
President and the Congress was that I was to stay out of 
solvency. So the only thing I am allowed to say is to refer you 
to Secretary Geithner and Director Orszag. I am not--we play 
purely a technical support role when it comes to solvency these 
days.
    Mr. Cole. So no opinions whatsoever?
    Mr. Astrue. I didn't say I had no opinions. I just said I 
studiously keep them to myself these days.
    Mr. Cole. Okay. Well, maybe that will give us a second 
thing to talk privately about. But I would be very interested. 
Obviously, you have a unique perspective and knowledge on the 
system. So what you can share would be very helpful.
    Mr. Astrue. What I would say, I do want to commend Chairman 
Pomeroy, who just took over the Ways and Means subcommittee. I 
had a long chat with him yesterday, and he indicated that he 
was going to be having a solvency hearing later this year. And 
I believe that is the first one in the Congress in over 5 years 
by a committee of jurisdiction.
    And I think it is important--all I will say is this. I 
think it is important to start the process as soon as possible 
to get as much input and transparency. I think there is a 
legacy of mistrust that came out of the privatization debate. 
Everybody on both sides of the aisle knows we have to deal with 
this issue. Everyone is scared to deal with it. I think the 
sooner we start this, take some time, get the experts, lay it 
out, I think that we will all be better off if we start early 
and we spend a lot of time in sort of soliciting input and 
trying to get as much consensus in a bipartisan way.
    Mr. Cole. I certainly agree. And I actually think there is 
an opportunity to do this here because people are aware in 
Congress of the dimensions of the problem. So I look forward to 
actually a bipartisan process.
    Thank you very much, Mr. Chair.
    Mr. Obey. Mr. Alexander.

                       ECONOMIC DOWNTURN AND SSA

    Mr. Alexander. Thank you very much, Mr. Chairman.
    Sir, in your opening paragraph there, you cite, ``More 
recently, the recession has driven numerous economically 
distressed persons and families to us looking for help.'' Talk 
to us about what that help would be, what they would be asking 
and what you might do to help.
    Mr. Astrue. Well, they come in for a whole variety of 
reasons. One of the ones that is incredibly important that we 
tend to overlook is the survivors' benefits. When a parent has 
died young, that is an incredibly important support for the 
children. So we see that. We see people coming in for 
disability benefits, for retirement benefits. We have people 
coming in for replacement cards. We have people coming in 
because there is confusion on one of these identification 
verification systems.
    And one of the things that has been hard in the past year 
is--I make a point, I read every violence incident report in 
the agency. And our people are on the frontline with a lot of 
disturbed people. When I started, we were probably getting 
about three to five a week. We are probably up to 20 a day now. 
And the intensity of what is happening is much worse, much more 
troubling. We have had more actual assaults. It is a very 
difficult environment that our claims reps and others are 
working in now. And they do a masterful job of trying to help 
people in those situations, and we provide as much help in our 
programs.
    We do a lot of help for Medicare. We register people for 
food stamps. We do a lot for these people. But there are a lot 
of desperate, angry people who come into our offices where 
there is nothing we can really do for them except refer them to 
another social service agency. It is hard. And often, when 
people are told there is nothing we can do, that is the trigger 
point for a threat or actual violence. It has been a very tough 
year in that regard.
    Mr. Alexander. Thank you, Mr. Chairman.
    Mr. Obey. Mr. Tiahrt.

                     PRODUCTIVITY AND THE BACKLOGS

    Mr. Tiahrt. Thank you, Mr. Chairman.
    I noticed in your testimony that you said you improved your 
productivity by 4 percent in the last 3 years.
    Mr. Astrue. Yes.
    Mr. Tiahrt. And then, later on, you talked about the 
hearing backlog, and you have a chart in here that shows it is 
increasing. How did you measure increased productivity when 
your backlog is increasing? I can't make the two come together.
    Mr. Astrue. Well, we have multiple--our backlog for the 
hearings has actually been going down. It took us 22 months to 
break the increase. We had had pretty much a steady increase of 
approximately 70,000 cases a year for many years. It took us 
about 22 months to get it to level and then that started going 
down.
    Most of our other backlogs at work are going down. The one 
that is going up right now is in the DDSs, which are the first 
two levels of review, because they are getting--they were 
scaled at the beginning of this decade for about 2,000,000 
cases a year. They are getting this year probably about 
3,300,000 is what we were projecting. And even with all the 
staff additions, they did not have the staff. And we also ran 
into the furlough issue with a number of States, which made it 
difficult to process cases.
    But having said all that, we are still at about 800,000 
cases pending, which is quite a bit less than what we were 
projecting just a year ago. I think they have really done a 
heroic job. Their productivity measures are way up in terms of 
the processing of the cases. They have been more productive 
than ever. But the cases are going up just because the 
workloads are an avalanche.
    Mr. Tiahrt. Based on a number of cases or on the time frame 
that each one is----
    Mr. Astrue. It is for each person. Basically, it gets 
complicated, but the measures go for each person who is 
working, what is the output in terms of work.

                  MEASURING WORKLOADS AND PRODUCTIVITY

    Mr. Tiahrt. And you measure that in how many cases they 
process or----
    Mr. Astrue. There is a composite measure that goes into 
something that we call the PPWY. We can provide a breakdown for 
you about how we measure productivity both for the DDSs but for 
the other field services as well. We have had for many years--
OMB has assumed a 2 percent increase in productivity for the 
agency. And that is about what we did for the first part of the 
decade. So I am really proud of the effort that we have made in 
the last 3 years with all this avalanche of work that we have 
basically doubled our productivity increases for the last 3 
years.
    Mr. Tiahrt. I am curious as to how you measured it. What 
were the factors? If you could give it to me, I would 
appreciate it.
    Mr. Astrue. Yes, sir.
    [The information follows:]

                          Agency Productivity

    The factors used in calculating productivity include the amount of 
work completed, the workyears used to complete the work, and the 
workyears it would have taken to complete the work in the prior year's 
work environment. Using FY 2009 as an example, we know how much work we 
completed in FY 2009 and the workyears used to complete it.
    To calculate how many workyears it would have taken to complete 
this same workload in the FY 2008 work environment, we first calculate 
the FY 2008 production rates. We calculate production rates for each of 
our workloads by dividing the FY 2008 completed work by the FY 2008 
workyears used to complete that work. To determine how many workyears 
we would have needed to complete this work in the FY 2008 environment, 
we divide the FY 2009 completed work by the FY 2008 production rates. 
We compare the workyears needed based on the FY 2008 production rates 
to the actual workyears used in FY 2009 and the resulting percentage 
change represents the change in productivity.
    The productivity increases cited in the testimony represent the 
overall net effect of productivity changes across all of our workloads. 
Despite the dramatic spike in the number of disability claims we have 
received, we have successfully increased the rate at which we process 
work, due in large part to our success at increasing benefit 
applications filed online, expanding the use of time-saving 
technologies in our operations, and our continuing efforts to 
streamline and simplify our business processes, policies, and 
procedures.
    Productivity is based on the amount of work completed; it does not 
take into account the amount of work received. Accordingly, it is 
possible to experience both an increase in productivity and an increase 
in pending work.

    Mr. Tiahrt. Thank you.
    Thank you, Mr. Chairman.
    Mr. Obey. Mr. Cole.
    Mr. Cole. I am fine.

              DISABILITY APPLICATIONS AND APPEALS PROCESS

    Mr. Obey. Mr. Commissioner, let me talk about the appeals 
process. When I look at what the numbers are, I am mystified 
because what it appears to me--or the situation appears to be 
this way: On average, 63 percent of applications for disability 
in the first instance are turned down. And then, on appeal, 
over 60 percent of those appeals are approved. I mean, I 
understand why the agency wants to set the right balance. But 
it seems to me that there is something systemically wrong when 
you have that kind of discombobulation between the first set of 
numbers and the second set of numbers. And you know, I 
understand that conditions may have changed from the time of 
the first application to the appeal. I understand all of that. 
But this has to provide lots of wear and tear on the 
applicants.
    Mr. Astrue. Sure.
    Mr. Obey. How do you analyze that problem? And what do you 
specifically do to correct it?
    Mr. Astrue. One of the things that I think is important to 
remember is you go through every step of the process, and what 
is the numerator and what is the denominator? And it is not the 
same group of people moving from the DDSs into the hearings and 
appeals process because over a million people just simply will 
not appeal. So it is by definition the close cases for the most 
part that are going into the hearings and appeals. So I think 
that the number doesn't look as unfair when you consider that a 
substantial number of people, for one reason or another, accept 
the decision.
    Certainly what we are trying to do is try to make sure that 
we are as accurate as possible. The DDS accuracy had been 93, 
94 percent for most of the last decade. We have done a steady 
increase. We are up to about 97 percent, and we think that we 
can do better with the health IT, because one of the largest 
sources of errors is an incomplete medical record. So even when 
someone is actually making the right decision on the basis of 
the information they have, if that is not the full story, which 
is often the case, then they make what is ultimately the wrong 
decision. So we are looking to provide more up-to-date medical 
standards. We have new systems in place to make sure that 
examiners, who are often inexperienced, are primed with what 
the full regulations are and what all the requirements are and 
try to make the best decision-making that we can.
    There are going to always be cases that are close calls 
that are rightly turned down by the DDSs, where the person's 
situation continues to decline, and by the time they go to the 
hearing, they are a legitimate allowance. There are also cases 
that are difficult inherently without the visual inspection of 
the claimant, which they don't have in the DDSs. And one of the 
strengths of the hearings and appeals process is the judge 
actually gets to look at the claimant, judge the demeanor, can 
look at functional capacity, and that often also means 
something that doesn't look compelling on paper becomes 
compelling when you actually see the claimant in the flesh.
    Mr. Obey. Well, I guess I would just say that I recognize 
the validity of some of the things you say. But we are still 
faced with the fact that in a majority of cases, you have got a 
reversal. And that, to me, indicates that it is just a basic 
dysfunction there. I don't know what to do about it, but----
    Mr. Astrue. I certainly acknowledge that we make tens of 
thousands of mistakes annually, no doubt about that. It is a 
huge system. We have limited control over a lot of things. We 
are doing the best we can. I think we are making it better, but 
I don't quarrel with the proposition that we still have a long 
way to go to make it the way that I think we would both like to 
see it be.

       DISABILITY APPLICATIONS AND THE APPEALS PROCESS CONTINUED

    Mr. Obey. I mean, it almost makes me think that, well, 
these poor suckers were turned down the first time. Then they 
had to go out and get a lawyer. When they got a lawyer, then 
they got some action. I hate to push people into having to----
    Mr. Astrue. Well, I think sometimes--again, I don't think 
it is that motivation. But I do think that there is a value--
the system is very complicated. It was originally designed to 
be very simple and not to have lawyers. And as with most 
government programs, it became incredibly complicated over 
time. Certainly on appeal, most claimants do benefit, in my 
judgment, from having a representative. And often it is very 
simple in that, for certain types of disabilities, the 
claimants don't want to even tell us that they are disabled. 
So, for instance, if you are disabled because of a sexually 
transmitted disease, certain types of psychiatric conditions. I 
mean, we just had a hearing that we are trying to improve our 
standards for schizophrenics. And when they come in, they 
almost universally deny that they have a mental illness at all, 
and they claim that it is back pain. So there is a reason why 
it does look different on appeal when you have the advisers and 
lawyers, at least in certain categories of cases.

                            CHIEF ECONOMIST

    Mr. Obey. Okay.
    Let me switch subjects. The Social Security Act creates the 
position of Chief Actuary for the Social Security 
Administration. That actuary is supposed to report directly to 
the Commissioner. To help insulate the actuary from political 
pressures, the Social Security Act also specifies that, once 
appointed, the Chief Actuary may be removed only for cause. 
This arrangement, it would seem to me, would serve Social 
Security and the Nation well because the independence and 
professionalism of the actuaries are absolutely crucial.
    In this regard, I believe that the current Chief Actuary, 
Steve Goss, has served the Nation well through his independence 
and professionalism. But I am also aware of the fact that you 
have created a new position in Social Security, and that is 
Chief Economist. And I understand the person you appointed to 
that new position had been nominated by President Bush to be 
deputy commissioner but was not confirmed by the Senate. Your 
announcement of the creation of the Office of Chief Economist 
said that the new official ``would be the agency's chief 
economic adviser with a coordinated role across all components 
in the planning and delivery of agency products that involve 
economic analysis.''
    I guess I would have thought that the Chief Actuary would 
be the Social Security Administration's Chief Economic adviser. 
Certainly economic analysis plays a major role in the actuary's 
product. Your announcement of the new Chief Economist position, 
therefore, I think it might suggest that he has some role in 
supervising the planning and delivery of the actuary's report. 
If that is the case, it would appear to be, in my view, a 
violation of the provisions of the Social Security Act 
governing the Chief Actuary's position.

                       CHIEF ECONOMIST CONTINUED

    Could you please explain why you created a new Office of 
Chief Economist, what the functions of that office are, how 
they relate to the Office of Chief Actuary? And also, can you 
tell us what you are doing to ensure that the independence of 
the Chief Actuary's Office is maintained despite the creation 
of this new position?
    Mr. Astrue. Sure. So in an agency as big and complicated as 
Social Security, there are sometimes decisions at the time that 
seem easy, simple and uncontroversial that take on a life of 
their own. And this was one of them. We have had for decades an 
associate commissioner position, which Dr. Fichtner holds, that 
supervises within either the Office of Policy or the Office of 
Research--and there have been a number of reorganizations over 
the years--most of the economic work in the agency. It runs 
some of the international studies that we do.
    In recent years, we have been providing an increasing 
support role to the Treasury Department for their FLEC 
activities, which are their financial literacy activities. So 
it is a staff of about 25. And this administration has a number 
of senior level economists that have been working with Dr. 
Fichtner, and it seemed largely to me to be a relabeling 
function to make it a little clearer for the public and other 
agencies as to who was supervising our economic research 
activities. And it did not strike me as a big deal at the time.
    Subsequently, there have been a whole set of concerns that 
have been raised that I don't think would relate to anything 
that we were trying to do. We actually hadn't formally changed 
the office at the time that we made the announcement. So we 
have held off on that. We are working through those issues. And 
certainly I don't see any more conflict in what was intended 
between what has worked pretty happily for the last several 
decades. But I understand the concerns. We are looking at them. 
I don't think that we would be doing anything that should be 
viewed as compromising the independence of the Chief Actuary.
    Mr. Obey. So can you assure us that whatever you are doing, 
the independence of the Chief Actuary's Office will be 
maintained despite the creation of this new position?
    Mr. Astrue. Oh, absolutely. I mean, I think that it really, 
in terms of my intention, wasn't supposed to be substantially 
different going forward than it has been for the last 20 years. 
So I don't think that there is any horrible change in the 
works.
    Mr. Obey. Okay. That is a good answer. Let me ask one more 
question and then ask other members to comment. Or no, let me 
call on them first, and then I will do this one at the end.
    Ms. McCollum.

                    PRIVATIZATION OF SOCIAL SECURITY

    Ms. McCollum. Thank you, Mr. Chair.
    I am glad we are having this hearing today because, quite 
frankly, we need to be talking about Social Security. And I, 
like all Americans, am very concerned about retirement in this 
country. But Social Security is an important program.
    For 75 years, millions of Americans have avoided poverty, 
have been able to retire with dignity and security in their 
retirement and have health care provided to them as well. From, 
just in Minnesota alone--nearly 13,000,000 seniors nationally 
and 141,000 seniors in Minnesota are above the poverty line 
because of Social Security. So it is a safety net.
    And one of the things that has been talked about a lot--and 
I know discussed and I know you have opinions on this--is 
privatizing Social Security. But it was the only guarantee left 
for millions of Americans during this recent financial 
collapse, Wall Street bail out. Millions of Americans opened up 
their mail to find that over $2,000,000,000,000 in retirement 
savings and 401(k)s were lost, gone, not there. And that is the 
Congressional Budget Office's numbers that I am using. So I 
have to wonder, what would have happened had that all been 
privatized? Where would the safety net have been?
    So I see, you know, taking Social Security, which is a 
safety net, and putting it out there in the stock market with 
all of its fluctuations, removing that guarantee of dignity and 
security for many of our seniors. And quite frankly, it is just 
not a gamble I feel comfortable taking.
    So I have a couple of questions kind of what you think 
would have happened. I know I just shared with you what I think 
and what I also know with $2,000,000,000,000 worth of 
retirement savings investment just disappearing. So had the 
efforts to privatize Social Security been successful, what 
would they have been on current senior retirement security 
today? And are there any proposals pending that you are working 
on or that you are aware of to privatize any aspects of Social 
Security? And what are you going to do to make sure that Social 
Security is secure from fluctuations in the stock market?
    Mr. Astrue. As I mentioned earlier, when I was confirmed in 
February of 2007, the explicit deal both with the President and 
with the Senate Finance Committee was that I was to stay out of 
privatization and in fact solvency generally, and that I am 
really not supposed to be saying anything more. Secretary 
Geithner has the lead for the administration on all those types 
of issues. So that was what I promised the Finance Committee in 
February 2007. I have not expressed an opinion on any of those 
subjects since.
    If you have questions technically in terms of what would 
have happened under different proposals, we would be delighted 
to run those numbers for you and supply you with that 
information. But it has been very clear that part of keeping 
Social Security nonpartisan and out of politics has been to 
stay out of these issues. So I am afraid I can't say much more 
than that.
    Ms. McCollum. So, Mr. Chair, let me pull apart what you 
have said. In order to keep Social Security, this discussion, 
nonpartisan, you have no opinion on privatization or you won't 
state it because it becomes partisan?
    Mr. Astrue. I think it is the latter. I would like to think 
that I am familiar with the issues about the agency. Since I 
was nominated in 2006, other than what I said on the record in 
the confirmation hearing, I haven't said anything substantive 
about privatization since then. I don't say anything either 
about solvency.
    Ms. McCollum. This isn't about you. This is about Social 
Security. I am talking about Social Security. I mean, the CBO 
says $2,000,000,000,000 would have evaporated out of 401(k)s. 
And I mean, people were calling our office. They were watching 
what was happening to their retirement. Had Social Security 
been privatized, would that money, as CBO--what would have 
happened to the Social Security?
    Mr. Astrue. We are happy, depending on which of the 
proposals you want us to assume, if you provide us with the 
assumptions----
    Ms. McCollum. Mr. Chair, I can see my time is up, and by 
answering or even asking a question about protecting Social 
Security by not having it privatized, that it is political.
    Mr. Astrue. If I could just say, I have been under direct 
orders from two Presidents and the Senate Finance Committee to 
not engage on this topic.
    And I am sorry, I don't mean to be unresponsive, but I 
think I would be disrespectful to the President if I entered 
into that territory.
    Mr. Obey. Ms. Roybal-Allard.
    Ms. Roybal-Allard. Welcome, Commissioner.
    Mr. Astrue. Thank you.

                       STATE FURLOUGHS OF THE DDS

    Ms. Roybal-Allard. As I know you are aware, due to 
unprecedented budget shortfalls, many States have been forced 
to furlough their State employees. And unfortunately, in 
California, these furloughs have included Disability 
Determination Services division employees whose salaries are 
paid by the Social Security Administration. As I understand it, 
for every day these employees are furloughed, California loses 
$850,000 in Federal reimbursements, employees lose a day's pay, 
and the payment of over $420,000 in much-needed Social Security 
benefits to residents with disabilities is delayed.
    I know that you have been working tirelessly to persuade 
the State Governors to put these employees back to work, and I 
applaud you for your efforts, because it really is 
unconscionable that during this economic time of hardship, in 
particular, that the decision to furlough these DDS employees 
is taking place at this time.
    Can you talk about the impact State furloughs are having on 
the Social Security Administration's ability to process 
disability benefit claims, the effect it has on the disabled 
community, and what can Congress do to help you in your efforts 
to re-instate the DDS employees?
    Mr. Astrue. Thank you. I appreciate the question. It has 
been devastating for morale in the States where we have had 
these types of furloughs. We already have very high turnover in 
many of these States. It is making it harder for us to retain 
the caliber of people that we need to retain for this important 
work. We are taking in 700,000 or so more claims than we 
expected just over 2 years ago.
    We have blunted the impact in some of the States by 
diverting cases to four States where we have developed 
additional capacity. We also have more Federal reviewers, I 
believe, than we have had at least since the 1980s. So, in some 
States, we have been able to blunt the impact, but if you look 
at the furloughed States, the processing times have been going 
up much faster than for other States, and sometimes it has been 
at an extremely distressing rate.
    And I will provide for the record detailed information 
about the impact on the States where the furloughs have been 
substantial. But I do want to thank--we have found that our 
best line of persuasion has been to work collaboratively with 
the Congress because most Governors don't actually care very 
much what my opinion is, but they care what the leaders in 
their congressional delegations think. And so we have worked 
hand in hand with many Members of Congress.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T8234B.119
    
    [GRAPHIC] [TIFF OMITTED] T8234B.120
    
                  STATE FURLOUGHS OF THE DDS CONTINUED

    Mr. Astrue. It has almost always been because we have been 
working hand in glove on a bipartisan way with the 
congressional delegations, and that has made all the difference 
in the world.
    Ms. Roybal-Allard. Is there anything more that you think 
can be done?
    Mr. Astrue. Yes. Well, I think the statute and the 
regulations, again, are 1980s that contemplate a different set 
of problems. They contemplate a time when there was tension 
between the States and the Federal Government, and the concern 
was that the States would walk and just not process these 
cases. It didn't really contemplate this type of situation. And 
I think it would be timely perhaps to ask GAO to take a look at 
what has happened, what the impact has been, and to look at 
what some of the alternatives might be from a statutory point 
of view of addressing this concern.
    To be honest, when Governor Schwarzenegger did it the first 
time, I thought it was so difficult to comprehend that I didn't 
see it as a trend, and I was wrong. I also think that we are 
going to see States in fiscal distress for quite some time, so 
I and probably my successor and successor's successor will be 
dealing with this issue. So I think it would be timely for 
Congress to take a look at what has happened and to consider 
what the various responses might be.
    Ms. Roybal-Allard. My office will be contacting you.
    Mr. Astrue. Great. Thank you.

             ACCESSIBILITY OF THE SSA WEBSITE FOR THE BLIND

    Ms. Roybal-Allard. There are 20 million legally blind and 
visually impaired people in the United States. And with the 
aging of the baby-boomer generation, that number is expected to 
increase by another 4 million by the year 2015. And it is my 
understanding that these individuals rely on computer screen 
readers to navigate the Internet, but unfortunately a high 
percentage of Web sites, including the Social Security 
Administration Web site, are not compatible with this 
technology and remain inaccessible to the disabled.
    Given that part of the Social Security Administration's 
mission is to provide assistance to disabled individuals, are 
there plans to make the Web site compatible with assistive 
technology like screen readers?
    Mr. Astrue. We had a lawsuit brought by one of the 
representatives of the blind group that we were not able to 
resolve, and we had a court order that required us to make a 
number of upgrades in our notices. It was a frustration to me 
with all the layers between everyone that we weren't able to 
sit down and work out a negotiated settlement. But it has been 
a big focus of activity.
    This year we are fully compliant with the court order. We 
are almost finished with the system's upgrade. I think it is a 
matter of just a couple of weeks before we are done, and it is 
my understanding that the court and the plaintiffs are happy. 
And when that is done, I believe that the Social Security Web 
site and other materials will be the most accessible of any in 
the entire Federal Government when we are done. So it should be 
a substantial improvement completed within a matter of a few 
weeks.
    [Clerk's note--Later corrected to ``we are working on the 
notice systems upgrade pursuant to the court order. It is my 
understanding that the court and the plaintiffs are happy. And 
when that is done, I believe that the Social Security materials 
will be the most accessible of any in the entire Federal 
Government. So it should be a substantial improvement.'']
    Ms. Roybal-Allard. That is good to hear. Thank you so much.
    Mr. Obey. Mr. Honda.
    Mr. Honda. Thank you, Mr. Chairman, and good morning.
    Mr. Astrue. Good morning.

          BACKLOG DEMOGRAPHICS AND MULTILINGUAL SSA EMPLOYEES

    Mr. Honda. Two quick questions. One is the backlog that you 
have discussed a lot in your report. I was curious to 
understand what the demographics of the backlogs are in terms 
of age and language. I have a bill that I just introduced that 
would provide a bump in salaries in terms of having a language, 
and if it is required, then that should apply. So the kind of 
needs that your agency has, have you seen a need for employees 
with another language? And I was wondering whether this is 
something that you could see as a beneficial attractant for the 
position that you want to fill in the future?
    Mr. Astrue. That is a very good question. We have a lot of 
information on this subject, and we will provide a lot of that 
for the record. But let me say the most important thing that we 
have done recently. I came to the conclusion after a couple of 
years looking at how we were allocating staff for our field 
offices that we were underestimating the stress on certain 
types of offices. And you could see that in the outcomes, that 
some offices had relatively short waiting times, and some of 
them really had abysmal waiting, you can't walk in and not be 
embarrassed. And it is very complicated. It took a while to try 
to figure out why that was, because we have been doing things 
the same way for decades. And I think we finally came to the 
conclusion that our metric for distributing staff 
underestimated certain things that were important.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T8234B.121
    
    [GRAPHIC] [TIFF OMITTED] T8234B.122
    
    So we are experimenting. Again, we may do it differently 
the next time, with a four-element metric to try to measure--
try to fix where we have been undercounting. One of the things 
we have looked at is volume of work that involves another 
language, because by definition if someone comes in and doesn't 
speak English, it takes a little bit more time to accommodate 
that person. So we are trying to factor that in so that the 
offices that are dealing with a high number of people who do 
not speak English are not disadvantaged in the staff 
allocation.
    I can't swear to you, because we have only just did the 
release a couple weeks ago, that we have got it right the first 
time around, so we are going to be looking at it and 
reassessing it, but we are trying to be sensitive to those 
types of issues.
    Mr. Honda. When you say you got it right and you talked 
about metrics----
    Mr. Astrue. I am saying I am not sure that we got it right 
with the new attempt. It is an experiment, we have exercised 
the best judgment we know, but we are going to look at what 
happened, we are going to look at the effect at the offices. It 
is probable we will decide to make some additional adjustments 
the next time we do this, but we don't know yet, because we 
haven't actually hired the 900 staff yet.
    Mr. Honda. Okay. So looking at your constituencies, when 
you break it down, you have that information, and you are 
breaking it down by age and place of birth and language?
    Mr. Astrue. We generally know, for instance, the percentage 
of work in each of the field offices that involve someone who 
is not a primary English speaker. I believe we have got other 
kinds of demographic data as well. I am not 100 percent sure 
exactly what we think we know and what we think we don't know, 
but I would be happy to supply that for the record for you.
    [The information follows:]

                 Demographics of Field Office Customers

    We examine the constituent demographics of each field office 
service area when making decisions about service delivery and hiring. 
Regional and area staff review local demographics, such as household 
economic data, language preference, and the age and number of 
residents, in determining staffing and client needs. Our field office 
managers thoroughly understand the demographics of their service areas 
and align staffing with those demographics.

               DEMOGRAPHICS OF VISITORS TO FIELD OFFICES

    Mr. Honda. Help me understand. When we work with our 
recipients, whether they are youngsters or oldsters or disabled 
or whatever, don't we have information on them as to their 
background, place of birth and language needs?
    Mr. Astrue. We do, but when we check people in, they don't 
supply that to us, so we only know what we know by the records 
that we already have. And depending on what they are coming in 
for, we may not know for every type of service--for instance, 
someone is coming in, we may not have detailed demographics. I 
would have to go back and check.
    Mr. Honda. So the only way you know is just interaction, 
and that is it. There is nothing we check off on in order to 
keep records so that we know how to create that metric and be 
able to hire staff that would match the needs of our clients?
    Mr. Astrue. What I believe we know is when someone checks 
in automatically coming in on something we call the VIP system, 
with an appointment, we have whatever information that we 
maintain for that individual generally in our computer records, 
which we call the ``numident.'' So certainly we would have 
that. I am sure that we have run studies at other points in 
time to try to look at different ways of assessing through 
surveys what our populations look like, but I am not sure off 
the top of my head what we have done recently and what it says, 
so I would have to supply that for the record.
    [The information follows:]

                 Language and Service in Field Offices

    When a person comes into our office, he or she can indicate a 
language preference when checking in at our Visitor Intake Process 
(VIP) kiosk. We also capture language preference data when people call 
to make appointments. We use this data to ensure that our offices meet 
the language needs of the local population. We have bilingual staff and 
where those are not available, we offer interpreter services.

    Mr. Honda. Okay. So given the great numbers that I have 
read here, and the government tries to be more like 
Nordstrom's, would it be a logical administrative direction 
that we find out what our population looks like and how we can 
anticipate the future populations so that we can match our 
staffing to that?
    Mr. Astrue. That we have certainly done. And we are going 
through another strategic plan where we are trying to reassess 
the workloads and what they look like and what we have to do. 
And we are trying to be sensitive to the needs of particular 
populations. So, for instance, we are going to have our first 
Spanish-language on-line service shortly, which I believe will 
be the first in the Federal Government, and that should be up 
and running in the fall.
    So we do look at special populations, we do look at 
demographics, but, again, I think to tell you completely and 
accurately what we do for all of them, I think I would be more 
comfortable supplying that for the record.
    Mr. Honda. I just want to ask, would this be an 
administrative necessity so that this is what we have to do and 
that is a directive, or is that something that needs to come 
through statute?
    Mr. Astrue. Certainly I think for the most part assessing 
the demographics of the populations that we serve is something 
where I have adequate administrative authority in terms of 
running studies and numbers to see exactly what the populations 
looked at from different angles. I don't think I need 
additional statutory authority to do that. And if, after we 
supply the information for the record, and you see what we do 
do and what we do know and what we don't do and what we don't 
know, if you have got suggestions for things that we ought to 
be doing, I would be very open and would welcome those 
suggestions.
    Mr. Honda. Thank you, Mr. Chairman.
    Mr. Obey. Mr. Tiahrt.
    Mr. Tiahrt. I am fine.
    Mr. Obey. Ms. McCollum.
    Ms. McCollum. Mr. Chair, I do have another question, and it 
has to do with IT.
    I heard clear in your response to the other Members that 
you really want to do what you can for customer service----
    Mr. Astrue. Yes.

                            INTERNET CLAIMS

    Ms. McCollum [continuing]. And make it absolutely the best. 
And we know that health information technology is going to 
totally revolutionize the way in which we have information on 
disability that could be used and possibly used in disability 
termination. So with IT, with the patient's permission, you 
could obtain medical records in a timely fashion.
    Could you talk a little more about the Internet claims, the 
I-claims that you are doing for seniors? You know, the 
information that I have is in 2009, on-line claims represented 
83 percent of the total retirement claims growth. Can you kind 
of talk about what is trending with that?
    Mr. Astrue. Sure.
    Ms. McCollum. And then the other thing that comes with it, 
I mean, in my district I have seniors that are very tech savvy, 
who have firewalls and all kinds of security systems and 
everything built into their services. But I am concerned about 
comments that I have heard for seniors who might not have 
access to this kind of technology is, oh, go to the library, or 
go to an Internet cafe, means totally different security 
systems and access to get back in a timely fashion. So tell me 
a little bit more about how you see medical records, as well as 
going more with I-claims.

                       ELECTRONIC MEDICAL RECORDS

    Mr. Astrue. Medical records are tremendously important. And 
you are exactly right. In the public's mind we are a 
retirement/senior citizens agency, but when you actually look 
at where the administrative money is going, it is 
overwhelmingly over on the disability side, and a huge part of 
that is chasing down paper medical records. We are the largest 
repository of medical records in the world, and it is a lot of 
time, and it is delay, and it is a source of error. And it is 
important both for quality and for timeliness to try to make 
sure that whatever systems are being built for electronic 
medical records fit seamlessly with ours, and, when there is 
appropriate consent, just a push of a button can transfer 
records.
    And we have done this on a trial basis with a couple of the 
very small entities that are already there: MedVirginia and 
Beth Israel Deaconess in Boston. And even without having 
changed our business process yet, it is a thing of beauty, and 
I think it really will be paradigm changing. It could, I think, 
cut processing times in half. So it is a wonderful, good thing, 
and the sooner it gets here, the happier we will all be.
    In terms of the electronic services, as I was coming on 
board in 2007, the National Academy of Sciences had been 
commissioned to look at our preparedness for the baby boom and 
electronic services, and they had a very negative report, which 
the draft response from the agency was going to reject most of 
it. And I read the report and said, no, this is the road map to 
the future, I basically embrace this report, we are not going 
to reject this.
    So we have worked very hard to try to break down our 
business processes, make them as simple as possible, which is 
something that we and other government agencies don't do often 
enough, and then try to embrace the highest level of user 
friendliness to new programs. And so this has really been 
welcomed by the American public. We had been flat with the old 
retirement application form for a decade at about 10 percent of 
the public using it, and we knew that a lot of people tried it 
and gave up in frustration. We are up, I think, today to about 
37 percent using it, and the level of satisfaction is extremely 
high.
    But for all the improvement, I think the way to 
conceptualize this is this is a service option for people who 
want it. For none of these electronic services have we made it 
more difficult or problematic for people to get service the 
traditional way. In fact, I would suggest by the efficiencies 
that we have picked up for the people who don't want to come 
into our offices, the claims reps are less pressured than they 
would otherwise be, and they are able for the people who come 
into the office to spend more time and provide high-quality 
service than they would be able to do if we did not have this 
choice of service. I think it has been a win-win for the 
American public. They have been extremely well received.
    We still have a lot more to do. We just launched the 
Medicare only application. We have got the Spanish-language 
retirement estimator coming, and we hope to do a Spanish-
language retirement application next year as well.

                  ELECTRONIC MEDICAL RECORDS CONTINUED

    Ms. McCollum. Mr. Chair, if I may, one of the things about 
the whole issue of electronic medical records--they are very 
exciting--were private entities, public entities, the Federal 
Government spent a lot of money in developing these records, 
but we know there is a lot of problem with the records talking 
to each other as they go from institution to institution. And I 
know that there has been discussions taking place about how to 
make--not selecting one vendor, but selecting a language that 
is interoperable with all of these different.
    And I don't know where we are on that, but as we look at 
going with the Social Security Administration and the rest and 
the investment that we have been in IT, I would like to maybe 
have this committee find out where the administration and where 
the oversight is to make sure that we have systems that are 
interoperable with each other. And that would be helpful for us 
in moving forward with this, because if we don't, we are going 
to have a big mess, and we are going to land up reinventing a 
system that could have been invented right the first time.
    Mr. Astrue. Mr. Chairman, I would endorse that. There is a 
standard-setting committee at HHS that is trying to set the 
standards for the country as a whole, which we have been active 
on. As a matter of fact, one of our people chaired it for a 
period of time. But I think it is an incredibly important 
topic, it has future implications for our disability programs, 
and I think that is a tremendous suggestion.

                           FINANCIAL LITERACY

    Mr. Obey. Just two last questions. I understand that the 
Social Security Administration has a financial literacy program 
and a related program called the Special Initiative to 
Encourage Savings. Our subcommittee staff is told that spending 
on these projects has increased from $9 million in 2009 to $15 
million in 2010, to an estimated $22 million in 2011. Now, 
nobody can argue that financial literacy isn't important, but I 
believe the Federal agency who is the lead role on this is 
supposed to be the Treasury Department, and they receive a 
specific appropriation for that purpose.
    Now, I know that the Social Security Administration is a 
member of the Federal Finance Literacy and Education Commission 
along with a large number of other agencies, but the law 
setting up the Commission does not create or expand any 
authorities for Social Security to undertake financial literacy 
activities, at least not that I can find. The mission of Social 
Security, in my view, is running Social Security, not taking 
the public to school generally on financial matters. Could you 
please explain the purpose of your agency's financial literacy 
program and what activities are carried out with those funds 
and the legal authority for those activities?
    Mr. Astrue. Sure. My understanding is that we have had for 
some time, certainly before my arrival, research activities in 
the area of retirement and savings, and that specifically I 
believe it was the Congress that encouraged us to--I think, so 
that they would have some degree of independence to contract 
out to some academic institutions to do that work for us. And 
so we have had three academic institutions that have been doing 
that type of work, which I would say has been extremely helpful 
to the mission of the agency, in my view. Most of the 
additional work that we have been doing has been to support 
administration initiatives in the area of promoting savings and 
financial literacy.
    But certainly it is a fair question. I will go back and 
take a look and make sure that everything we are doing is 
consistent with what we should be doing.
    Mr. Obey. Well, what is the legal authority?
    Mr. Astrue. Well, I believe that we have specific 
authority, and I will have to go back and check. When the 
academic institutions were set up as part of the research--the 
research consortium that is set up under our research budget, 
that we got fairly specific guidance from the Congress on that, 
I believe. But I will go back and take a look. It is an 
important question. I don't want to wing an answer for you.
    [The information follows:]

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               REDIRECTION OF FINANCIAL LITERACY FUNDING

    Mr. Obey. How much field staff or DDS workyears could the 
Social Security Administration fund if those resources were 
redirected into disability processing or field service?
    Mr. Astrue. Back of the envelope, so obviously we will 
submit a more precise answer for the record, probably in the 
range of 150 to 200 FTEs.
    Mr. Obey. A couple for each State?
    Mr. Astrue. Yes.
    [The information follows:]

                       Financial Literacy Funding

    Once funds are appropriated, we do not have the authority to 
redirect resources budgeted for financial literacy to process work, 
because the financial literacy funding is part of our research budget 
within the SSI appropriation. A separate Limitation on Administrative 
Expenses (LAE) account provides the funding for salaries and benefits.
    Using the FY 2011 average agency salary and benefit rate, each $1 
million in funding pays for about ten employees for one year. 
Accordingly, $15 million would pay for about 150 people, and $22 
million would fund about 220.

    Mr. Obey. I have got two other questions for the record, or 
I would like you to respond to for the record, but other than 
that, thank you very much for coming.
    Mr. Astrue. Thank you.
    Mr. Obey. We appreciate it.
    [The information follows:]

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                           W I T N E S S E S

                              ----------                              
                                                                   Page
Astrue, M. J.....................................................   356
Corr, William....................................................     1
Domenech, Daniel.................................................   172
Donaldson, Nancy.................................................   103
Ganzglass, Evelyn................................................   103
Grindler, Gary...................................................     1
Jefferson, Raymond...............................................   230
Johnson, Brian...................................................   103
Kanter, Martha...................................................   230
Lee, Karen.......................................................   103
Levinson, Dan....................................................     1
Oates, Jane......................................................   230
Perez, Omar......................................................     1
Posny, Alexa.....................................................   230
Richmond, Greg...................................................   172
Seminario, Peg...................................................   103
Van Roekel, Dennis...............................................   172
Weingarten, Randi................................................   172
Wilhoit, Gene....................................................   172


                               I N D E X

                              ----------                              

                 COMBATING HEALTH CARE FRAUD AND ABUSE

                                                                   Page
Chairman's Opening Remarks.......................................   1-3
Deputy Secretary, HHS Opening Statement..........................   3-6
 Deputy Secretary, HHS Written Statement.........................  7-17
Acting Deputy Attorney General, DOJ Opening Statement............ 18-19
Acting Deputy Attorney General, DOJ Written Statement............ 20-35
Inspector General, HHS Opening Statement......................... 36-37
Inspector General, HHS Written Statement......................... 38-50
Special Agent, HHS Opening Statement............................. 51-52
Special Agent, HHS Written Statement............................. 53-59
Recovery Audit Contractors....................................... 60-63
Contract Eligibility............................................. 63-65
Information Technology Investments............................... 65-67
Health Care Fraud and Abuse Control Discretionary Funds..........    68
Performance Measures.......................................68-70, 91-92
Fighting Fraud................................................... 71-73
Medicare Trust Fund.............................................. 73-75
Recovery Audit Contractor Demonstration Program.................. 76-78
Provider Enrollment...........................................78-79, 81
Working With the Private Sector.................................. 79-80
State Cooperation................................................    80
Health Care Fraud Prevention and Enforcement Action Team (HEAT82, 92-94
Health Care Fraud and Abuse Control Program...................... 83-87
Program Integrity Allocation Decisions........................... 87-89
Return on Investment............................................. 89-91
Improper Payments..........................................94-95, 97-98
Clean Claims..................................................... 95-96
Best Practices for Program Integrity............................. 96-97
Electronic Health Record and Electronic Medical Record........... 98-99
Discretionary Health Care Fraud and Abuse Control--Parts C and D.99-100
Health Care Fraud and Abuse Control Appropriations Language.....100-101

          LABOR AND EDUCATION PRIORITIES/ESEA REAUTHORIZATION

 Chairman's Opening Remarks............................103-104, 172-173
 President, National Association of State Workforce Agencies 
  Opening Statement.............................................104-105
President, National Association of State Workforce Agencies 
  Written Statement.............................................106-117
Director, Workforce Development, Center for Law and Social Policy 
  Opening Statement.............................................118-119
Director, Workforce Development, Center for Law and Social Policy 
  Written Statement.............................................120-133
Executive Director, Alliance for Worker Freedom Opening Statemen134-135
Executive Director, Alliance for Worker Freedom Written Statemen136-143
Director of Safety and Health, AFL-CIO Opening Statement........144-145
Director of Safety and Health, AFL-CIO Written Statement........146-152
Director, Washington Office, International Labor Organization 
  Opening Statement.............................................153-154
Director, Washington Office, International Labor Organization 
  Written Statement.............................................155-161
Executive Director, American Association of School Administrators 
  Opening Statement.............................................173-175
Executive Director, American Association of School Administrators 
  Written Statement.............................................176-182
President, National Association of Charter School Authorizers 
  Opening Statement.............................................183-184
President, National Association of Charter School Authorizers 
  Written Statement.............................................185-188
Executive Director, Council of Chief State School Officers 
  Opening Statement.............................................189-191
Executive Director, Council of Chief State School Officers 
  Written Statement.............................................192-194
President, American Federation of Teachers Opening Statement....195-196
President, American Federation of Teachers Written Statement....197-206
President, National Education Association Opening Statement.....207-208
President, National Education Association Written Statement.....209-218

                        FY 2011 BUDGET OVERVIEW:
                     JOBS, TRAINING, AND EDUCATION

Chairman's Opening Remarks......................................235-237
Ranking Member's Opening Remarks.................................   237
Employment and Training Administration...........................   238
Partnerships....................................................238-239
Recovery Act Investments.........................................   239
Pathways Out of Poverty..........................................   239
Assistant Secretary for Employment and Training, DOL Written 
  Statement.....................................................240-250
VETS.............................................................   251
Unemployed Veterans..............................................   251
Transition Assistance...........................................252-253
Assistant Secretary for Veterans' Employment and Training, DOL 
  Written Statement.............................................254-261
Under Secretary, Department of Education Opening Statement.......   262
President Obama's Goal for 2020..................................   262
Higher Education and the Workforce...............................   262
Special Populations and the Workforce............................   262
Elementary and Secondary Education..............................262-263
Pell Grants......................................................   263
College Access Grants............................................   263
Career and Technical Education Training.........................263-264
Reauthorization of the Workforce Investment Act..................   264
College- and Career-Ready Standards Program.....................264-265
Under Secretary, Department of Education Written Statement......266-270
Assistant Secretary for Special Education and Rehabilitation 
  Services, Department of Education Opening Statement............   271
American Recovery and Reinvestment Act...........................   271
Special Education Grants to States..............................271-272
Vocational Rehabilitation State Grants Program...................   272
National Activities and the Workforce Innovation Fund............   272
Supported Employment for Youth With Significant Disabilities....272-273
Assistant Secretary for Special Education and Rehabilitation 
  Services, Department of Education Written Statement...........274-278
Carryover........................................................   279
Obligated Versus Expended.......................................279-280
Green Jobs Act..................................................280-281
Huge Disparities in Communities of Color...................281, 283-299
Summer Youth Jobs Program........................................   282
Emergency State of Minority Unemployment.........................   299
Comprehensive Jobs Package......................................299-300
H-2A............................................................300-302
Women Veterans...................................................   302
Veterans Courts..................................................   302
Emergency Grants................................................303-304
Federal TRIO Programs............................................   305
Career and Technical Education..................................305-307
Early College and Pell Grants...................................307-309
H-2B.............................................................   309
Public Service Loan Forgiveness Program..........................   310
Elimination of the Career Pathways Innovation Fund..............310-312
Job Corps.......................................................312-315
One-Stop Centers................................................315-316
Reconciliation Act and Funding for Community Colleges...........316-317
Cost of Regulations.............................................317-319
Consolidation of Rehabilitation Services Employment Programs.....   319
Continuation of Services Under Consolidation Programs...........319-320
Business Investment in Training.................................320-321
Promising Practices.............................................321-322
Work Opportunity Tax Credit......................................   322
Questions for the Record........................................323-359

                        FY 2011 BUDGET OVERVIEW:
                     SOCIAL SECURITY ADMINISTRATION

Chairman's Opening Remarks......................................361-362
Ranking Member's Opening Remarks................................362-363
Commissioner's Opening Statement................................363-365
Commissioner's Written Statements...............................366-392
    Payments to Social Security Trust Funds.....................377-379
    Supplemental Security Income................................380-387
    Limitation on Administrative Expenses.......................388-390
    Office of the Inspector General.............................391-392
New Support Center...............................................   393
Support Center Site Selection....................................   393
Effect of Health Care Reform on SSA.............................393-394
New Hires.......................................................394-395
Privatization of Social Security.................................   395
Effect of Recession on Retirements..............................395-396
Online Retirement Estimator......................................   396
Unemployment and Disability......................................   396
Diversity of Staff..............................................397-407
Removal of Administrative Law Judges............................407-408
Solvency of the Trust Funds......................................   408
Economic Downturn and SSA........................................   409
Productivity and the Backlogs...................................409-410
Measuring Workloads and Productivity............................410-411
Disability Applications and Appeals Process.....................411-412
Chief Economist.................................................412-414
Privatization of Social Security................................414-415
State Furloughs of the DDS......................................415-419
Accessibility of the SSA Web Site for the Blind.................419-420
Backlog Demographics and Multilingual SSA Employees.............420-423
Demographics of Visitors to Field Offices.......................423-425
Internet Claims..................................................   425
Electronic Medical Records......................................425-426
Financial Literacy..............................................427-429
Redirection of Financial Literacy Funding.......................430-437
Information Technology Fund.....................................437-438
Problems Caused by Spike in New Disability Applications.........439-443
Progress on New National Support Center.........................443-446
Electronic Filing of Social Security Claims (iCLAIMs)...........446-448
Social Security Productivity....................................448-454
Occupational Information System.................................454-460
Continuing Disability Reviews (CDR) and Redeterminations........460-471
SSI Non-Medical Redeterminations................................471-472
Office of the Chief Economist....................................   472
Health Information Technology (HIT).............................472-474
Reinstating Reconsiderations.....................................   475
Current Appeals Process..........................................   475
Disability Processing Time.......................................   476
Estimated Cost of FTE...........................................476-483
Programs, Projects, and Activity Costs..........................483-486

                                  
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