[Congressional Record (Bound Edition), Volume 146 (2000), Part 4]
[House]
[Pages 4544-4546]
[From the U.S. Government Publishing Office, www.gpo.gov]



          LIBRARY OF CONGRESS FINANCIAL MANAGEMENT ACT OF 2000

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Maryland (Mr. Hoyer) is recognized for 5 minutes.
  Mr. HOYER. Mr. Speaker, today I am introducing the Library of 
Congress Financial Management Act of 2000, bipartisan legislation which 
will authorize the Library to create a revolving fund which would allow 
a number of the Library's cost-recovery programs to operate more 
efficiently. This legislation, which the Library has sought for a 
number of years, would provide for more efficient and accountable 
financial management of fee-based Library programs and would correct 
longstanding deficiencies first identified by the General Accounting 
Office in 1991 and highlighted in subsequent independent audits.
  The legislation has bipartisan, bicameral support. Our colleague 
Senator Cochran of Mississippi, who serves with me as a member of the 
Joint Committee of Congress on the Library, has introduced similar 
legislation in the Senate (S. 2286). It is especially appropriate for 
Congress to address these matters now, in the year of the Library's 
Bicentennial, as the Library retools itself to meet the needs of 
Congress and the American people in the new century.
  The bill authorizes a financial restructuring of existing fee-based 
program operations. It authorizes no new fees, other than for specified 
activities relating to audio-visual preservation services associated 
with the Library's role as a national conservation center.
  The bill would increase the efficiency of the Library's cost-recovery 
programs by establishing a systematic relationship between program 
costs and fees charged, setting program operations on a more business-
like foundation. A 1996 Library of Congress management audit report 
stated that ``charging fees for services works best when the 
appropriate financial structures, such as revolving funds, are in 
place.'' The report also stated that a revolving fund mechanism allows 
managers to better control their resources, monitor their costs, and 
track performance, and most importantly, allow accumulation of reserves 
for slow periods and the development of strategic plans that address 
productivity objectives across fiscal years.
  This legislation will increase the accountability of the Library's 
current self-sustaining programs by: providing proper statutory 
authority for retaining receipts, as GAO has often suggested; limiting 
obligations to amounts approved in annual appropriations bills; 
requiring annual independent audits of financial statements following 
government auditing standards; requiring annual submission of the 
audited financial statements to Congress; and establishing separate 
accounts for each fund service unit.
  In the most recent audit report reviewing the Library's financial 
statements, the independent auditor again noted the Library's need for 
proper Congressional authority to operate gift revolving funds. This is 
now the sole remaining vulnerability identified by the auditor's 
examination of compliance with certain laws and regulations.
  The bill will also transfer to the revolving fund certain cost-
recovery programs currently authorized under the Economy Act. The major 
programs included are FedLink and Federal Research Division [FRD]; the 
services the Library of Congress is able to provide the federal sector 
through these programs are invaluable, and the Library is uniquely able 
to provide them because of its collections and its acquisitions 
expertise. The transfer of these programs to a revolving fund will 
eliminate significant costs currently incurred by annual shut-down and 
start-up imposed under that Act.
  With the requested revolving fund authority, federal libraries 
participating in FedLink could save, in the aggregate, an estimated 
$1.37 million each year in increased efficiencies and improved vendor 
discounts. The paperwork burden of federal librarians, such as overly 
complex inter-agency agreements and year-end closeout, refund and re-
registration chores required by the Economy Act, could also be 
significantly reduced. Revolving fund authority would, simply put, save 
costs and place both programs on a firmer business foundation.
  The Financial Management Act also includes language to update the 
outdated 1902 law authorizing the sale of cataloging data to libraries 
across the nation, by allowing the use of new technologies and enabling 
a more businesslike cost-recovery mechanism. In addition, it includes 
administrative changes to the Library of Congress Trust Fund Board to 
permit more efficient operation of the Board's decision-making 
functions.
  The Library's Inspector General, in reviewing this legislation, 
strongly believes it will strengthen the internal controls and 
accountability of the Library's business-type operations, as well as 
clarify the legislative authority for the operation of these programs.
  Mr. Speaker, a more detailed section-by-section description of the 
legislation follows:

  The Library of Congress Financial Management Act of 2000 Section-by-
                            Section Analysis


                                summary

       The Library of Congress Financial Management Act of 2000 is 
     intended to improve the Library of Congress's financial 
     management and administration and to maximize the use of its 
     resources. The bill encompasses three changes in the 
     Library's authorizing legislation: (1) it establishes a 
     revolving fund for the operation of most cost-recovery 
     services, as recommended by the General Accounting Office, 
     and Economy Act (inter-agency) activities; (2) it updates the 
     1902 authority provided in 2 U.S.C. 150 that allows the sale 
     of cataloging products and services to the nation's 
     libraries; and (3) it makes needed changes to enhance the 
     continuity of the Library's Trust Fund Board.


              title i. library of congress revolving fund

       The legislation establishes cost recovery for the direct 
     and indirect costs of information products and services, 
     through a Library of Congress Revolving Fund. This practice 
     embodies the principles of 31 U.S.C. 9701: ``It is the sense 
     of Congress that each service or thing of value provided by 
     an agency . . . to a person . . . is to be self-sustaining to 
     the extent possible.''
       The Library currently provides a variety of these types of 
     services through various self-sustaining funds, the most 
     notable of which, the Photoduplication Service, has existed 
     since 1938. However, the General Accounting Office (GAO) in 
     its August 1991 report, First Audit of the Library of 
     Congress Discloses Significant Problems (as well as 
     subsequent reviews), recommended the Library seek 
     authorization of a separate revolving fund to handle these 
     types of activities. This legislation enables the Librarian 
     to implement that recommendation.
       A fundamental reason to establish a revolving fund is to 
     provide for the systematic

[[Page 4545]]

     disclosure of the relationship between program income and 
     costs for products and services, thereby providing a firm 
     basis for decisions regarding services to be undertaken and 
     prices to be charged. Thus, the revolving fund will improve 
     accountability to the Congress, as recommended by the GAO.
     Section 101. Availability of fund service activities
       This section authorizes the Librarian of Congress to: (1) 
     establish specific cost-recovery activities as Revolving Fund 
     service activities; and (2) establish Revolving Fund service 
     units to carry out activities supported by the revolving 
     fund's cost-recovery mechanism. These service units (an 
     organizational term already employed in the Library) may be 
     partially or fully sustained through the Revolving Fund 
     established under the Act.
       The intent of this provision is to authorize, but not 
     require, fee service activities to operate under the 
     revolving fund on or after the effective date of this Act. 
     The Library anticipates restructuring the financial operation 
     of these activities as soon as is feasible, but it is 
     recognized that it may be necessary to transfer some 
     activities to the revolving fund in phases.
     Section 102. Fund service activities authorized
       This section lists the Fund service activities authorized 
     by this act that may be conducted by Fund service units. 
     These activities are limited to the following seven: (1) 
     preparation of research reports, translations, analytical 
     studies, and related services, for any entity of the Federal 
     government or the District of Columbia (but would not, for 
     example, cover such appropriated research activities as those 
     conducted for the Congress by the Congressional Research 
     Service); (2) centralized acquisition of publications and 
     library materials in any format; information, research, and 
     library support services; training in library and information 
     services; and related services for any entity of the Federal 
     government or the District of Columbia; (3) decimal 
     classification development; (4) gift shop and other 
     activities involving sale of items associated with Library 
     collections, exhibits, performances, or other events; (5) 
     location, copying, storage, preservation and delivery 
     services for library materials (not including domestic 
     interlibrary loans), and international interlibrary lending; 
     (6) special events and programs, performances, exhibits, 
     workshops, and training; and (7) cooperative acquisitions of 
     foreign publications and research materials and related 
     services on behalf of participating institutions.
       For the most part, these activities describe programs the 
     Library conducts currently. Some examples of these current 
     activities are: a bibliography of citations to scientific 
     literature on the earth's cold regions, compiled for the 
     National Science Foundation; area studies handbooks prepared 
     for the Department of Defense; centralized and cost-effective 
     procurement of commercial database services for Federal 
     agencies through FedLink; sale of exhibition catalogs in the 
     gift shop, such as Rome Reborn: the Vatican Library & 
     Renaissance Culture, and African American Odyssey: A Quest 
     for Full Citizenship; development of the Dewey Decimal 
     classification tables, and the Library's Cooperative 
     Acquisitions Program, which will be folded into the newly 
     created fund under this legislation.
       Charging fees under the authority set forth in item (e) for 
     retrieval and delivery of library materials will not infringe 
     on basic library services, but will allow the Library to, for 
     example, continue to make its film collections available for 
     loan by permitting recovery and retention of costs of making 
     a loan copy of the film from a master copy.
       The intent of section 102 is to authorize a revolving fund 
     mechanism for current fee-based activities of the Library 
     which now operate under the Economy Act, or the Library's 
     extant gift fund authority, plus the following activities not 
     currently being done or for which fees are not currently 
     charged: (1) charging fees for attending films and other 
     performances; (2) charging fees for borrowing films; and (3) 
     charging fees for services relating to a national audio-
     visual conservation center (preservation, copying, 
     transporting and storage of films and other audio-visual 
     materials).
     Section 103. Establishment of the Library of Congress 
         revolving fund
       Section 103 establishes the Library of Congress Revolving 
     Fund in the U.S. Treasury as a ``no year'' fund to carry out 
     Fund service activities; this means that money remains 
     available in the Fund until expended. This section also sets 
     forth the sources of the Fund capital, and specifies amounts 
     received for Fund activities that are to be credited to the 
     Fund.
       This section also establishes various operational controls 
     and limitations on the fund, including: (1) specification of 
     the capital and credits to be deposited into the fund; (2) 
     limiting obligations under the fund to limits set under the 
     legislative branch appropriations act for any fiscal year; 
     (3) requiring annual audits of fund financial statements, to 
     be submitted to Congress; and (4) requiring separate fund 
     service unit activity accounts.
       The intent of sub. (b)(2), authorizing funds from other 
     Library appropriations accounts to be temporarily transferred 
     to the Fund, is primarily for the purpose of initially 
     capitalizing activities previously conducted under section 
     1535 of Title 31, U.S. Code [the Economy Act]. This 
     subsection requires the fund to reimburse such a ``loan'' 
     within the period for which the appropriation is available. 
     Subsection (b) also specifies other amounts to be deposited 
     into the fund.
       Subsection (c) specifies amounts to be added to the fund as 
     credits to the service unit accounts.
       The intent of sub. (d) is to ensure that, once the 
     Librarian determines the appropriate grouping of activities 
     into fund service units, the reimbursable portion of each 
     service unit will be self-sufficient, operated under a 
     separate account within the revolving fund.
       Subsection (e) is standard language applying to self-
     supporting programs, requiring the agency to designate excess 
     amounts in the fund as miscellaneous receipts and deposit 
     such funds in the Treasury.
       Subsection (f) requires that a financial statement be 
     prepared annually, that the statement be audited, and that 
     the audit be submitted to Congress on an annual basis.
     Section 104. Operation of revolving fund activities
       Section 104 establishes parameters for the operation of the 
     Revolving Fund activities Subsection (a) authorizes the 
     Librarian to set fees to recover the costs of activities 
     authorized by sec. 102, and authorizes the Library to sell 
     products and services resulting from those activities. This 
     section limits the purchase prices to levels necessary to 
     recover the direct and indirect costs for each fund service 
     unit, over a reasonable period of time.
       Subsection (b) provides express authority to require 
     participants (including federal participants) to provide 
     advance payments, where necessary to ensure that the fund is 
     sufficiently capitalized, and under other circumstances upon 
     agreement with participants.
       Subsection (c) permits fund activities to engage in multi-
     year contracts. This language parallels identical authority 
     currently afforded executive branch agencies and the General 
     Accounting Office under the Federal Property and 
     Administrative Services Act [41 U.S.C. 253l and 254c].
     Section 105. Repeal
       Section 105 repeals the current authorization for the 
     Cooperative Acquisitions Program revolving fund; that fund, 
     and the corresponding activities associated with it, are 
     incorporated into the new Library of Congress Revolving Fund 
     created under Title I of this bill.
     Section 106. No effect on personnel
       This section specifies that nothing in Title I of this Act 
     is intended to affect the terms and conditions of employment 
     of any employee of the Library of Congress who carries out 
     any Revolving Fund activity. The purpose of this section is 
     to avoid any unintended consequences of restructuring current 
     activities to operate under a new revolving fund.


               title ii--cataloging products and services

       In 1902, the Library of Congress was first authorized by 
     Congress to serve the Nation's libraries by producing and 
     distributing catalog cards. These cards establish and 
     describe the author, title, and physical characteristics of a 
     book and contain subject headings and a classification number 
     to enable researchers to locate books by author, title, or 
     topic.
       Over the years, the Library of Congress has expanded its 
     catalog card service by producing and distributing additional 
     bibliographic and technical products and services. In 
     addition to the print format, the Library has utilized other 
     formats to make cataloging data available, e.g., magnetic 
     tapes and CD-ROMs, and has recovered the distributing costs 
     for providing these products.
       As a result of this centralized cataloging activity, the 
     Nation's academic and public libraries save significantly on 
     costs they would incur if they had to create their own 
     cataloging records.
       Title II modernizes the authority given in the 1902 law 
     under which the Library provides these bibliographic 
     information services and products; and makes funds available 
     until expended.
     Section 201. Availability of cataloging products and services
       In addition to authorizing the Librarian of Congress to 
     sell cataloging products and services, this section limits 
     the prices charged for such products and services to recovery 
     of the distribution costs associated with furnishing such 
     products and services, rather than the current ``cost plus 10 
     percent.'' This section also provides that all moneys 
     received through the distribution of such products and 
     services shall be deposited in the Treasury and credited to 
     the Library of Congress salaries and expenses appropriation, 
     to remain available until expended. This mechanism will 
     provide a more stable financial base for cataloging 
     distribution operations.
       For the purposes of this title, ``cataloging products and 
     services'' is defined to mean those bibliographic products 
     and services, in

[[Page 4546]]

     any format now known or later developed, that are used by 
     libraries and library organizations, including other Library-
     created databases, and related technical publications.
       The language ``over a reasonable period of time'' is 
     included to make the provision consistent with the revolving 
     fund language under s. 101. This language will assist the 
     Cataloging Distribution Service in bridging fiscal years if 
     some distribution costs are incurred over more than one 
     fiscal year, and recognizes that the sale price of cataloging 
     products must be established on a businesslike basis, i.e. 
     based on overall distribution costs, measured by the 
     estimated sales volume of cataloging products over the 
     estimated duration of sale of any given item.
     Section 202. Repeal
       This section repeals the obsolete 1902 law authorizing the 
     production and sale of cataloging cards and records, in light 
     of the new authority established under sec. 201.


                 title iii--trust fund board amendments

       Title III of the bill, amending the Library of Congress 
     Trust Fund Board Act, will ensure the Board's continuity 
     across members' terms as well as the Congressional calendar. 
     The Library of Congress Trust Fund Board was created by 
     Congress in 1925 and charged with the acceptance, deposit, 
     and administration of funds given or bequeathed to the Board 
     for the benefit of the Library. In 1992, the Board was 
     expanded from 5 to 13 members. Three are ex-officio (The 
     Librarian of Congress, the Secretary of the Treasury; and the 
     Chairman of the Joint Committee on the Library); the 
     remaining members, who serve five-year terms, consist of two 
     appointed by the President, and four each appointed by the 
     Speaker of the House of Representatives and the Majority 
     Leader of the Senate (both in consultation with the 
     respective minority leaders).
     Section 301. Addition of congressional board member
       Section 301 increases the size of the Board by the addition 
     of a new member--the Vice-Chairman of the Joint Committee on 
     the Library. The Committee's Chairman has been an ex-officio 
     member of the Trust Fund Board since the Board's creation in 
     1925. Because the Chairmanship and Vice-Chairmanship of the 
     Joint Committee on the Library alternate each Congress 
     between the Senate and the House of Representatives, this 
     provision is intended to enhance the continuity of the 
     Library's Congressional overseers in the activities of the 
     Trust Fund Board.
     Section 302. Temporary extension of board member term
       The bill authorizes the Board Chairman to extend 
     temporarily the term of an appointive board member whose 
     period of appointment has expired. Such an extension could 
     not exceed two years, and would expire immediately upon the 
     appointment of a successor. The Library is requesting this 
     provision on behalf of the Trust Fund Board, which approved 
     the request by resolution on September 24, 1998.
       Vacancies on the Trust Fund Board have occurred due to the 
     expiration of the members' terms, resignations, deaths and 
     for other reasons. Due to the press of Executive and 
     Congressional business, these vacancies often cannot be 
     filled to ensure that the Board consists of a sufficient 
     number of members necessary to conduct business and carry out 
     its fiduciary responsibilities. In recent cases, this has 
     meant, for example, that funds given to the Board to benefit 
     the Library have not been able to be accepted and invested in 
     a timely manner, at the expense of valuable investment income 
     to the Library.
     Section 303. Trust fund board quorum
       Section 303 amends the Trust Fund Board Act to specify that 
     seven members of the 14-member Board constitute a quorum; 
     current law requires nine of 13 members to conduct business. 
     The Library is also requesting this provision on behalf of 
     the Trust Fund Board, which approved the request by 
     resolution on September 24, 1998.

                          ____________________