Segment 1 Of 2 Next Hearing Segment(2)
SPEAKERS CONTENTS INSERTS Tables
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DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION, AND RELATED AGENCIES APPROPRIATIONS FOR 1999
Tuesday, April 21, 1998.
RAILROAD RETIREMENT BOARD
WITNESSES
JEROME F. KEVER, MANAGEMENT MEMBER
V. M. SPEAKMAN, JR., LABOR MEMBER
MARTIN J. DICKMAN, INSPECTOR GENERAL
Introduction of Witnesses
Mr. PORTER. The subcommittee will come to order.
We continue our hearings on the fiscal year 1999 budget request with the Railroad Retirement Board, and we are pleased to welcome Jerome F. Kever, the Management Member, V.M. Speakman, Jr., the Labor Member, and Martin J. Dickman, the Inspector General. Gentlemen, it is good to see each of you. Mr. Kever, why don't you proceed and then Mr. Speakman and then Mr. Dickman.
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Opening Statement
Mr. KEVER. Thank you very much. Good afternoon, Mr. Chairman and members of the committee. I am Jerome F. Kever, the Management Member of the Railroad Retirement Board and with me today, as you pointed out, presenting joint testimony is V.M. Speakman, Jr., to my right, the Labor Member. As you know, Ms. Cherryl T. Thomas has been nominated by the President to become Chair of the Board. We have submitted a written statement which we ask to be made a part of the record. Joining us today, as you point out, is the Board's Inspector General to my left, Mr. Martin J. Dickman, who will also make a statement.
During fiscal year 1997, the Board paid $8.3 billion in railroad retirement and survivor benefits to nearly 800,000 beneficiaries. We also paid unemployment and sickness insurance benefits of $104 million to 35,000 claimants.
We appear before you today to ask for an increase in the fiscal year 1999 appropriation of $4 million or 4.65 percent to get to $90 million. This $90 million is $3.8 million less than the agency's original request to the Office of Management and Budget of $93.8 million and reflects our continuing efforts to reduce costs. The President's request for the Board's administrative budget, however, is only $86 million, which is $1.2 million less than the amount appropriated for fiscal year 1998. In combination with the $3.7 million we expect to receive as reimbursement from the Health Care Financing Administration for Medicare activities, the President's requested budget of $86 million will support a total of 1,095 FTEs. That is 135 FTEs, or 11 percent, less than we expect to expend this year. The President's budget also proposes legislation to allow voluntary separation incentive payments, or buyouts, through December 30, 1998.
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REQUEST FOR ADDITIONAL FUNDING
We estimate that in fiscal year 1999 the Board will need an additional $4 million, as well as the proposed buyout authority, for a total administrative appropriation of $90 million. Over the last several years, the Board has undergone dramatic reductions in both staffing and funding which affect our ability to withstand deeper cuts at this time. In conjunction with the buyout authority, an additional $4 million will allow us to avoid a major reduction-in-force and proceed with special automation initiatives that will enable the Board to make a successful transition to operating at a lower cost on a long-term basis. Our rationale for requesting this additional $4 million is as follows:
Approximately $2.66 million of the additional funding is needed to avoid an immediate reduction-in-force of 97 employees. Because actual buyouts and net attrition for fiscal year 1998 have been substantially less than anticipated, we will enter 1999 with more employees than we can accommodate at the President's $86 million appropriation level. In addition, recently adopted occupational disability regulations are expected to increase our estimated fiscal year 1999 fees for consultative medical examinations by $700,000, an increase which we could not and did not anticipate in the original $86 million appropriation request.
This agency simply cannot afford a reduction-in-force of this magnitude at this time. Since fiscal year 1993, we have conducted reductions-in-force resulting in 58 separations. We have offered buyouts on 4 separate occasions, which resulted in a total of 177 separations. We have also restricted our hiring, allowing attrition to decrease our staffing levels by an additional 242 positions as of March 1, 1998. Despite these reductions in our salary costs, we were only able to pay 50 percent of the dollar amount of the annual performance awards in fiscal year 1997.
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According to the Analytical Perspectives published as part of the President's proposed budget for fiscal year 1999, our staffing reduction from fiscal year 1993 through 1999 is projected to be 34.8 percent. This is more than double the reduction of 15.4 percent projected for total civilian employment in the executive branch, and nearly 4 times the reduction of 8.8 percent projected for non-defense employment. Further, while total governmentwide discretionary outlays are projected to rise about 2.4 percent in fiscal year 1999 as compared to fiscal year 1998, the Board's administrative budget would undergo a 1.4 percent cut. Thus, under the proposed budget, we would be required not only to absorb an actual cut in spending, but also to pay for an expected 3.1 percent January 1999 pay increase.
Moreover, in fiscal year 1999, approximately $5.4 million of our total administrative budget, which represents 6.3 percent of the proposed budget, will fund Year 2000 project costs. In view of these internal and external funding constraints, it is important to remember that the Board administers entitlement programs established by Congress. These are not subject to discretionary spending. In order for us to manage further significant cuts in staffing, our agency must have the information technology tools in place to help maintain an adequate level of customer service.
INFORMATION TECHNOLOGY FUNDING
For this reason, the remainder of our request for the additional $4 million is for funding technology initiatives and system evaluations that will allow us to accomplish our strategic vision. Regarding our customers, this vision anticipates that they will be able to contact the Board, not only in person or by telephone, but through a host of new choices, such as interactive voice response system, video conferencing, or through the Internet, knowing that in almost all cases their business will be concluded during that initial contact.
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The Board's Information Technology Capital Plan was developed in concert with our Strategic Information Resources Management Plan. Both these plans support the agency's Strategic Plan which we prepared in accordance with the Government Performance and Results Act. These plans outline a comprehensive approach toward maintaining our customer service at future lower costs, and cannot be achieved without closing the near-term gap between our planned initiatives and those which a reduced level of funding would permit. Accordingly, we are requesting additional funding of $1.34 million to cover a broad range of technology investments needed to help ensure adequate customer service by improving our efficiency.
Now, in concluding my testimony, I wish to stress the Board's continuing commitment to improve our operations and to provide quality service to our beneficiaries in the face of tight budgetary resources. We believe that the performance of the Board over the last few years has earned us a level of trust with this subcommittee. We therefore ask that you continue your confidence in our administrative ability and grant us the additional $4 million necessary to ensure the efficiency of our operations into the future.
Now my colleague, Mr. Speakman, would like to make a brief statement after which we would be happy to answer any questions you may have. Thank you.
Remarks by Mr. Speakman
Mr. SPEAKMAN. Thank you, Mr. Chairman. As Labor Member of the Railroad Retirement Board, I would like to express my full support for the testimony of my colleague, Mr. Kever. It is not my intention to offer redundant testimony. However, there are a few brief points I would like to emphasize in support of the request for a $4 million increase in the agency's budget for fiscal year 1999.
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First of all, we have made significant strides in recent years in reducing staffing levels, while maintaining and even improving service levels. We have improved processing times and increased accuracy rates for many types of benefits. We have managed to accomplish this largely through expanded use of automation and we fully intend to continue this direction and have developed the necessary plans to assist us. However, our ability to implement these plans and to maintain service to our customers would be seriously jeopardized at the proposed level of $86 million.
Mr. Chairman, we want to emphasize that the Railroad Retirement Board clearly understands, we clearly understand that financial resources are limited, and that this resource will continue to be limited. However, by making some short-term investments in information technology, we believe that we will reap the long-term benefit of continuing to provide adequate customer service with fewer staff and to see these plans through with the goal of providing adequate customer service in a more proficient and efficient manner, and to avoid a significant reduction in force, we are seeking an additional $4 million in fiscal year 1999.
We believe, given our track record, that our proposal is a reasonable one, and that concludes my remarks, Mr. Chairman.
[The prepared statements of Mr. Kever and Mr. Speakman follow:]
"The Official Committee record contains additional material here."
Mr. PORTER. Thank you, Mr. Kever and Mr. Speakman.
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Mr. Dickman.
Inspector General's Opening Statement
Mr. DICKMAN. Good afternoon, Mr. Chairman. My name is Martin Dickman and I am the Inspector General at the Railroad Retirement Board. I am here to ask for your support for our fiscal year 1999 budget request of $5.4 million. I wish to submit my testimony for the record and summarize our priorities for next year. After my formal statement, I would like to discuss our request for $200,000 of additional funding to avoid a RIF of 4 FTEs.
We will continue the audit of the RRB's 1998 financial statements and perform the preliminary work for the 1999 financial statements. Each of the previous 5 audits of the agency's financial statements have included a disclaimer of opinion. We will continue to provide recommendations to agency management to address the identified weaknesses.
We will conduct monitoring reviews of the RRB's actions to meet strategic and performance goals as required by the Government Performance and Results Act. We have formed a special unit to evaluate the RRB's performance similar to that used in our monitoring of the 5-year RRB–OMB Special Management Improvement Plan. We will conduct reviews to monitor the RRB's Year 2000 project management for conversion of 166 mainframe computer systems. We have also established a special audit group to monitor the agency's Year 2000 compliance.
We will evaluate agency efforts to improve coordination with the Department of Treasury, the Internal Revenue Service, and the Social Security Administration. The financial statement audits have cited the RRB's inability to verify the accuracy and timeliness of railroad payroll taxes as a material weakness. We will also monitor the agency's progress in achieving additional system-to-system access with the Social Security Administration. We will continue our reviews of the agency's investment committee and its practices and policies. This committee is responsible for the investment of over $15 billion in trust fund monies. We will conduct audits relating to benefit payment accuracy and provide management with recommendations to reduce the number of administrative and adjudicative errors. We will also monitor the agency's debt collection activities as outstanding receivables continue to remain high at $65.7 million.
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In fiscal year 1999, our Office of Investigations will focus its resources on cases with the highest fraud losses, which usually involve the RRB's disability benefit program. Our active investigations currently total about 1,000 fraud cases with losses of approximately $7.4 million. We will continue to cooperate with other Inspectors General and law enforcement entities. We will work closely with agency managers to ensure that all fraud matters are appropriately referred to our office.
This concludes my remarks, Mr. Chairman, and I will be happy to answer any questions that you may have concerning our request for additional funding. Thank you.
[The statement of Mr. Dickman follows:]
"The Official Committee record contains additional material here."
Remarks by Mr. Porter
Mr. PORTER. Thank you, Mr. Dickman. I want to thank each of you for traveling to Washington and being with us both this morning and this afternoon, and we understand that Cherryl Thomas has no opposition and it is only a matter of scheduling the floor time in the Senate for her to be confirmed, and so we look forward to working with her when those administrative matters are taken care of.
You preside over a, what we consider to be a very well-run agency. You deserve credit for the great progress that has been made over the last several years, and I hope you will continue in the direction the Board has set of improving productivity, limiting FTEs and expenditures, and providing top quality service to your customers. You have done a very good job also of implementing the Government Performance and Results Act, and in this area you are ahead of most of the agencies that we oversee. I believe you have a good understanding of the value of outcomes assessment and performance measurements.
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The budget hearings necessarily focus attention on the things we think could be improved, so I want to make clear that my questions are in the context of an agency that is doing a very good job already.
RRB PERFORMANCE OBJECTIVES UNDER GPRA
Mr. Kever and Mr. Speakman, the President is requesting a reduction for the agency below the fiscal year 1998 appropriation of about 1 percent. The agency, however, is asking for an increase of about 3 percent over fiscal year 1998 and about 5 percent above the President's request. The justification for the requested increase is in part the desire to avoid reductions in force and in part to avoid deterioration in productivity and service. However, if we look at the GPRA plan included with the President's request, the agency indicates that at the funding level requested by the President, service delivery and productivity for each GPRA indicator will be maintained at fiscal year 1998 levels or will, in fact, improve.
That raises 2 issues. First is the issue of data significance. Many of your performance targets are expressed as percentages exceeding 95 percent and many are set at 99 percent. A decline from 99.4 percent payment accuracy, for example, to 98.5 percent would reflect a significant deterioration of service, representing substantial sums of money that would be reflected in the GPRA report as 99 percent for each year, no change. So let me suggest as a future standard that all GPRA submissions to the subcommittee provide percentage data to 1 decimal place for any percentage indicator for which either the actual data or the target data equals or exceeds 95 percent. Please report 2 decimal places when actuals or targets equal or exceed 98 percent.
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The second issue is the more serious one. Not every variance in service levels between the GPRA plan and the impact statement can be explained by data significance. Clearly the information you have reported to our staff regarding service levels under the President's request are not fully reflected in the GPRA report in the budget justification. You may comment on the reasons for this disconnect, but let me indicate to you that GPRA is a budgeting tool and your performance targets must reflect the budget request.
Do you want to comment on that?
Mr. KEVER. I certainly do, Mr. Chairman.
Mr. PORTER. Please proceed.
AGENCY PERFORMANCE AT PROPOSED FUNDING LEVEL
Mr. KEVER. I would like to clarify first what was contained at least in our view in the budget justification package. The cover letter on this package suggested that the President's budget request of $86 million would, in fact, fund 85 fewer FTEs in 1999 than was called for in the justification book. We would be very unlikely to reduce staff to that extent without incurring a reduction-in-force. A reduction-in-force would, of course, further negatively impact our level of performance. Also, the $86 million does not reflect the impact of the new occupational disability standards which were negotiated between rail management and labor and implemented January 1, 1998, and we also had a switch in the medical contractors due to the poor performance that we received on the prior contractor.
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Also, the introductory statement in our annual performance plan states that administrative funds of $86 million for fiscal year 1999 will have a negative effect on trust funds and customer service. It further points out that these negative effects may not be readily apparent when you review the plan.
Now, in preparing the budget justification, we developed various scenarios depicting the impact of an $86 million budget on our staffing levels. We chose to conservatively estimate the impacts on performance levels at that time because we did not want to risk overstating any quantifiable impacts on performance. Since that time, we have learned that our estimated net attrition level has significantly decreased, and we have learned that the additional dollar amount, some $700,000 that will be needed to implement our new occupational disability standards and to cover our increased outside medical contractor costs. So although we are still unable to measure precisely how staffing will impact each of our performance levels, we can say that there is an even stronger likelihood that the agency's performance will slip in areas such as timeliness and accuracy. And given what we know now, we can say that the impact statement that we have provided to support our request for an additional $4 million is the result of our best and most recent attempts to quantify the negative effects of a reduction in staffing on our performance levels.
Mr. PORTER. Anyone else want to comment on that?
Mr. SPEAKMAN. Mr. Chairman, that basically states the point. I think the point you also made with regards to the decimal point inclusion to increase—to identify the impact more clearly is a good point and it is certainly one that we will do in the future. It offers the opportunity to enlighten the committee with regards to the impact of the service.
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REPORTS OF ACTUAL AND PLANNED PERFORMANCE DATA
Mr. PORTER. Let me also ask you in the future to provide GPRA data that includes one year of actual performance data in addition to current year and future year projections. And for the record, could you please provide a table which indicates for each performance indicator the fiscal year 1998 projections, the fiscal year 1999 President's budget projection, and the fiscal year 1999 RRB request levels. Please include FTE in this table as well.
Mr. KEVER. We will be happy to provide you with that.
[The information follows:]
"The Official Committee record contains additional material here."
SPECIAL MANAGEMENT IMPROVEMENT PLAN GOALS
Mr. PORTER. Are all of the SMIP targets and goals included in the GPRA plan, and if not, which ones are not and why are they not included?
Mr. KEVER. All of the targets are included in the GPRA plan that we have.
GOALS FOR FULL CYCLE TIMES
Mr. PORTER. I want to congratulate you on a generally very good performance plan in service delivery matters that focuses on the outcomes we are interested in; for instance, processing times and backlogs. Generally, your indicators focus on the front end of the process, initial decisions, those that affect most people. However, the plan does not seem to set targets for full cycle times to include processing times for appeals.
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Why haven't you set goals for full cycle times since you intended to do this for fiscal year 2000?
Mr. KEVER. Thank you, Mr. Chairman. That is a very timely request, because we are discussing that very issue at the Board amongst the managers at this point. In fact, over the last month I believe we have been getting reports from our Hearings and Appeals department that include the final adjudication of a claim. So we will be able to provide you within the next year information in that area.
Mr. PORTER. Thank you.
CUSTOMER WAITING TIMES
Another area that we have looked at with the Social Security Administration is customer waiting times, whether for office visits or for telephone calls. We would like you to measure how many callers to RRB, both the offices or automated systems are connected on their first try and how many are served within 5 minutes. Would you be willing to do this?
Mr. KEVER. We are willing to do that, and I believe we have statistics that would show you where we are at in that regard, if I am not mistaken, by field office.
Mr. PORTER. We would also like to have some measure of waiting times for individuals coming into RRB offices both with and without appointments. Would you do that for us for fiscal year 2000?
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Mr. KEVER. We in fact capture that information today and could report to you now on that.
Mr. PORTER. Good.
RECOMMENDATIONS FOR THE FUTURE
Last year I asked Chairman Bower for his recommendations for the future of the Railroad Retirement Board. He gave us those recommendations. If the new Chairman is confirmed shortly, I would like her for the record to take those recommendations and break them into 2 categories: those that the agency can act on without Congressional action and those that could be undertaken—and others that could be taken within legislative authority of the subcommittee as opposed to the authorizing committees. In each case I would like the Chairman to offer her thoughts regarding the recommendations and her intentions regarding implementation. And I would also be interested in hearing your comments, Mr. Kever and Mr. Speakman, on those recommendations.
[The information follows:]
"The Official Committee record contains additional material here."
RECONCILIATION OF TAX DATA
Mr. PORTER. The justification indicates a target of completing all reconciliations within 26 months of the end of the tax year. Why do these reconciliations take so long to perform, and why do you feel 26 months is an adequate target date?
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Mr. KEVER. Mr. Chairman, while we don't believe that 26 months is an adequate target date, we are unfortunately stuck with that time because of the slowness in receiving the information from the Internal Revenue Service, and I am not knocking the Internal Revenue Service, but it is a very complicated process that they go through to get us the information, and then we have to reconcile it to the records that are reported to us by each of our employers. We have, in fact, if I am not mistaken, cut that time down substantially in the past. I think when I came on board 5 or 6 years ago we were like 4 or so years behind. So we have closed the gap. We are not happy with it, and we continue to try to get it done quicker, but this is the best we can do today.
Mr. PORTER. Is there anything the subcommittee can do to help you get that information more quickly?
Mr. KEVER. Let me get back to you on that. I don't know for sure, but we would be happy to solicit your help if it would be worthwhile, which I am sure it would.
[The information follows:]
STATEMENT BY MR. KEVER CONCERNING RECONCILIATION OF TAX DATA
Railroad employers are required to file Annual Railroad Retirement Tax Returns by February 28 of the year following the tax year, unless a filing extension is requested and granted. The Internal Revenue Service (IRS) processes the returns, accumulates all the relevant information, and provides us with a computer disk containing all the required tax information, generally by early October of that year.
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We compare the compensation reported by railroad employers for tax purposes with compensation reported for benefit calculation purposes. Over 80 percent of our reconciliations are completed within 12 months after we receive the tax information from the IRS. All are completed within 2 years after the original filing deadline which is 1 year before the statute of limitations expires to take action on the tax forms. The IRS, therefore, has adequate time to take action to resolve any issues that we report to them before the statute of limitations expires or to take action to extend the statute of limitations for individual tax filers.
Our target dates are consistent with those established under the Special Management Improvement Plan. We believe the target dates are reasonable and allow us to work efficiently with the IRS to resolve issues within the statute of limitations time frames.
RECOMMENDATIONS BY FORMER CHAIRMAN
Mr. PORTER. Will you, Mr. Kever and Mr. Speakman, comment on the recommendations made by Chairman—former Chairman Bower?
Mr. KEVER. Mr. Chairman, we actually have not sat down and had a dialogue about the recommendations, other than probably amongst our own staff. We are primarily waiting for a new Chairman to come on board and to try to get a consensus of how we should respond, and your request that Ms. Thomas should delve into those immediately. Mr. Speakman and I, I am sure, will be happy to sit down with her and walk through it and get back to you on that.
RETURN ON INVESTMENTS
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Mr. PORTER. The performance plan indicates that the market rate of return for the Railroad Retirement Account will exceed the Bloomberg index of Treasury notes and bonds with one year of maturity. Why did you choose the Bloomberg as your benchmark? Please provide a table indicating the rate of return of the Railroad Retirement Account and the Bloomberg index for each of the last 5 years.
Mr. KEVER. Mr. Chairman, we chose the Bloomberg primarily because it is the most recognized authority on bond performance, and in fact we have beat that level each year since we have used it. But we will be happy to provide you with the statistics you asked for to the extent we can. I don't know if we can go back 5 years.
[The information follows:]
The following table provides a comparison of the market rate of return earned by the Railroad Retirement Account and the Bloomberg index of Treasury notes and bonds with more than 1 year to maturity. The Railroad Retirement Board began to measure the market return on investments in July 1996.
Mr. PORTER. Thank you.
Mr. Dickman, we are asking all of the IGs to participate in the GPRA process in 2 fundamental ways. We would like you first to act as a management consultant to review the GPRA plan comprehensively and suggest modifications or improvements which will give us a better picture of agency performance. Second, we would like you to act as an auditor to provide some assurance regarding the process by which GPRA data is collected and reported to the subcommittee. If you would like to comment on this now, you may, but we would like you to submit a plan for the record to undertake this initiative. And please feel free to put a price tag on the plan.
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GOVERNMENT PERFORMANCE AND RESULTS ACT
Mr. DICKMAN. Mr. Chairman, as I stated in my opening statement, we have in place a special audit group to audit the GPRA plan of the Railroad Retirement Board. We do have an audit report which I can provide to the committee of the plan. Again, this is part of our request for the additional funding of $200,000. It relates to the money that we would need to provide the necessary resources to audit the GPRA plan; to monitor the agency's Year 2000 compliance; and also to perform the financial statement audit along with the regular audits that we do in the ordinary course of business.
[The information follows:]
PRELIMINARY AUDIT PLAN
REVIEW OF PROCEDURES AND CONTROLS FOR MEASURING RRB PERFORMANCE IN MEETING THE ANNUAL PERFORMANCE PLAN GOALS AND OBJECTIVES
In accordance with the Government Performance and Results Act of 1993, the Retirement Board submitted a five year strategic plan which identified the following four strategic goals:
Provide Excellent Customer Services,
Safeguard Customer's Trust Funds Through Prudent Stewardship,
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Align Resources to Efficiently and Effectively Meet the Agency's Mission, and
Expand the Agency's Use of Technology and Automation to Achieve its Mission.
The Railroad Retirement Board also developed an annual performance plan based on its strategic goals; the plan is designed to ensure the agency's continual, measurable progress on its objectives. The agency released its first annual performance plan to the Office of Management and Budget and Congress along with the agency's fiscal year 1999 budget submission in September 1997. This plan contained 16 performance goals with 52 performance indicators.
The Office of Inspector General has formed a special unit to evaluate the agency's actions to meet its strategic and performance goals. In fiscal year 1999, this unit will review the adequacy of agency procedures and controls for accurately measuring the agency's performance in meeting the goals established in the annual performance plan. Four auditors have been assigned to this unit on a rotational basis, with each focusing on one strategic goal and a sampling of its performance goals and indicators. Because this audit will not include a validation of each of the 52 indicators, the scope of all audits in progress is being expanded to include the agency's performance goals and measures. In fiscal year 1999, this practice will be continued for all newly initiated audit work.
Review of the agency's compliance with the Government Performance and Results Act is an additional function that the Office of Inspector General will be required to assume.
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In November 1997, the Office of Inspector General conducted a review of the agency's compliance with the basic requirements of the Act. Auditors identified some performance indicators and goals in the Annual Performance Plan which required improvement. Some indicators promote the status quo, not program improvement. Agency management rejected all report recommendations for improvement. We will again act as management consultant through the review of the updated Annual Performance Plan to identify any ongoing deficiencies and make recommendations to management. We will consult with the newly appointed agency head and Congress to determine the priority and exact number of indicators to be tested.
Auditors will determine if the agency's internal control structure ensures that data supporting specific performance measures are properly measured and recorded to permit the preparation of reliable and complete performance information in the financial statements. Policies and procedures will also be reviewed to assess their effectiveness in providing reasonable assurance that the agency will meet its strategic objectives.
During the performance of the audit of the fiscal year 1997 financial statements, auditors reviewed the agency's annual performance goals/indicators for two strategic goals (Provide excellent Customer Service and Safeguard Customer's Trust Funds through Prudent Stewardship). Auditors will continue their monitoring of performance measures during the audits of the fiscal years 1998 and 1999 financial statements.
Mr. PORTER. Thank you, Mr. Dickman.
Mr. Wicker.
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AGENCY DOWNSIZING
Mr. WICKER. Thank you, Mr. Chairman. I moved over here to get closer to the microphone.
Let me just back up and ask something that the Chairman touched on about how we are doing in downsizing the number of employees at the Railroad Retirement Board. How many FTEs did we have last fiscal year and how many do we anticipate having this year and next year?
Mr. KEVER. Did you want 1997 or 1998?
Mr. WICKER. Well, I would like to have the last fiscal year, this fiscal year and the next fiscal year.
Mr. KEVER. The expected usage of FTEs in 1998 is 1,230, and at the budget level of $86 million we would have 1,095 FTEs.
Mr. WICKER. So that is what you are proposing to actually reduce the amount to, 1,095 in fiscal year 1999?
Mr. KEVER. No. We would like not to RIF 97 people, so we would add the 97 to the 1,095. That is the level that we would like to have.
Mr. WICKER. And that would put you at what?
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Mr. SPEAKMAN. 1,192.
Mr. WICKER. That is hardly any reduction at all, isn't it?
Mr. KEVER. It is a 34.8 percent reduction.
Mr. WICKER. Well, at a time when the number of railroad beneficiaries is declining for any number of reasons, how can you justify that?
Mr. KEVER. We believe we have done a tremendous amount of work with our constituents, both the labor side and the management side and industry, and they concur with us that this is the amount of people we need. Most of the increase that we are asking for today is so that we can stop and catch our breath in our maturation process at the Board to make sure that the reorganization that we put in place 2 years ago is exactly what we need to get us into the future.
Now, another justification that we have is that if we are going to continue to reduce FTEs at the pace we have, and we have done it like quadruple what every other agency has done—we have to have technology in place to replace these people. And that is what we are asking for as well, specific technology to allow us to get to the future with fewer FTEs. It is simply a matter of the 5 or 6 years that we have downsized tremendously, I think in the testimony we will go down about 34.8 percent over the last 5 years. That is a pretty tremendous hit for an entitlement program like ours, at least in my view. And we are not kidding ourselves that we will probably have to reduce in the future because of the appropriation, but we need to stop now and see where we are at and get the technology in place in order to be able to effectively reduce FTEs in the future.
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Mr. WICKER. How much trouble would it be for you to provide me and how quickly could you provide me with the number of beneficiaries, Railroad Retirement Board beneficiaries for the past several years?
Mr. KEVER. We can do it within a week, no problem.
[The information follows:]
BENEFIT PROGRAM BENEFICIARIES COMPARED WITH AGENCY STAFFING FISCAL YEARS 1993–1997
The following chart shows the number of beneficiaries under the Railroad Retirement Act (RRA) and the Railroad Unemployment Insurance Act (RUIA) compared with the agency's staffing for fiscal year 1993 through 1997.
Mr. WICKER. Okay. Well, I would just say, Mr. Chairman, that to say that this agency has reduced its FTEs more than other agencies is an interesting fact, but it does not take into account the fact that the number of people served by the agency is declining and some agencies, the people served by those particular functions is increasing. So I don't know if it is particularly instructive to compare FTEs of this agency to other ones. I really would like those figures, and so I appreciate the fact that you can get them to me.
Mr. KEVER. We will have them.
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MEDICARE ADMINISTRATION
Mr. WICKER. If I might continue for a few more minutes, Mr. Chairman. In the past I have questioned the sensibility of having railroad retirees' Medicare claims processed by the RRB. To me it seemed more sensible for HCFA to run all claims processing activities. Recently the HHS Inspector General reported that savings could be as high as $40 million per year if RRB claims were processed by HCFA.
In light of that fact, do both of you agree that these duties should be shifted to HCFA?
Mr. KEVER. Mr. Wicker, I can only speak for myself. Intuitively, I believe it makes sense for us to switch there with a $40 million price tag. There are a lot of things that go into making a decision like that; the fact that we have done it a different way all of these years, the fact that we have legislative authority to do it, all of these things need to be changed, and I guess intuitively again my reaction would be yes, I would be for it, but I would like to see a plan that makes sure that our constituents are not affected in any way.
Mr. WICKER. Mr. Speakman?
Mr. SPEAKMAN. Mr. Wicker, we have addressed ourselves to this question in the past and quite candidly, the labor people that I represent have expressed themselves on this issue and have expressed opposition to the change of the Medicare contract. We believe that we are best positioned to administer the contract, and quite candidly, we would like to be able to speak in more detail and offer for the record some comments on this so-called $40 million savings. We believe that those numbers may not be in fact as valid today as they were when they were first developed. So we would like to have an opportunity to speak to those and give you the benefit of our comments.
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Mr. WICKER. Certainly I would appreciate having the benefit of those comments.
[The information follows:]
"The Official Committee record contains additional material here."
Mr. WICKER. You are not suggesting that claimants would be disadvantaged by having HCFA process these claims, simply by having——
Mr. SPEAKMAN. I am not suggesting that they necessarily would be disadvantaged, I am not suggesting either that they would be advantaged by HCFA. I believe that we are positioned well, we have a good track record with regards to our Medicare administration, and we have done it in a very cost-effective way. We have good service standards which we have used, and I believe our service standards probably exceed HCFA's standards. So if you want to quantify whether you would be advantaged or disadvantaged, I believe that you could make a very good case that service levels would be enhanced through the Railroad Retirement Board administering Medicare.
Mr. WICKER. Well, I look forward to a future discussion about that particular issue.
If I might direct a couple of questions to Mr. Dickman. Could you tell me how much money was deposited into the Federal Treasury during fiscal year 1997 due to your activities?
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INVESTIGATIVE ACTIVITIES
Mr. DICKMAN. Due to our activities? Excuse me. Let me see if I have the information available to me. The problem we run into is we are an investigative agency and not a collection agency, as is any Inspector General. We investigate cases, fraud cases, and present them to the appropriate authorities, whether it is a local prosecutor, whether it is a local United States Attorney, Department of Justice, whether it is a criminal matter or whether it is a civil matter under the Ace program.
After we present the case to them, it is up to them to prosecute the matter. If there is a prosecution, an adjudication and a judgment against those individuals, then it is up to the Debt Recovery Division of the Railroad Retirement Board to monitor those cases to make a determination whether those monies are actually paid or the individuals might be in default.
I cannot give you an accurate number today as far as what are the total deposits that are put into the United States Treasury due to our efforts. All I can tell you is what the judgments were that we obtained from the cases that we had in 1997.
Mr. WICKER. Very fine.
Mr. DICKMAN. The recoveries from in fiscal year 1997 for Medicare were $5,985,000, those are old cases that we are still involved in. Other programs were $500,988. This is substantially lower than the 1996 number from all other programs, which was $3,296,000, and the reason for that is we had to close our Houston office in our reduction of force. We had a tremendous turnover both in our main office and in our surviving office in Philadelphia, so there was a tremendous amount of transition that went on with special agents. There is a lag time in the cases that are building up, and I believe that for fiscal year 1998 we should be up to about $2.5 million. There won't be any Medicare money—monetary accomplishments for Medicare cases—I don't think. There might be a few that are still outstanding, but I think from all other sources, it should be about $2.5 million. But again, I cannot tell you the——
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Mr. WICKER. Okay. And those are judgments?
Mr. DICKMAN. Those are judgments.
Mr. WICKER. And what I am understanding from your testimony is that RRB has a recovery division which is separate and apart from your shop.
Mr. DICKMAN. Correct, exactly.
Mr. WICKER. And you can't speak to how much of that judgment——
Mr. DICKMAN. No, because in some of these cases the individual might be on a payment plan that might last for 5 years, and then sometimes an individual might be in default on it.
Mr. WICKER. And one final question to the Inspector General, Mr. Chairman.
For the past several years this committee has included language in the bill to prevent the IG from working on Medicare fraud cases. Do you believe this decision should be reversed?
MEDICARE ACTIVITY
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Mr. DICKMAN. Mr. Wicker, as I have stated previously, I have always thought it should be reversed because as long as the Part B Medicare contract is administered by the Railroad Retirement Board as a program responsibility of the Railroad Retirement Board and if it is a program responsibility, then it comes under the jurisdiction of the Inspector General's Office. And——
Mr. WICKER. How much effort are you expending to obtain a reversal in the contents of this decision?
Mr. DICKMAN. The only effort that we have expended, as we have every year, is to make an effort, and put it down in our request. We have gone to the Senate side also, which has been a little more receptive, and said we would like to maintain—to continue to do Medicare fraud contracts and we will do the same, make the same recommendation to the Senate side again. That is as far as our efforts go.
Mr. WICKER. Your formal submission?
Mr. DICKMAN. Correct.
Mr. WICKER. Have you visited individually with Members of the House or Senate to request that they vote to reverse this?
Mr. DICKMAN. No. Just staff people. In fact, this afternoon I will meet with staff on the majority and minority side to make our presentation at that time. Other than that, I have never spoken personally to any Senator regarding that request.
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Mr. WICKER. Has your office submitted letters to Members of the House or Senate individually?
Mr. DICKMAN. In the past, we have, yes.
Mr. WICKER. About this decision. Have you done so in this cycle?
Mr. DICKMAN. No.
Mr. WICKER. Mr. Chairman, thank you for indulging me on the time.
Mr. PORTER. Thank you, Mr. Wicker.
RRB FIELD OFFICES
Last year Chairman Bower testified that the number of field offices would decline to 55 in fiscal year 1997 and 53 in fiscal year 1998.
Was the goal achieved for fiscal year 1997 and do you expect it to be 53 at the end of this year?
Mr. KEVER. Mr. Chairman, I am happy to report that we are now at 53 offices.
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UPDATE OF CHARTS PREPARED FOR FY 1998 BUDGET
Mr. PORTER. If they have not been included with your statements for the record, please update each of the tables included with the Chairman's fiscal year 1998 budget statement.
Mr. KEVER. We would be happy to do that.
[The information follows:]
"The Official Committee record contains additional material here."
FINANCIAL STATEMENT AUDIT RESULTS
Mr. PORTER. Mr. Dickman, last year we discussed the audit of the Board's financial statements. Outside auditors were unable to issue even a qualified opinion on the statements, citing concerns about accuracy of benefit payments, overall control environment, and railroad tax deposits. I think we had all hoped to make progress at least on payment accuracy and perhaps on IRS information.
What is the current status of the audit and what is the prospect for obtaining either a qualified opinion or a clean audit in the future? In answering the question, please indicate the status of the rule on administrative finality and the status of the MOU with the IRS that Chairman Bower testified would be completed by the end of calendar year 1997.
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Mr. DICKMAN. We have completed our financial statement audit and the 3 material weaknesses still remain. Let me take the material weakness concerning the reconciliation of the tax receipts. That will be implemented, as far as the information, by December of 1998, so by February of 1999, when we will be reconciled I think in June of 1999, we will have a complete reconciliation of the tax receipts, and for the first time the Railroad Retirement Board will be able to reconcile the receipts on the CT-1s with the deposits made with the IRS. That is my understanding. So that material weakness should disappear in the future.
As far as the other 2 material weaknesses, as far as the benefit payment accuracy, that is a more complex matter which I think will take a longer period of time. I think if the Board has the additional resources for claims processing going into automation with less manual handling, going into imaging with the administrative finality in place at the present time, then I think the benefit payment accuracy will be reduced [CLERK'S NOTE.—Later changed ''reduced'' to ''increased]. But I think there is always going to be some portion of it out there. In the future, it might become so minimal that it may be a reportable condition, but not a so-called material weakness.
As far as the last material weakness, the control environment, I think that can only be changed by a dramatic change in the way the Board does business. I would have you recall my first reinvention proposal which, although I don't consider it a panacea, that it is the proposal that has to be done, I think that it is a material weakness that has been brought out by the prior audits, by the independent auditing companies; also by GAO in their review of the government performance results plan of the Board that the overall control environment of the Board must be changed dramatically.
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Now, my plan might be a very draconian type of plan which would reduce the 20 bureaus into 5. I believe you know, that is the way to go to reduce the amount of bureaucracy, the layers of administration, the lack of some direct control, the lack of a fine line of control, and a chain of command, and to eliminate the micromanagement that is involved in the day-to-day operations. Again, while I believe this is a very good plan, I don't say it has to be the plan. I look forward for the new chairperson to come on board and for the Board to revisit this reinvention proposal.
Mr. PORTER. Gentlemen, do you want to comment on that at all?
BENEFIT PAYMENT ACCURACY
Mr. KEVER. Oh, yes, I would like to comment on that, if you don't mind.
[The information follows:]
STATEMENT BY MR. KEVER CONCERNING AUDIT OF FINANCIAL STATEMENTS
For the record, I would like to clarify that the Office of Inspector General's report on our fiscal year 1997 financial statements included a disclaimer of opinion because (1) the auditors were unable to obtain sufficient audit evidence to determine what adjustments, if any, are required to properly account for and report benefit payments and (2) information was not yet available for the auditors to apply sufficient procedures to the receivables, payables and revenue amounts related to the financial interchange with the Social Security Administration.
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In a separate evaluation of internal controls, the Office of Inspector General reported material weaknesses in the areas of (1) accuracy of benefit payments, (2) overall control environment, and (3) railroad retirement tax deposits. The existence of material weaknesses, however, is not always relevant to the type of audit opinion rendered as indicated by the omission of the overall control environment in the audit opinion.
I would like to make one clarification. I think for the last 2 years, if I am not mistaken, the audits have shown that the accuracy of the payments that we have made show virtually no errors being made, and Mr. Dickman, is that a fair statement?
Mr. DICKMAN. No errors?
Mr. KEVER. Virtually no errors being made in the computations that we have made on benefits for the last couple of years, versus what we might have incurred in the previous years, 3, 4, 5 and 6 out.
Mr. DICKMAN. I don't have the figures in front of me, but I will be happy to provide them to you.
[The information follows:]
BENEFIT PAYMENT ACCURACY
Independent public accountants performing audits of the Railroad Retirement Board's fiscal years 1995 and 1996 financial statements performed limited testing of the benefit payment accuracy and concluded that the error rate was in excess of 5% for all benefit payments and ''current year awards'' (these were cases adjudicated in fiscal years 1995 and 1996 respectively and tested separately). Tests applied to ''current year awards'' did not indicate improved performance.
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In connection with the Office of Inspector General's audit of the agency's fiscal year 1997 financial statements, we performed tests of benefit payment accuracy as a whole. We did not test cases adjudicated in 1997 and nothing about the accuracy of ''current year awards'' can be inferred from our data. However, our sample of cases, taken from the entire population of cases in current pay status, indicated an error rate in excess of 5%.
Based on these results, we do not see any evidence of improvement in the accuracy of benefit payments.
STATEMENT BY MR. KEVER CONCERNING BENEFIT PAYMENT ACCURACY
The point I was making was that, as a part of the financial statement audit, virtually no errors were found for those cases initially adjudicated during the past 2 fiscal years. As part of the 1997 financial statement audit, our Bureau of Quality Assurance recomputed benefits being paid to 93 annuitants. Four of these were awards initially adjudicated in fiscal year 1997. All four were accurate. In the previous year, the audit included 59 cases with awards initially adjudicated in fiscal year 1996. Of this group, errors that will result in reopening cases were found in only 2, or 3.4 percent, of the cases reviewed.
Increased automation has led to a high level of benefit payment accuracy during the past few years. For each year from fiscal year 1992 through fiscal year 1996, the overall benefit payment accuracy rate for initial claims processing (new entrants on the retirement rolls) has exceeded 99 percent. For fiscal year 1996 initial claims processing, we achieved an overall payment accuracy rate of 99.45 percent. We will conclude our review of 1997 initial claims processing within a few weeks and would be pleased to share those results with the committee. Further planned automation will continue to improve accuracy.
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Mr. KEVER. I believe that that is the case, and I think that strengthens the fact that we need to continue the technology initiatives that we have had to improve the accuracy of our benefits. I really look forward to a new Chairman coming in so that we can discuss another way to manage this agency. It is difficult for me to believe, in view of the fact that we have had such great improvements that we are doing something wrong.
I am very pleased with what our managers have been able to accomplish, in spite of the FTE reductions. I think it is a matter of personal management style as to how we run this agency, but we always look forward to receiving other input and trying to figure out if there is a better way to run the agency. So you can rest assured when the new Chairman comes on board we will revisit this issue again.
Mr. PORTER. Thank you.
Mr. SPEAKMAN. Mr. Chairman, if I might just elaborate a moment on that.
Mr. PORTER. Yes, please.
DETAILED RESPONSE CONCERNING MATERIAL WEAKNESSES
Mr. SPEAKMAN. I share the points raised by both Mr. Dickman and Mr. Kever with regards to the areas of material weakness that the IG has alluded to. I think these are important issues that warrant a thorough discussion, and I think we need to elaborate on those in the form of an answer to you that allows not only just myself to respond to them, but for you to have the benefit of the new Chair and Mr. Kever with regards to these issues, and let us present a very detailed response to that question. We clearly appreciate the areas that have been identified. We may have an area or 2 that we may have a disagreement on, and I think we need to articulate and identify those areas for this committee.
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Mr. PORTER. All right. Why don't you do that then for the record.
Mr. SPEAKMAN. Thank you, Mr. Chairman.
COMPLIANCE WITH DEBT COLLECTION IMPROVEMENT ACT
Mr. PORTER. Will the RRB fully comply with the provisions of the Debt Collection Improvement Act, which requires that all payments be made electronically by January 1, 1999, except in certain limited circumstances? What percentage of payments do you estimate will be made electronically by the end of fiscal year 1999?
Mr. KEVER. Mr. Chairman, right now we are in compliance with the electronic funds transfer requirement, and what percent are we at now? We are up to 70 percent at this point.
CLAIMS PROCESSING REDESIGN
Mr. PORTER. All right. What is the status of claims processing redesign?
Mr. KEVER. My goodness. I am not sure I understand the question. Redesign?
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Mr. PORTER. We will make it more specific and you can answer it for the record.
Mr. KEVER. Okay. Thank you.
[The information follows:]
STATEMENT BY MR. KEVER CONCERNING CLAIMS PROCESSING REDESIGN
The Board does not have a specific ''claims processing redesign'' initiative. We have, however, made certain organizational changes to improve the overall efficiency of the Board's benefit programs.
RECOMMENDATIONS BY REINVENTION TASK FORCE
Mr. PORTER. For the record, please indicate the status of the 34 recommendations made by the reinvention task force. I think you can answer that entirely for the record.
[The information follows:]
"The Official Committee record contains additional material here."
LEASE OF FIELD SERVICE VEHICLES
Mr. PORTER. Last year, Chairman Bower testified that he did not believe the field services needed to lease 8 vehicles.
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What is the status of this practice in the field?
Mr. KEVER. There has been no change in that status. However, on the recommendations, the reinvention recommendations that you had mentioned, we have substantially implemented almost all of those recommendations at this point. I think there may be 2 or 3 that are still in the process, or we have decided that we could not do them, but we are substantially complying with those.
Mr. PORTER. All right. If you will indicate the 2 or 3 for the record, please.
Mr. KEVER. Sure.
OUTSOURCING DATA PROCESSING OPERATIONS
Mr. PORTER. What is the status of the agency's effort to outsource all data processing activities? Does the current Board still consider this initiative a priority and have security issues been resolved with the IRS?
Mr. KEVER. Each year we are asked by the Office of Management and Budget whether we can outsource our data center, and each year the response is basically that the Internal Revenue Service, under the Privacy Act, would not allow us to do that. We have not had formal discussions with any other Federal agency that would be able or be capable under the terms of the Privacy Act to allow them to operate or to run our data. It would certainly be our intention to look into that. I believe I am speaking for myself, I would think I would ask our managers to look into that and to start a dialogue with other Federal agencies.
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The Treasury Department does of course do our check writing for us, and so that is an outsource that we did many, many years ago. So we would be happy to look into that and report back to the committee.
[The information follows:]
STATEMENT BY MR. KEVER CONCERNING OUTSOURCING COMPUTER OPERATIONS
No further actions have occurred regarding outsourcing our data center operations. The Railroad Retirement Board (RRB) is prohibited by the Internal Revenue Code from employing outside contractors to process tax data for a purpose other than tax administration. The Internal Revenue Service (IRS) has informed us that the RRB may disclose this information only to officers and employees of the RRB, and then only for the purpose for which it was received. This need to safeguard the tax data which is embedded throughout our systems and files effectively precludes us from contracting out our data center.
In light of the legal issue involving safeguarding the IRS tax data used by the RRB, we do not plan to take any further action at this time on data center consolidation. However, after we have successfully concluded our Year 2000 project, which impacts on virtually every mainframe system, we will pursue the possibility of using or sharing the data center resources of other Federal agencies, to the extent that this could be accomplished without violating the safeguarding requirements specified in the Internal Revenue Code, or adversely affecting the mission of our agency
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Mr. PORTER. Thank you.
RECURRING REPORTS
Last year, Chairman Bower testified that Federal statute, regulatory and other directives required the RRB to produce 110 recurring reports. Can you provide a list of the reports, the law and the regulation or organization that requires them, identify specific committees and subcommittees that require congressional reports? Please tell us generally whether this problem is a serious one, and whether it is getting better or worse.
Mr. KEVER. Mr. Chairman, I don't believe that the problem is a serious problem for our agency, but I will have to get back to you with the detail of the 110 reports and who requests them and where they go.
[The information follows:]
RECURRING REPORTS REQUIRED BY THE CONGRESS AND FEDERAL AGENCIES
The number of recurring external reports required by the Congress and Federal agencies has increased to 119. The following list provides the report title, the directive that requires the report, and the organization for which the report is compiled.
Collectively, the reporting burden is significant. Individually, it is generally understandable why the requesting organization is gathering the information. Little change has occurred in the recurring reporting burden.
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"The Official Committee record contains additional material here."
Mr. PORTER. Gentlemen, thank you very much. You have answered all of our questions. As I said, they are in the context of an agency that we feel is doing a very good job and we appreciate very much your coming in to testify this afternoon, and Robert Rose, your CIO coming in to testify this morning. Thank you so much.
The subcommittee will stand briefly in recess.
[Brief recess.]
[The following questions were submitted to be answered for the record:]
"The Official Committee record contains additional material here."
Thursday, April 23, 1998.
UNITED STATES INSTITUTE OF PEACE
WITNESS
DR. RICHARD H. SOLOMON, PRESIDENT, USIP
Introduction of Witness
Mr. PORTER. The subcommittee will come to order. We continue our hearings on the Fiscal Year 1999 budget, and are pleased to welcome Dr. Richard Solomon, the President of the United States Peace Institute.
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Dr. Solomon, I am obviously sympathetic to your budget request and to the additional funds you are requesting for the Bosnia initiative and would like to learn more about it and, as you know, I am a long-time fan of the Peace Institute. But I remain a greater fan of what the Institute could be perhaps than what it is.
I have discussed my vision of the Institute as a professional degree granting institution that would be a counterpart to the War College. Obviously, given current resource levels, that is no more than a vision at this point in time. But I believe that within current constraints, the Peace Institute can play an enormously important role in providing practitioner training worldwide, and I believe that the Institute could be doing a lot more within current constraints than it is doing in that regard.
At last year's hearing, Dr. Solomon, you testified that the Institute had hired a top-flight individual to develop practitioner training at the Peace Institute. That individual did not serve out the fiscal year. The Institute apparently has not even advertised for a permanent replacement, and does not intend to do so in the near future.
I asked staff to obtain a list of practitioner training activities conducted and planned, including the number of people trained. I also asked for a list of requests for training that were not accommodated by the Peace Institute.
According to the information we received, the Institute has trained about 200 individuals in 1997. You are requesting about $1,500,000 for education and training in 1999. For that amount of money, I hope that we will see a dramatic expansion in the number and scope of training sessions and the number of people trained. I also hope that you will not turn down requests in the future.
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I am obviously going to give you a chance to comment on this shortly, but I would like to see three things happen—one, fill the Training Director's position with a permanent top-flight person, dedicate more resources to training within your existing budget constraints and, thirdly, produce more with the funds that are already being dedicated to training.
And with that, please let me hear your opening statement, and then we will go to questions.
Opening Statement
Dr. SOLOMON. Thanks very much, Mr. Chairman, I am really honored, along with my colleagues, to have another chance to discuss with you the work of the Institute, to review our annual budget, and to talk about our future programs. And I appreciate the candor and the directness with which you have raised a number of very serious issues which we have given a great deal of thought to. This opportunity today to go into some detail, I think, is a very healthy thing. I look forward to answering all of your questions because I share many of the same concerns that you do about the quality and the scope of our training activities.
With that said, let me read a very brief, truncated version of my formal testimony which I have submitted to you.
As you know, today we have come prepared to discuss our Fiscal Year 1999 budget request of $12,595,000. This amount is $1,100,000 more than the President's Fiscal Year 1999 budget request for the Institute, reflecting our proposal to you for additional support for our proposed Special Initiative on Bosnia, which you have already referred to.
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NEW LEVEL OF INSTITUTE EFFORT
Let me say, Mr. Chairman, that our budget request reflects a new level of Institute effort in areas that are central to America's foreign relations. Our programmatic work, as you know, is designed (1) to support policy makers in developing new approaches to managing international conflict, (2) as part of that to train practitioners, both within and outside the U.S. Government, in practical conflict management and resolution skills, and (3) to prepare the next generation of young Americans to understand and be able to act on the international conflicts that we anticipate will be what they will encounter in the 21st century.
We are, as you know, approaching a new millennium, at the end of what has been the most violent era in human history. Traditional diplomacy, the foreign affairs institutions which served us well during the Cold War Era, are frequently proving to be ill-suited to meeting the contemporary challenges of securing stability and human justice abroad.
To meet these challenges, the Institute has been working to develop new approaches and new instrumentalities for managing the political turmoil and the human suffering that result from failing nation states, ethno-religious conflicts, and the ambitions of local tyrants.
I believe if we are going to make this coming century and the coming millennium less destructive than the current one, the United States, as a country, must take the lead in developing a new culture and a new practice of international conflict management.
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Today's professionals must be rapidly trained to meet the complex new challenges of the post-Cold War Era; and the next generation of Americans, now at secondary and college-levels of education, must be equipped to manage international conflict as they will encounter it in the coming decades.
Success in preventive diplomacy, in ameliorating conflicts, and in post-conflict reconciliation means not just saving lives, but also saving U.S. taxpayer dollars.
With each passing year since the end of the Cold War, Mr. Chairman, we have found growing demand for the Institute's training programs, for our publications and inventive approaches to diplomacy—from Congress and such Executive Branch agencies as the National Security Council, the Department of State and the U.S. military. The Institute, I believe, is a highly cost-effective national center of innovation that is helping our country to translate such concepts as preventive diplomacy and war crimes accountability into operational reality.
BOSNIA INITIATIVE
Responding to your earlier invitation, I want to highlight our Bosnia initiative, which provides an especially clear illustration of the cumulative effect of our work on a high-priority national security commitment. The Institute's Bosnia activities, led by my colleague Harriet Hentges and with important leadership as well from Ambassador John Menzes, who is with us here today, these activities are designed to support the U.S. Government in stabilizing the Dayton peace process and facilitating reconciliation in that society.
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Building on more than ten years of Institute work on peace settlements, and two years of activity in support of the implementation of the Dayton Accords, our proposed Special Initiative on Bosnia and the Balkans is designed to foster a culture of peace and reconciliation in that country, and to build on the work we and others have done there to make the Dayton Agreements stick.
We have laid the foundation for these proposed expanded efforts through the Institute's special expertise in matters of war crimes accountability, led by Neil Kritz—who also is with us here today—the Director of our Rule of Law Initiative. Our work also reflects past activities on the role of religion in conflict, and conflict resolution skills training and education. These areas of expertise allow us to fill the gaps in implementing the Dayton Accords, to complement the efforts of other U.S. Government agencies, and to support the work of a variety of private sector humanitarian assistance activities in the region.
In light of the nearly $10,000,000,000 already expended on peacekeeping in the Balkans, our proposed budget increase of $1,100,000 for the Institute's Special Initiative is a modest and cost-effective approach to increasing the chances for successful implementation of the Bosnia Accords. These efforts have special urgency, of course, in light of the Administration's plan to extend the U.S. military presence in Bosnia.
We are working today with key religious leaders in Bosnia to support their efforts in promoting reconciliation programs.
Our work with Bosnian justice officials has led to our being requested to design a Truth and Reconciliation Commission for the country to deal with the human rights abuses of almost five years of conflict. Such a commission would complement the efforts to prosecute war criminals through the Hague Tribunal and domestic courts in Bosnia.
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The Institute's conflict resolution skills training program continues to be an integral part of our work in Bosnia. We are planning to incorporate this training into work with the religious leaders, media, NGOs, educators, and community leaders. In addition to these training sessions conducted by the Institute staff, we also support the efforts of other training organizations through our grant program. So some of the numbers of people trained that you mentioned are, in fact, substantially expanded through our grant programs I will comment on shortly.
Our varied work in Bosnia led a number of NGO organizations there to request in 1997 that the Institute organize a policy forum, now called the Bosnia Working Group, that Harriet Hentges heads, for purposes of policy development and coordination of public and private sector efforts in support of the Dayton process. The Bosnia Working Group enables administration and private sector personnel to share information and helps articulate needs and identify gaps in the implementation process.
I focused on this activity in Bosnia, Mr. Chairman, not only because of its urgency in operational terms, but also because it demonstrates the effective integration of the Institute's varied programs of analysis, training, education, and action in support of the Dayton accords.
PRACTITIONER TRAINING
Let me, in particular, focus on our training programs for practitioners because practical training is, and will remain, the heart of our mandate and our work.
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The Institute's conflict resolution skills training programs are aimed at increasing the operational effectiveness of those on the front lines of conflict. Each training session we have conducted has generated new demands for such training, and has identified new forms of support for practitioners. For example, one participant in a training session we conducted in collaboration with the U.S. Army's Peacekeeping Institute at Carlisle, Pennsylvania, was almost immediately assigned to head the office of a major NGO in Sarajevo. This individual then asked us to offer a similar training program to some 60 NGOs now working in Bosnia. So our activities are clearly generating a lot of interest and demand for more of this activity.
Participants in this earlier session also identified the need for a military-NGO handbook that would help these two cultures work together more effectively in Bosnia. The Institute has then developed this handbook in collaboration with the U.S. Army's Peacekeeping Institute.
As another example, a U.S. Army officer, who was recently in residence as a senior fellow at the Institute, has just been named commander of the U.S. Brigade in Tuzla, and has requested that we provide him the handbook and other materials developed by the Institute to enable his troops to work more effectively with NGOs and other organizations in Bosnia. So this activity is not academic. It is very much practical, and it is feeding right into, in this case, the Bosnia peace process.
We have conducted conflict resolution training sessions over the past three years in the Balkans for foreign affairs professionals, diplomats and NGO workers from the various states of the region. And from those sessions have come additional requests for training that, given our resources, frankly, are just too numerous for us to fulfill.
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We have been asked by a participant in one of those sessions to conduct conflict resolution and negotiating training for a team named by President Rugova of Kosovo, to prepare his team to negotiate with Serbia if, and when, talks between the two sides take place. And, of course, the successful completion of those talks could lead to the resolution of a serious conflict in the Balkans which otherwise might escalate into massive violence and upset the efforts of the Dayton Process effort to stabilize that particular country.
This experience demonstrates the need for our conflict resolution skills training to be tailored to the requirements of a specific conflict, which would then have a direct and positive impact on its resolution. We are now making plans to conduct this training in Kosovo, and will offer a similar training program to Serbia, if they request. Harriet Hentges, who has been taking the lead on this training activity, will be glad to describe it in more detail.
Apart from the Bosnia work, Mr. Chairman, in Fiscal Year 1997, the Institute directly trained over 200 foreign affairs professionals, including U.S. and foreign military officers, U.S. Government officials, U.N. representatives, and the staff of major NGOs in conflict resolution skills.
In addition, the Institute supported through its grant program conflict resolution training of an additional 350 individuals, including Cambodian diplomats, government and community leaders in the former Yugoslavia, and refugee camp workers.
These training programs are practical, they are hands-on, and they emphasize understanding of particular international conflicts. Their practical nature is assured in three ways: the trainers are professionals with real-world experience; the participants include individuals who have experience in dealing with real-world conflicts; and the training programs include practical examination and role-playing exercises based on actual situations.
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I particularly want to highlight the Institute's collaboration with the U.S. Army's Peacekeeping Institute. For the fourth year in a row, the Institute is collaborating with PKI on a week-long workshop dedicated to improving negotiating and mediating skills, as well as coordination among civilian and military organizations involved in peace operations such as Bosnia. Following the Institute's contribution of sections to the 1995 Joint Commanders Field Handbook, the Institute and PKI have collaborated, as I mentioned earlier, in developing a military/NGO handbook to improve cooperation in peacekeeping operations.
ETHNIC VIOLENCE IN CENTRAL AFRICA
A further example of the practical relevance of our work, Mr. Chairman, could be illustrated by the horrendous ethnic violence that we are all too much aware of in the Great Lakes region of Central Africa—Rwanda, Burundi, and Zaire—which was, of course, highlighted during the President's just-concluded trip to that region.
The Institute has done considerable work, again with Neil Kritz in the lead, in areas of transitional justice and assessing the impact of the current turmoil in Zaire and its nine regional neighbors.
In addition, the Institute continues to fund the Great Lakes Policy Forum which, much like the Bosnia Policy Forum, is a coordinating body for planning and operations conducted by the U.S. Government together with NGOs in the countries of Central Africa.
Well, that is a very compacted version of the Institute's various training activities. Let me just conclude with some comments about a longer-term vision for the Institute.
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I believe that the sum of our current activities and the significance of the Institute's mandate to the Nation's foreign affairs needs underscores the relevance of our efforts to move to a new level of institutional capacity.
The Institute is working hard to pioneer new approaches to training foreign affairs professionals, to help the government and the NGO community become more effective collaborators in international peace and conflict management efforts. And I believe we are also serving a fundamental U.S. national interest by educating new generations about the international landscape they will face in the new century.
PERMANENT HEADQUARTERS FACILITY
This leads me to the concluding point I want to make regarding the future of the U.S. Institute of Peace, and that is our project to build a permanent headquarters facility here in Washington.
As you know, in the fall of 1996 Congress set aside for the Institute a three-acre tract of land next to the National Mall, at the northwest corner of 23rd Street and Constitution Avenue, as the site of our permanent home.
In addition, legislation passed in 1992 authorized the Institute to accept private donations for the purpose of building a headquarters facility. We are now in the process of organizing a capital campaign to raise the construction costs of the building from the private sector, thus making the headquarters project a true public-private partnership.
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From a functional point of view, a building at this location will significantly enhance our professional training and policy development work, given the ready access of the site to the State Department—which is just across the street—as well as to the Pentagon, the White House and Congress, which are not very far away.
This facility will give us unprecedented opportunities for public education in view of the large numbers of students and citizens who visit the Mall each year.
We intend the new headquarters facility to be equipped with state-of-the-art electronic capabilities for video-conferencing, Internet connectivity, and interactive computer teaching, thus giving the Institute national and global outreach for training activities, educational programs, policy seminars and research work.
APPRECIATION FOR SUPPORT
Mr. Chairman, in closing I just want to stress the appreciation of the Institute for Congress' support of our work, and for your support in particular.
As the committee deliberates our Fiscal Year 1999 budget request, I would again stress the Institute's hands-on efforts to train professionals in the skills needed to prevent, ameliorate, or resolve conflicts such as those in Bosnia, Central Africa and East Asia, which I have noted here either today or in prior presentations.
With your continuing support, I believe we are maturing into a true national asset in the on-going striving to build a less violent world.
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Again, I appreciate your consideration of our testimony. My colleagues and I will be glad to answer all your questions, including the ones you have already put on the table. Thank you.
[The prepared statement follows:]
"The Official Committee record contains additional material here."
Mr. PORTER. Thank you, Dr. Solomon. That is an excellent statement that does address a lot of my concerns. Please understand that these questions come from a friend and a fan of the Peace Institute, although they are fairly tough questions, but I think by our looking deeply into these matters, we are going to get a greater understanding of what you are doing and see if we—I am sure we want to move in the same direction.
RESPONDING TO REQUEST FOR TRAINING
Dr. Solomon, the Peace Institute turned down requests for training by Albania, Cambodia, Kosovo, the Tanzanian Embassy, the Tunisian Ambassador, and the Turkish Ambassador. You turned down the Foreign Service Institute, the State Department, the USIA, the Peace Corps Crisis Corps, the Bosnian Task Force, the Army Peacekeeping Institute, although you talked about both, and other U.S. Government agency requests. You turned down the OAS, the OAU, and the OSCE. And this is information that we got by specifically asking our staff to get it from yours.
Dr. SOLOMON. Correct.
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Mr. PORTER. I am concerned that we have lost these opportunities to impact international conflict, and concerned that you have not redirected funds from more academic and library work to respond to these requests. And I am also concerned that we were not aware that these specific opportunities were being missed.
Why has this happened, and why have not resources been redirected?
Dr. SOLOMON. First, let me say I share many of your concerns, but what I would like to do in responding to your fair and tough questions—I would not expect you to be anything less than as frank as you have been—let me try to put the turn-downs in a broader perspective, because we are not a ''turn-down'' organization. We are, in fact, running to catch up with a demand which, in fact, is being stimulated by the other side of the ledger, which is all that we are doing.
IMPORTANCE OF PRACTITIONER TRAINING
First, let me say that this is a new area of activity for just about everybody. We began our training programs in 1994. So this is about a four-year-old effort and so it is very much a work-in-progress. But it is an area of activity that is absolutely central to our mission. And much of the work that we sponsor in the way of background research through our grant program and our policy development work is laying the groundwork that makes our training programs effective. We are not an academic organization, even though we draw on the analytical work of the universities and the think-tank community. Our purpose is to bridge the gap between analysts and practitioners and to raise the level of practical hands-on training for the people who are at the front lines of these conflicts, as I have mentioned.
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Now, in that context, if you were to graph the number of people we are training, it is clearly taking off—it is an exponential curve. In 1997 we trained 200. This year we are training 400. In 1999 we are scheduled to train almost 500. So the curve is clearly up.
What are the constraints on doing more—to respond specifically to some points you raised at the outset? It is essential, as we pick up on this area of activity—which has been pursued by a number of academic centers—that we produce something of the highest quality and practical value because, again, this is not just academic training.
You mentioned a management position that has been vacant. All I would say on that point is that we have not been satisfied with the quality of leadership in terms of it being practical and as effective as it should be. For that reason, we are in a period of taking a very serious look at the special requirements and attributes of our training program, and making sure that we are providing practical training that makes the kind of sense that I think you and I would agree is not just designed for university communities separated from practical application.
We also felt that after three, three and a half years of this training it was prudent to step back and assess what we were doing. For that reason—and I should add that our Board of Directors, concerned as we are with having the highest quality training, wanted to make sure that they were comfortable with the assumptions and the approaches of training that we were pursuing—led by a very competent member of our staff, Pamela Aall, who is with us today, we have been doing a reassessment of our place in this training universe. That is who the targets of our training should be; the intellectual assumptions of our work; and the best methodologies for making our training truly practical. And I think we have made significant progress in that regard. It was our feeling until we had thought through exactly what we were after, to go out and hire an individual who might not meet our needs, frankly, did not make a lot of sense. But I and my other colleagues, Harriet Hentges in particular, and Pamela Aall, are spending a great deal of time focusing on an issue that otherwise might be dealt with in a somewhat different way organizationally. This is only my way of saying that this activity has the highest level of attention within the Institute, precisely because we take it so seriously.
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Let me talk about the issue of more resources. One of the things that we have found as we have gotten more deeply into this area of activity is that the number of individuals capable of doing effective training is not as large as we would like. Therefore, we did not want to just throw money at an activity if we could not guarantee the quality of the work that we are doing.
And we are now in a process of training more trainers and, therefore, making it possible to do the increases in numbers that I mentioned earlier. So, to some degree, just putting more money into this activity is not going to solve the problem.
In Bosnia it is clear we can do some very significant things with added resources, and we will detail that more for you. But what I want to give as my bottom line to you is—I want to assure you that we at the leadership of the Institute see our training activity as central to our mission. We are determined to take the start that we have begun over the last four years and build on it and turn it into an absolutely first-quality activity. Frankly, I would just say that the level of requests that we continue to get as we do these training programs, I think, indicates that we are generating a kind of activity that already is highly in demand. But, again, if we were to make a false start—and there has been criticism of some of the other training activity that is carried out that is not quite as plugged-in to the operational aspects of implementing policy that ours is—I think you might be asking me other kinds of questions. And so we want to make sure we get it right.
I think we should spin out a little more in our discussion of our Bosnia work, how we intend to put more resources into this activity in support of the numbers of trainees that will increase because, again, I want to reassure you that our objective, and yours, are exactly the same, not just for the short-run in training the practitioners, but for the longer-run in terms of building a broad training program that, in the fullness of time, could grow into, let us say, a degree-granting level of training.
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Mr. PORTER. Well, Bosnia represents, obviously, a very immediate need. On the other hand, if you think of the training that you might be able to do that would head off, rather than just direct at immediate conflict, head off potential conflicts, there is so much good you can do that—obviously you are as frustrated as we are—that it cannot all be done and done immediately.
REIMBURSABLE TRAINING
Let me ask you, have you considered offering your services on a reimbursable basis? I am going to discuss with you the Federal Mediation and Conciliation Service in a minute.
I was, frankly, surprised to learn that they did any international work, but I found out last year that they provided over 1,000 hours of training and education services around the world on a totally reimbursable basis. These included sessions in Bosnia and with the OAS, for example. In addition, over 300 foreign nationals spent time in the U.S. learning from FMCS employees. Have you considered trying to expand your training activities through fully or partially reimbursed projects of this type?
TRAINING IN KOSOVO
Dr. SOLOMON. In the immediate future, the reimbursable approach, again, does not solve the current problem, which is to get the focus right and to have trainers who we have confidence in. I think over time this could well be an approach, but to go back to your earlier point of trying to get involved in training activities that would really prevent a conflict, I think the work that is now just being put together in terms of Kosovo is a good example of training negotiators and could be an absolutely critical negotiation to head off a real confrontation between Serbia and Albania.
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Harriet, I do not know whether you would like to add something to that activity.
Dr. HENTGES. Yes, because the request for the training in Kosovo grew out of an earlier training that we did. And I think it is fair to characterize the training that was done in the first couple of years as a period of testing, a period of investment, and a period of growth. And we are beginning to see the effects of that investment and of that testing because it was out of two trainings—three trainings, actually—that we did in Southeastern Europe that the two requests for training in Kosovo came.
We have learned a great deal in this period of how to organize and package the trainings in a way that they are very specific to the needs of the participants. In this case, in Kosovo, we know the kinds of training that they think would be helpful, and we are assembling the team that would be able to provide that.
FEDERAL MEDIATION AND CONCILIATION SERVICE
I want to relate this to your question about the FMCS. What we have discovered is that there is not a great deal of appreciation for conflict resolution training within the budgets of foreign governments, not even within ours. So, there are no funds available to do training on a reimbursable basis. And in this period where we have gone to key members of the State Department or Department of Defense, and have identified the people that we think need training, there are not the budgets to reimburse for that training. And so we did not want to withhold that training because they did not have the funds. And the same is true of Kosovo; it would be out of the question that the government of President Rugova would have the funds to pay for training.
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We have had a number of exchanges with the Federal Mediation and Conciliation Service over the last year. We got insight into how they craft their training and why they are able to do this on a reimbursable basis. Some foreign governments are trying to ward off bigger expenditures by having some of the training in mediation and arbitration that FMCS provides.
We would hope sometime in the future that our own Government would have budgets for training that would recognize the importance of this, put a value on it, and that we would receive reimbursement for training. But right now the audience is one that we need to bring in, train, convince, market, and so we are giving our services.
Mr. PORTER. Well, I think that their international experience would be different than yours, in that they might be working with European countries, for example, where they have resources available for these kinds of things, and you are working in areas that may be much more tenuous as far as their resources are concerned. But they are working in certain areas also that you would not think would have resources for this.
EARMARKING AID FUNDS
I think your idea about perhaps putting into our aid packages a kind of earmark for conflict resolution training might be a very good one. In other words, put the money in their budgets, do not try to get it into a mode where you have the resources, but have them have the resources, and then you get reimbursed for offering the service.
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Dr. SOLOMON. That is an excellent idea because we find increasingly American Ambassadors abroad come to us and say, ''Can you help us''. For example, the Ambassador to Cyprus called me about four months ago and said, ''We want to promote a dialogue among the Greek and Turkish communities, we have seen your writings about power-sharing structures, could you send some folks over''.
We did send over two of our staffers, and they began what could be a very interesting ''Track-2'' kind of dialogue among those communities.
Mr. PORTER. Well, I knew Ambassador Brill was very smart. I was there earlier this year, with a congressional delegation, and spent a lot of time with the Ambassador, and I was very impressed with him. And, obviously, he is one who is really trying to get two communities that have been at loggerheads for a long time together in some sense, and I am glad to know that he was tapped-in to the Institute and seeking your services.
Dr. SOLOMON. Maybe you suggested it to him.
Mr. PORTER. Well, we did talk about some things. No, I think he probably——
Dr. SOLOMON. Let me make one other comment that I think underscores what, for me, is the critical importance of this work. This was the comment in my formal statement that I think we, as a country, have to take the lead in developing culture and a practice of managing conflict by nonviolent means.
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And in my meeting with Dr. Wells, of the FMCS, we came up with one very important thing that I am trying to interest the State Department in. That is, in China today they are starting to put large numbers of workers out on the streets because they are downsizing their state-owned enterprises.
One of the things that came out of Jiang Zemin's visit here last fall was a rule of law initiative in the China relationship. It seems to me that getting the FMCS people to work with the Chinese in thinking about how to deal with workers who are out on the streets, not with troops with guns but through a mediation process, is precisely the kind of ''technical assistance'' that we have a leg up on given the experience we have had in this country. That, in the broadest sense, is the mission I see for the Institute. We are blessed with over 200 years of history of politics where our conflicts are played out politically, not violently. That is an experience we should be making available around the world. It is the focus of all that I try to bring to this job as we build the Institute.
And I would, again, only say that our programs are very much a work-in-progress. Our training activity really only blossomed with the end of the Cold War, but I believe that the very numerous examples of the requests for training demonstrate that what we are doing, while it is not enough to meet the need, is in the right direction.
Mr. PORTER. I agree with that, and somehow we have to find how we can meet the need because unfulfilled need means untapped opportunities and missed opportunities.
MORE ON FEDERAL MEDIATION AND CONCILIATION SERVICE
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Let me ask about your meetings with Dr. Wells and the FMCS. You have had some exploratory kinds of meetings, and you just mentioned that you had some talks about what is going on in China. How do you view the opportunity to work together with this Institute that is engaged in conflict resolution of a different type than yours, and can you really learn from one another, and is this a positive experience that you can build on?
Dr. SOLOMON. We have worked already with one of their staffers in a training program that we ran in Greece for Balkan area diplomats, and that is just the start. As you know, there has been a turnover in the senior leadership at the FMCS, but we see this as a relationship that should be developed with the new Director.
Harriet has had several other meetings with them. You should comment in more detail.
Dr. HENTGES. Yes. At our first meeting, Mr. Chairman, we were interested to find that each of us had expertise that the other would have found useful at a certain time. When they first started going overseas, responding to requests, they lacked expertise that we had in particular areas; they said, ''We wish we had known of that''. They in turn have done some training and have packages and materials that are very useful to us.
The individual with whom we collaborated and we asked to be part of our team, is a specialist in mediation and he fit in very nicely with our team, and we were able to identify some follow-on programs for further collaboration. In fact, we have had some recent meetings on that as well.
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At one of the last meetings we had before the recent personnel change there was agreeing to look for an opportunity where we might jointly do a training program. That will take some special planning and care because it will have to meet the strengths that we each have and fit the needs of the particular circumstance. But it was a very exciting exchange that we had among the staff. I think simply being aware of that resource was already important input for our own planning.
Mr. PORTER. I personally see this as a tremendous opportunity for the United States to impact a lot of other societies in very positive ways. These other societies look to us for having this kind of expertise in both the domestic labor-management area and in terms of resolving international problems. And George Mitchell and the Northern Ireland situation is a very good example.
If we can provide those kinds of skills and that kind of training, it seems to me that in the long run it is going to save not only a lot of resources, but a lot of lives probably. So I think it is a very, very high priority. And while I realize that the development of the academic side—that is, the credibility on an academic basis of what you do is very important, that gives you standing and credibility that is necessary to have impact.
I hope that you can see your way clear to emphasizing, as you said you are doing and going to do, the training side even more heavily. It seems to me extremely important.
BOSNIA INITIATIVE
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How specifically would the $1,100,000 requested for the Bosnia initiative be allocated? Is it funding primarily for salaries, for travel, for consulting fees, or exactly what?
Dr. HENTGES. I would be happy to address that, Mr. Chairman. The overall objectives for our work in Bosnia have been to enhance and create a culture of peace and reconciliation. That has been our focus.
And there is a second part to this: to ''Bosnia-ize'' the process as quickly as possible so that it is not something that is dependent on the U.S. We are in the process of transmitting expertise and building capability and in each stage want to be able to withdraw that support because of what we have put in place there.
The emphasis will be in our areas of strength—education, conflict resolution training, rule of law, religion—and the categories, if you look at the budget for the additional request on page 21, about 30 percent is for a dedicated staff full-time. This is labor-intensive work. It requires a lot of connecting of wires and follow-up; 40 percent for grants and fellows, and this is to stimulate expert and targeted work both to complement our efforts, and to extend our reach and build some capability on the ground; and then 30 percent is for special projects which includes our conflict resolution training, work with educators to be able to build on a successful models that we have for working with teachers here, to do that and adapt that to Bosnia. In that category is some of the travel money. I think we have allocated about $184,000 for travel, because we have projects on the ground, or we may be bringing individuals from Bosnia and the region here. We would do, for instance, some training of religious leaders in conflict resolution, or in the media for the support for the Truth and Reconciliation Commission that was begun through our work in the Rule of Law. This would be in the category of the special projects as well.
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Mr. PORTER. I am going to have a series of questions for the record that are very important. I am going to ask you to answer them as quickly as you can, but let me say, as far as FMCS is concerned, you are going to decide what you are going to do with them or not do with them——
Dr. HENTGES. Yes, the specific projects to follow-up on earlier conversation.
Mr. PORTER. And I am certainly not the expert that could tell you that there is a great deal that could be done, but I would ask that you explore this very deeply and see whether there are opportunities that really make a lot of sense for both agencies. Other than that, I obviously think very highly of the Institute and of the job you are doing.
I just worry greatly that we are missing opportunities that I do not want to miss and I know you do not want to miss, and I think the suggestion that perhaps we could empower some of those who want the opportunity to get the training with some funds from our foreign assistance programs, and an earmark might be a very, very good way of addressing that and getting people into the programs. Obviously, you have some preparation that you have mentioned you need to do. I am sure you can do it even more efficiently if you have a lot of demand built up out there, especially those who can pay their way. And it seems to me that that approach might help everyone.
TIME FOR DEVELOPING RESPONSES
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Dr. HENTGES. Mr. Chairman, I would just like to correct the characterization of the list that we provided you of ''approaches for the training.'' I would like to characterize it differently than ''turn-downs'' because these were requests that were made that we could not respond to at the moment, but which we are either now working on or in the future we may go back to. The timing was not right, or we had made prior commitments that had fully engaged our staff.
So they are not lost opportunities yet. One that is on that list, Kosovo, it was a more general invitation the first time from Kosovo. The one most recently is more specific and, because of the nature of the conflict there, we thought important to respond to. So I want to give you confidence that these are not off the screen.
Mr. PORTER. Well, I assumed that. In fact, several of the ones that were on the list—Dr. Solomon had mentioned the Army Peacekeeping Institute—you had mentioned that you are working with, so the turn-down obviously was then picked up at a later point.
Dr. SOLOMON. Well, it may have been another problem. We do a lot with them, so it may have been two different activities.
Mr. PORTER. Let us look forward a year from now to seeing what can be accomplished in terms of working much more and emphasizing much more the training aspect, and impacting all of these countries that need this kind of help.
TRAINING BY TELECONFERENCING
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Dr. SOLOMON. I appreciate the way you have put in neon lights the priority you attach to this issue. It is, again, something we share with you. We are looking for ''force multipliers'' to increase the impact of what we are doing. We will be moving into a new facility—a temporary arrangement in the fall that has a teleconferencing capacity. One of the things that is being made possible by the information revolution is the capacity to run a training program via a teleconference link anywhere in the world where the opposite party has the capability to dial us up.
So we will be looking at that as one example of how we can do a training program and get many more people involved than otherwise might be the case. We will be experimenting with these approaches.
Mr. PORTER. Are you on the Internet, by the way? I assume that you are.
Dr. SOLOMON. Oh, yes.
Mr. NELSON. Like gangbusters.
Mr. PORTER. Pardon me?
Dr. SOLOMON. Like gangbusters, he said.
Dr. HENTGES. Visit our Home Page.
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Dr. SOLOMON. That is another way to broaden our outreach. We are putting our library facilities on the Internet so that people will have access to our material through the Net. It is a natural extension of this work.
Mr. PORTER. Thank you very much, Dr. Solomon. Thank you, Dr. Hentges and Mr. Nelson. Appreciate very much your appearance. We will stand briefly in recess.
[The following questions were submitted to be answered for the record:]
"The Official Committee record contains additional material here."
WEDNESDAY, APRIL 22, 1997.
CORPORATION FOR PUBLIC BROADCASTING
WITNESS
ROBERT T. COONROD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
Mr. PORTER. The subcommittee will come to order. I apologize to everyone in the room for starting late. I was chairing a congressional human rights caucus briefing downstairs and was held over.
We continue our hearings on the fiscal year 1999 budget for the Corporation for Public Broadcasting. We are very pleased to welcome Robert T. Coonrod, President and CEO of CPB, and I hope that you will take a few moments, either in the course of your prepared remarks or immediately following, to give us a sense of the direction you would like to take the Corporation for Public Broadcasting, the opportunities and obstacles that you face, and your personal priorities as the new CEO. And with that, I will ask you to proceed with your opening statement and then we will take questions.
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Mr. COONROD. Thank you, Mr. Chairman, and I would welcome the opportunity to respond to those questions that you put to me. But first, just let me say it is an honor to be here, and I have submitted for the record written testimony, and I would like to summarize that briefly. But before I do summarize that, I would like to acknowledge your leadership, Mr. Chairman, and the support that this subcommittee has provided us in securing the increase for the fiscal year 2000 appropriation. For that, we are extremely grateful.
Opening Statement
As you know, Mr. Chairman, under current law, all broadcasters must make a transition to digital broadcast by the year 2003. Public broadcasting does more than simply accept this Federal mandate. We are enthusiastic about it. It is an opportunity to expand dramatically the services public radio and television stations provide to every community across this country.
A committee of public broadcasters has now been at work for 16 months preparing for the transition, providing a central clearinghouse for the latest information about digital technology, acting as a sort of think tank to public broadcasting strategic planning, and providing a public service perspective to the broadcast industry at large.
The Public Broadcasting Service and the Harris Corporation have launched the DTV express. It is a technological road show that will travel the country to educate broadcasters, civic leaders, educators, and the business community about digital TV and the promise that it offers to the American public.
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CPB is also working with public broadcasters, educators, and the creative community, to develop the innovative new programs and services that will make the promise of digital broadcasting a reality. We will see video, audio, and data converge into a new medium that can benefit all viewers and listeners, especially underserved and minority audiences.
And to ensure that the vision of Congress becomes a reality for every American, CPB is requesting $340 million for its regular 2001 appropriation. And it supports the administration's allocation of $450 million for a digital transition fund. This multiyear digital transition fund will help stations finance the cost of new equipment associated with digital broadcasting. The administration's request represents approximately one-quarter of the total DTV conversion cost for public broadcasters. The remaining funds will be raised by stations from State and local sources, from the corporate sector, and from private donations.
In summary, Mr. Chairman, the two requests support public stations in the following ways. The digital transition fund will get stations off to a good start in raising the $1.7 billion that they need to bring public broadcasting fully into the digital era, and the 2001 appropriation request addresses both public broadcasting's ongoing needs and the new costs associated with digital broadcasting. Support for these two requests will help ensure public broadcasters make the transition to digital and make the digital vision a reality for the American people.
But I note too, Mr. Chairman, this committee is interested in the CPB support for minority programming; it was mentioned in the conference committee report last year. [CLERK'S NOTE.—Later changed from ''conference committee'' to ''committee''.] I would just like to say that the CPB board shares that interest. It is committed to sustaining and to increasing the level of support we are able to provide for programming which celebrates and explains our Nation's rich cultural and ethnic diversity.
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CPB currently supports five minority consortia. It also provides significant direct support for minority programs. We have been able to maintain support for the consortia at pre-recision levels. We have offered consultative assistance to the consortia to help them update their business practices and to explore new revenue sources, and we have provided additional assistance to two of the consortia for special fund-raising efforts.
In addition, CPB has directly funded programs such as Plaza Sesamo, which is the Spanish version of Sesame Street; Rock with Wings, a 2-hour documentary about a Navaho girls' basketball team; an American experience called Africans in America; a special 90-minute documentary on the Scottsboro boys. These and many others were all funded through CPB's 1997 general program fund. And with your permission, Mr. Chairman, I would like to make the complete list of those programs available to the committee.
That concludes my prepared remarks.
[The prepared information and statement of Mr. Coonrod follows:]
"The Official Committee record contains additional material here."
THE FUTURE OF PUBLIC BROADCASTING
Mr. COONROD. But I would, Mr. Chairman, like to respond to the question that you raised at the beginning. It has been about 6 months since I have been the President of the Corporation for Public Broadcasting, and a number of the topics or issues which impelled me to accept the job—or to seek the job would be a better way to put it—are the kinds of things we will be talking about today in the course of the questioning.
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I think there are three issues I focus on. One is a growing cohesiveness within public broadcasting, a common sense of purpose among the various groups and organizations and stations within public broadcasting.
Another thing, Mr. Chairman, as I noted, is a rededication to the principles of public service and the whole notion of public service telecommunications, and especially the educational roots of public broadcasting.
And, finally, and perhaps most significantly, given what we are facing now, is the digital revolution that we are about to go through and the genuine opportunity and promise it offers for public broadcasters to be able to provide the kinds of services to their communities around the country that the technology didn't permit in the past. And I decided when I spoke with our board last October, that I would like to be part of that digital revolution, and the board agreed they would like to have me be part of it, and that is why I am here today, to describe to you why I think that significant congressional support for the transition to digital is an important thing for all of us.
DIGITAL CONVERSION FUNDING OPTIONS
Mr. PORTER. Mr. Coonrod, this is your first appearance before our subcommittee as President of CPB, but you are well acquainted with the subcommittee by reason of your prior service. And I think that you know that a large number of Members of the Subcommittee are great friends of public broadcasting, and are very supportive of what CPB does. That also means that our questions get tougher, and so let me play a little devil's advocate here and challenge some of the thinking that you have raised about digital and I will let you respond to it.
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Perhaps public broadcasting is getting the cart before the horse. Obviously you have to respond to the regulatory deadlines laid out by the FCC, but I don't believe those deadlines are going to be met. In fact, the regulations contain a huge escape clause that requires 85 percent of households to have digital receivers before analog signals can be turned off. Your own justification indicates manufacturers can't even keep up with the current demand for digital transmitters, let alone deal with the coming tidal wave of demand we would see if broadcasters attempt to meet the FCC guidelines.
More importantly, I don't think CPB or anyone yet has a good grasp of what the actual cost of converting to digital transmission will be. Again, in several places, justification indicates costs for various elements of the conversion effort cannot yet be estimated. In addition, the approach to obtaining funding seems to be haphazard.
On the one hand, you have testified to the need for a new digital conversion fund that is not authorized in law and would require a new authorization to be implemented. On the other hand, you indicate another large increase is required in the regular CPB appropriation to help meet the requirement of digital conversion, and you are requesting an additional funding in the existing Public Television Facilities Fund, which is appropriated in the Commerce-Justice bill.
Other evidence that the industry's desire for funding has outstripped its analytical capability is the fact the budget does not propose the authorizing language necessary to implement the digital grant program, nor is such a proposal available today.
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You have described generally how such a system might work, but neither the CPB nor the industry has done the analysis or generated consensus principles that would be needed to produce such a proposal. In fact, you are even asking us to put the cart before the horse legislatively, since you do not intend to obtain the prerequisite authorization to the regular authorizing process; rather, we would have to authorize and appropriate the digital program in the same bill.
I think the greatest danger in rushing to get some digital funding in the pipeline is we will fail to consider many alternatives which might provide better solutions. I want to suggest several alternatives and get your response to them; and could you indicate whether you have seriously considered these options and please provide for the record the analysis upon which you base your rejection of them, if so.
First, CPB or stations could borrow money for digital conversion in private financial markets.
Second, the Federal Government could provide an interest subsidy or interest guarantee for funding borrowed in private markets.
Third, the Federal Government could loan capital funding directly to CPB or to individual systems or stations.
Fourth, CPB could be granted statutory authority to reserve some portion of regular appropriations for digital conversion grants. Specifically, the CPB could use the $50 million increase provided for operations in fiscal year 2000 for the first year of digital conversion activities.
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Fifth, CPB could be granted other revenue-enhancing authorities, such as those proposed by Representative Fields in his reauthorization bill.
Sixth, CPB could request all facilities funding through the PTFP fund, which is the existing Federal capital program for public broadcasting.
Seventh, stations and systems could be allowed to enter into cooperative agreements with commercial entities in which digital upgrades could be exchanged for unneeded spectrum.
I wonder if you would comment on each of the options and tell us why we ought to disregard all other options in the short-term to embrace a concept which has not yet been authorized.
Mr. COONROD. Perhaps we can go through the options first and then maybe we could talk to the premise of your question, because I think there are a number of points in the premise of your question I would like to discuss.
In the list of alternatives that you have mentioned, the first one, private borrowing, or a Federal Government interest subsidy, we have done some preliminary—taken some preliminary looks at those, and the basic problem is that that would require, at this point, some guarantee that the digital spectrum would generate a certain amount of revenue over and above the revenue that could be—that would be required to operate the stations and produce the programming or purchase the programming that would be required. And there are no reliable estimates of revenue that would make those first two options, in our view, realistic at this point.
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The third option is one that has a lot more promise because it, in effect, is a public-private partnership, and it would offer, in effect, as I understand it, Mr. Chairman, a government guarantee for the loans that might be available.
Mr. PORTER. Well, it would be Federal loans directly either to the corporation or individual systems or stations that would have to be repaid in the normal course.
Mr. COONROD. But the entity providing the loan would not be a bank or a—you know, someone else, so the terms could be worked out with the committee or with the Congress, and—
Mr. PORTER. Presumably the terms would be more liberal than might be obtained in the private marketplace, presumably.
Mr. COONROD. And could take into account the fact that in some cases, for example, in rural areas, or in other smaller markets, there would need to be a certain leniency in how these things would be considered, because we recognize the economics of public broadcasting in the rural areas, and recognize, also, the need to maintain universal service. So because there would be some flexibility to discussions, it would certainly have more potential than the first two.
Your fourth question was reserve to a portion of the regular appropriation. While that is possible, that would be a kind of Hobson's choice, because what we are trying to do now is trying to balance the need for the capital expenditures—those things that are required by public broadcasters to make the transition to digital—balance that need against the potential that digital offers and how do we develop the services and the programs whereby we can demonstrate to the public the value of the digital spectrum.
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So if you were to say to us you can use the money to build infrastructure, we would be put in a position where we would say we are limited in our abilities to develop the programming and related educational services that could be used, that infrastructure could be used for. So while that is a possibility, it is far less attractive than the previous one.
Other revenue enhancements, like the ones that were looked at in the Fields' bill, there are two elements to that. One is the revenue projections. And we could provide you with some analysis that has been done of the amount of revenue those kinds of things could produce, and essentially they would not produce revenues that would adequately capitalize the digital transition.
[The information follows:]
"The Official Committee record contains additional material here."
Mr. COONROD. The other part of that, though, Mr. Chairman, and it is not an insignificant part, is currently there is no consensus within public broadcasting about the wisdom of certain of those revenue enhancements, and one of the things we have managed to do in these last several months is to maintain a cohesive, coherent public broadcasting community, and I think if we went down that road, we might begin to see some of the tensions come to the surface.
As to your question about putting all of the money through the Public Telecommunications Facilities Program, that is certainly an option. I would have to defer to others to know how realistic an option it is. What we did when we were developing our thinking within the public broadcasting community, we developed what we described as a ''two pots'' strategy for lack of a better word, and the notion here was to try and make the case in those two appropriations, which have traditionally supported capital development in public broadcasting.
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The satellite interconnection systems have been traditionally supported through CPB, and this has some of the aspects of an interconnection system built into it; and the individual capital equipment accounts have traditionally been supported through the PTFP. So while I believe the authorizing legislation for PTFP would permit that, it does not have a history of appropriations of a significant size to accomplish that.
Mr. PORTER. Can I interject at that point and simply say that logically, since this is a capital program and since this is a Commerce jurisdiction, that would be the place where the money should be provided. What you are saying, I think, is practically speaking, there isn't the same strong support on that subcommittee for public broadcasting as there might be on this one. Is that correct?
Mr. COONROD. There is strong support on that subcommittee for public broadcasting. That subcommittee has perennially provided money for programs. Up until this year, there has not been support from any administration for the PTFP program, however. This is the first time, in my memory, at least, an administration supported funding, and the amounts of money that are made available have never been anywhere near enough to meet the needs. So, yes, you are right, Mr. Chairman; logically that would be the place.
Mr. PORTER. Logically, wouldn't the request for digital conversion come right there? Shouldn't your request be before that subcommittee instead of this one, logically?
Mr. COONROD. There is a logic that impels us in that direction, and that is part of the reason that we chose to follow a two-pronged strategy. But there is also a logic that impels us at this direction, Mr. Chairman, because it is the appropriation for the Corporation for Public Broadcasting that has been the account that funded the major, the significant changes in public broadcasting.
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When the interconnection system was first established in the seventies, that was through an appropriation to the Corporation for Public Broadcasting. When it was redone again in the late eighties, when both the new satellites for public radio and public television were purchased, in effect, and the attendant equipment was purchased, that was done through an appropriation to the Corporation for Public Broadcasting.
This is of that scope and of that magnitude. We are not talking here about individual pieces of equipment that—you know, like changing a tape machine or something else—we are talking about a wholesale conversion of broadcasting from analog to digital. It is of that other magnitude.
Mr. PORTER. All right. That was number 6. Then there is 7.
Mr. COONROD. Number 7, co-op agreements with commercial broadcasters, Mr. Chairman. There are a number of initiatives underway seeking to find, at the local level, cooperative arrangements with public broadcasters. In fact, one of the reasons that I would argue that it is important for the Congress to make funds available in fiscal year 1999 is so that public broadcasters can fully pursue those cooperative arrangements with commercial broadcasters. But it is important to bear in mind that in a lot of the markets, below the top 25 markets, commercial broadcasters face challenges that are nearly as daunting as the ones public broadcasters face in terms of making the conversion to digital. And the natural partners are the people who share, for example, broadcast towers; commercial broadcasters and public broadcasters often share broadcast towers. They are natural partners in this conversion, and very often that is the avenue that is being pursued. But we can't look to the commercial broadcasters to finance the cost of the public broadcasters conversion; we can look to them to share the costs.
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Mr. PORTER. But they can get something in return. That is the unneeded spectrum. They finance it, in effect, by getting something in return through a cooperative agreement.
Now you wanted to comment on the premises to the question. I am running over my time and I want to recognize Mrs. Lowey, but why don't you comment on the premises of the question, too?
Mr. COONROD. We think that we have done—you talked about a number of things, the timing, the cost, and that. The timing is driven by a requirement, by an FCC requirement. Regardless of when this all plays out with the 85 percent rule, unless stations make the conversion to digital, they will lose their licenses. So at this point it is a requirement that all broadcasters convert to digital. That is an important consideration.
We would argue, Mr. Chairman, that our analysis has not in the least been haphazard, and we would be happy to share with you and other members of the subcommittee all of the underlying data that we have, which I think will be very convincing. And as we have compared our analysis to the work that has been done by commercial broadcasters, we find in terms of the basic costs, there is significant congruence.
On the other hand, you are absolutely correct in noting that this is an area that is speculative to some degree; there are some unknowns. And we would expect to be analyzing this and revisiting this regularly and amending our needs accordingly.
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One of the reasons for a multiyear request is recognizing precisely that uncertainty, and we would expect to be able to refine that as we get further down the road. But certainly we know that regardless of the amounts of money that would be required, they would be far more than what we are requesting in year one.
DIGITAL CONVERSION TIMELINE
Mr. PORTER. Let me ask, what is the FCC timetable for commercial conversion? What is the date; 2003, is it?
Mr. COONROD. The stations in the top 10 markets have to convert by November of this year, I believe it is.
Mr. PORTER. November of this year?
Mr. COONROD. Then the next tier, by November of the following year. All stations must have converted by 2003.
Mr. PORTER. How many have converted?
Mr. COONROD. How many commercial stations?
Mr. PORTER. In the top tier, how many have actually converted?
Mr. COONROD. I can't say with any precision, but it is a handful.
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Mr. PORTER. There aren't many at all?
Mr. COONROD. Right.
Mr. PORTER. And it is fairly clear a lot are going to miss the deadline; right?
Mr. COONROD. I wouldn't speak for them, sir.
Mr. PORTER. To us uninitiated observers, it seems like it is very clear that the deadlines are too tight for the amount of investment and technological change involved and that the FCC is going to have to back them off, and that the conversions won't in fact occur by the deadlines for those reasons. But I wondered if you had any insight on that or feeling for it?
Mr. COONROD. I have a feeling for it, but I don't have any particular insight.
Mr. PORTER. I don't either, I have a feeling.
Mr. COONROD. My feeling is based on the conversations that took place around the National Association of Broadcasters meeting a couple of weeks ago, where there was only really one topic and that topic was the conversion to digital [CLERK'S NOTE.—''Months'' was later changed to ''weeks'']. Digital is here. And that was, if you will, almost a mantra. No one was talking about delay, they were all talking about going forward, so that is the feeling that I have.
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Mr. PORTER. Thank you, Mr. Coonrod.
Mrs. Lowey.
THE PROMISE OF DIGITAL PUBLIC BROADCASTING
Mrs. LOWEY. Thank you, Mr. Chairman, and I want to join Chairman Porter in welcoming you to the committee. You do have friends on the committee and I share the Chairman's strong support for the Corporation for Public Broadcasting. We certainly have been advocates and continue to wish you well.
I have been very intrigued by the questions the Chairman posed. I certainly haven't looked into them, but I look forward to pursuing your responses to those as options that can be considered. However, I want to make it clear that I do support the administration's request, although I am interested in pursuing the various options the Chairman has posed.
A very basic question. Perhaps you can tell us for the record how public broadcasters will gain from digital technology; specifically, what type of services and educational programming can the public expect? I think at this point, the public knows it is going to cost a lot of money for a lot of new equipment. I think it would be very helpful for them to know the great advantages, if there are any.
Mr. COONROD. Mrs. Lowey, there are two parts to that answer. One is what we know now what will be possible. We have actually got an illustration of that, and I think copies of this have been made available to the subcommittee. It is a mockup of what would be possible on Maryland Public Television today if it were broadcasting in digital.
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What you can see from the chart is that there would be four simultaneous streams of programming that would be available. During the day, you could have a children's channel and the PBS ready-to-learn service. Simultaneously, you could be broadcasting a Maryland Public Service channel. What we have done here in doing this mockup, Mrs. Lowey, is we have used programs that are currently available, so while it isn't happening today, with the conversion to digital, it could happen. These are programs that are currently available.
You could have a third educational and instructional channel, and then, finally, a business and information channel. These could run during the day. Then in the evening it would be possible to broadcast the kinds of programs that are—that are PBS's signature programs in high-definition television. And high-definition television, if you haven't seen it, it is beyond imagination that that is what television could look like.
There is a Benjamin Britten opera on PBS this evening. Imagine watching that in high-definition television. It would be a stunning experience for all of us. And that is the kind of thing that would be possible, given current programming, and the technology that we can anticipate, that we know is coming down the line.
But what you have here is a compression ratio of 4 to 1. In effect, you can have four channels where you currently have one. We were looking at demonstrations 2 weeks ago, where the compression ratio was 10 to 1, where you could have 10 channels, all of which provided a better picture and better sound than current television in the space where you now have one. So that is the service that could be provided to a general audience.
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In addition, we have been doing a lot of work with educators to see how we might use this more effectively. One of the things we have been talking about is how it can be used in medical education, for instance, education for doctors. There is a specific project that we are looking at now in North Dakota, where they need to train physicians in rural communities. They haven't been able to use analog television because the pictures have not been clear enough and precise enough for the medical applications. They are convinced that with digital technology, the pictures would be precise enough that they would be able to do the medical training that they can't now do through distance learning. And with the possibility of providing additional data screens, they could be providing the physicians with the kinds of information they need for their in-service training and that sort of thing, making sure that physicians in rural communities, you know, are current on the latest techniques and everything else.
Those are the kinds of possibilities that we have only begun to explore, but which we think are absolutely realizable with the digital technology.
Mrs. LOWEY. Well, I thank you and I think it is very important, that we educate not only the members but the public as to the incredible possibilities of digital technology.
You talked before about the cohesiveness. Were you talking in terms of management, or were you talking about cohesiveness in terms of planning and programmatic possibilities?
Mr. COONROD. All three. And one example of that is the DTV road show which will be a national—I mean, these are large trailer trucks that will go around the country and they will provide information to educators, business leaders, and others about what the possibilities of digital television are. In fact, the DTV road show had its inaugural stop here at the Capitol. But it does exactly that. It helps people sort of visualize about what the possibilities are, because this is a dramatic change. This is not like taking a black and white picture and turning it into color; it is more profound than that, and we don't know yet fully what the implications will be.
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THE FEDERAL ROLE IN DIGITAL CONVERSION
Mrs. LOWEY. Mr. Coonrod, in another area in your testimony, you state that the total cost of converting all public television stations to digital will be $1.7 billion. Could you just tell us again, what percentage of this cost are you seeking from the Federal Government? Can you please talk about how the stations will raise the remaining funds, and, also, the role that the Federal funds play in leveraging private contributions and State funding?
Mr. COONROD. The administration has requested $450 million, which is about 26 percent of that total. And the Corporation for Public Broadcasting is supporting the administration's request. The public television stations are requesting a larger amount, they are requesting a total of $600 million, but they are requesting $375 million; that is the same as the administration's request for the Corporation for Public Broadcasting.
We have been working with stations around the country, particularly the trade association, America's Public Television Stations and PBS have been working with stations around the country to help them develop their own capital campaigns. There are, at this point, two major types of capital campaigns underway. For those stations that are State networks or get State funding, they are preparing their requests to their State legislatures. For community stations that don't have—don't get State funding, they are preparing major capital campaigns and we have helped them develop kind of a tool kit, for lack of a better word, of materials they can use to develop the capital campaigns. These are multiyear capital campaigns.
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It would be significant, both in terms of securing State funding and in securing funding through capital campaigns, it would be significant for the stations to be able to say that the Federal Government has made a major commitment to the conversion to digital and that's what we are looking at, in effect, at the national level, we are challenging the State, local governments, and the communities to raise a portion of it. It is, I think, a tribute to the public broadcasters that there has been no strong call to come in here and ask for 100 percent of the funding.
When the interconnection systems were put in place, both in the seventies and eighties, those were 100 percent financed by congressional appropriations. In this case, we see this as a public-private partnership and we see this as a shared responsibility and commitment of all of the stakeholders in public broadcasting. One of those stakeholders is the Congress and the Federal Government, but there are other stakeholders, and we would challenge all of the stakeholders to do their part.
Mrs. LOWEY. The FCC is requiring public television stations to be on the air with a digital signal by 2003. Shouldn't we be providing funds over 4 years rather than 5 years, as the administration has requested? Can you explain the timing?
Mr. COONROD. Four years would be preferable to 5 years, because we would have about 8 months in the last—in other words, we wouldn't have a full year in the last year, we would have about 8 months. So if we could get the funds over 4 years, rather than 5 years, that would certainly help our procurement and our funding; yes.
RELOCATION OF TOWERS
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Mrs. LOWEY. I understand from phone calls I have received that public radio stations will also be impacted by television's transition to digital. In fact, it was WNYC in New York that did call me because they were concerned about the cost associated with the relocation of towers and possible broadcast interference.
Specifically, WNYC is concerned the proposed new digital TV towers on top of the World Trade Center could force them and others to relocate because of interference problems. If forced to move, the cost to WNYC would be at least $1 million. At least that is what they indicate.
The scenario is likely to be repeated across the country. And I know the bell went off, but I will just finish quickly and maybe you can answer quickly. What plans is CPB making to assist radio stations like WNYC and others?
Mr. COONROD. As part of our analysis, we included our best estimates of what it would cost for the conversion to digital for radio. But at this point, there is no agreed-upon standard for radio, so that is speculative. However, it is absolutely necessary that public radio make the conversion to digital for digital as well, but once that standard is established, and it hopefully will be in the next year, we can refine the estimates.
The tower problem is a real problem, both in radio and in television. By our estimate, 83 percent of the stations, radio or television, would have some kind of a tower adjustment that would be required.
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Mrs. LOWEY. Thank you.
Thank you, Mr. Chairman.
Mr. PORTER. Thank you, Mrs. Lowey. Mrs. Northup.
THE COST OF EQUIPMENT
Mrs. NORTHUP. Thank you. I have a couple questions about changing to the digital, too.
First of all, I mean, realistically, I think there is an anticipation that as more stations adopt this technology, particularly a part of it that is available very incrementally, that it will get cheaper as it is mass produced. Do you anticipate that to be true?
Mr. COONROD. In the long run, yes; that is absolutely true. At this point, it is not possible to predict how that curve will look. In the short run, it is a seller's market, however.
Mrs. NORTHUP. As I understand, there is only one maker, it is in Germany, and they make 400 a year or something; is that right?
Mr. COONROD. I am not sure what we are talking about, but there are certain pieces of equipment that will be required that there is a single manufacturer; that is right.
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Mrs. NORTHUP. And the anticipation is this will be mass produced in a very short time; in fact, people are gearing up to take on that responsibility.
Mr. COONROD. That is true. And in working up our estimates when we did our analysis, we included two what you might call deflation factors. All of the estimates that we did we discounted by 10 percent, based on the notion that we thought costs would come down. Then, in addition to that, we put in what we described as an efficiency factor. By group purchases and those sorts of things, we assumed we could drive the cost down even further; in other words, negotiate agreements with manufacturers and everything.
So in doing our estimates, we have included both of those considerations; yet the estimates that we worked from were based on the current cost. Should those costs come down, obviously we would adjust our estimates. That is one of the reasons why a multiyear procurement would be certainly to our benefit, because we could take advantage of the reduced cost.
FCC DIGITAL CONVERSION TIMETABLE
Mrs. NORTHUP. Well, having some background in electronics, I guess what my question would be is: As the commercial market begins to make the switches and as the production gears up, it seems to me like maybe the kindest thing we could do is maybe delay by 2 years, for example, the implementation of this for public television in anticipation of the cost decreasing and the availability of the technology. And, also, with the understanding that it is very unlikely we are going to meet the 2003 deadline, maybe an appeal to the FCC for some cooperation here would make an enormous public dollar difference.
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Mr. COONROD. There are two parts to my response. One is, while what you are proposing is attractive, it is not an option we currently have as an option we have available to us. We are constrained by the existing deadlines and time frames. And I just simply don't know the answer to the second part, as to what the dollar difference would be if we did that. We can only speculate.
Mrs. NORTHUP. Mr. Chairman, do you think that it would be possible to send a letter to the FCC inquiring about the possibility of cooperation or opportunity here? You know, we know the numbers before us anticipate current costs, we know that prices are anticipated to come down; the commercial market that is out there in front of us is liable to drive that. And considering our local communities that are struggling with this, I just wondered if that would—as we appropriate money for this project, whether that makes sense.
Mr. PORTER. We certainly could consider as a subcommittee doing that; yes.
DIGITAL FUNDING DISTRIBUTION
Mrs. NORTHUP. I would like to also ask whether you are considering giving States any guidance to prioritize certain markets. You have some States that I think would maybe appreciate some guidance as to how to prioritize. In fact, I believe there are guidelines for the commercial market. I am sort of struggling here to maybe prioritize the high-population markets.
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Mr. COONROD. Yes.
Mrs. NORTHUP. Is public television going to do something along the same line that would give some relief to a phase-in to those? I mean, ultimately, some of the urban areas and State legislatures are going to have to subsidize significantly what the rural population does.
Mr. COONROD. We are using a kind of different approach than has been—I mean, let me put it this way. The FCC has given public broadcasters the option of converting on the last day, in effect. There is no requirement that it be staged where the top 10 markets have to go first, and then the next group and everything else. So the public broadcasters don't have that requirement. They would literally be able to all convert on the final day.
On the other hand, there are a number of public broadcasting stations that have already made significant expenditures, and they are going first. And there is a group called the Digital Broadcast Alliance, about 11 stations that are moving forward quickly. It is a voluntary thing and we think it is a useful and important voluntary thing because it is going to provide us with the kind of experience that currently is unavailable. And we think, based on that experience, the engineering in the subsequent stations will be much smoother.
So, in effect, what we are saying is that the stations that are taking the lead have agreed as a system to provide the expertise that they acquire to help the smaller and the more rural stations in making the transition. And that is not entirely a cost question; that is also a technical and engineering question, because when you have to bring in consulting engineers and all of those sorts of things, that drives your cost up. If that expertise is available from within public broadcasting, we can keep the costs considerably lower, so we are doing that.
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In addition——
Mrs. NORTHUP. Let me follow-up on that, if I may. So the money we would appropriate this year, would it be targeted to those 11 stations?
Mr. COONROD. The money that we would ask for in 1999 would not necessarily be targeted to those 11 stations, because some of them have already made the expenditures and we wouldn't want to, you know, provide money for expenditures already made. But we have identified the costs of the top 20 markets, where people will be making—the conversion to digital will already begin and there are about $47 million in costs in the top 20 markets.
We mentioned earlier the towers. We believe that there are fully—a third of the stations will have to develop—will have to either move towers or do something with the towers. Eighty-three percent of the stations, beyond two-thirds, will have to make some towers modifications. Those were prerequisites, so we would target those kinds of preliminary activities.
Not to belabor the towers question, but there are, as I understand it, seven engineering firms that are fully qualified to provide the kind of towers—consulting and engineering services for towers. And so you need to get into it, and the way you get into it is to make a down payment and part of the funds would be going for things like that.
Mrs. NORTHUP. I just wondered, since I think having 11 stations go first and work through it, and also waiting for the technology, that we are going to have a tidal wave of technology here, considering all the commercial channels, that it makes sense to target what we do, to plan, to build the capacity, and make sure we do those 11 well, and in the meantime, let the price drop. And I just worry about—you know, even though I realize there is sort of a drop dead date, it wasn't my understanding that we really thought that date would be adhered to. And if we can buy for $50 million what we are liable to spend $75 million today for, it is a good use of public money.
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Mr. COONROD. Any way we can find to reduce our overall cost would be to everybody's advantage, certainly.
Mrs. NORTHUP. I also am going to submit questions about your ready-to-learn program. I am very interested in what you all are doing in the area of reading.
Mr. COONROD. I would be happy to respond to that.
Mrs. NORTHUP. Thank you, Mr. Chairman.
Mr. PORTER. Thank you.
Ms. Pelosi.
Ms. PELOSI. Thank you very much, Mr. Chairman. Congratulations to you, Mr. President, and good luck to you.
Mr. COONROD. Thank you very much.
Ms. PELOSI. Just listening to the questions and reading your testimony, it is pretty exciting.
Mr. COONROD. Yes, it is.
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THE NEED FOR FEDERAL ASSISTANCE
Ms. PELOSI. It is pretty exciting to see. It is interesting because the Corporation for Public Broadcasting is such a challenge to begin with, and now there is this additional challenge. But let's make sure we all take complete advantage of the opportunity.
It is interesting to hear you talk about it in terms of distribution as well as programming, and some of my questions were asked by my colleague, so I am going to go to the questions about distribution and what it will mean. Congresswoman Lowey asked about what difference it will make, and you pointed out this very clear chart for Maryland. What will happen if Congress does not assist public television in the transition? I mean, it is just not to be considered?
Mr. COONROD. Well, we try to think—we try not to look at the bleakest options, but I certainly think there are certain stations that would make the transition to digital. But one of the things we would lose is universal service and one of the things that has been the hallmark of public broadcasting from the very beginning is that the best in television is available to all people in this country at no cost, and that would no longer be the case.
There are a number of markets that will have difficulty making the transition, even with Federal assistance, and without Federal assistance it would be impossible. So I think the first thing we would note is a loss of coverage in certain parts of the country. And the next thing we would note is that the educational potential that is available through digital would be truncated, if the stations then had to direct all of their resources to building infrastructure rather than developing the content that we know will—that the digital will be able to provide. So we would lose the possibility of fully exploiting the potential of the digital technology.
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And I think the final thing, at least that sticks in my mind, is the fact we are looking at digital as an opportunity to serve the multiple audiences that public broadcasting serves. Two things are true. This Nation is simultaneously getting older and it is getting younger and more culturally diverse. Both of those things are true. We need to appeal to audiences that have divergent tastes and interests, and one of the things that digital does is it offers that opportunity. You can provide quality programming that appeals to a mature audience and you can at the same time provide quality programming that appeals to a younger, more culturally diverse audience. And while you are doing that, you can also be providing the educational services and the ready-to-learn service. So I think it would be an unfortunate missed opportunity if we didn't go forward with this.
CULTURALLY DIVERSE PROGRAMMING
Ms. PELOSI. Since you talked about the diversity—and I think that is very important—as you mentioned in your testimony, the subcommittee has expressed its support for an increased amount of multicultural programming from public television and support for the work of the Minority Consortia. Are you satisfied with the amount placed in the multicultural program on public television and radio; and what is CPB's commitment to increasing Minority Consortia funding, especially in light of the challenges that lie ahead for digital?
Mr. COONROD. I don't think we can ever be fully satisfied. I do think that I sense—I mean, I can talk about the Corporation for Public Broadcasting initially. The board of the Corporation for Public Broadcasting is firmly committed to sustaining an increase in programming of this nature, and I sense a much stronger awareness of this at PBS as well. Certainly in public radio, I think there is a deep commitment to that in public radio. And in the kind of programs, just to use radio for a second, two-thirds of the programs we funded in recent years—radio programs—have been of a culturally-diverse nature: a lot of Native American programs, Hispanic programs, and that sort of thing; and we have been a major developer of those kinds of things.
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And I would like to make available to the subcommittee a list of the programs that CPB funded in 1997. I think you will find an impressive list of programs that really speak to the ethnic and cultural richness of this Nation.
So, no, we are not satisfied, but that would be—we could never say that. But I think we are making progress, as part of the strategic program review we have underway, we are looking at this. I have met with either the chairs or the directors of all of the minority consortia in the last several weeks. I am convinced that we have common objectives. We don't always want to follow the same route to get there, but we all want to get to the same place, and I am convinced over time we will be able to work together constructively.
INDEPENDENT PRODUCERS
Ms. PELOSI. Would you address some of that same energy to be sure that consideration is given to providing digital conversion support to the communities which come from outside the public television system, such as independent producers who may be supported by the minority consortia or the independent television service?
Mr. COONROD. That is one of the things we are working on now, and we haven't worked out how that should be done, but that is one of the things we think is important for two reasons. Obviously these are communities that deserve our support; but in addition, often some of the kind of work, sort of the ''out-of-the-mainstream'' work that is being done, is the kind of work that lends itself very well to the digital environment, and we want to make sure we can fund that.
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Ms. PELOSI. Do you anticipate—I will press the question—independent producers will find more opportunities there because of digital conversion?
Mr. COONROD. Certainly the opportunities will be there. What we also have to work on is securing the funding so that those opportunities become reality.
THE FEDERAL ROLE IN DIGITAL CONVERSION
Ms. PELOSI. The budget request is, as you mentioned, is an additional $50 million for the transition fund. The public broadcasting stations tell our office they will require funds in excess of the President's request. I mean, certainly in excess of the President's request, but even the Federal part will have to be in excess of the President's request for the digital transition fund for the first year. Do you think that that is enough or is that just what you thought you could get, if I may be so crude?
Mr. COONROD. Obviously all of it at once would be best, but the administration's request is for $50 million dollars. That is enough to get started. The request that the stations have of $75 million would be better; there is no question about that.
Ms. PELOSI. Do you think there is a real absorptive capacity for $75 million the first year?
Mr. COONROD. There is. When we did our analysis and estimates, our first-year estimate was even higher than that, so I believe that there is.
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Ms. PELOSI. I was interested in how you came up with the $1.9 billion figure. I just want to know how it has been defined to be. I would have thought it was more, quite frankly.
Mr. COONROD. We did an analysis of the costs, and we broke them down into categories. There are five categories, and in fact, I could refer you, if you have a copy of the justification, to page 41——
Ms. PELOSI. I know how you get to the $1.7. I want to know how you get to the $1.9.
Mr. COONROD. I am sorry; I misunderstood the question. The $1.9 billion is an annual estimate we do of all revenues that are—that come into public radio and television. We do an annual survey of all of the stations and of the national organizations and the regional organizations and we ask them a series of questions. And based on that, we come up with our estimate of what we call, for lack of a better word, system revenue.
Ms. PELOSI. Does that include the Federal funding?
Mr. COONROD. That includes the Federal funding.
Ms. PELOSI. It seems impossible to me a $1.9 billion industry can undertake a $1.7 billion transition.
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Mr. COONROD. It is certainly going to be a stretch, and it is going to be a very interesting and difficult operation.
The other thing, the other stat, though, that I think is relevant is that the majority—beyond 80 percent of the population—express strong support for public broadcasting, and it is that support that we can count on over the long haul to provide those funds.
Ms. PELOSI. Well, from what I hear you say today, I think it will be well worth it, and I am very, very excited for the prospects, because as wonderful as public television has been up until now, it seems like great things are just over the horizon. So hopefully we will be able to meet the challenge, and I commend you for your leadership and your willingness to undertake this challenge. Thank you, Mr. Chairman.
Mr. PORTER. Thank you, Ms. Pelosi. We have been operating under the 10-minute rule. For round two we will operate under the 7-minute rule. We have another agency after this to also consider this afternoon.
Again, Mr. Coonrod, I don't want you to think of these as hostile questions.
Mr. COONROD. No, sir; I understand.
FY99 REQUEST
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Mr. PORTER. CPB has a large advantage over all other programs funded in our bill. In effect, CPB never has to compete for funding under the budget caps because you have an advanced appropriation that is always taken off the top. All other programs have to compete for whatever money is left over. I do not believe we ought to consider any funding for digital in fiscal year 1999 unless we also go back and reassess the underlying appropriation for the year.
In other words, if you want to have two cuts at the fiscal 1999 allocation, shouldn't we then put your full appropriation back into the same competition for funds that student aid or biomedical research or Head Start or every other program has to endure? Why, in other words, do you feel that CPB ought to be exempt from any competition with regard to operating funds and then be allowed to dip back into fiscal 1999 allocation and require cuts in other worthy programs in order to fund digital conversion?
Mr. COONROD. It is my understanding, Mr. Chairman, and I must admit that it is an imperfect understanding of how the budget process works, but it is my understanding the $50 million was included in the administration's fiscal 1999 request. So the imperfect part of my understanding would be that since it was included in the President's budget, it could be funded without requiring cuts of other programs. As I say, that is an imperfect understanding of how it works.
Mr. PORTER. Your understanding is quite imperfect; yes.
Of course, the President's budget is not going to be the budget resolution that we are going to be operating under, and we have no idea what our allocations will be. But our point is that if you are forward funded, and you are the only program that is forward funded by 2 years in our bill, then you are never scored against our allocation until we reach the year of your appropriation; and then you come right off the top, so you are protected, and we have to fit all our other programs under what is left.
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The point is that if, in fact, you are already protected in your fiscal 1999 sum—and you have been—and now you are asking us to add to that sum, why shouldn't the whole process be opened so all of that has to compete against other priorities within the bill, and not just the digital part you are now requesting in addition to what we have already allocated?
Mr. COONROD. I can only answer that by saying that I believe that the case that was made for the 1999 appropriation, when it was made, was a strong and good one and it would hold up even better today than it did at the time. So that, you know, I guess what I am saying is I think we could compete very effectively.
On the other hand, I would be surprised if we didn't achieve a similar result. I am saying that not based on overall—you know, I don't know all of the priorities and all of the other concerns that you have to deal with as the Chair of the subcommittee; but knowing the small piece of it that I am arguing for, I think there is an absolutely rock-hard, strong, solid justification for a $250 million appropriation in 1999 for the traditional operations of public broadcasting, and I have no—I would be willing to defend that, you know, nonstop. So in that sense, I am not concerned; I just don't think it would be worth the effort.
THE COST OF CONVERSION
Mr. PORTER. Well, all right. The President is requesting that the Federal Government provide $450 million of the estimated $1.7 billion cost of digital conversion through the new digital grant program. This represents about 25 percent of the total cost or twice the Federal contribution to operating cost as a percentage of total expenditures. Why are you asking the Federal Government to make a much greater commitment to digital conversion than you do to operations?
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Mr. COONROD. There are a couple of reasons. The first is that in the past, whenever a major thing like this was required, we came to the Federal Government and asked for 100 percent of it. And this year we are not coming and asking for 100 percent of it. We recognize the limitations, but, also, we recognize the fact that we must, as we have demonstrated in the past, we must be more self-sufficient. And this is an example I would argue; that we are operating more self-sufficiently than we had in the past.
I am thinking specifically of the satellite interconnection. Every time we needed a new means of distribution, we came to the Congress and said we need this much money. Here is a case where we are saying this is the amount of money we need, $1.7 billion, and we think that the Federal appropriations should be, you know, roughly 25 percent of it. Now, why should it be 25 and not 15, I guess? But there are certain areas of the country where they are going to have a harder time, particularly the rural areas, they are going to have a much harder time to meet the matches than the large urban markets and that sort of thing.
Mr. PORTER. Could I ask a question at this point? If the Federal Government were to provide $450 million of the $1.7 billion, how will the rest of the money be raised?
Mr. COONROD. It will be raised from States that—from stations that are State licensees and therefore get State funding. They would get appropriations from State legislatures. There are a few stations that are licensed to school boards and university stations which would, by and large, not get monies from the universities; but if they are state universities, they may have access to State funding. All of the community stations would raise the funding in the community, they would do capital campaigns, they would do corporate underwriting, they would get corporate sponsorships and that sort of thing.
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Increasingly, there are the cooperative arrangements between the commercial stations and the public broadcasting stations. There are even some conversations now about joint locations. These haven't come to fruition yet, but commercial stations and public stations would share facilities. There are a number of ways that this would be done, so these funds would be raised from nonFederal sources. Some of those would be State government sources, but increasingly the proportion that would be raised in the marketplace, so to speak, would be increased.
Mr. PORTER. So if they can raise 75 percent of the funds that way, why can't they raise 100 percent of the funds that way?
Mr. COONROD. There are particular parts of the country—as I say, this gets to the question of maintaining universal service—that, A, we would risk the loss of universal service because there would be some areas of the country where it is unrealistic to think they could make this kind of digital conversion.
But the second part, Mr. Chairman, is if all of the resources went into raising the funds for the infrastructure, the stations would be handicapped in their ability to provide the programs and the services that we think digital can offer.
Mr. PORTER. One presumes, then, that you have a plan to target this money to the stations who cannot and will not be able to raise it locally through these other means.
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Mr. COONROD. We are developing that plan. We have agreed with the stations to six principles, that on the basis of which we are going to conduct a consultation and make the principles very concrete. But two of the principles, one of those is hardship; in other words, those stations that have a hardship, that realistically could not raise the funds, will get an additional incentive. We also are looking at productivity incentives for those stations who can do this in a way that would be long term, more cost efficient. There would be incentive for them as well.
Mr. PORTER. Would WETA or WTTW get any of these funds, since they seem to be pretty well-heeled in terms of raising funds, would they get any portion of the funds or do the funds all go to——
Mr. COONROD. They would get a portion of the funds, but they would get a smaller portion of the funds than a station that had—that was in financial difficulty.
Mr. PORTER. I think we need to talk further about—one of the interests that many of us have is to make public television more independent of Federal subsidies, and we know very well that a lot of stations are perfectly able to raise funds themselves and do so all the time and could easily raise 100 percent of their operating funds and 100 percent of their capital needs as well. And we wonder sometimes why a plan has to give them any money when they really don't need it. So I think we have to leave that for a further discussion at this moment because I have to call on Mrs. Lowey, but I would like to have your response to that later on.
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Mrs. Lowey.
PROGRAMMING FOR TEENS
Mrs. LOWEY. Thank you, Mr. Chairman. I would like to ask a different kind of question that I have been, frankly, asking for years. As you look at this programming, you can really see that public broadcasting has made its mark with regard to children's programs. Whether it is Bert and Ernie on Sesame Street or other characters of Sesame Street, there is no question it has taken an important place in our viewers' homes.
One of my concerns for many years has been, what are we doing to creatively program for the teenager? Teenagers face such challenges and I know there is an occasional news program or, without names mentioned, someone will get a group of people around the table to talk about teenage pregnancy or addiction or smoking or alcohol use, et cetera, or maybe there is an occasional Saturday morning news program. But what is so frustrating to me is that with all the great minds in public television, you can't somehow create programs that will have a positive influence on teenagers. They seem to prefer to watch the trash.
And I think the real challenge for us is how can public television create the kind of programming that teenagers will watch? And I mean those aged 14 to 22 or, if we can get to even part of that, let's say 14 to 16, and then we can go higher, we could really accomplish what I feel is an important public objective.
Is there any research being done, is there any work being done in that regard, is there any programming that can attract our young people? And perhaps you can tell me what percentage of the audience is teenage, what percent is 14 to 16, what percent is 16 to 18. You get the question.
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Mr. COONROD. I can provide you with the specific data, but I don't have them in my head. I am sufficiently familiar with them to say this; that your perception is right. The audience for public television, up until about age 6 or 7, is enormous relative to other media, and it tails off rather dramatically.
Mrs. LOWEY. Then they get people like me watching Jim Lehrer, or the Lehrer Show, it is called now.
Mr. COONROD. The News Hour with Jim Lehrer.
We have a new team together at CPB and we have hired a new Executive Vice President and a new Chief of Programming, and we have the very engaging head of our education staff. And one of the things that they are looking at right now, they are going through what I describe as a strategic review, and one of the things that they are looking at exactly is the question that you raise, because in a digital world, in a digital environment, you don't have to make the choice; you don't have to say, well, we are going to be broadcasting for the people who pay the bills, who give the money. In other words, we are going to be broadcasting for the mature audiences, because you would be able to do that and still in a multicast environment, provide additional programming.
So we are going to be looking at that question. I don't have an answer to it, though we certainly recognize that it is a—it is one of those issues that constantly bedevils us and we need to come up with a good solution to it, I agree.
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Mrs. LOWEY. I certainly would love to continue this dialogue and I know the Chairman and my colleagues would join me. We spend millions and millions of dollars on appropriations to solve the ills of society, and when it comes to our teenagers, it is an acknowledged fact that the media has a tremendous impact on them, and I fear in too many cases, a very negative impact, at least in my judgment. And somehow we haven't figured out how we can get our teenagers directed towards positive influences, when there are so many other negative influences around them. So we have had this dialogue for many years, and I would hope that as difficult that it is to crack, I would hope that through adequate research and intelligent minds, you can move in that direction.
Mr. COONROD. If you don't mind, in about 3 or 4 months, we will have a much better fix on the question because it is a question we are exploring. If we can sort of get back to you at that time, we can sort of maybe get your perspective on it as we move forward.
Mrs. LOWEY. I thank you. Thank you, Mr. Chairman.
Mr. PORTER. Thank you, Mrs. Lowey.
Ms. Pelosi.
Ms. PELOSI. Thank you, Mr. Chairman.
HEALTH RELATED PROGRAMMING
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Mr. Coonrod, yesterday a chairman of another committee, Mr. Callahan, from Foreign Operations, and I went to speak at Voice of America, your old stomping grounds. And when I said earlier I was so pleased that you were presiding over this transition at CPB and the excitement it presented, I was also thinking about your previous work. At that meeting yesterday was a marriage of programming and distribution with USAID and the Voice of America, to transmit throughout the world to young people—just following up on Congresswoman Lowey's point—to young people, issues related to their health, whether it was about AIDS or other health issues, a transmittal of the idea that Americans care about the health of these children throughout the world; we work with groups in terms of eradication of polio and other deficiencies.
And I just wonder as I look at this chart, I see Health Week and I see Nutrition Mission. But, I mean, I believe that we are missing an opportunity with young people in terms of their own well-being, but it has to be presented interestingly enough. We are in an attraction business, after all; we have to attract the viewers.
And I do think that it is really important for our country, for young people, to understand the value that we place on them and their health and well-being and their education. And it could be presented in a way that may not be a ''you shouldn't smoke,'' ''you shouldn't use drugs'', ''you shouldn't do this,'' but a value placed on their health, education, and well-being in such a way that they would conclude on their own that these other things are not preferable means for them to take.
So I would hope that we could see what VOA is doing with USAID in terms of reaching young people throughout the world, a 90-million person audience they have, and see if we can't incorporate that. Because I think it is an opportunity missed if we don't, especially when young people will be very well aware of the fact that digital is crossing a threshold. And if we can say to them as we cross the threshold, this is going to be good for you in every respect, I think it is an opportunity that would be most unfortunate if we missed. So if you would like to comment.
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Mr. COONROD. I agree and thank you for the kind words about VOA. I agree with the need for emphasis on health. Two observations on that. One, you may have noted, or maybe it hasn't started yet, but the News Hour with Jim Lehrer has received a major grant so it can establish a health beat, so they will be doing more health-related reporting in the future.
Ms. PELOSI. Wonderful.
Mr. COONROD. In addition——
Ms. PELOSI. We have to get a little younger. But, as I said, I worship at the shrine of Jim Lehrer.
Mr. COONROD. The other thing is a couple weeks ago, there was a series Bill Moyers did on addiction.
Ms. PELOSI. It was fabulous.
Mr. COONROD. Which was a very well-run series; and one of the things about that is the audience for that, to use the phrase, skewed younger than the typical audience for PBS prime time program, which indicates if it is a subject younger people are interested in, they will respond.
Ms. PELOSI. That was a very interesting presentation and very useful, and, actually, our colleagues have presented to the NIH about addiction and prevention. But I still think we have to aim a little younger because we want to get more into prevention.
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Mr. COONROD. But we are heading in the right direction.
Ms. PELOSI. We are coming down, and who knows; we may be developing viewers for other shows, other news programs that are important as well.
Was that a buzzer or is somebody getting a phone call? Do I still have more time?
Mr. PORTER. You have over 2 minutes.
Ms. PELOSI. Actually, Mr. Chairman, I know that we have another witness here this afternoon, so I will yield back the balance of my time, and I want recognition of the fact I have yielded back the balance of my time.
Mr. PORTER. You have 2 minutes in the bank.
Mrs. LOWEY. Oh, wait a minute. I didn't use my whole time. How many minutes do I have? We can use that in the future.
Mr. PORTER. I am going to use your 2 minutes.
Ms. PELOSI. Okay.
THE BILL MOYERS ''ON ADDICTION'' PROGRAM
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Mr. PORTER. Mr. Coonrod, I have been asked by the Speaker's office to look into an issue regarding PBS's Web site. I will provide you with a copy of the Web page my staff downloaded yesterday. It regards the Bill Moyers program on addiction. It includes several suggestions to learn about and take action on addiction issues.
It reads, in part: ''Organize a letter-writing campaign to your congressional representatives, express your concern over the issue of addiction and your support of increased funds for prevention, treatment, and public health approaches like needle exchange.''
I don't know whether you know this, but needle exchange was one of the two issues that held up the enactment of our entire bill last year. Mr. Wicker of our subcommittee was the chief opponent of the view espoused by PBS. And, in fact, had the subcommittee adopted the position advocated by PBS, our bill would never have been passed in the House and Senate, and CPB would not have been funded.
Leaving aside the legality of PBS's activity, is this an appropriate use of funds, in your opinion, and shouldn't we be concerned about this?
Mr. COONROD. We should be concerned about this type of thing and this came to my attention yesterday. While I have not been able to speak to Bill Moyers directly, we have communicated. And I can tell you two other things; it came to his attention, too. He was not aware this was in there, and he shares my view that is an inappropriate use of the Web site. I believe, as we speak, the Web site is being changed.
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To try to put it in some context, however, this was a document that was prepared as part of an education guide, and I think that is really the key issue here. An education guide shouldn't be an advocacy document. That sentence goes over the line, and that is unfortunate, but most of the important programs on PBS are linked to the PBS Web site. This Web site was put up by a group in New York that was responsible for putting the education guides together, and I think perhaps the person who wrote it was overzealous, and maybe the editing wasn't as good as it should have been, and we agree with you it is an important thing.
That program was one that was really outstanding on the impact it had and the support it had and I would very much like to make information about the program available to the committee so that you can have sort of the full picture, and we not sort of leave you with the impression that it was something that should not have been done, because a lot of what should have been done was also done and we would like to leave you that impression. I asked Bill Moyers and he sent a memo with a lot of detail in it that I would like to make available to the committee.
[The information follows:]
"The Official Committee record contains additional material here."
Mr. PORTER. Thank you, Mr. Coonrod. We have had a lot of very tough questions for you. Let me reiterate this subcommittee, for the most part, are strong supporters of the Corporation for Public Broadcasting and your mission. We want to, within the limit of our resources, provide you with the resources that you need from the Federal Government. At the same time, we would like to see a more independent CPB, if that is possible.
We appreciate your appearance, your answering our questions directly, and the fine job you are doing there at CPB.
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Mr. COONROD. Thank you. I appreciate all the support you and other members of the subcommittee have been providing to us and look forward to a continuing working relationship.
Mr. PORTER. Thank you, sir. The subcommittee will stand briefly in recess.
[The following questions were submitted to be answered for the record:]
"The Official Committee record contains additional material here."
WEDNESDAY, MAY 6, 1998.
NATIONAL LABOR RELATIONS BOARD
WITNESSES
WILLIAM B. GOULD IV, CHAIRMAN
FRED FEINSTEIN, ACTING GENERAL COUNSEL
ALFRED WOLFF, CHIEF COUNSEL
HARDING DARDEN, JR., BUDGET OFFICER
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Introduction of Witnesses
Mr. PORTER. The subcommittee will come to order, to complete our regular hearings this afternoon on the fiscal year 1999 budget. We are pleased to welcome the National Labor Relations Board: William Gould, Chairman, and Fred Feinstein, the Acting General Counsel.
I would point out to the Chairman that this is the first time in over three years, since I have become the Chairman of this subcommittee, that the NLRB has had a full Board with no vacancies. We certainly welcome the new members of the Board, and we are obviously very glad that the White House and the Senate could get together and get NLRB back to full strength.
Mr. Gould, if you would introduce the other people who you have with you at the table, and then we would be very pleased to hear your comments.
Mr. GOULD. Thank you, Chairman Porter. To my far right is Acting General Counsel Fred Feinstein, and to my left is my Chief Counsel, Alfred Wolff. To my immediate right is Harding Darden, who is our Budget Officer.
Opening Statement
Mr. Chairman and members of the committee, I appreciate this opportunity to appear before you a final time as the chairman of the National Labor Relations Board to testify in support of the agency's budget request for fiscal year 1999. My term of office expires in August of this year, and I will depart at some point during the summer.
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It has been a privilege and an honor to accept President Clinton's nomination of me as Chairman of the Labor Board, and to serve in Washington for more than 40 years—4 years in this capacity. It seems like 40 years. I am grateful to the President, as well as the Senate, which confirmed me, for their confidence in me.
I have worked hard at this job for the more than 50 months that I have held the office of Chairman to meet the standards of excellence that I have set for myself throughout my entire professional career. I am pleased to be able to carry on the tradition of public service which my family is associated with, going back to my great-grandfather, who served in the United States Navy in the War of the Rebellion between 1862 and 1865.
In accordance with our normal procedure, the agency has submitted a detailed fiscal year 1999 justification, Mr. Chairman, and in my testimony today I am just going to briefly highlight a few of the points that we are focusing upon, as well as some of our recent initiatives and accomplishments.
The fiscal budget for 1999, which is now before you, requests an appropriation of $184.5 million so that the NLRB can fulfill its responsibilities to protect the rights afforded to both employees and employers under the National Labor Relations Act of 1935, as amended.
This request is the product of an analysis of the Board's best current estimate of the number of cases that the agency will be handling in 1999, how those cases will be resolved, and the FTEs that are necessary, as well as the information technology requirements for case processing and the costs expected in connection with our caseload.
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GOVERNMENT PERFORMANCE AND RESULTS ACT
I want to begin by noting the Government Performance and Results Act, GPRA, which requires agencies to put a high priority on measuring and improving the efficiency and effectiveness of their operation. The Board's strategic plan, annual performance plan and budget, are formulated within the context and spirit of GPRA, and what we have attempted to do is to set the measures which allow us to expedite and deliver cases to the public, as we are required to do, to issue all representation cases that have been pending at the Board for more than two years—they shouldn't be pending at the Board for more than one year—to reduce the age of unfair labor practice cases pending by 5 percent each year, and to issue all unfair labor practice cases that have been pending for more than three years.
JUSTIFICATION FOR BUDGET REQUEST
This budget is dedicated to personnel costs, which constitute 78 percent; rental payments of GSA's, and the request would be a 5.6 percent increase over that of the previous 2 years. The additional $9.8 million which we seek for fiscal 1999 would cover mandatory adjustments in employee compensation; investment in information technology needed to complete CATS, the Case Activity Tracking System, and achieve Year 2000 compliance; and to bring an additional 15 FTEs to deal with the problem of the backlog.
It remains a problem in the field. We have made some improvements in terms of overcoming that backlog in recent months, but the problem of the backlog in the field is such that we have more than 6,000 cases which are still pending in the field. I think that this is so for three principal reasons.
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One is that the mix of cases has changed. We are having more unfair labor practice cases, as opposed to representation cases, which consume more than double the amount of staff time.
The other factor is that because of the success of the NLRB Information Office program, which is designed to screen out the frivolous cases that would otherwise come before us, the merit factor has gone up slightly.
Also, the size of cases, transcripts, the burden that our administrative law judges have even in ordinary unfair labor practice cases, has gone up. I note on page 7 that just a couple of years ago the average transcript size was 449 pages. In the first 6 months of fiscal year 1998, it was a record 684 pages.
We continue to face a backlog problem at the Board. This is a troubling trend, and one that I am trying to come to grips with. It is attributable at least in part to Board member turnover. You mentioned that we are and have been, since November of 1997, Mr. Chairman, at full strength for the first time in a number of years. We have a 15 percent decrease in Board member staffs since I first came to office in 1994.
In conclusion, Mr. Chairman, let me mention the fact that I take great pride in the initiatives that we have put forward since I became chairman in early 1994. They are all aimed at reducing wasteful litigation by putting in place a new settlement judge corps among our administrative law judges, by establishing bench decisions which are being used successfully and in which less appeals are being taken than are taken in most of our cases. Our administrative law judges are using them increasingly. This means that we are able to both expedite our cases and resolve a lot of our cases without the need for them to come to Washington and then on to the Court of Appeals.
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Finally, let me say that I am also pleased to say that as a result of my initiatives, I have urged the Board and the general counsel to restructure the agency in such a way that our resources can be used more efficiently. As a result of my efforts, the agency will formulate, by the end of the year, a plan which will identify efficiencies and assess whether offices in the field, as well as here in Washington, can be consolidated or otherwise restructured. We will establish a time frame for implementing this plan.
Mr. Chairman, the critical role of the National Labor Relations Board is to promote industrial peace, to substitute the resolution of disputes for strife which would otherwise occur and to thus contribute to economic stability, and to facilitate the unimpeded flow of commerce between the States. This is the fundamental justification, Mr. Chairman, for the fiscal year 1999 request which is before your committee.
The National Labor Relations Board respectfully requests favorable consideration by Congress to enable the agency to effectively enforce this statute and to protect the rights of all parties, employers, employees and individual employees covered by it.
This concludes my statement. When the Acting General Counsel has completed his statement, my colleagues and I will be pleased to answer any questions that you may have.
Mr. PORTER. Thank you, Chairman Gould.
Mr. Feinstein.
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Statement of the Acting General Counsel
Mr. FEINSTEIN. Thank you, Mr. Chairman, and members of the subcommittee.
Today I appear before you as the Acting General Counsel of the NLRB. Having completed a four-year term as General Counsel, I now serve as the Acting General Counsel until the Senate confirms a successor.
It has, as the chairman has stated, been an honor and a privilege to serve as General Counsel. The job has certainly been a challenging one, and to the extent that I have succeeded at all, I wish to credit and again thank the dedicated career staff of the agency who have worked hard to enforce the National Labor Relations Act. Together we have worked to continue to build upon the traditions of the agency that have stressed fair and effective law enforcement.
As in my previous appearances before you, today I will describe how the part of the NLRB that comes under the supervision of the General Counsel's office has continued to reinvent, restructure, and economize to meet current fiscal realities. I believe our record of accomplishment is a sound one, and it is one of which I am proud.
While today I will briefly describe some of the things that we have done in these past 4 years to improve our efficiency and service to the public, a much fuller presentation is contained in the retrospective report that I recently issued just last week which I have provided to the subcommittee as an attachment to this statement. I do hope that you will take the time to review it, and you will see that the NLRB's Office of General Counsel has undergone important changes during this period of time.
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At the time that I began my term, the government had embarked on a new way of doing business. As the chairman has suggested, in accordance with the Government Performance and Results Act we have developed a strategic plan which sets clear goals for the NLRB, as well as objectives, strategies, and performance measures with which to determine whether we are meeting our goals.
PERFORMANCE MEASURES
Pursuant to the goals set forth in the NLRB's strategic plan, performance measures for fiscal year 1999 include: At least 50 percent of all elections will be held within 42 days of the filing of a petition; no election will be held more than 85 days from the filing of a petition, unless due to circumstances beyond the regional office's control; and the percentage of unexcused overage, what we call Category III cases, those allegations that are most central to the NLRB's mission and/or affecting the most significant number of employees, we hope to reduce from 18.3 percent to 16 percent.
The goals and principles and methods of GPRA have informed our efforts to improve operations and reduce costs. In the Office of General Counsel we have reviewed every aspect of our operations with a view toward improving our service to the public. I believe we have succeeded in numerous respects.
IMPROVING SERVICE TO THE PUBLIC
In the area of case handling, we have adopted a program that we call impact analysis. We have moved beyond the ''first in-first out'' approach in an effort to ensure that the cases we get to first are those which are most central to the agency's core mission. While we still do not get to all of the cases as quickly as we would like, we are better able to ensure that our backlogs are comprised of lower priority cases.
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Similarly, we have paid much attention to finding ways to focus on all aspects of conducting elections. Pre-election issues are resolved promptly by agreement or decision. Elections are held sooner, 87 percent, almost 9 in 10, within 57 days, compared to 75 days in 1993. Post-election objections and challenges are disposed of as quickly as possible, as well.
In the injunction area, we have tried to standardize the approach taken by our regional offices so all cases receive proper consideration, regardless of where in the country they happen to arise. Despite an early upsurge, the number of injunctions being sought has leveled off as respondents have come to recognize that delay will no longer be available to them as a means to evade the law.
In the compliance area, which concerns obtaining the remedies that have been ordered or agreed to, we have streamlined our methods of computing back pay, provided centralized guidance, applied the principles of impact analysis, and encouraged the regional offices to pay greater attention to a respondent's likely ability to comply in fashioning the relief sought in each case.
We have also taken numerous steps to save costs. Since 1994, and especially during the 1996 space reduction initiative, we have reconfigured by reducing space or closing completely 28 field locations, including the Division of Judges. We closed the El Paso, Texas, resident office, and moved the resident office in D.C. to our headquarters offices. The '98 and '99 planned space reductions include 10 regional offices and headquarters. Our 1998 end-of-year space assignment is expected to be 721,000 square feet, a more than 10 percent reduction from the 1994 level. This represents a rental savings of $2.25 million.
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Other areas of savings include streamlining of supervision, command and control, reduction of casehandling travel, increased delegations, and greater use of electronic communications internally and with the public.
GROWING CASE BACKLOG
Notwithstanding all of the administrative efforts of the past several years, case backlogs continue to grow, particularly at the initial investigative stage of unfair labor practice cases, where two-thirds are finally resolved by dismissal or withdrawal. In 1997, case intake rose 2.1 percent over the previous year. Furthermore, case intake for the first 5 months of fiscal year 1998 is approximately level with the same period last year. At the end of February, 1998, there were almost 6,800 unfair labor practice situations pending initial disposition, nearly double the number from just four years ago. Additional backlogs appear at the more advanced stages of our casehandling pipeline.
What is the reason for these growing backlogs? We fear that despite all of the steps we have taken to become more efficient, the size of our professional staff simply is not enough to get the job done the way it should be. Our present FTE level of 1,900, actually a little bit below that now, is the NLRB's lowest since 1962. Yet, our case intake last year was almost 60 percent greater than it was that year. The case intake in fiscal year 1997 was almost 2 percent above the 1991 level, yet the FTE was almost 10 percent lower.
The net effect of the steady staffing reduction of recent years, which has not been matched by shrinking case intake, has been that the case handling burden per FTE has risen markedly. Last year the case intake per FTE was 12 percent higher than the level five years earlier. In addition to an increase in the sheer number of cases each employee is called upon to handle, as the chairman has indicated, the cases have grown in complexity, further exacerbating the workload.
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This phenomenon has come about for several reasons: First, changing patterns of business organization have changed the nature of disputes and the ease with which remedies can be ascertained and carried out.
Second, the mix of cases has shifted towards a greater proportion of unfair labor practice cases, which are more resource-intensive compared to representation cases.
Finally, the success of our information officer program, which is designed to reduce the filing of frivolous charges, has meant those cases which do enter the system are more likely to make a real claim on our resources.
PRESIDENT'S REQUEST
The President's fiscal year 1999 appropriations request, as you know, is $184.5 million. This funding level would permit current staffing and operational levels to be adjusted for inflation and provide an additional 15 FTE to help begin to reduce our field backlog by an estimated 750 cases, or about 10 percent.
The request includes $10 million for information technology, $6.9 million of which is for the multiyear CATS project and the upgraded technology platform upon which it will run. CATS is the NLRB's initiative to meet the information and functional needs for case processing. It will maintain information on the status and activities of cases nationwide, as well as the history of closed cases. It will also support the functional legal research litigation and administrative needs of the NLRB staff in its various casehandling processes.
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By the end of fiscal year 1998 CATS development will be completed for the regional offices and will be operational in eight regions. CATS headquarters data consolidation and reporting systems will be completed, we hope and expect in 1999. The completion of CATS, along with the Year 2000 activities and other agency systems, will make the NLRB Year 2000 compliant. In addition, CATS will improve the accuracy and availability of information for reports to Congress, public inquiries, GPRA compliance, as well as internal management.
Failure to implement the system as has been planned will necessitate increased costs in future years to patch old application software that is not Year 2000 compliant, and cumbersome to program as well, as well as to maintain obsolete information technology that is more than 20 years old and can no longer be commercially supported.
Thank you for this opportunity to appear before the subcommittee in support of the President's fiscal 1999 funding request for the National Labor Relations Board.
[The prepared statements follow:]
"The Official Committee record contains additional material here."
Chairman's Tribute To Congressman Stokes
Mr. PORTER. Thank you, Mr. Feinstein.
I said at the beginning of this hearing that this was the last regular hearing of the subcommittee for this year, and I want to take a minute before we proceed to pay tribute to one of our senior members of the subcommittee who is retiring at the end of this session of the Congress, and that is our friend Lou Stokes from Ohio.
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Lou has been on the subcommittee for 24 years. He began when Dan Flood was the chairman, and if you know the intensity and volume of the hearings of this subcommittee, you know that that is real, true service to our country and to the process we are privileged to serve.
Lou, you have been not just a member, you have been here, you have been here listening to the testimony. Lou has been one of the most steadfast members to be here and listen to the testimony and ask the tough questions. This year and for the last few years he has been a ranking member on his other subcommittee, and prior to that time was the chairman of the subcommittee, and nevertheless, he was here steadily and participated actively in the deliberations of the subcommittee. That alone would get him a great deal of tribute from the members of this subcommittee.
But let me say that he has been a true leader, a leader in looking at the effects of policies on minorities in our country, looking at programs in the NIH where a disease may disproportionately affect minority populations, and ensuring that those populations are served and represented and that we are doing the research that reaches out to them and helps to solve the diseases that afflict them disproportionately; a leader in fighting for those programs that affect those most at risk in our society.
Lou has been an absolute champion of programs like TRIO, for example, that make a difference in the lives of young people who don't have a full opportunity and a chance to participate in our economy and get the kind of education that they might need. Lou has been there every single time.
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I just want to say, as we have had our hearings this year, practically every witness has come before this subcommittee and thrown hosannas at Lou Stokes for his work. All of us, Lou, feel even more so that you have been a really valued member of this subcommittee. Your service to our country and to the Congress has been exemplary, and we are going to miss you a great deal.
Mr. STOKES. Thank you, Mr. Chairman.
Mr. OBEY. Mr. Chairman, if I could have equal time.
Mr. PORTER. Mr. Obey.
RANKING MINORITY'S TRIBUTE
Mr. OBEY. Mr. Chairman, let me say that I remember it took a rules change in order to get Lou on this committee, and me too, for that matter, because in those days members didn't have an opportunity to bid for committee assignments.
As a lot of you know, my favorite philosopher is Archie the cockroach, and I quote him a lot. One of the things that he said was that as life goes by, he tried to see things from the underside. I think that Lou Stokes, in all of the years that he has served not just on this subcommittee but in this Congress, has understood that there are a lot of people in this country who only get to see life from the underside, and they rely on us to equalize things just a bit so that everybody has at least some opportunity to make a better life for themselves.
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I cannot think of a single education initiative taken on this bill in the years that Lou has been a member that he has not been deeply involved in. I cannot think of a single markup where he has neglected in any way the needs of people in this society who need help the most.
In addition to the work that he has done in this subcommittee, he has been truly a Congressman's Congressman. He chaired the assassination committee, an incredibly difficult job. In fact, I saw him on television just the other night because they were showing the rerun of one of those exchanges. He chaired the Ethics Committee, and he has done absolutely everything that he has done in this place with consummate good will and grace.
I am going to miss him very much, as I know every other member of the subcommittee is. I think you can truly say of Lou Stokes that he left this place, at least in terms of his own contributions, certainly in at least as good a shape as it was when he found it, and I cannot think of a single thing that he has done in all the years that he has served here that has in any way denigrated service in this institution. I don't think there are very many members that can make that statement.
Lou, it has been a privilege to work with you, and we all feel that way.
Mr. STOKES. Thank you very much, David.
Mr. PORTER. Lou, you are not going to want to retire after hearing this, or you are going to be impossible to market, one or the other.
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Mr. STOKES. Mr. Chairman, if I can just comment.
Mr. PORTER. Mr. Stokes.
Mr. STOKES. If I can just take a moment, Mr. Chairman, to express my appreciation to both you and Dave Obey for your very kind and overly generous words on this occasion.
I would just like to say that for me, I have had no greater honor than the privilege of serving on this subcommittee. I can recall, so vividly, how whenever our revered Chairman of this subcommittee, Bill Natcher, took this bill to the floor, he would say, ''Mr. Speaker, this is the people's bill.'' And indeed I think all of us over the years have felt that we had a chance to work on the people's bill. This is a bill that has meant so much to the people in this country, and I have enjoyed the privilege of serving with each and every one of you on this subcommittee.
When I leave the Congress, I will carry with me fond memories of each and every one of you. It has been a privilege and honor for me to serve with all of you, and again, thank you for your comments.
Mr. PORTER. Thank you, Lou.
Mr. Gould, let me start by saying that I have a very high respect for you. I have a high respect for your intellect. I have a high respect for your service as Chairman of the NLRB, and you and I, I think, have been able to communicate in a way where we at least defined our differences and knew where one another have stood during the time you have been Chairman.
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Last year when the bill was on the floor of the House I conceded that I felt that you had politicized this agency. You took great offense at that. We talked about it at some length, and I think we have since talked that out.
PRESS RELEASE ON CALIFORNIA PROPOSITION 226
This past week or so you testified before the California legislature regarding Proposition 226. That is a ballot initiative that requires individuals to give unions permission to spend their dues for political activities. Clearly, you have a right to do that and to express your viewpoint in any way you see fit. Clearly, you would also have the right to do that in your capacity as Chairman of the NLRB, provided you were talking to the California legislature, under the provisions of our bill.
What I have a problem with, and I want to be clear what I have a problem with here, what I have a problem with is that this testimony said, in part, a very small part of it, it said that Proposition 226 is flawed because it would ''exclude trade unions from participation in a democratic pluralist society, and at the same time cripple a major source of funding for the Democratic Party.'' That was a significant part of your testimony that you wrote into an NLRB press release and put on the NLRB website, and I think in doing so that you have gone beyond the authority that you have, and may in fact have violated the law.
I take this as a very serious matter, and it is not the content of your statement, you can make any statement you want, it is not testifying before the legislature. It is taking this and putting out a press release and using the NLRB website for what I consider to be a very political statement, to start with, but also an attempt to influence people in their views in a political way.
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So I am very disappointed that you would do this. You know, of course, and you handed me just a moment ago an Inspector General report on this same subject, apparently, I have not had a chance to read it, but Section 503 of our bill prohibits the use of agency resources for publicity designed to influence legislation—designed to influence legislation—except in direct presentation to the Congress or a state legislature. The presentation to the State legislature in my mind is within that provision. The putting it on the website and putting out a press release and using the NLRB is not.
That is why I believe that we ought to ask, and I have asked or will ask the GAO to determine whether this use of the website and a press release violates this Act or any other Act. I think that the remarks hurt the agency. I think it does politicize the agency, Mr. Chairman. As I say, I have been very disappointed in that.
We had earlier this year another issue, and you had written to me in regard to it that independence of the agency is a prerequisite for the confidence which the Board must enjoy if the statute is to be interpreted impartially. You told me that NLRB is different from the rest of the administration. It needs an extra measure of independence to have credibility, to be an impartial arbiter.
I agreed that you do need independence and credibility, but I think publishing the press release and putting it on the website went beyond, first, your authority, and secondly, beyond good judgment, and I think it imperils the credibility and impartiality and independence of the agency. It is a matter, I think, of judgment.
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Now for the first time in three years you have a full Board. Your term ends soon. There will then be another vacancy. We believe you ought to be working on the backlogs, and I know you are going to tell me you are, you have told me you are, and getting as many decisions out while the Board is at full strength. The budget justification makes clear that work on the backlogs is required, but I don't think it makes clear at all that political use of the website is required.
REVIEW OF MATERIAL ON AGENCY WEBSITE
Mr. Feinstein, the chairman has designated to your office the responsibility of maintaining the website. For the record, I would like you to indicate who at the agency is responsible for reviewing the content of material before it is posted on the Web, and who certified the availability of funds for this particular activity.
Again, I don't question the Chairman's right to make the statement before the legislature, but I am very concerned about the use of agency resources to publicize through the official agency website a statement that I consider to be a political one, that I read earlier.
I understand the material was put on the Web without consulting other members of the Board. I understand that there are many within the agency who do not support the use of the website for such activities. I want to note that the material was taken off the Web yesterday afternoon, and I want to commend the agency for taking that responsible action, and to personally commend those individuals who took the difficult decision to broach this matter with their chairman.
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Mr. Feinstein, this raises an issue that all agencies must face: How do they determine what materials should and should not be posted to the Web? In most cases a relatively low level official has responsibility for determining what will go on the site. Under what circumstances is that person able to tell a more senior agency official that something should in fact not be posted? Who is currently responsible for the content of the website? What guidelines does the agency have for its use? What steps will NLRB take to ensure that incidents like this one do not recur in the future?
Mr. FEINSTEIN. Mr. Chairman, first, if I can just take a half a second to associate myself with your remarks and those of Mr. Obey regarding Mr. Stokes' tenure. As a former staff member of Congress for many years, I had the great honor and pleasure of working with Mr. Stokes from time to time, and have enormous respect for the work that he has done.
Mr. Chairman, the NLRB has had a website now for a little less than a year and a half. When it was first established, a committee was set up that had representatives from both the Board side of the agency and the General Counsel side of the agency to set the basic guidelines of how the website would be administered.
As you know, and as I have stated many times, our agency is divided into two parts, the General Counsel's side of the agency and the Board side of the agency. While the General Counsel serves as a prosecutor and also as the administrator, it is not within the responsibility of the General Counsel, and would indeed be beyond the General Counsel's designated authority and responsibility, to in any way advise or recommend or regulate the ways in which individual members of the Board choose to present themselves to the public. That is a matter and an issue that is the responsibility of the Board and the Board members.
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When we were establishing the website we reached an agreement. The Board and the General Counsel's Office agreed to the kinds of materials that would appear on our website. They included decisions of the Board, summaries of decisions of the Board, operational manuals, other kinds of operational documents that the public utilizes and could have better access to through its publication on the website. We have recently instituted a help desk in which we direct people to other agencies, where the kinds of queries they have are not pertinent to our agency but might be to others. We have expanded the kinds of materials that are available .
One of the appropriate kinds of materials that was outlined in our initial formulation of the website was press releases. The way in which a press release would get posted on the board is either, if it were a General Counsel side press release, it would be done through our office; or if it is a Board side press release, it would be done through the Board side, through the Office of Information which is under the authority of the Board. Thus the way in which a press release could get on would be if it were a Board press release, they would simply, through our Office of Information, contact the GPO, who is the actual administrator of our website, to put forward the particular document.
Those are the basic structures and guidelines. Future steps might be necessary. This is something that is not only new to us, but new to government in general. We are certainly concerned that our website meet the needs of the public and the needs of the agency to present itself to the public and to provide pertinent and relevant information. It is something which we will continue to assess and evaluate as to how we can assure the best possible use of our website.
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PURPOSE OF STATEMENT ON CALIFORNIA PROPOSITION 226
Mr. GOULD. Mr. Chairman, if I may, may I respond to your comments?
Mr. PORTER. Yes. I have to say my own time is up. I want to give every member of the committee a chance to ask questions. I am assured that this matter will undoubtedly come up in the questioning with you, but I think you should have a right to make whatever statement you would like at this point.
Mr. GOULD. Yes. This matter began when I began—prior to the California legislature's invitation to me to make a statement to them, I began to hear in a variety of forms, conversationally, newspaper reports, and statements that were made when I would give talks—the most recent was over at the American Enterprise Association—ideas presented which were in my view mischaracterizations, misrepresentations of both the National Labor Relations Act and the agency's interpretation of that statute, particularly as it relates to worker liberty and also as it relates to the enforcement of Beck. I was invited by Senator Solis, I think around April 14 or 15, to submit a statement to the California legislature on Proposition 226, and I submitted that statement in response to her invitation.
I might say, with regard to the content of the statement, my intent was to clarify misunderstandings, misimpressions about both the National Labor Relations Act and the National Labor Relations Board. My approach and rationale would have been exactly the same even if unions were giving more money to the Republicans than to the Democrats. That basic point was irrelevant to the central thrust of my testimony to the California legislature, which was that the statute—which was that the Proposition proceeded upon false understandings of our statute and the way in which our agency administers it.
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SECTION 503 OF APPROPRIATIONS BILL
Late Thursday afternoon I received word from your office about Section 503. I regret to tell you that I had never seen that statute until that moment. On Friday—and I had a number of discussions with my staff at that particular time. On Friday morning Members Hurtgen and Brame of the Board came in to see me and expressed their concern about this.
I said, as a result of the meeting, that I would do two things. One would be that I would undertake an immediate investigation to determine whether I had done something that was lawful or unlawful, and I immediately asked the Inspector General to look into this matter. You have his report, which was issued early this afternoon.
I also have had conversations with the White House in which I expressed the view that my hope was the Office of Legal Counsel would look at this as well, and I welcomed any examination of this. I did not know of this statute as of late Thursday afternoon.
I also telephoned a number of people who were involved in the Senate and House Appropriations Committees to get some sense of what the purpose of the provision was. On Monday and Tuesday no investigation was completed. I took steps immediately, without any meeting or without any consultation, without any urging from anyone else, any other presidential appointee, to remove this from the website because of the legal issues that had arisen with regard to it.
I regret the diversion that this has caused. I felt that I was meeting my responsibilities. I have an obligation to adhere to this law as the chairman of the National Labor Relations Board, and from time to time to speak out, particularly in response to the invitation of both the Congress and the State legislatures, on a law which directly implicates the National Labor Relations Act.
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I wish, with regard to the passage that you had cited, that I had said that the same would be true if more money was given to the Republicans than is given to the Democrats, because the basic thrust of my statement was that this was—this Proposition 226 was sailing under false sails insofar as our statute was concerned, and constitutional issues which are concerned with it.
I have an obligation to speak out when our law is implicated, and I have an obligation to remain faithful to the trust that has been given to me to interpret the statute and to see that the goals of this statute are realized. That is what has happened. I did not intend to violate any law. I was not aware of the rider. The Inspector General has concluded that I have not violated the law. I welcome any investigation of this matter. I have nothing to hide or be ashamed of, or apologize for.
Mr. PORTER. Mr. Chairman, if the main thrust of your testimony was otherwise, I don't understand why the passage I just read was highlighted in your press release, if it wasn't really relevant or it is only tangential to the main thrust of your statement. Why write it into a press release and put it on the website?
Mr. GOULD. Let me say, Mr. Chairman, that I did not direct that a press release be issued. I did not write the press release. I did not know the form that it would take. What I knew was the statement that I gave to the California legislature.
Mr. PORTER. Sir, somewhere within your agency somebody wrote a press release and put it on the website, and you are responsible for what goes on in your agency.
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Secondly, you are a lawyer. You are a law professor. Your agency is an agency that carries out a very important law. You should have known that there was Section 503.
Mr. GOULD. I should have known, you are absolutely correct, Chairman Porter. For that, I apologize, and as the guy at the top, I have to take—the buck stops here. I have to take responsibility for it. I didn't know. I should have known.
The Inspector General has concluded that in any event, I did not violate the statute. But I should have known that the statute was there.
Mr. PORTER. I haven't read the Inspector General's report, but on its face I would say that you probably have violated the statute, without knowing all the relevant matters.
Mr. Obey.
RANKING MINORITY'S VIEW OF PRESS RELEASE
Mr. OBEY. Mr. Chairman, I am reminded of the Biblical admonition, let he who is without sin cast the first stone. I would observe that there is not a person serving in the Congress who has not put out a press release which bears an impact.
But having said that, Mr. Gould, I want to say this. I believe that the more people who become involved in public issues and the more people who advocate various courses on public issues, the stronger our society and our government will be. I also think that people are given special roles within our society and under our system of government which make certain types of advocacy more difficult to engage in without running into the law of unintended consequences.
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Several years ago you accepted one of the most important jobs in any industrialized society, to be the chief peacemaker between employers and employees. Your agency can have an enormous impact on our overall economic growth, job creation, unemployment, the national prosperity, and most of all, the sense of justice in labor and management relations.
There may be some on this subcommittee or some in Congress who regard unions as a nuisance and as an interference in the wonders of the free market, and who would like to see us return to the good old days of almost anything goes between labor and management, or where fights were settled between Pinkerton guards and union muscle.
I don't happen to share those views. I think the NLRB has done a lot to bring about a sense of justice to the bargaining table, and I think you have helped in that process. I think the current prosperity which we are enjoying is in part the product of the more modern approach to resolving labor-management disputes which the National Labor Relations Act represents.
But the ability of your agency to act as an honest broker in the process of assuring fairness to workers can be hurt, as the Chairman has indicated, if you do not act with exquisite care in the expression of your views. I agree with your personal observation, or with your personal opposition to the California initiative in question. I agree that in fact the initiative in fact would stand Beck on its head.
I also believe that the discussion of the partisan implications of that policy, while they might be appropriate as an expression of personal opinion, are nonetheless easily misconstrued and should not be made or should not appear to be made on behalf of the Board. Certainly I don't believe that that reference belongs in a press release or on your website.
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I very much admire your willingness to stand up for what you believe to be fairness on an issue, but if you feel strongly enough to do that, then I would simply suggest that it might be much more effective for you to do so, and at the same time you might be in a better position to protect the objectivity of your agency, if you were to make clear that you are expressing your remarks in a personal rather than an official capacity.
Since I understand you are already intending to leave in August, I believe that your comments might be more effective and more appropriate if you were to limit future comments on issues like this until after your departure; and to make certain that people understand that in your response to the California legislature, you were speaking for yourself and not on behalf of the Board. I think if you were to exercise that caution, that there would be less confusion about the actions of the Board as a neutral arbitrator and your actions as they concerned individual citizens, in your view, trying to achieve a just outcome in political controversy.
I can understand your motivations, but I also think it is necessary for you to appreciate the problems that it creates for the agency if you do not demonstrate exquisite care in the way you exercise the responsibility. I would hope that you would take the Chairman's expression of concern and mine to heart in dealing with issues like this in the future.
Mr. GOULD. I shall take them to heart, Congressman Obey. I did take care to speak in the first person singular, but perhaps I should more affirmatively disassociate myself, when speaking on a matter like this, with the agency itself.
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Mr. OBEY. If I could interject, I think the fact that this appears in a press release and on your website could have led one to conclude that this was the agency speaking, rather than yourself. I don't think the agency can afford that under any circumstances. I would urge you to exercise much greater caution in the future.
Mr. PORTER. Thank you, Mr. Obey.
Mr. Istook.
Mr. ISTOOK. Thank you, Mr. Chairman.
INTENTION OF TESTIMONY ON CALIFORNIA PROPOSITION 226
Mr. Gould, I find a tremendous contradiction between what you are telling us was the purpose of your testimony and the actual text of your testimony.
You sat there this afternoon and claimed to us that you testified in California to correct misunderstandings about NLRB and about the Beck decision, and it was only that someone who you did not identify took your statement and put it into a press release that put the focus on your opposition to 226. The press release, of course, has the headline that ''NLRB Chairman William Gould attacks California's Proposition 226.'' That is the word they use, ''attacks,'' and I have a copy of your testimony itself.
Mr. GOULD. Congressman——
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Mr. ISTOOK. Let me finish. I have a copy of the statement that you submitted to the California legislature, and the focus of that statement is indeed attacking Proposition 226, not the purpose which you just told us a few moments ago was your intent, to straighten out misunderstandings about NLRB or the Beck decision. Those are only peripheral.
It is very clear to any person that reads your testimony, that looks at the whole point of it. You first introduce yourself and then you say, ''I plan to vote no for a number of reasons set forth below.'' Then you have the caption: ''Proposition 226 is flawed,'' and you go on from there.
That was the purpose of your testimony, to discourage people against voting for Proposition 226, not to straighten out anything that has to do with the policy of the Federal agency itself. I am not stupid, sir. I resent deeply your trying to say the contrary to this committee today, when just reading the statement that you presented to the California legislature shows clearly that your whole purpose was to attack Proposition 226. Your statement itself shows that, just as the press release which follows.
I don't think a person who can't tell the truth to this committee should be in your position. I don't think the taxpayers should have had to pay for your trip out to California. I think you ought to, at the least, whether it was legal or not, you ought to be reimbursing what we paid through the Treasury of the U.S. Government for that trip out there and any expenses that were associated with it.
I deeply resent, sir, your trying to say something different. All you have to do is look at the statement you made to the California legislature, and it has a very different purpose than what you are trying to claim to us.
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Mr. GOULD. May I respond, Congressman?
Mr. ISTOOK. You may respond briefly, and I am going to go vote, because frankly I don't trust anything you might say to us after that beginning.
Mr. GOULD. Notwithstanding that, let me tell you that I am speaking and do speak truthfully, and that I first of all did not travel to California. I submitted a statement to the legislature. I was unable to get to California.
Mr. ISTOOK. I misunderstood that. That is fine.
Mr. GOULD. Secondly, you are absolutely correct, I attacked Proposition 226. I attacked Proposition 226 because much of its assumptions are built upon false and flawed reasoning with regard to the National Labor Relations Act and what the National Labor Relations Board is doing, absolutely.
The whole focus of my statement to the California legislature was Proposition 226. That is what it is all about, because these people who are pushing Proposition 226 are saying that we must do so in the interests of protecting worker liberty, which is not assailable. So what I tried to do was to sketch for the legislature what the actual provisions of the National Labor Relations Act are, what the actual provisions of the Landrum-Griffin Act are, and what the Supreme Court holdings say about the extent to which trade union treasuries represent the views of members, as opposed to corporate treasuries.
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Secondly——
Mr. PORTER. Chairman Gould, we are going to have to go vote. We will give you a chance to continue, and Mr. Istook to continue his line of questioning, when we return.
The subcommittee will stand briefly in recess.
[Recess.]
KNOWLEDGE OF SECTION 503
Mr. BONILLA [presiding]. We are going to start again, for the record.
My question was, in trying to understand what you were saying earlier, I want to try to focus in on this and get right down to the point: Is it possible, then, that you broke the law because you did not know what the law was?
Mr. GOULD. My answer, Congressman Bonilla, is this: In vacuo, whenever an individual doesn't know about a law, his chances, I suppose, of him violating it increase.
I think of myself as a law-abiding citizen. I don't believe that I violated this particular law, and I must say that the Inspector General's report, which was issued earlier this afternoon, seems to come to the same conclusion.
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I am going to note also that there was—I asked Congressman Hoyer's staff to get the congressional service people to look into this as well, and they could come to no conclusion that I had violated the law, either. I sent them—and also the Inspector General, obviously—a copy of my press release, as well as the statement, and indicated to them that it had been placed on the website.
So that is the best answer I can give to you, sir.
Mr. BONILLA. Mr. Feinstein, I ask you the same question: Is it possible that you broke the law, even though you may not have known what the law was? I just want to ask that for the record.
Mr. FEINSTEIN. Congressman, I was not involved in either the writing of this press release or its dissemination on the website. I was aware of the law. I do know what it says. I am not an expert on it, certainly. But on this particular matter, I simply had no involvement.
INDEPENDENCE OF BOARD
Mr. BONILLA. Mr. Gould, another just more philosophical question I want to ask along these lines. When we wrote you a letter about the single site rule recently, there was a group of Members that wrote you about that, and you expressed your view very strongly, and we respect that, in response to the issue we brought up.
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But the point you raised was about there was an implication that the Board was above politics, and that such political influence that we were allegedly trying to impose on NLRB might ''erode the system of independent adjudication and democracy in the workplace.''
So I guess my question is more philosophical. If you are claiming that NLRB is trying to stay above politics and trying to remain independent, then isn't that a direct contradiction to what the statement was in California about the proposition?
Mr. GOULD. I don't think so, Congressman Bonilla. I think that the statement that I made to you referred to our adjudicatory process. The Board must remain free to decide cases on a case-by-case basis, independent of immediate political passion or immediate political pressure from the outside.
Congress, of course, as I said in my letter to you, is always free to change the statute. You have that authority. I think that that is very different from the function of a chairman speaking about national labor policy and what proposed legislation may mean for national labor policy which is on the books.
There are many proposals which come forward where those kinds of situations are presented, and I have been asked by members of the Senate, the United States Senate, frequently, to comment on legislation that was coming before the Congress which involves the NLRB.
Mr. BONILLA. I don't want to get diverted on whether or not you have a responsibility and a right to make such a statement. My only reference was to the fact that you specifically mentioned one political party and what the political impact would be on that; not your responsibility of stating your view.
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Mr. GOULD. I understand your point. I would like to refer you back to an earlier point that I made. That is that my analysis is just the same even if you change the statement in my document and substitute the word ''Republican'' for ''Democrat,'' that the unions are giving most or all of their money to the Republicans. It is irrelevant to my approach to Proposition 226, which I think will involve us in a great deal of wasteful litigation about substantive law and about jurisdiction, as well.
Mr. BONILLA. In hindsight, I am sure you wished you would have probably referred to both political parties and made that reference, and avoided this entire situation. It has turned quite sticky.
Mr. GOULD. In hindsight, I do wish I had referred to both political parties, but I want to say that I don't think I would have avoided the situation nor the stickiness involved in it.
SALTING CASES
Mr. BONILLA. I want to move on, now. I don't want to use all my time up on this one subject. I want to move on to the budget you are proposing.
Throughout your testimony you are discussing the increasing caseload facing the Board, Mr. Gould. Would you agree that the various salting campaigns across the country have contributed to this increased number of charges filed with the Board?
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Mr. GOULD. We do note that there is an increase in the salting cases that are pending before the Board in Washington. In the past fiscal year, according to the records that I have, the number of salting cases has doubled from 5 percent of our caseload to 10 percent of our caseload, according to my best estimates.
Mr. BONILLA. So if there were not as many salting controversy cases out there, you would not need as much money as you are asking for?
Mr. GOULD. I don't know whether that would be the case or not, Congressman Bonilla. There are many who believe the salting cases emerged because other avenues of organizational activity were being closed down or were not being successful.
I can't sit here today and tell you that if Congress were to prohibit salting and reverse Town & Country, or to adopt the law that passed the House of Representatives in March, that there would be a decrease in the caseload, because I don't know what the parties in the field would do in response to that.
Mr. BONILLA. Do you have a feel for whether some or most of those charges are motivated by a desire to set up the employer, or to put the employer in a Catch-22 of settling cheap or paying to defend against frivolous charges?
Mr. GOULD. Congressman, I am not in a position to comment on the motivation of individuals who are bringing charges before our agency. I have no contact with those individuals, and it would be inappropriate for me to, in my present capacity, learn of their motivations. All I can do is to look at every case that comes before me and make a decision based upon the record and the law that is relevant.
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Mr. BONILLA. I certainly wouldn't ask you to comment on a pending case. My question was more general in nature.
Mr. GOULD. I realize it is more general in nature, Congressman, but that is the best answer I can give. We have many cases coming before us which involve a whole myriad of fact situations. What we have to do is to make judgments about these cases on the basis of the National Labor Relations Act, as best we can.
WEEDING OUT FRIVLOUS CLAIMS
Mr. BONILLA. How do you make decisions on how to weed out frivolous claims? Could you give me an example of a frivolous charge that you have dismissed?
Mr. GOULD. When I spoke of frivolous claims earlier, I was speaking of the information officer program which we have in the field and through which our people, through our information officers, are able to deal with people who walk in off the street and say, you know, ''I have this kind of complaint.'' You can say to them, ''Hey, listen, this has nothing to do with the National Labor Relations Board. You ought to try some other avenue.'' I suggested that we are dealing more effectively with frivolous claims because of the good work of the NLRB information officers.
I can't—regrettably, Congressman, there are many cases where I have participated where we have summarily affirmed the administrative law judge's dismissal of charges that are brought before us. I can't give you chapter and verse and name one for you at this moment, but I would be glad to supply examples of that to you subsequent to the close of the hearing, if that is satisfactory to you.
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Mr. BONILLA. I would appreciate that, Mr. Gould, very much. I appreciate your time here. I only have one last question because my time is running out, as well.
[The information follows:]
The following are examples of recent cases in which the Board adopted with little or no comment an Administrative Law Judges dismissal of a complaint:
1. Lepel Corporation, 29–CA–19699, 323 NLRB No. 150, 5/30/97
2. Sanitary Fill Company, 20–CA–27139, 324 NLRB No. 21, 7/31/97
3. Cardiovascular Consultants of Nevada, MI, 28–CA–13567, 28–CA–13601, 323 NLRB No. 7, 2/25/97
4. Dobbs International Services, Inc., 1–CA–31889, 323 NLRB No. 71, 4/11/97
5. Fredon Corporation, 8–CA–27797, 323 NLRB No. 91, 4/28/97
6. Power Systems Analysis, Inc., 8–CA–27465, 8–CA–27776 (Formerly 3–CA–19457), 322 NLRB No. 85, 11/13/96
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7. GATX Logistics, Inc., 8–CA–27101, 325 NLRB No. 63, 3/9/98
8. International Paper, 3–CA–20001, 325 NLRB No. 127, 4/30/98
9. Food Mart Eureka, Inc., 20–CA–26545–1 and 20–CA–26545–2, 323 NLRB No. 218, 7/18/97
Mr. FEINSTEIN. Mr. Chairman.
Mr. BONILLA. Mr. Feinstein.
Mr. FEINSTEIN. I just wanted to comment that the vast proportion of salting cases never reach the Board and are handled in the field. Indeed, 95 percent of the caseload that is filed before the agency gets resolved in the field, without any need for not only Board involvement, but not even Washington General Counsel involvement.
I think the Chairman is certainly correct in that one of the ways in which we hope to deal with frivolous charges is through our Information Office program. But I think the other way, and this has really been one of the strengths of the agency for many, many years, is that we have success in getting to an initial merit determination on such cases in a relatively short period of time. The quicker we can deal with a frivolous case and dismiss it, the less disruptive it is to all concerned; certainly to a party, a respondent, in this case, perhaps an employer who is unjustly accused. If we can investigate that case quickly and dismiss it quickly, it has the least disruptive and the least costly effect. That is what we strive to do.
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We have continued to dismiss approximately two-thirds of the cases in recent years, as in the past, and we try to do that, again depending on the import of the case, just as quickly as we possibly can. I would suggest to the Congressman that that is certainly one of the ways that we are best able to deal with these kinds of frivolous, nonmeritorious claims.
NOMINATION OF LAURENCE COHEN
Mr. BONILLA. I only have one further question. This is for Mr. Feinstein, about his proposed successor, Mr. Cohen. He has been called, and this is all in the spirit of trying to look at the politicizing of issues, as we have been discussing here today, he has been called the ''father of salting.''
I feel certain that the man who dreamed up these campaigns will not have an objective view of which claims do or do not have merit. Since he is not before us today, I will have to ask you, Mr. Feinstein, how in the world could the ''father of salting'' consider any salting claims to be frivolous?
Mr. FEINSTEIN. I am not exactly sure how to respond, Congressman. Larry Cohen has been nominated to be the General Counsel by the administration. I was not involved in that process, of course. That was a determination by the President and by the administration.
I would reiterate what several have said on both the labor and the management sides: that he has an extremely fine reputation as a lawyer, as a legal advocate, as a fair and balanced person with great integrity. I have known Mr. Cohen for many years and I have dealt with him over the years, both in my capacity on the Hill and the agency, and I know him to be an extremely able advocate, an extremely able attorney, and I suppose, most importantly, a fair individual. I certainly think he would be capable of being balanced and fair.
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Mr. BONILLA. I ask that question as food for thought, as we look at who fills some of the shoes at the NLRB.
Obviously, we have another vote.
Mr. Dickey, would you like to proceed now and recess and then come back, or would you like us to recess and then come back and resume?
Mr. DICKEY. I would like to proceed.
Mr. BONILLA. Mr. Dickey.
PURPOSE OF TESTIMONY ON PROPOSITION 226
Mr. DICKEY. Mr. Gould, I am quite shocked at the statement you made. You all have been talking about whether or not it is against the law or for the law or however you might want to discuss it. But I want a short answer. We don't have time for long answers right now.
Do you consider it a major goal of your agency to protect the funding for the Democrat Party?
Mr. GOULD. No.
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Mr. DICKEY. Why would you ever make such a statement, then?
Mr. GOULD. No. I was concerned about the fact that arguments were being put forward about Proposition 226 which were ephemeral, which were not real arguments. I suggested that this is really what 226 is about, not about the arguments that are being put forward; i.e., worker liberty and lack of enforcement of Beck.
Mr. DICKEY. You were helping them with their scope of the picture? In other words, they didn't know enough about it, and you were telling them what it was that was going on in their State? Is that what you are saying?
Mr. GOULD. I am a Californian, Congressman Dickey. I was invited by the California legislature to testify in my own State.
Mr. DICKEY. As a Californian?
Mr. GOULD. Yes, sir.
Mr. DICKEY. You were telling them that they were missing the point, it really was about trying to limit the Democratic Party getting funding, political campaign funding, is that correct?
Mr. GOULD. I——
Mr. DICKEY. Is that what you were saying?
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Mr. GOULD. I said that was part of it.
Mr. DICKEY. What possible duty do you have in your capacity as Chairman to go in to preserve the campaign funds for any party?
Mr. GOULD. I have no interest in preserving the campaign funds for any party, Democratic or Republican. The only interest I have is in seeing that this statute retains its integrity.
Mr. DICKEY. Do you say that is not a political statement you made? Is that what you are saying?
Mr. GOULD. Which statement?
Mr. DICKEY. The statement you made about protecting the funds for the Democratic Party. Is that a political statement?
Mr. GOULD. I don't believe it was a political statement. It alludes to a political reality.
Mr. DICKEY. It certainly does. Let's talk about a political reality, and that is that you want to protect the Democratic Party. Everything that you do has some effect of protecting the Democratic Party. Isn't that correct?
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Mr. GOULD. No, that is not correct.
Mr. DICKEY. When we levelized the budget last year, you reacted, didn't you, to it?
Mr. GOULD. Surely.
Mr. DICKEY. What did you do? Tell me some of the things you did in response.
Mr. GOULD. We had to look and see how we were going to live within the means that——
MEETINGS WITH MEMBERS OF CONGRESS
Mr. DICKEY. You came on the Hill and tried to lobby some people, didn't you?
Mr. GOULD. I am sure I have——
Mr. DICKEY. It is not ''I am not sure.'' You know you did it, don't you, Mr. Gould?
Mr. GOULD. I don't know whether I did it subsequent to the time that the budget was finalized.
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Mr. DICKEY. Did you talk to any Republicans?
Mr. GOULD. Yes.
Mr. DICKEY. Did you tell any of the Republicans this is going to hurt the Democratic Party?
Mr. GOULD. No, sir. No, sir.
Mr. DICKEY. Did you tell any Democrats that this is going to hurt the Democratic Party?
Mr. GOULD. No, sir, I did not speak to either Democrats or Republicans about the Democratic or Republican parties. I spoke to Democrats and Republicans about the budget of this agency.
Mr. DICKEY. Do you know what Mr. Obey said when the conference started? Have you heard his statements? Have they been written down and handed to you?
Mr. GOULD. I have not seen any of Congressman Obey's statements except the one I was provided this morning.
Mr. DICKEY. Have you heard the one last year during the conference——
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Mr. GOULD. Yes, sir.
Mr. DICKEY. Was that favorable toward the bill?
Mr. GOULD. It was not.
Mr. DICKEY. Was it because you were being political?
Mr. GOULD. No, I don't believe it was being political. It was because he thought, as he was putting it, we didn't know how to act, and he was referring to others besides me, in Washington; that he said that by going to—and I have since day one, since 1994, I have gone to both Democrats and Republicans in Washington, D.C. and throughout the United States, and made them aware of the plight of our agency, and part of our plight being its funding problems.
Mr. DICKEY. Whose amendment was it that was voted on in the subcommittee, asking for a reduction in your budget that year, last year? Who proposed that amendment?
Mr. GOULD. I know that you have proposed a number of amendments providing for our reduction.
Mr. DICKEY. Did you ever come to me and ask whether or not I would reconsider or whether or not we could do something about it?
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Mr. GOULD. I have come to you on a number of occasions, Congressman. In fact, I tried to arrange a meeting with you for two months this spring, but I was told that you were unwilling to meet with me.
Mr. DICKEY. That is not so.
Mr. GOULD. That is what I was told.
Mr. DICKEY. I said, of course, we will meet any time. I don't know what has happened to that meeting.
But what I am asking about is when we asked for a modest reduction last year, and we were told we couldn't get the votes this time—that is what they said last time. That amendment was my amendment, and you never came to me, but you went to the Democrats, didn't you?
Mr. GOULD. Congressman——
Mr. DICKEY. You went to every Democrat you could, because you knew that you could say to them, ''We are protecting your party.'' Isn't that correct?
Mr. GOULD. No, that is not correct. Congressman Dickey, I have come to you time and time again. You know I have sought you out since 1995. We were standing outside the hallway at the hearing, and I identified myself and introduced myself. You know that I have come to your office. You know——
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Mr. DICKEY. That is correct.
Mr. GOULD. I have met with you in my office. You know that I tried to arrange for a meeting with the new Republican members of the Board, and we were told, perhaps erroneously, that you were not able to meet with the three of us.
Mr. DICKEY. If you gave a certain date, I guess that is right.
Mr. GOULD. We were ready—you write in the date, we were ready to meet with you any time.
Mr. DICKEY. I will meet with you today, tonight.
Mr. GOULD. I will meet with you tonight.
Mr. DICKEY. My point is that you are politicizing things.
Mr. GOULD. I don't think I am politicizing things. I reject your assertion. I am telling you that I am willing to meet with Republicans as well as Democrats, and I have met with Republicans as well as Democrats. I am willing to meet with you any time, Congressman.
Mr. DICKEY. Let me tell you this, you have made my job a lot easier this time. For what Mr. Obey said, how he was offended by the way you acted and the way you were lobbying, and saying we can't do this, and then today, and I guess—without going to him, I don't know, but he sat there, and we were all just—our jaws were dropping with what he said. Then you sit there and do that.
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You have used the 10(j) injunction as if it is your own instrument to try to organize labor across the United States, to make it miserable for business to exist. You have done all those things plus others. Chairman Porter has mentioned several. I don't know how you could do anything but ask now for a decrease in your budget.
GENERAL COUNSEL VACANCY
I want to ask Mr. Feinstein a question. I don't know how much time I have, and I have to watch going over to vote.
Mr. Feinstein, you are the Acting General Counsel?
Mr. FEINSTEIN. That is correct.
Mr. DICKEY. I want to know this, and I will try to calm down later for my next run.
What percent of reduction would it take for you just to resign and leave the position vacant? What percent of the reduction would you say, ''Okay, I can't go any further''?
I can see what is happening. You all have put up the father of salting as the General Counsel. You know he is not going to be confirmed in the Senate, so you are going to stay on forever as Acting General Counsel. I like you personally, as I do Mr. Gould, but I think you have politicized this agency, from what I have been told, more than any other General Counsel in time that can be remembered.
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I want to ask you, sir, the only job I can do is to drive home a reduction in the budget. What percent would it take for you to say, ''I am leaving,'' with or without a replacement?
Mr. FEINSTEIN. Congressman, the National Labor Relations Board cannot function without a General Counsel in place. Each of the actions that are taken in court before administrative law judges, the papers that are filed, are all done under the name of the General Counsel, so that were there not to be a General Counsel, the agency could virtually not function. The agency would in effect have to close down until there was someone in place.
Mr. DICKEY. Could we close some of the offices, some of the regional offices during that time, effectively? We have 52, don't we?
Mr. FEINSTEIN. I believe it is 51, now.
Mr. DICKEY. We could close some of those down during that period of time?
Mr. FEINSTEIN. You would have to close all of them down, and headquarters as well. The agency, as I say, can't function without a General Counsel.
Mr. DICKEY. Mr. Feinstein, if we did that, would we get a more reasonable offer for a replacement of yours, rather than someone who is the father of salting?
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Mr. FEINSTEIN. Again, I am not responsible or involved in the process of naming the General Counsel. That is the responsibility of the President or the administration.
Mr. DICKEY. Are you saying there is no scheme? There is no scheme set up here to put him up there so that you stay on? Is there a scheme?
Mr. FEINSTEIN. I am not aware of a scheme, no. Let me say this, also, in response to your question.
Mr. DICKEY. I have to go vote, Mr. Chairman.
Go ahead and answer.
Mr. FEINSTEIN. In terms of how I have conducted myself as the General Counsel, I have tried to be a General Counsel who has been effective, who has been balanced, who has been fair. All of the indices that measure the performance of the General Counsel's Office indicate that during my tenure as General Counsel the office has been conducted in a manner that is well within the traditions of General Counsels of the past, both Republican and Democratic.
We proceed on approximately the same number of cases. There are approximately the same number of cases pending before the agency. Our success rate in the courts is roughly equivalent, to what it has been in the past. The merit factors, the appeals rates, all of those are well within the range and are quite consistent with the records of General Counsels of the past.
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I am proud of that record. I have tried to conduct myself as General Counsel in a manner that is consistent with the agency norms and the way General Counsels in the past have performed. Frankly, I am sorry that Congressman Dickey isn't here, but when statements like his are suggested, I am puzzled as to where they are coming from.
Mr. PORTER. Mr. Stokes?
CASE BACKLOGS
Mr. STOKES. Thank you, Mr. Chairman.
Mr. Chairman, what I would like to do is move into the questions involved with the budget. My understanding is that this is a budget hearing. I think we have gotten off into another area. I would like to pursue some questions regarding the budget.
The testimony this morning from the two of you, or rather, early this afternoon, indicates that you are experiencing a growing backlog of cases. I would like to know the extent of this backlog problem.
Mr. GOULD. In Washington the backlog is in excess of 700, Congressman Stokes. As you may recall, in November, 1995 we got the backlog in Washington down to the lowest level it has ever been since we have been keeping figures, and it poses a sharp contrast to what existed in the 1980s when the backlog was, I think, 1,600 or 1,700 cases.
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We have been backtracking over these past three years, and we are up substantially in excess of 700, and my hope—and it is due to some of the reasons I alluded to when I gave my opening statement, i.e., the turnover, the loss of Board staff, and the like. I hope that we are able to turn this around. There isn't a day that I don't try to urge my colleagues to take on the business of tackling these cases, and I hope that when I do leave this summer we are going to be seeing a picture of progress.
Mr. FEINSTEIN. Mr. Stokes, may I talk about the backlogs in the field?
Mr. STOKES. Yes, Mr. Feinstein.
Mr. FEINSTEIN. These are a little more troubling. The primary measure of our backlog is what we call situations pending initial investigation. Those are cases where investigations are pending.
Our backlog has gone up from 3,858 in 1993, to the 1997 figure which was almost twice that, 7,424. This is a very troubling number. It is a number that suggests that we are not getting to the cases in the kind of expeditious fashion that the agency believes is necessary and appropriate and in the manner that we have gotten to them in the past.
Most importantly what it means is that our ability to make this initial determination, this initial merit determination—which, as I suggested earlier to Mr. Bonilla, results in the dismissal or withdrawal of almost two-thirds of our cases—our ability to reach that determination is delayed. That field backlog case processing number is one that is particularly troubling to us.
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Mr. STOKES. Let me ask both of you, will the President's budget adequately enable you to address this backlog in a meaningful manner?
Mr. FEINSTEIN. If I could start, we estimate that the President's budget will allow us to begin to bring down the backlog. We expect that it should allow us to bring down the backlog approximately 10 percent in fiscal year 1999.
We certainly hope, in the future, to be able to do better than that, but that would be an important start. It would allow us to make a serious inroad into our case backlog, yes.
Mr. GOULD. Speaking of the regional backlog, and speaking of our national backlog in Washington, at the Board level, Congressman, my belief is that the budget will adequately permit us to reduce the backlog. We can do it. I want to see us do it. I believe that we will do it within that budget.
CASE ACTIVITY TRACKING SYSTEM
Mr. STOKES. Let me ask you, what is the current status of the implementation of the NLRB's Case Activity Tracking System?
Mr. FEINSTEIN. Mr. Stokes, we are making progress on its implementation. We do expect that it will be installed by the end of this year in approximately eight regions. With the President's budget we would expect it would be installed in all the regions in 1999. However, it would not be entirely operational until into the Year 2000.
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We are taking steps in regard to meeting the Year 2000 problem, contingency steps that will allow us to meet the Year 2000 problem. Although we will not, as we had originally hoped, be able to have the CATS program fully implemented by then, we do expect to have the CATS system fully operational sometime early in the Year 2000, budget permitting.
Mr. GOULD. We have submitted—we have submitted monthly reports on the status of becoming Year 2000 compliant, and as the General Counsel has indicated, I think the first report, which was due on April 30, was submitted a few days ago. We have 29 mission critical systems, of which 11 are already 2000 compliant. Ten systems are being rewritten, and eight are being modified to be Year 2000 compliant.
Mr. STOKES. You were referring to the Year 2000 compliance problem. Can you give us some understanding of what it would mean if your agency were not compliant by the Year 2000? What would be the impact?
Mr. FEINSTEIN. Our agency, like all other agencies, and indeed probably all other organizations in the public sector or private sector, is becoming increasingly reliant on computers and technology. Were we not to be Year 2000 compliant—and of course no one knows precisely what would happen—it would cause a serious disruption in our ability to process cases, to develop recordkeeping and performance measures, and the other kinds of operational indicators that are critical to the functioning of our agency.
I could summarize by simply saying, were we not to be Year 2000 compliant, it would seriously impair the ability of the agency to function.
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Mr. GOULD. And particularly, Congressman, in connection with the actual scheduling of hearings and the calculation of back pay, where back pay is awarded in unfair labor practice proceedings, the inability to be 2000 compliant would cripple us in that regard.
Mr. STOKES. Do I understand from both of you that in terms of becoming Year 2000 compliant, that you are currently on schedule, that the budget submission to the Congress is adequate for those purposes, and that there is nothing additional that Congress would have to do, let's say in terms of reprogramming or anything of the sort, to enable you to become compliant by the Year 2000?
Mr. FEINSTEIN. Right. As I suggested, Congressman, we have instituted plans, contingency plans, that will account for the fact that our original plan to have the CATS system up and running by Year 2000 will not be met, given the funding that we have experienced in the last couple of years. We have developed contingency plans which are currently being implemented, so that we will be able to be Year 2000 compliant if we receive the President's budget.
We will be able to be Year 2000 compliant through the implementation of the contingency plan and then the completion of the CATS program. We have budgeted $10 million in fiscal year 1999 in anticipation of the budget requested by the President, and that is what we believe would be necessary to assure that we are Year 2000 compliant.
Mr. STOKES. Chairman Gould?
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Mr. GOULD. I have nothing to add to that, Congressman.
Mr. STOKES. Okay.
Mr. Feinstein, Chairman Gould, thank you very much.
Thank you, Mr. Chairman.
Mr. PORTER. Thank you, Mr. Stokes.
Mrs. Northup?
REGIONAL DIRECTORS
Mrs. NORTHUP. Thank you, Mr. Chairman.
Mr. Gould, I have a couple of questions. Actually, I think I will direct these to the General Counsel, if I may.
I was wondering, Mr. Feinstein, how exactly the Regional Directors operate, what sort of oversight they have, what sort of goals you have put in place for them. I guess what I am wondering, of the regional offices, do some directors seem to be able to expedite cases more quickly? Let's start with that question.
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Mr. FEINSTEIN. Regional Directors are appointed. I make the nomination to the Board and they must be approved by the Board. Most Regional Directors have served for many years. We have a number of operational measures and operational incentives by which we evaluate and assess the performance of our regions, and that of course includes the performance of the Regional Director, who is the chief operating officer of the regional office. We have a number of measures of performance, case processing times, various other ways in which the performance of the Regional Director is evaluated.
Some of our Regional Directors do better than others. That is true in any organization. I think that in general the caliber of our Regional Directors is quite good, and that their performance has withstood the test of time, and that they have done a good and in many instances an excellent job of managing their offices.
Of course, as I have said, some do better than others. For those regional offices that have had performance problems, that have not been up to the standards of the best performing regional offices, we certainly make an attempt to work with the regional management, the Regional Director as well as other regional managers and supervisors, to see what we can do to improve their performance, to disseminate best practices.
We look closely at those regions that are performing best, that are the most productive or the most efficient. We try to understand what is going on in those offices, and we try to make that information available to the offices that could benefit from it.
Mrs. NORTHUP. Since I am on a time limit here, I would like to just sort of keep this going at a fairly steady pace.
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Have you ever removed a Regional Director?
Mr. FEINSTEIN. There has been no Regional Director removed during my tenure. As to whether it has happened in the past, I am not aware of any, but it is possible. I am just not aware of it.
Mrs. NORTHUP. How many Regional Directors are there?
Mr. FEINSTEIN. We have 33.
Mrs. NORTHUP. Thirty-three? And how long have you been there?
Mr. FEINSTEIN. A little over four years.
Mrs. NORTHUP. When you have a Regional Director that is sort of not up to snuff or does not seem to be able to perform, are there differences in pay increases that the Regional Directors get?
Mr. FEINSTEIN. Like all employees in the Federal sector, there are various award incentives, and of course it is our best performing Regional Directors who receive those awards. Unfortunately, we have had to suspend them this year because of budgetary reasons. But that is one way in which we can reward the performance of those who do the best.
We appraise their performance. Each year the Regional Directors receive performance evaluations, and again, those who are performing less well than others are appraised at a lower level. That, too, affects the ability to receive incentives.
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Mrs. NORTHUP. Just from an objective standpoint, would it be possible for you, without giving me names, to list the 33 regions? You said most of them have been there for many years. Would it be possible for you to give me a list of how many years each one has been there?
Mr. FEINSTEIN. I certainly can provide you with that.
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PRODUCTIVITY OF REGIONS
Mrs. NORTHUP. I guess the sort of recurring themes that I have heard when I have asked questions about efficiency and so forth is that, number one, that there are too many regions, and number two, that there are regions that don't perform well.
Since the buck stops with you in that case, I just sort of wondered what sort of concrete steps you were taking to ensure that every region was productive. Have you thought of combining any regions? What can you tell us about the effective management of those regions?
Mr. FEINSTEIN. There are at least two questions there, one having to do with what we do with the weaker performing regions, and the other has to do with the number of regions.
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In regard to the latter question, the number of regions, that is a question which we continually evaluate. Our concern is, of course, that we have to process all of our cases, and the model of the agency has been a decentralized one. That is to say, since we have to be everywhere in the country because cases arise everywhere in the country, we find, generally speaking, that it is more efficient to have more regional offices spread throughout the country than having centralized offices, with more people in them, which then have to serve a wider geographic area. What that does is it increases our travel costs, it limits our accessibility to the public, and it creates certain limitations on our ability to get to and investigate a case quickly.
If we were to take, for example, two offices, one office with 20 staff and the other office with 30, that serve two different regions, and combine them into one, so we now have 50 people serving in a more centralized office, our experience suggests that that would not decrease costs. We still have to house the same number of people with the same amount of space. We still have to serve the same caseload. What it does is, in addition to the initial moving and restructuring costs, to increase travel costs.
To the second question, what we do to increase efficiency, for some of them we try to develop action plans. We sit down with the regional management, others who are involved in the operation of that region, and we try to pinpoint exactly what the operational deficiencies are. We try to come up with a specific plan as to how to address that. We have done this in a number of regions.
PERFORMANCE PLANS FOR REGIONAL DIRECTORS
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Mrs. NORTHUP. Are those plans open records? Would it be possible to reassure ourselves that in fact these action plans are executed, because that just doesn't seem to be the prevailing sort of culture or understanding that people seem to have about this agency, people that deal with it all the time.
I guess it would be just reassuring to me to know, is there any sort of look at this? Is there any sort of GAO study about what these action plans consist of? You are giving me all this information, and I would just sort of like to know just how concrete they are and how well executed they are.
Mr. FEINSTEIN. I would be happy to provide you with that.
Mrs. NORTHUP. Okay, so we could sort of set up a meeting with our office and follow up.
Mr. FEINSTEIN. Sure.
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VARYING BACKLOGS AMONG REGIONS
Mrs. NORTHUP. Let me ask you, do I understand there are some regional offices that do not have a backlog and some that do?
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Mr. FEINSTEIN. There are some regional offices where the backlog is greater. I don't think we have any regional office, although I haven't checked the numbers most recently, that has no backlog, that is completely up to date. We certainly do have some offices that come close, but the norm and certainly the majority of offices at this point have significant backlogs.
Part of this is due to fluctuations in caseload, that it might be the case that over a particular period of time there is a dropoff in cases in a particular region, so that might allow that particular region to catch up, while in another region there is a surge of cases that causes the backlog to go up. Part of this has to do with structural matters that are really not a reflection of the performance of the region, but there certainly are differences.
Mr. GOULD. There is a substantial—if I can just interject, Congresswoman, there is a substantial difference in the pending cases in different regions. For instance, if you look at region 7, the pending cases, 838. If you look at 24, the pending cases are 81. So to answer your question, there is a substantial difference.
Mrs. NORTHUP. It is sort of my understanding that maybe you would have a strike someplace and you would have a fluctuation, an accelerated number of cases that would be filed, but at the end of that they would also tend to be settled fairly quickly.
I would also be interested in knowing, region by region, the number of cases in the backlog and the total number of cases over, say—you know, what would be a director's tenure? Maybe eight years? Would that be an average tenure, if they have been there for many years?
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Mr. FEINSTEIN. I don't know the exact figure. We have some directors who have been in office longer than that.
Mrs. NORTHUP. Because I think the question is, are they inefficient, or are there too many regions? One of the ways is to look at the caseload, although I realize that you could have very time-consuming cases and also some fairly quick cases. But because of a strike causing a spike, that would come down, and you would have to look, I guess, at about a——
TRANSFER OF CASES
Mr. FEINSTEIN. I do want to mention one of the initiatives we have taken which, along with many others, is outlined in this four-year report which I have provided you. We are now transferring cases between regions at a much greater level than we have in the past, to address these kinds of fluctuations.
Mrs. NORTHUP. Mr. Feinstein, if you are going to transfer cases, then you have moving anyway, and traveling and everything. Doesn't that argue for consolidating some of these offices?
Mr. FEINSTEIN. I was starting to say that what we have done through the development of the impact analysis process, which is also outlined in this report, is differentiate between the kinds of cases we get. Only a certain kind of a case is susceptible to that kind of treatment.
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If a case requires a lot of personal contact, personal interviews and going out and meeting with witnesses, you can't transfer that kind of case. But we do get some kinds of cases in which we have now developed alternative investigative methods, such as investigation by telephone, investigation by questionnaires and position papers provided by the parties. It is those kinds of cases which we are able to transfer. We have more than 2,000 cases now that we have transferred. A few years back we had hardly any, so that has been a significant change.
I think you are correct, that our increased ability to move cases around does raise issues that perhaps we can consolidate some of our operations, and that is something which we are looking at and continue to consider.
Mrs. NORTHUP. The fact is that every case in Louisville, Kentucky goes to Cincinnati, anyway. They are going to travel. It is just are they going to travel to Cincinnati or to Indianapolis, if you consolidate. You are not really eliminating travel by having all of these—unless you happen to be in one of the 33 cities. They oversee quite a bit of other area that requires travel.
Mr. PORTER. Mrs. Northup, your time is up.
Mrs. NORTHUP. Do I get another round?
Mr. PORTER. If you stay, yes, absolutely.
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Ms. Pelosi.
Ms. PELOSI. Thank you, Mr. Chairman. I want to thank you for your wonderful words of commendation to our dear colleague, Mr. Stokes. I wish he were here so I could publicly, in front of him, associate myself with your remarks, and also to say that on the Intelligence Committee, we have the Stokes Scholarships there for young people to be involved in the intelligence community, and once again it relates to education, of course, as Mr. Obey referenced. There is hardly a place in this Congress that you can go that a positive impact has not been made by Mr. Stokes.
Thank you, as one who admires the work of Mr. Stokes, and it is presumptuous to thank you but I certainly did enjoy hearing your kind words about him.
I also commend you, Chairman Gould, for your fine service to our country and the education of our young people as a professor, and now in your public service as Chair of the NLRB. I, for one, will certainly miss you, as I believe you have brought great integrity and intellect to the position.
Mr. GOULD. Thank you, Congresswoman. It has been a pleasure working with you on the committee.
Ms. PELOSI. Thank you.
Mr. Feinstein, I don't know how long ''Acting'' is, but I commend you also for your fine contribution. I think that America and the NLRB have been well served by the service of all of you, and that is very important to the productivity of our country and to the morale of our workers, the success of our workers. Thank you for that.
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Mr. FEINSTEIN. Thank you.
IMPACT ANALYSIS
Ms. PELOSI. Coming as I do at this point, my questions have been asked. And then in answer to Congresswoman Northup's questions of Mr. Feinstein, you started to go into the area that I was going to go into, to ask him to further elaborate on the impact analysis program.
I understand that you did respond to some of my other questions, which I will check the record for, but I will be fascinated to see how you are dealing with the year 2000 challenge that we have.
Mr. Feinstein, if you would, is there anything more you would like to add to the record about the impact analysis?
Mr. FEINSTEIN. Yes. This is one of the key initiatives of my tenure. It is a program which was developed over a period of in excess of a year, and we took great care. We had an agency task force that was composed of a broad cross-section of representatives in the agency. We had managers, supervisors, and our internal unions who all made an important contribution to the development of this program.
It was consistent with the dictates of NPR and GPRA to be more consumer conscious in attempting to better rationalize increasingly limited resources. It was an effort to begin to process cases with better recognition and better understanding of the particular importance and the particular issues in different cases. It simply could no longer be first in, first out. Our backlogs were increasing. We wanted to assure ourselves that those cases that we were taking longer to get to were the ones that could best tolerate more lengthy consideration.
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The cases with the broadest impact, the broadest impact on the collective bargaining process, the broadest impact on employee rights, on employer rights, are the ones that we are focusing our resources on initially. Also, as I suggested to Congresswoman Northup, it also gave us the ability to differentiate how we approached the investigations of different cases, so that we are now better able to say, in these kinds of cases we can develop alternative investigative techniques which are more efficient and require less resources, but would not necessarily be applicable to other kinds of cases.
So the benefits are on different levels. As I say, we took a lot of care. We consulted with the people who practice before the agency. We have developed and implemented this program, which has now been up and running for nearly two years in our regional offices. We are carefully assessing it. It does reflect a significant change in the operational culture of the agency, and it is an initiative which we are now carefully evaluating and assessing.
We recognize that when you implement an initiative of this nature, you have a responsibility to evaluate and assess and make appropriate adjustments as we better understand its effect. We are currently in the process of doing that, and do expect to be refining and modifying the program accordingly.
But I think that the initial reaction, the initial response both from the people within the agency who are carrying it out, as well as those who appear before the agency, has been a positive one, and we are hoping to continue to develop and improve it.
Ms. PELOSI. I appreciate that.
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Does anyone have anything to add to that?
SETTLEMENT JUDGES
Mr. GOULD. The only thing I would say, Congresswoman, is that we have tried to streamline our agency, particularly with regard to the resolution of cases at the administrative law judge level. Earlier I referred to our settlement program, where what we have done is reduced the amount of wasteful litigation that would otherwise consume our agency and ultimately consume the courts.
One of the things that I have been proudest about is the ability of our administrative law judges to come in and act as impartial arbiters or mediators, so to speak, conciliators, really, and to resolve differences between parties that would otherwise go to litigation. They have been effective in issuing their bench decisions, expediting our procedures, and they have been carrying a heavier workload and doing it in much less time than their predecessors.
I often speak of our administrative law judges as kind of the unsung heroes of our agency. All of our people, I think, throughout the regions as well as in Washington, have done just first rate work during my tenure, and I think that our administrative law judges stand second to none.
We have also undertaken reforms that we have outlined to you earlier in connection with our procedures in Washington itself.
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Ms. PELOSI. What you say is music to the ears of Members of Congress, I believe, because performance and results are important to us in terms of approaching issues fiscally, as we do in our committee, but also in terms of what it means to the people who have a grievance and are looking for a decision.
So to that extent, to hear about these efficiencies is very encouraging, and especially if you are doing it with a discerning eye in terms of those that can be resolved one way, not a cookie cutter approach, but making some distinctions among the cases that lend themselves to that versus those that do not. So I commend you both for that, and again for your service as General Counsel and the Chairman of the NLRB.
Mr. Chairman, if I may, I would just like to for one moment say something about what you opened the meeting about this morning. That is, that in making and observing the issue at hand, I think we have to also keep in mind that we are on new territory here when we talk about cyberspace.
I remember on the Intelligence Committee this year I wrote the dissenting views to a bill we took up on encryption earlier in the year, and I did not put my dissenting views on the Web immediately because I wanted to get the permission of the committee to make sure it ought to go. For two days my office was subjected to the most harassment that we have ever received, ever received under any issue, because we were withholding the information.
People think once something is in the public domain—the expectation is something quite different than it might have been in the past. They want it in realtime. There may not be an exact corollary from one situation to the next that we are talking about here today, but I do know what the public expectation is. They think once it is uttered, it is theirs and entirely theirs.
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Mr. PORTER. If the gentlewoman would yield, except that in this case we are dealing with a specific statute.
Ms. PELOSI. I understand that. But I am saying as we look into that, we have to take into consideration what the public expectation is, as well. But I appreciate the Chairman's observation.
Once again, I thank the gentleman, and I yield back the balance of my time.
Mr. PORTER. Thank you, Ms. Pelosi. You yielded back, I think, two seconds.
Ms. PELOSI. Nonetheless.
Mr. PORTER. Mr. Miller.
Mr. MILLER. Gentlemen, I am cautiously optimistic that we are moving in the right direction, I think, in the direction not to pursue single site. I think it was a politically responsible decision to withdraw your renomination. However, with this Mr. Cohen we take two steps forward and we go three steps backward, so I hope the administration will get some very objective and not biased, partisan people to be your successors.
But with just that statement, I would like to yield the balance of my time to my colleague, Mr. Dickey.
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STATEMENT ON CALIFORNIA PROPOSITION 226
Mr. DICKEY. Thank you, Mr. Miller and Mr. Chairman.
Mr. Feinstein, I would like to ask you a question. Mr. Gould has made the statement that the proposition in California would ''cripple a major source of funding for the Democratic Party, given the fact that most donations by unions go to Democrats rather than Republicans.''
Do you agree or not agree with that statement?
Mr. FEINSTEIN. Mr. Dickey, since I first became General Counsel more than four years ago, I have made the judgment that I have declined to comment on public issues, on legislative issues, on issues of matters pending before legislatures. This was, from day one, a position that I have taken. I have consistently declined to comment when asked in public appearances to comment on these kinds of issues. I have not commented upon them, in the limited public remarks I have made during this period of time.
Mr. DICKEY. Are you saying you can't comment now?
Mr. FEINSTEIN. I am not saying I can't comment. I am saying the position I have taken is I prefer not to comment.
Mr. DICKEY. Do you agree or don't agree? I am just asking you this, and you make up your mind. Mr. Gould is your partner, and you all have worked together for all these years. Do you agree with what he said or do you not agree with what he said? Just yes or no.
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Mr. FEINSTEIN. In terms of characterizing our relationship, Mr. Gould is the Chairman of the Board. I am the General Counsel. We are separate. There is a wall between our functioning.
Mr. DICKEY. I happen to know that. Just yes or no, do you agree with what he said?
Mr. FEINSTEIN. In his statement?
Mr. DICKEY. Yes, sir.
Mr. FEINSTEIN. I haven't studied it closely. I agree with parts of it and I disagree with other parts of it.
Mr. DICKEY. Which part do you agree with? Let me read it again, ''. . . cripple a major source of funding for the Democratic Party, given the fact that most donations by unions go to Democrats rather than Republicans.''
What part of that do you agree with?
Mr. FEINSTEIN. Congressman, I don't mean to be evasive here. I have not studied the issue. I am not aware of the nuances or even the content in particular of the issue.
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Mr. DICKEY. You are not only being evasive but you are taking a lot of time.
Mr. FEINSTEIN. What I am saying is I have not studied the issue and I don't have a view on it.
Mr. DICKEY. You say you agree with some of it.
Mr. FEINSTEIN. Plans——
Mr. DICKEY. Is it something he shouldn't have said? You can answer that. Should he or should he not have said, as a professional head of this agency, that comment?
Mr. FEINSTEIN. My position is that it is something I would not have said.
Mr. DICKEY. You think he shouldn't have said it?
Mr. FEINSTEIN. The Chairman and I have discussed over the years the kinds of comments that might or might not be appropriate, and we have agreed to disagree on that issue.
BODENSTEIN CASE
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Mr. DICKEY. I know. I want to ask you about the paycheck protection. Is it the Bodenstein case—do you know about that, Bodenstein?
Mr. FEINSTEIN. I am not sure I know——
Mr. DICKEY. Where you all decided that the 70 cents a month that, without consent, went to political purposes, that it was de minimis, too small to mess with. Do you remember that case?
Mr. FEINSTEIN. I think I have a vague recollection of it. It is a case that arose several years ago.
Mr. DICKEY. Yes, sir, from Oklahoma.
Mr. FEINSTEIN. Yes.
Mr. DICKEY. De minimis is 70 cents. If we have 15 million workers, we are talking about $126 million that goes for political purposes. Is $126 million de minimis?
Mr. FEINSTEIN. If this is the case that I think it is, I believe that the holding in that case was a procedural holding. The information that was provided to the particular individual was sufficient at what we call stage one of the Beck case for the individual to decide whether or not to proceed to challenge the allocation.
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It was not saying that the allocation itself was de minimis. It was saying that the information that was provided was adequate for the particular individual to assess whether or not to challenge the way in which the union was allocating its expenses.
Mr. DICKEY. Mr. Gould, let me ask you that question, if I may. Can you answer it?
Mr. GOULD. I cannot answer it, Congressman, because this is a matter that did not come before us. As I understand it—I recollect a good deal of discussion in the press, and I think there was some discussion of it in the hearing that we had last year. You asked the General Counsel about it. I cannot discuss it because it is a matter that has not come before us and that could come before us during our tenure, or during my tenure.
Mr. FEINSTEIN. I believe it is currently a live case. It has now come to us in what we call level two. Now, the actual allocation is being challenged.
Mr. DICKEY. Let me ask you this, Mr. Gould: Is any part of your decision that your agency gave in this case colored by the fact that the Democratic Party is going to get the benefit of the $126 million?
Mr. GOULD. First of all, let me tell you that our agency did not—our agency—I did not make a decision in this case. The Board did not make a decision in this case.
As I understand it——
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Mr. DICKEY. It is back to Mr. Feinstein.
Mr. GOULD. All that has happened at the General Counsel level.
Point number two, no decision of mine is ever colored by the amount of money that is going to go to a particular party or not, period.
Mr. DICKEY. ''This would cripple a major source of funding for the Democratic Party, given the fact that most donations by unions go to Democrats rather than Republicans.'' You are not asking me whether I agree with you, you are just making a statement that you are not aware, that you don't make decisions based on who gets the money. Is that what you are saying?
Mr. GOULD. I am telling you——
Mr. DICKEY. Are you asking me to agree with you?
Mr. GOULD. I am not asking you anything. You are asking the questions, I am giving the answers. I am telling you that I do not make any decisions based upon where the money in a particular political contribution case goes to.
Mr. DICKEY. What does this mean, ''. . . cripple a major source of funding for the Democratic Party?'' You were out there in California advocating for the Democratic Party, so they would get part of this $126 million, if not all of it.
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Mr. GOULD. My point in California was that this proposal in California was animated by those concerns that you have just alluded to, and my purpose in opposing Proposition 226 is based upon the view that this will interfere with the National Labor Relations Act, and that the Board is doing a good job in enforcing Beck.
I am not commenting on matters that were before the General Counsel.
IMPACT OF FIFTEEN PERCENT REDUCTION
Mr. DICKEY. Let me ask Mr. Feinstein this: If 15 percent of your last year's budget is cut, if that is part of an amendment and it is passed, that would be $27 million that would be cut from last year's budget. Let's just assume that is correct. What would you do? What offices would you close? What people would you terminate to cover $27 million?
Mr. FEINSTEIN. Congressman, I can't tell you at this time specifically the offices or specifically the people. I can say that it would require us to lay off employees of the agency and it would cause our case processing times to increase significantly.
Mr. DICKEY. In the last year you have added 40 new employees to your work force?
Mr. FEINSTEIN. This current fiscal year we have had a hiring freeze and we have not added any new employees. In fact, we have lost on the order of 40 or 50 people that have quit or retired over this period of time.
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Mr. DICKEY. You have a net loss of 40?
Mr. FEINSTEIN. That is correct, this fiscal year.
Mr. DICKEY. I thought you had a net gain of 40.
Mr. FEINSTEIN. Last year we did hire some 40 or 50 people over the course of the year, who replaced around half of the people who left the agency during that period of time. So last year we had a net decrease, as well, but we did do some limited hiring. This year we have done none.
Mr. DICKEY. The $27 million, would you close any offices? You all—I have been on this thing since 1995, I guess, saying ''Please close an office, please close an office,'' and you closed one, and I think that was in D.C. Would any offices be closed if $27 million was cut from your budget, and which ones?
Mr. FEINSTEIN. Again, Congressman, I can't tell you precisely what would happen. It would certainly require a significant reduction in the staffing level of the agency. Whether that would mean that every office gets reduced 15 percent or whether we would close specific offices, the determination of that would require careful consideration as to what we would believe would least impair the operations of the agency. I simply could not give you an accurate answer to that at this point.
Mr. DICKEY. The annual rent on the offices here in Washington is $8 million a year. Would you consider reducing the office space and cutting off some of that $8 million a year, if that happened?
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Mr. FEINSTEIN. I think that would have to be considered, yes.
Mr. DICKEY. Would that be considered before you close the regional offices? Which is more important to you, the regional offices, or the home office charging $8 million a year?
Mr. FEINSTEIN. That it is a hard question to answer. We have reduced significantly the space in both regional offices and in headquarters. We have moved the resident office in D.C. into the Washington headquarters. We also closed the resident office in El Paso.
As to which we would do first, the best answer I could give you is we would carefully evaluate that question. I have not made a determination because I haven't really sifted through the facts and the evidence as to which would be the most appropriate thing to do.
Mr. PORTER. Mr. Dickey, your time has expired, but we will have a second round, if you wish to stay.
Mr. DICKEY. Thank you, sir.
Mr. PORTER. Mrs. Lowey.
GROWING COMPLEXITY OF CASES
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Mrs. LOWEY. Thank you, Mr. Chairman. Welcome, Mr. Gould and Mr. Feinstein. I want to thank you for appearing before us.
I hope that we can really focus on the important mission of the NLRB. You have already discussed your view of this incident. Our Chairman I thought was very gracious in discussing it. I think it is absolutely critical that we don't use those views of some of our members who have been anti-NLRB for a very long time to obfuscate the very, very important mission of the NLRB, which is to promote peace between labor and the business community. I personally want to thank you and Mr. Feinstein for the important accomplishments you have advanced since your tenure there.
I am hoping that this hearing can really remain focused on the important work of the NLRB, because I think this incident has been discussed quite sufficiently. I would like to go on to several questions that I want to pose to you.
First of all, Mr. Chairman, can you please elaborate on your testimony in which you state that the NLRB's cases have grown in complexity? I think it is important for us to know, as we appreciate the work that you are doing, how these cases have changed, how has this affected staffing needs? Life certainly has gotten more complex in a whole range of areas, and you certainly see it at the NLRB. Can you discuss that with us?
Mr. GOULD. Certainly, Congresswoman Lowey. Thank you for your comments.
Let me say that a major way in which our cases have changed relates to the mix between representation and unfair labor practice cases. We are getting a greater percentage of unfair labor practice cases than we did in the past, and this requires more than double staff time that would otherwise go on a representation case, so we are getting more unfair labor practice cases.
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Why this is, I am not sure. I have been particularly interested, for instance, in looking at the resident office in Las Vegas, where there is a great deal of union activity and where some of the unions apparently are not filing representation petitions but where, nonetheless, we have gotten a big increase in cases, particularly in the unfair labor practice area.
The second factor here is that I think many of our cases relate in a global economy to corporate relocations, reorganizations, mergers and the like. We are getting more lead cases dealing with the duty to bargain, the duty to disclose information. Some major disputes between the companies and unions have emerged.
You may have read of the Caterpillar dispute which consumed a great deal of our agency's time and resources. I was pleased to see that we were able to approve of the settlement that the United Auto Workers and the Caterpillar Corporation entered into.
Just the volume of pages that we are getting, and I am not sure whether there is a complete correlation between the complexity of the cases and the volume of transcript pages that we are getting, but we are—whether this is because lawyers are becoming more contentious, or whatever. But we have now moved to, as I said in my earlier testimony, to an average of 684 pages per unfair labor practice case. Just three or four years ago we were at about 449. So again, this increases the burden on our administrative law judges and our people in the field.
We are trying to attack this problem of a greater burden by introducing some of the initiatives that I have alluded to. Our agency has always had a very good record when it comes to the settling of cases. What we are trying to do, as I described to Congresswoman Pelosi, is to involve our administrative law judges in this process. We have been able to settle about 250 cases in the relatively short time that this initiative has been in effect, where we bring in a third party, and that third party doesn't have the authority to adjudicate but merely to conciliate differences between labor and management. So these are the kinds of things.
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And there are other disputes of this kind, like Bridgestone we had a few years ago. We have had a number of disputes in the Midwest; the case in the deep South, the Avondale case, which has taken up—Ms. Webber is handing me the table of contents for I guess the administrative law judge's decision in this case. There were thousands—40,000 pages of transcript. We are putting an enormous amount of time and energy into trying to resolve these very difficult—these very difficult matters.
So hopefully this provides you with some kind of insight into the challenges we are confronted with.
Mrs. LOWEY. Just to pursue that for a moment, because I certainly don't have the expertise that you and your staff have, you mentioned that the average brief has increased from 440 to——
Mr. GOULD. Transcript pages.
REASONS FOR INCREASE IN LITIGATION
Mrs. LOWEY. Transcript. What are the other reasons for the increase in litigation, do you expect?
Mr. GOULD. Gosh, that is very difficult to say. One of the things——
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Mrs. LOWEY. Is there less discussion between labor and management at the outset?
Mr. GOULD. You know, one of the things that has happened in the 1980s and has continued through the 1990s is that we have seen a society where we have had more polarization, regrettably, between labor and management, and frequently that has meant less discussion.
We try to, through our agency, promote discussion, promote the resolution of both representation and unfair labor practice cases. I think we have increased our ability to do so. But I think that we as a society are seeing more polarization between labor and management, and that tends to harden positions, to make disputes sometimes more acrimonious and carry over a considerable duration.
If you will recall, the Caterpillar dispute lasted six full years, at the end of which it finally resulted in a settlement. We have seen a number of disputes that have gone on for a very substantial period of time, even though the number of industrial disputes and strikes and walkouts is decreasing. What we are seeing is that some of the very big ones, in terms of the tenacity and obdurate nature of the parties, is increasing.
IMPROVING PRODUCTIVITY THROUGH INFORMATION TECHNOLOGY
Mrs. LOWEY. Given the increase in workload and the increase in complexity, to what extent has information technology improved the productivity of your staff, and how are you using it?
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Mr. GOULD. I think information technology has improved the productivity of our staff, but we are very far behind. I mentioned this Avondale case that has so many hundreds of pages of transcript. The lawyers who were representing the company had scanners where they could identify particular portions of testimony, briefs, that they could use immediately, every night at the end of the hearing.
We are behind in technology, and we are trying to make more of an investment in technology. That is a large part of what the President's budget is all about. We find ourselves a few steps behind what private parties generally have in this arena. Our hope is that with the President's budget we can recoup some of the disadvantages that we suffer from.
Mrs. LOWEY. I know Mr. Feinstein has been working in this area. Could you elaborate?
GROWING COMPLEXITY OF CASES
Mr. FEINSTEIN. Surely. As to the first question, in terms of complexity, the Chairman has made a number of points with which I would concur as to possible reasons. It is difficult to know.
I think changes in the economy itself, in the increasing fluidity of the workplace where employees are less tied to particular employers, there is more contracting and subcontracting, changes in economic organization. This new workplace reality presents a number of complex issues when they come before the agency in the form of a case: Who is the employer? Who is liable? Who are the employees? How broad should be the scope of a unit, or should be liable in what is considered to be a violative situation?
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So the changing and increasing complexity of the workplace itself is reflected in the increased complexity of the cases that appear before the agency. As the Chairman suggested, we have made efforts to weed out, through our information officer program, those kinds of cases which in the past were coming before the agency and were relatively easy to resolve because they were not meritorious, or because they were not appropriately before the agency. So what is left are cases with greater substance that are more demanding of our resources.
These are, again, some of the reasons for the increase in complexity.
We have been working hard on improving our technological capacity at the agency, the level of our computerization, the kinds of automated data processing systems which enhance our productivity and enhance our work. We have not made as much progress as we had hoped, largely due to funding limitations, but we continue to move forward in this area. Once our CATS program is implemented over the next couple of years, we will benefit significantly in terms of further productivity increases and further capacity to improve our efficiency.
Mrs. LOWEY. Thank you, Mr. Chairman.
Mr. PORTER. Thank you, Mrs. Lowey.
Mr. Hoyer.
Mr. HOYER. Thank you very much, Mr. Chairman.
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Mr. Gould I apologize for being late. Welcome to the committee. I understand you have had a delightful afternoon. I am pleased to be here.
Mr. GOULD. It goes with the turf, Congressman.
Mr. HOYER. Some turf is rougher than others.
I presume some of the concerns I have have been covered, and if they have, you can simply say that we have covered that and you don't need to answer a second time.
Obviously the concerns I have are that we have a statute in place which I strongly support, which gives to working men and women the right to organize and bargain collectively on behalf of their rights to pay, benefits and working conditions, and that that right is only so good as the enforcement mechanisms that are eventually to ensure that the law is complied with on both sides of the bargaining table.
DECREASING CASE BACKLOG
So my concern is that, as we have reduced very substantially your budget, your complement of employees, by 35 percent, 30 plus percent over the last 10 years, that we are in fact able to handle the cases properly and in a timely fashion.
In that regard, Mr. Dickey asked the question, if $27 million were taken out of the budget, what impact would that have? Let me start from, if the President's budget is approved, will in fact we be able to not only handle the new cases, but to reduce backlog?
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Mr. GOULD. It is our expectation that we will be able to reduce the backlog, Congressman. That is our expectation.
Mr. HOYER. How rapidly? In other words, what percentage do you project, under the President's budget, for us to get the——
Mr. FEINSTEIN. In terms of the field backlogs, we estimate that under the President's budget we could reduce them by about 10 percent.
Mr. HOYER. Per year?
Mr. FEINSTEIN. Yes, 10 percent in fiscal year 1999, the year that the budget covers.
Mr. HOYER. Okay. We have a five-year projection, however. I don't know whether you have a five-year projection.
Mr. FEINSTEIN. Yes, we do, under our GPRA plan.
Mr. HOYER. I understand that.
In terms of that, would it be approximately 10 percent a year? Would it be appropriate to project it would take you seven to nine years to reduce the backlog so we had a current docket?
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Mr. FEINSTEIN. That is a fair rough estimate. Of course, we are talking about an operational budget at roughly the same level, that if the operational budget were maintained at the level of what the President proposes for 1999, we could make continuous progress on the reduction, slowly, of the backlog.
Of course, it is contingent upon the one thing that is the most difficult to predict, and that is the caseload. If the caseload surges, that obviously would not be the case. Likewise, if it decreases, we would be able to make quicker progress.
Mr. HOYER. That is my understanding, that in fact the caseload has surged.
Mr. GOULD. It has. In recent months there has been a surge. I think it is difficult to project for the entire year whether there will be a substantial increase. We have not so projected.
Mr. HOYER. With respect to the reduced staffing and the reduced funding as required—I am sure it is in this paper that I am looking at, I just can't find it—but the backlog or the pending cases that are unresolved, how quickly are they rising on an annual basis?
Mr. FEINSTEIN. To give you a couple of numbers, again to the field backlog, the 1993 number was about 3,850. The 1997 figure was in excess of 7,400.
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Mr. HOYER. When you say ''situation pending,'' that is the backlog?
Mr. FEINSTEIN. That is the primary measure of the backlog, yes.
Mr. HOYER. So the backlog in 10 years has increased by 250 percent, 2,891 to 7,424?
Mr. FEINSTEIN. I trust your math.
Mr. HOYER. It is obviously more than two and less than three.
Mr. FEINSTEIN. Double.
Mr. HOYER. Being a politician, I will split the difference, right? But it is over a 200 percent in increase in 10 years. And at the same time we have had—since 1993 we have had a 10.6 percent effective reduction in your budget?
Mr. GOULD. Yes.
Mr. FEINSTEIN. That is correct, I believe.
Mr. HOYER. Now, the concern that for instance we have with respect to the Federal Election Commission, expressed by many on both sides of the aisle, is that we are not handling cases quickly enough and we are having to dismiss cases that may have merit, and therefore not enforcing the system. Some perceive the fact that we do not have sufficient computerization of that system—it may not be as applicable to your work as the FEC's, but it is clearly applicable.
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YEAR 2000
We are very concerned in the Congress about the compliance for Year 2000. Are you, given the President's budget, going to be able to have solved your Y2K problem by the first quarter of next year?
Mr. FEINSTEIN. As we indicated earlier, under the President's budget, we believe we will be in compliance with the Year 2000 problem. It has required us to develop a contingency fallback plan. Our original plan, developed a couple of years ago, we are simply not able, given the funding restrictions, to implement. But we have already developed a contingency plan that will bridge our ability to get from the current operating system to the new system that we are implementing in a manner that is consistent with meeting the Year 2000 problem.
The short answer to the question is, under the President's budget, we have a plan to take care of the Year 2000 problem.
Mr. HOYER. Now, I am glad to hear that, and I am glad to hear of your optimism. We are all very concerned that—I sit on the subcommittee that oversees the IRS. It is critically important it gets there. Defense, it is critically important it gets there. Yours as well; all the agencies. I am concerned that the optimism perhaps may not be justified.
CANCELLATION OF TRIALS
Having said that, can we go on to another subject? As a result of the current funding freeze that you are under, it is my understanding that you have canceled all trials in September. Was that this coming September or last September?
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Mr. GOULD. This coming September.
Mr. HOYER. That will mean, I presume, that cases that are legitimate and not legitimate, you are not—how are you making the judgment? How do those get on the docket? If you are canceling all trials in September, what ramifications does that have? How long will it be before they get back on the docket?
Mr. FEINSTEIN. The way our trial calendar is developed is, as cases progress through the pipeline and complaints issue, and our efforts to settle the cases are not successful, they get set for trial. They are set at the next available slot—each region is allocated a certain number of trial slots. The cases that need to be set for trial are then set for trial in the first available trial slot.
The length of the period of time it takes to schedule a case does vary from region to region. I think our average is about eight or nine months now, or seven months or so. What the cancellation of trials in September means is that we are not scheduling, we are leaving the month of September blank, we are not scheduling any trials. The cases that would normally be scheduled in August are being scheduled in August. The cases that would normally be scheduled in July will be set in July. The cases that would normally be set in September are not being set for September.
We have had to do that simply to assure ourselves that we will be able to come in under the line for our current fiscal year budget. What will happen to those trials is they will be deferred and put over until next year, which causes delay, causes further backlog in the pipeline, and most importantly, further time to resolve the issues of the case.
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Mr. HOYER. At the time the decision was made, was the October docket—October, November, December docket already filled up, so you just didn't push everybody 30 days? You are now going to jump the September cases out of the line and put them somewhat later?
Mr. FEINSTEIN. It probably was a little of both. When we were developing our operational plan for the current fiscal year, we realized that in order to assure ourselves that the budget was balanced, so to speak, we needed to do this and realize the savings. Conducting a trial incurs transcript expenses, travel expenses, and other kinds of expenses.
Mr. HOYER. I understand the savings that can be effected. It is the ramifications to the litigants that I am concerned about.
Mr. FEINSTEIN. Exactly. Some of the trials might have been put forward a month, some might have been put forward further. There were probably October trials that were already in place at that time.
Mr. GOULD. To give you some nature of the extent of the ALJ hearing problem, in Region 15, for instance, you can't get a hearing now, right now, as we speak, before February of 1999. In Region 28 you can't get a hearing before late February of 1999. In Region 30, late January of 1999. So this is the enormity of that.
Mr. HOYER. That would mean if there was an allegation of an unfair labor practice by a group trying to organize a particular business, if they could not get that resolved, the probability is they would not be able to continue their organizational efforts?
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Mr. GOULD. I think it would be very difficult.
Mr. HOYER. It would at least undermine it?
Mr. GOULD. It is the old story. ''Justice delayed is justice denied'' has particular applicability in our field. One of the things that we have tried to do is to deliver our service more promptly, but this makes it quite dismal.
Mr. PORTER. Mr. Hoyer, your time is up, but we are going to have a second round, if you are interested.
I want to at this point in the record say that when the subcommittee adjourns today, our regular hearing schedule is complete. We will have a special hearing on May 20th, beginning at 1:30 p.m., with six Nobel laureates to discuss with the members of the subcommittee the future of biomedical research. They will be here for us.
The second round, Mr. Dickey.
Mr. DICKEY. Thank you, sir. How long do I have?
Mr. PORTER. Ten minutes.
Mr. DICKEY. Thank you.
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Mr. PORTER. You have already had, I might say, 18 minutes, but 10 minutes.
GENERATION OF CASES
Mr. DICKEY. Mr. Feinstein, have you ever paid any attorneys' fees to anybody personally?
Mr. FEINSTEIN. I believe I have. In the preparation of our will I believe I incurred an expense. Perhaps there were others.
Mr. HOYER. Mr. Chairman, parliamentary inquiry. I presume under the hearing process one cannot object to a question as being irrelevant and immaterial?
Mr. DICKEY. Neither can you ask me why I asked it. Are you the judge or something?
Mr. PORTER. I am sure Mr. Dickey is going to develop that relevancy in the course of his questioning.
Mr. DICKEY. I may and I may not.
Mr. HOYER. I am betting on the latter.
Mr. DICKEY. Mr. Feinstein, have you ever been a part of a large law firm?
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Mr. FEINSTEIN. No, I have not.
Mr. DICKEY. Let's just assume that nowadays we have a lot of branches and everything. Let's say a law firm in Washington, D.C. wants to branch out, and they go into—they have 51 different offices all across the Nation. I don't know where I get that figure, but I am just going to pick 51 out of the air. They are going to put people in those offices and they are going to want them to generate the business to justify that office. Isn't that a fair assumption?
Mr. FEINSTEIN. I am quite honestly not familiar with the economics of law firm practice, but it sounds reasonable to me.
Mr. DICKEY. Let's just say if you put someone out there and they see job security as being very important, they are going to make sure that they have enough caseload to justify that office staying open, aren't they?
Mr. FEINSTEIN. It sounds reasonable to me, yes.
Mr. DICKEY. Every law office controls how much caseload they have. They can control it. They can say no or they can say yes, or they can go out and advertise, in the case of private practitioners, or they can go generate just so they can keep their job security. Have you ever thought about the fact that these 51 offices that you have created a caseload motivation or momentum?
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Mr. FEINSTEIN. Congressman, I think that the nature of the act which we enforce requires us to respond to charges that are filed with the agency. I am not aware of any activity by anyone within the agency that could be construed as generating cases.
Particularly in recent years when our backlogs are increasing, as is the number of cases that are being handled by each of the staff members, I think if anything the incentives run the opposite way. In the case of a government agency like ours, there is an incentive to have less cases because each individual staff member already has a caseload that is significantly greater than it was in previous years. I am certainly not aware of any activity conducted by anybody in the regional offices that could be construed as attempting to generate cases.
Mr. DICKEY. Do you think those 51 offices should run like a law firm, like a branch of a law firm, or do you think they should just be out there and be autonomous? Should there be some accountability as to how many cases they have and don't have? Should there be a comparison between the offices and the efficiencies of various offices?
Mr. FEINSTEIN. Certainly. We do keep records of the extent of the caseload and the efficiency of the operations, how quickly and thoroughly and the degree of quality with which the cases are handled. That is an important part of our operational structure.
DISTRIBUTION OF RESOURCES
Mr. DICKEY. I have felt like we either put a lot of money in the home office or we put a lot of money in the regional offices. I have asked you all, because of budget considerations, to please get efficient one way or the other, and you have just—you have said no. You have just sat there and are spending money on both counts.
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Let me ask you this: Which is more important for the welfare of the litigants in America, the home office or the 51 branch offices?
Mr. FEINSTEIN. Congressman, we are constantly assessing where our increasingly limited resources are best spent. Over the past several years a higher proportion of resources have been allocated to the field. The reduction in headquarters has been greater than the reduction in the field. We have been reducing both. Our general inclination at this point is that we need to allocate more resources to the field.
But let me say this, that we have tried very hard, out of necessity and out of a sense of responsibility, that it is the right thing to do, to economize and operate more efficiently. I have issued a report which points to a number of very specific things that we have done, specifically in the area of cost savings and efficiency initiatives.
We estimated in our presentation to you a couple of years ago that those efficiencies had realized savings in excess of $12 million, and we have continued to implement efficiencies, and I believe that we have accomplished other considerable efficiencies. So I would merely assert that we have taken your concerns and the concerns of others and the concerns of the administration, and the fact that we have increasingly limited resources, to work very hard to increase our efficiency. I think we have made important progress in that area.
EFFECT OF CASES ON LITIGANTS
Mr. DICKEY. Mr. Gould held up this brief or whatever it was and said, ''Look, that is what we are dealing with. This is the number of pages we are dealing with.''
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Have you ever thought, maybe when you woke up at night or when you were in a particularly thoughtful mood and had enough time, have you ever thought about the effect that this has on the litigants and the bottom line, and the expense of all these companies?
Mr. FEINSTEIN. Absolutely. That is a great concern of ours.
Mr. DICKEY. Have you ever thought about, rather than acrimony, trying to promote cooperation?
Mr. FEINSTEIN. Absolutely.
Mr. DICKEY. Talking to those people and saying let's work it out?
Mr. FEINSTEIN. Absolutely. I think that is a very important value and a very important process to encourage. In fact, we settle 95 percent of the cases that are brought before us. We dismiss approximately two-thirds of them, and the remaining third that we find meritorious, we reach settlements in something approximating 95 percent. I believe last year it was 96 percent.
Mr. DICKEY. Could that be attributed in any way to the fact that you all are generating cases that do not have merit at the start, and you are finding that these generation centers or these lawsuit centers that you have out there are bringing cases in that don't really have merit?
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Mr. FEINSTEIN. I don't think so, Congressman. I think that the number of cases that we process is approximately the same as it was 10 years ago. If that in fact were the case, that would have been the case for many years.
What I am pointing out is that it hasn't changed. Our settlement rate has gone up somewhat, although the agency has always been quite proud of the high degree of settlement. One of the reasons for the settlement rate is indeed the high caliber of staff and the expertise of the agency, and the respect that the agency has in the communities that it serves, in the regions that it serves. People understand that the agency, because it doesn't find merit in the majority of the cases, that when there is merit and that there is a potential for—that the agency has acted responsibly in finding merit. That is one of the reasons we settle so many cases.
10(J) INJUNCTIONS
Mr. DICKEY. Are you saying that the reduction of the 10(j) injunctions from a high of 32 a month to a low of 4 a month was done because you all had started working with people? Or did it have anything to do with the fact that this committee had passed several different provisions that were aimed at the 10(j) injunction abuses?
Mr. FEINSTEIN. I am not sure what numbers you are referring to, but as I have said to this committee in the past, the initiative in the 10(j) area consisted of the following. One of the things that I observed and was made to understand was that the enforcement of the 10(j) provision of the Act was not consistent throughout the country; that we had a minority of the regions, perhaps a third of the regions, handling—bringing 70 or 80 percent.
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There was no indication that that was based on simply the kinds of cases that were occurring in that region. It did seem to be that there was an inconsistency with how different regions were approaching the enforcement of this important provision of the Act.
Mr. DICKEY. We saw that, yes.
Mr. FEINSTEIN. We implemented a training program, we published a manual. What happened was, we have greater consistency now.
PERCEPTIONS OF BIAS
Mr. DICKEY. It also has something to do with what we did here.
Mr. Gould, is there a chance that there is more litigation because you all have driven management and industry into the awareness and the reality that you all are prejudiced and discriminate against them in any way?
Mr. GOULD. I don't think that is the case, and I don't think that I am prejudiced or discriminatory towards them in any way.
You raised earlier the Beck issue. I have been in the forefront, for instance, of obliging unions to spell out in their collective bargaining agreements precisely what the worker has to do under these union security agreements, and to give the workers information about their Beck rights, and in the Monson decision, and Group Health.
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Just this week I have been urging, on behalf of a majority of the Board, the Solicitor General to file a brief in the Supreme Court taking the same position that I have taken, imposing obligations upon unions in this Beck area. So I don't think anyone, be they on the management or union side, who tells you that I am prejudiced against one side or the other is telling you correctly.
Mr. DICKEY. I don't know if I was a litigant that I would go tell somebody I was Republican, under this thing, since you think it will cripple a major source of funding for the Democratic Party. Don't you think there might be some people on the other side that think you all are just creating this problem because we are Republicans?
Mr. GOULD. As I said to you, the word ''Republican'' could be substituted for ''Democrat'' in terms of the basic rationale that I pursued in my testimony to the California legislature.
As I have said to you also, my approach to Beck in the context of adjudication has been one of balance and fairness which has taken into account the competing interests of unions, employees and employers, and which has thrust greater obligations upon unions to spell out exactly what they are obliged to spell out vis-a-vis the employees that they represent.
You may smile, Congressman Dickey, but——
Mr. DICKEY. I am smiling because of the next thing I was going to say. I wasn't really listening, I am sorry.
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Mr. PORTER. You are not going to be smiling because your time is up.
Mr. DICKEY. I am going to tell him that you are finished with me this year. That is what I am smiling about.
Mr. GOULD. Don't say that.
Mr. HOYER. Mr. Gould, be truthful, now. Be truthful.
Mr. GOULD. I was going to ask him to join me at Blues Alley to hear Ron Holloway play some jazz, because I have had such difficulty getting together with you, Congressman, I thought maybe that was the way to reach you.
Mr. DICKEY. I just found out about that. Bob Brame did make an appointment and did come by. You are certainly welcome, or I will come see you, like I did last time, up at that $8 million mansion.
Mr. GOULD. Whenever, wherever.
Mr. PORTER. Mr. Hoyer, would you like to yield your time to Mr. Dickey?
Mr. HOYER. Can I take a few minutes to think about that?
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Mr. DICKEY. Thank you, Mr. Gould, and Mr. Feinstein.
Mr. GOULD. Thank you.
Mr. FEINSTEIN. Thank you.
Mr. HOYER. I am sure Mr. Dickey wants to hear my questions.
Mr. DICKEY. I am leaving.
MECHANISM TO SOLICIT CASES
Mr. HOYER. For the record, Mr. Feinstein, as Mr. Dickey walks out the door, do you have any mechanism to solicit cases?
Mr. FEINSTEIN. Not that I am aware of.
Mr. HOYER. Do you have any employees that are charged with the responsibility of generating cases?
Mr. FEINSTEIN. No, we don't.
Mr. HOYER. Do you have any option under the statute not to respond to cases that are brought to you?
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Mr. FEINSTEIN. No, we don't. We have to respond.
Mr. HOYER. You can respond by dismissing them?
Mr. FEINSTEIN. Correct.
Mr. HOYER. I presume you can respond by dismissing them at a relatively early stage, but you cannot reject them?
Mr. FEINSTEIN. We have to consider any charge filed, yes.
Mr. HOYER. So any cases considered by the NLRB are in fact cases that were brought to you through the mechanism established by statute?
Mr. FEINSTEIN. That is correct.
Mr. HOYER. You do not solicit businesses or unions to say that we are available and we would love to have your business, and we will charge you $25 per crack?
Mr. FEINSTEIN. We don't do that.
Mr. HOYER. All right. Clearly not. I am not sure I followed my colleague, who I happen to really like, I want everybody to understand that. He is a delightful individual, even though we disagree on some premises underlying his view of the NLRB and mine.
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But there is, I want to make it clear for the record, and Mr. Gould, maybe you want to comment on that, there is no mechanism, budget item, office structure, employee who is assigned the responsibility or does in fact generate cases that appear at your doorstep?
Mr. GOULD. Absolutely. There is nothing whatsoever like that, Congressman Hoyer. There is no mechanism like that. We are the recipient of charges and petitions that are filed with us, and we have no mechanism to recruit and solicit cases.
As I have indicated previously, quite to the contrary, what we are trying to do through the settlement judge program, through the voluntary efforts in the field, is to diminish the amount of litigation that would otherwise tie us and the taxpayers and private parties up, and I think we have been fairly successful in that process.
Mr. HOYER. Mr. Gould, what you have just said is consistent with what Mr. Dickey asked, and I think we all agree. That is, to the extent that we can reduce cost and time for litigants on either side, we will have served the public's interest?
Mr. GOULD. I couldn't agree with that more.
Mr. HOYER. So Mr. Dickey is clearly correct, if we can get parties to voluntarily come to an agreement and compromise on disagreements, everybody wins?
Mr. GOULD. And one of the things, probably the major thread to all the reforms that I have pursued since I have been here, has been to reduce what would otherwise be burdensome and sometimes wasteful litigation. Less appeals are taken from the bench decisions which we put in place with the administrative law judges than are taken with regard to most administrative law judges' decisions. I think this also has served this overall purpose well.
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MEASURES TAKEN TO LOWER CASELOAD
Mr. FEINSTEIN. Mr. Hoyer, if I can simply add, not only do we not solicit cases but we make efforts, and I can point to three specific ones, to try to lower our caseload. We have talked about our information officer program, in which we handle from 150,000 to 200,000 inquiries a year, of which less than 5 percent result in charges. That number has steadily come down through the years. We believe that our IO program has helped to keep our caseload down.
Another undertaking, early in my term as General Counsel we made a determination to defer certain kinds of cases where an alternative remedy outside of the NLRB processing the case might be available. Instead of continuing to process such a case, we have a policy to defer consideration of that case, hopeful that an alternative means can be realized to resolve that case so the agency won't have to consider it.
Finally, we engaged in a process with the Postal Service and the Postal Service union. We had more cases before the agency that were generated out of the Postal Service than any other employer that comes before the agency. We noticed that there were a large number, many hundreds of cases of a particular nature dealing with information requests, and we undertook to get the Postal Service and the Postal Service union together to see if they could work out an agreement whereby, instead of bringing these kinds of cases to us, they can establish an internal mechanism to resolve such cases.
It was a long and difficult process. It is not always easy getting the Postal Service unions and the Postal Service together on a matter, but they acted responsibly, and we pursued with them the development of an ADR, alternative dispute resolution process whereby these kinds of claims would be solved without bringing the case to the agency. An agreement has been in effect now for going on nearly a year, and we believe that it has resulted in a reduction of cases brought before the agency by many hundreds, and indeed eventually we think a couple of thousand cases.
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Mr. HOYER. I am glad to hear that. I think Mr. Dickey and some of our other friends will be glad to hear that as well. They would be even happier if it were a private sector employer with whom we worked closely. If you are going to use an example, my suggestion would be Postal Service, and Postal Service unions are sort of quasi-public, quasi-private organizations. But I think what you have done is good and I assume that is the case.
Mr. Chairman, I thank you for the time.
CONTROVERSIAL NATURE OF NATIONAL LABOR RELATIONS ACT
Mr. Gould, in closing, I do not want to get into the controversy that has arisen with respect to your testimony except to say this, and I am sure you know this, this is a controversial agency because the law itself is controversial. There are very substantial philosophical differences and perspectives with reference to what rights ought to be extended to workers and what protections ought to be given to employers who have put their capital at risk to start a business.
In that context, because of the controversy that surrounds the determinations that your agency makes, it is, therefore, even more important that the specter of fairness and objectivity be maintained. Without saying more, there were a number of us, as you know, who were concerned, I am sure you were concerned in retrospect, about the appearances that have occurred.
Having said that, whatever happens is not related to that. There is a much bigger issue at play here, in that if you don't like a law some way, sometimes the way to get at it is not to repeal it, because you don't have the votes to do that; it is simply to not enforce it.
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Frankly, I make no analogy here, I want to make that clear. There were a lot of very good words and very good protections in a lot of autocratic states. The words were great, both in constitutions and in statutes, but the fact of the matter is, there was no mechanism to enforce them so they were empty rhetoric. It seems to me it is the responsibility of Congress to ensure that the words that it enacts in pursuit of a workplace that is fair to both sides must not be empty. And if they are not to be empty, you have to have the resources to carry out your responsibility.
Thank you very much, Mr. Chairman.
Mr. PORTER. Thank you, Mr. Hoyer. Let me say that what the gentleman from Maryland said earlier about the rights of American workers to organize and to bargain collectively is something that all of us believe in very deeply. This agency is one whose purpose is to allow that process to go forward and be a free and fair one, and to resolve disputes that occur in the course of that in an environment of law instead of violence that we have had in the past in this country.
The independence and credibility of the agency, as I said earlier, is to me very, very important. I think it is to everybody on this committee. While, Mr. Gould, we have obviously had some differences about some of the things that you have said and done in the course of your service, I don't want to end this hearing for you or Mr. Feinstein without saying that you have performed valuable service to the agency and we do appreciate that service to our country.
Mr. GOULD. Thank you, Mr. Chairman. It has been a pleasure and honor for me to serve the United States Government. I have tried to do the best that I can to keep the faith of this statute and agency alive. I am proud of the work that I have been able to do, and I will try to keep on doing it until I leave Washington. I thank you very much for your hearing this afternoon.
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Mr. PORTER. Thank you.
Mr. FEINSTEIN. I wish to thank you as well. You have been very generous in your comments and in your efforts to work with the agency, and it is greatly appreciated.
Mr. PORTER. Thank you. The subcommittee will stand in recess until a special hearing with the Nobel laureates May 20, Wednesday, at 1:30 p.m.
[The following questions were submitted to be answered for the record:]
"The Official Committee record contains additional material here."
TUESDAY, APRIL 28, 1998.
UNITED STATES NATIONAL COMMISSION ON LIBRARIES AND INFORMATION SERVICES
WITNESSES
JEANNE HURLEY SIMON, CHAIRPERSON, U.S. NATIONAL COMMISSION ON LIBRARIES AND INFORMATION SCIENCE
ROBERT S. WILLARD, MEMBER AND ACTING EXECUTIVE DIRECTOR
Mrs. NORTHUP [presiding]. Good afternoon. We are delighted to have this afternoon the National Commission on Libraries and Information Sciences and Mrs. Jeanne Simon who is the Chairperson. I would like to welcome you and tell you as the mother of six children, my husband and I and our six children, they will all be sorry they missed you because going to the library was the thing we did for recreation for years and years. They were the only books we could really afford and we have a deep love and still do. We go every other Monday night when I am home. I want to welcome you and tell you that you have a warm place in my heart and many other Americans.
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Ms. SIMON. That is a very nice way to start out. Thank you, Madam Chairman. I am Jeanne Simon. I am the chairperson of the U.S. National Commission on Libraries and Information Science. My colleague here today is Robert Willard, who is the acting executive director of our commission. I am pleased that you have library cards, you and your six children. I speak for two children and four grandchildren, so I can kind of catch up with you, who are also library users.
I am sorry that Mr. Porter is not here because he comes from the State of Illinois and has always been very, very cordial. I will see him later on, I hope.
We thank you for scheduling this hearing for the U.S. National Commission on Libraries and Information Science. The President's budget for fiscal 1999 includes $1 million for our agency, the same amount appropriated by this Congress for the current fiscal year.
This is my fifth appearance as chairperson before this committee. I should be more at ease than I am, but I am very pleased to discuss with you our past accomplishments, current activities and future plans. And as I pointed out, Bob Willard, appointed by President Clinton in 1994 as a commission member, is now our acting executive director.
I am most grateful for the opportunity to discuss what is admittedly a microscopic amount in terms of the amounts usually discussed by this committee and by the Congress itself. A famous son of Illinois, Senator Everett Dirksen, is supposed to have remarked at one point, a billion here, a billion there, and pretty soon you are talking about real money. But I can assure you that the $1 million entrusted to us is real money both to the American people and to us, and we take pride in the careful and effective manner in which we put it to use on their behalf.
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It can be argued that the public makes a relatively small investment generally in libraries of all types. Yet that investment is paid back many times over in terms of increased literacy, economic efficiency, and general quality of life.
We intend to bring equally powerful leverage to our very small budget. In establishing the commission as a permanent and independent agency, the Congress and the President affirm that library and information services adequate to meet the needs of the American people are essential in order to achieve national goals and to utilize effectively the Nation's educational resources. Since our creation in 1970, our mission has been to develop overall plans for library and information services and to recommend those plans to Congress, the President, to State and local governments.
In the nearly 28-year history of the commission, there has probably not been a period as exciting and complex as that which faces us today, nor has the need for a policy body like NCLIS been as acute. The widespread availability of information and communications services through the Internet casts a whole new light on the term ''library and information services adequate to meet the needs of the people.''
Meanwhile, new funding mechanisms such as the Universal Services Fund implemented under the Telecommunications Act of 1996 and major new philanthropic efforts are bringing significant technology enhancements into a host of libraries serving disadvantaged users.
Throughout these developments, complex issues such as privacy, intellectual property rights, censorship and so on, on both the national and international level, continue to confound policymakers.
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Change is also taking place in the membership and staff of the commission. I note with sadness the death last summer of our fellow commissioner, Gary Sudduth of Minnesota. We miss him deeply. I am happy to report, however, that two prominent leaders in the library and information fields, Jose-Marie Griffiths, a renowned information scientist and chief information officer at the University of Michigan, and Rebecca Bingham of Louisville, Kentucky, the retired director of libraries for a large urban school district and former president of the American Association of School Librarians, have joined our commission and are bringing valuable new perspectives. Martha Gould of Reno, Nevada, our commission vice chairman, has been appointed to a second term, and I am pleased to report that President Clinton has nominated me to a second term also.
We have also experienced changes within our very small staff. Peter Young, John Lorenz, Jane Williams, and Mary Alice Hedge, in short our entire professional staff, departed in less than one year. Retirements and opportunities elsewhere accounted for that. This development presents us with some difficulties but it also provides us a wonderful opportunity for renewal. The commission earlier this month in Kansas City, Missouri, unanimously approved the appointment of our fellow commissioner, Bob Willard, to the position of executive director. He is already moving to bring on board excellent replacements for our professional staff, and I know that Bob will devote appropriate attention to improving the agency's own information technology and administrative processes.
PARTNERSHIPS WITH OTHER ORGANIZATIONS
I would like to spend a few moments discussing activities funded by transfers from other agencies. Such activities are familiar to members of this committee and fully in accordance with our enabling statute. The first is our ongoing cooperative program with the Department of Education's National Center for Education Statistics (NCES) which collects library statistics. Recently NCLIS engaged a consultant to perform an assessment of the library statistics program. The results of that effort, already in hand, will inform us as we move to engage a new coordinator and restructure the program to include greater NCLIS involvement in support of the joint activities.
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A second and continuing program funded by the State Department is the library and information science aspect of the International Contributions for Scientific, Educational and Cultural Activities known as ICSECA and their funding. This is funded at $100,000 in 1997. The activity allows the support of a modest number of programs that reach beyond our borders and help us to fulfill our broadened mandate to focus on international programs.
I also want to mention an effort currently underway whereby NCLIS will survey individuals and organizations in order to catalog, as much as we can, all U.S. involvement in international library and information science programs.
Finally, we are planning for the year 2001 when this Nation will host library professionals from throughout the world at the International Federation of Library Associations annual convention in Boston.
Third is the effort we are undertaking on behalf of the Government Printing Office and the Congressional Joint Committee on Printing. As GPO relies more on electronic information to make its publications available to citizens, an essential question concerns the mediums and formats that should be used to ensure ease of use, security, and permanent accessibility. NCLIS will survey a number of agencies and examine a broad variety of publications already, or planned to be, converted to electronic form. This unprecedented collection of information will not only guide the future publishing plans of the entire Federal Government, it will also prepare the way for NCLIS' deeper reexamination of a host of public policy issues surrounding access to and use of government information in electronic form.
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ACTION PLAN
In January the commission adopted an action plan that continued its emphasis on themes that have long driven the activities of the commission.
I would like to conclude my remarks by recounting the three primary goals of the plan and their implications for the upcoming fiscal year. First, we focus on the national and global information infrastructure. In this context we will continue our data collection efforts regarding the penetration of Internet activity into the Nation's public libraries and we may expand study into other types of libraries. Our landmark research in 1994 and 1996 revealed a rapid growth from 21 percent to 45 percent penetration in public libraries. In 1997, in partnership with the American Library Association—and I am holding up a copy of this marvelous survey and I love the color—the latest survey showed continued growth, with more than 72 percent public libraries connected to the Internet.
It is also in the context of this goal that we propose to deal with one of the thorniest issues affecting public libraries today: how to continue the traditional library value of unlimited access to information while also assuring that children using electronic networks are not the victims of pornography and predatory practices.
We also plan to continue monitoring the implementation of funding under the universal services program of the FCC. Also we will address issues regarding preferential postal rates for book shipments and legislative initiatives to modify current copyright law.
The second goal of our plan is concern with the Library Services and Technology Act, LSTA. In this area the cooperative library statistics program with NCES that I described earlier will play a key role. We hope to be able to measure impacts arriving from the congressionally restructured program to provide Federal aid to libraries and, where appropriate, make recommendations to Congress and the President as well as to the director of the Institute of Museum and Library Services on the workings of this program.
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Our third and final goal addresses Federal Government information products and services. The GPO study project I described earlier will be the commission's principal effort under this goal. We are also mindful of the current effort to revise the sections of Title 44 of the U.S. Code dealing with government printing, publishing, and dissemination and stand ready to provide policy advice on this subject if the legislative process calls for such assistance.
As you can see, Madam Chairman, for a microagency we have a macroagenda. On behalf of all the commissioners, I can tell you that we are excited and we are challenged by our vital role in policy development in this Information Age. We know there is a lot to do, and with proper resources I think we can do it. I urge you to support the President's request.
My colleague Bob and I will be happy to answer any questions that you may have. I ask that the entire written testimony be entered into the record of this hearing.
[The prepared statement follows:]
"The Official Committee record contains additional material here."
Mrs. NORTHUP. Thank you very much. Mrs. Simon, one of the commission's major responsibilities is oversight of the new library authorization that is now funded through an independent agency in this bill. What is the status of this transition? I wondered if you are satisfied with this new system.
Ms. SIMON. I am entirely satisfied because it is still in its primary stages; but so far, so good. We were talking this morning with Diane Frankel, director of the IMLS, and we feel that our cooperation and collegiality has worked out well. We looked at the guidelines for the programs that they have developed for library services and offered advice, when asked for it. We also believe that some of our commissioners will be listening to the panel discussions, the peer review groups when they come in, when the grants are being reviewed by the panels. We will not be contributing; we will not be asking questions, but we will see what the process is like and we will be better able the next time around to provide more information on possible guidelines.
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Mr. WILLARD. I would just like to add that the presence of the cooperative statistics program allows us to develop some very important statistics that measure the impact of the program. That is why that program, which is done basically with the Department of Education money but with very much the involvement of the commissioners and staff, is a critical program for measuring how well that legislation is attaining what the Congress wanted it to do.
Mrs. NORTHUP. I would like to ask you about the national grants now being made jointly to museums. Specifically, you know, of course, that we had to fend off an attempt by the Senate to earmark all of those funds for a handful of specific projects. I wondered how the competition is proceeding.
Ms. SIMON. That is part of the museum part. We are not privy to that. The joint programs were earmarked. I am not very happy about that. What the Senate does is something that we cannot control. We are hoping in the future it will be more open.
Mrs. NORTHUP. But am I not right that the library grants are now going, they are now actually on a competitive basis, the national grants for the libraries?
Ms. SIMON. Yes, the leadership grants are on a competitive basis. We will be sitting in on the peer review panels but only as listeners, not as contributing to it, not asking questions or participating in it. We will be seeing what the process is. Following that, we may come back to our commission meeting and discuss the process and perhaps offer some advice to the director of the institute.
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Mrs. NORTHUP. Am I right in thinking that April 1st was the cutoff deadline for those grants and now you are already into the process?
Ms. SIMON. The panels will be meeting in July, the end of July. They are coming to Washington, and I think there will be three sessions, four, to review these leadership grants applications.
Mr. WILLARD. It should be pointed out that the commission is not involved in the evaluation of the grants. That is done through a peer review process administered by IMLS. But because we have a statutorily assigned role of providing policy advice, we will be acting as observers to the peer review process so that subsequently when we provide advice both to IMLS and to Congress and the executive, we will have that experience in our background.
Mrs. NORTHUP. Okay. Let me ask you a little bit more about the advent of all the electronic media and what your thoughts are about how that is going to change libraries or what effect it will have on libraries. I think that we are interested, in particular, as to whether or not libraries will become electronic repositories or whether they will continue to be the repository of books, the things we do for recreation.
Ms. SIMON. We feel that at least where this transition period—we are going to have books always and we will have electronic services as well. There is a fear out there, though, that libraries may become virtual. I have heard this expressed from academic librarians as well as public librarians. I can't believe this will ever, ever happen. But there are some people out there who feel that they will never be able to pick up a book or read to their children again. This simply cannot be. But the effect of electronic access and electronic information is indeed very important, and it changes all the time. We are continually trying to keep up with the whole process.
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Mrs. NORTHUP. From a more personal note, my feeling always was that libraries had sort of a drudgery side—that is, when a teacher assigned a research project to me—and that they had the great recreational side of sort of a primary source of new books, what you did when you had your own choice. I guess as I watch my children, my suspicion is that there is at least more primary research that will go on from computer terminals.
Ms. SIMON. Exactly.
Mrs. NORTHUP. But the sort of recreational social benefit of a library will be just as important as ever.
Ms. SIMON. I totally agree with you. The library will always be a meeting place for groups, for people who are seeking information, seeking books, seeking ways to improve their way of living, seeking medical advice and job opportunities, farmers checking up on crop reports. There are so many things that libraries do that I cannot even comprehend all of it.
I think, like you, I grew up thinking that the library research was important, but the mystery novels and so on were also very important. Libraries today are absolutely wonderful, the university of the common man. They provide just about everything. We are pleased to see that they are growing in importance. I can testify that a small library in Royalton, Illinois got together a budget of $10,000 for the entire year just to keep that library open for three days a week. It is that kind of spirit that keeps libraries moving.
Mrs. NORTHUP. Thank you. Mrs. Simon, we have focused a lot of energy on accountability and measuring results. Last year we discussed how you might conceptualize a performance measurement system for the Institute of Museum and Library Services programs. At that time your agency was just getting started. I wondered what the status of that initiative is and can you give us some specific examples of how the agency will measure outcomes in the library programs?
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Ms. SIMON. As I understand it from the director of library services at the Institute for Museum and Library Services, Mrs. Betsy Sywetz, they are in the process of collecting data from State libraries to see how this is working. And the evaluation will indeed be very important to all of us to understand what it means. As far as I know—I have not seen a copy of that final report, maybe it is still in the process—but I could find out for you and definitely let you know later on if you would care to put it that way. For myself, I know that I would care to know how it is going because this is a very important part of our legislation.
Mrs. NORTHUP. And certainly, Mrs. Simon, we have found that as agencies focus on what their outcomes are going to be, their goals, and put them in concrete measurable terms, that it does seem to make a difference in reaching those goals, so the committee is very interested in knowing.
Ms. SIMON. We will be pleased to provide you information as soon as it is available.
[CLERK'S NOTE:—The information was not yet available for the hearing record.]
Mrs. NORTHUP. Thank you. How much do you expect to receive in non-appropriated revenue for fiscal year 1998 and fiscal year 1999?
Mr. WILLARD. Those numbers are still being worked out. They are a collaborative or a negotiation process with three different agencies. With regard to the GPO study, that one is firm. We spent $25,000 last fiscal year. We have $175,000 of current year money that is committed. The project will probably extend beyond the current year but it is fully funded in fiscal year 1998 money. We received $100,000 from the State Department for the ICSECA funds last year. We are in negotiations with them right now. It looks like we will probably be somewhere between 75,000 and 100,000 but that still is not nailed down.
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The library statistics program, because of significant changes—two—one being that the Department of Education has moved from relying on internal resources to contracting out in terms of logistical support, so running the meetings, doing the follow up, that has been contracted out. Secondly, after a library career that extended 57, 53 years, John Lorenz, who used to be deputy librarian at the Library of Congress, has finally retired and that left a vacancy in a very critical position as statistics coordinator. As the testimony indicated, we are subjective, we already have done a very good consultant review of how to best manage that statistical program. We are very close to implementing that with a change in my situation now, where I am about to become the executive director. I plan to engage in conversations with the commissioner at NCES and his people to really pin that down. From memory I cannot recall what the number is. I think it is about 40,000 that is on the books this year for the statistical program. I will submit that for the record.
CLERK'S NOTE.—The agency provided the following explanation: ''The amount transferred from NCES to NCLIS in FY 1998, is $66,778.00.''
Mr. WILLARD. The GPO, the State Department and the Department of Education statistics looks like it will be in the neighborhood of about 300,000.
Mrs. NORTHUP. Okay. Thank you. I know you touched on this briefly, but I wondered if your agency has a Year 2000 problem and if you are going to make it.
Ms. SIMON. I certainly hope we are going to make it. The deadline will be reached, I am sure. The Year 2000 brings up the Millennium Project and that we are deeply involved in. Of course the Boston Convention of the International Federation in 2001 will also be important to NCLIS, but if you mean the transformation of the digital, I am not the expert on that. But, Bob, I hope you are. Somebody better be.
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Mrs. NORTHUP. I mean the computer accommodation of the Year 2000.
Mr. WILLARD. We have it as much as anyone who relies on personal computers does. But it is not significant. We do not have any major systems that any customers rely on, any citizens rely on. I think we have been staying in touch with Year 2000 coordinating activity out of OMB, but we really are not touched by it.
Mrs. NORTHUP. What about the libraries that you work with around the country? Are they anticipating any traumatic or difficult problems with the Year 2000 conversion?
Mr. WILLARD. It is not an issue that we have dealt with but it is a very good point and it is something that we should look into. I have paid a certain amount of attention to the Federal Government's problems with that but it really covers everything. People say you better not even be on an elevator on New Year's Eve in the year 1999. I cannot answer the question but I appreciate it, and we will do a little exploration.
Mrs. NORTHUP. And the last—finally, has the commission lapsed or carried over any funds in the last three fiscal years?
Ms. SIMON. No, it has not.
Mrs. NORTHUP. Okay. Again, I want to thank you for being here today. I particularly appreciate hearing what you are doing and how viable our libraries are.
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Ms. SIMON. Thank you for your attention and for your questions, Mrs. Northup.
Mrs. NORTHUP. Thank you.
The committee will stand in brief recess.
[The following questions were submitted to be answerd for the record:]
"The Official Committee record contains additional material here."
Thursday, April 23, 1998.
NATIONAL COUNCIL ON DISABILITY
WITNESS
MARCA BRISTO, CHAIRPERSON
Introduction of Witnesses
Mr. PORTER. The subcommittee will come to order. We continue our hearings on the fiscal year 1999 budget and are pleased to welcome Marca Bristo, Chairperson of the National Council on Disability.
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Ms. BRISTO. Thank you, Mr. Chairman. It is a great pleasure to be here with you once again. I am joined today by our Executive Director, Ethel Briggs, and our Director of Policy, Andrew Imparato. Mr. Imparato joins us from the other side of the Hill, from Senator Harkins' office.
Mr. PORTER. We will forgive him. [Laughter.]
Ms. BRISTO. In any case, we have submitted for the record a full written testimony, and I thought perhaps I could move us along a little if I moved into some of the highlights both of last year's accomplishments and the priorities that we propose for this year.
Opening Statement
First, we are extremely grateful for the support we have received from this Committee in prior years, and we believe that our small budget, which has not seen an increase for the past four years, has been used in a very significant way to enhance the rights and opportunities for people with disabilities.
Given our congressional authority to review and analyze broad issues of disability policy to both the Congress and the President, the Council has undertaken several major initiatives last year.
ACHIEVING INDEPENDENCE
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Last time I was here, I reported to you on a summit that we held in 1996 wherein we released the report called Achieving Independence. This report, which I have brought with me today, summarized major recommendations from 300 diverse disability community leaders.
One of the major reasons for us doing this summit was to galvanize the Council's thinking and strategic direction, and it is important to point out that we draw our leadership and our direction from the work of this document.
One of the main recommendations from this document was to pursue the strengthening of the enforcement of the civil rights laws that we have worked so hard, with your support, to achieve.
CIVIL RIGHTS MONITORING
During the last couple years, we have commissioned a major study to look at these civil rights laws and how they are being enforced, and we look forward to the release during the coming fiscal year of a report that will look at the Air Carrier Access Act, the Fair Housing Amendments Act, followed immediately by the Individuals With Disabilities Act and the Americans With Disabilities Act.
EMPLOYMENT TASK FORCE
This year we have also issued, as required in the statute, our policy progress report, which has been distributed widely on the Hill. These two documents, our policy progress report and our Achieving Independence, led us to pursue vigorously an effort to establish within the Federal Government a high priority on eradicating the unemployment rate of folks with disabilities. This unemployment rate is currently at 70 percent of people who are disabled who are not working. We have all been working to eradicate this for many years. We felt that it needed a jump-start, and one of the recommendations in Achieving Independence was to establish that the President should issue an Executive Order directing the Secretary of Labor to promote the employment of people with disabilities, and to establish employment goals for people with disabilities, to be reached by the year 2006.
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Yesterday, I am very happy to report that the first meeting of this task force occurred. I have to say, in all my years of working on disability, it was the first time I have seen Cabinet members together in an interagency way, focusing their attention in a vigorous and diligent way on this particular issue.
As we heard during the task force proceedings yesterday, we have an enormous problem in this area. We are spending upwards of $70,000,000 to maintain people with disabilities in a state of unwanted dependence, and we are committed, through the creation of this task force, to begin a serious effort with what the Administration can do to begin to untangle this.
REMOVING BARRIERS TO WORK
The Council recognizes that the Administration is but part of the equation, and we also, during the last fiscal year, convened a series of field hearings around the country to begin to better understand what are the barriers to work that people with disabilities face, and what can be done to eradicate those.
We issued another report last year called Removing Barriers to Work: Action Proposals for the 105th Congress and Beyond, as a result of these field hearings, and I am really happy to say that this has been the impetus for both an administrative initiative pursuing something called a Ticket for Independence by the Social Security Administration, one of the recommendations contained in this report, and also through the evolution of bipartisan legislative initiatives which are currently on the table that are beginning to take a serious look at many of the issues both raised in this report and the solutions proposed.
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Mr. PORTER. Ms. Bristo, may I interrupt just for a moment. Ms. Northup, are you going to be able to come back after these votes? If so, I would ask that you go now and come back and assume the chair.
Ms. NORTHUP. Yes, Mr. Chairman.
Mr. PORTER. Please proceed.
Ms. BRISTO. We have also continued our work in a variety of other areas. I will only touch on those very briefly, in the interest of time.
TECHNOLOGY
Our technology initiative has continued this year. Last year, I reported to you a series of reports and activities the Council had been engaged in. Most importantly, we have just returned from an important meeting in Seattle with the Chairman of Microsoft, Bill Gates, who made a very powerful public statement bringing his whole corporation together to begin to look at the issues of people with disabilities.
More and more and more we hear about how the technology revolution is changing the world and opening opportunities for people with disabilities. Very little attention is given to the fact that for many disabled people technology is closing doors to opportunity, particularly people who are blind and visually impaired.
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To that end, this year we also issued a report on Multimedia Access. As businesses, schools, and the rest of the world are beginning to turn their attention to the use of computers in a multimedia manner, people who are blind and visually impaired are being significantly left behind. There is considerable work to be done in this area, and we hope that Congress will really focus some attention to this. There is more in the way of legislation that needs to occur.
YOUTH LEADERSHIP
We were also very successful last year in holding the first ever Youth Leadership Development meeting where we brought young people from all around America together to begin to focus on what are the issues that young people with disabilities see as we enter the new millennium, and to begin the process of understanding how we can strengthen their skills to participate in the democratic process. All too often, those leadership opportunities are not open to disabled people and, very significantly, as I think you know, we have begun to lose many of the leaders to premature death associated with disability.
So we believe that the Council's efforts to turn the Nation's attention to our young people is an important leadership role we can play. As a result of this, we have engaged the support of several other agencies who helped promote and support this. We are now working to try to push this concept down, out into the private sector. We are happy to report that several of the national organizations are beginning a process of outreach and sponsoring scholarships to young people. We will be again convening this this year.
INTERNATIONAL
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Another area that relates very much to one of the presentations you heard from a prior panel today is the Council's work in the international arena. Though our work last year did not take us beyond the borders of the United States, it has considerably continued nonetheless.
In Achieving Independence, we focused some priority attention on this area. We were very happy to see Secretary Albright last year address the first international meeting of Women With Disabilities where she announced her Agency's commitment to looking at issues such as Embassy access, foreign assistance and whether and how it reaches people with disabilities. We were even more happy to hear her highlight our recommendations in her speech and see the results of those recommendations form new policies at AID to target some of their attention towards international assistance for people with disabilities.
MINORITY AND RURAL CONCERNS
Finally, the Council, having heard at our summit and from a variety of other sources, about the lack of attention given to minority persons with disabilities and people who are living in rural communities, we have convened at gatherings with over 100 leaders who represent people of color and people from rural communities, to begin to get a better handle on what the particular issues there are. We will continue those efforts over the coming year.
CLOSING STATEMENT
Our budget request for this year does include a modest increase, which is the first such requested increase in the last four years, and our work will continue to build in the priority areas which I have identified. Although we have specified this more fully in our written report, we anticipate that our civil rights project will continue in two significant ways. Number one, we will turn our attention to two civil rights arenas that we didn't look at during the last segments of our work, Title V of the Rehabilitation Act, which looks at the Government and how it operates, and the Civil Rights of Institutionalized Persons Act, that looks at the civil rights of people with disabilities who are currently in institutions.
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Secondly, as we consolidate the findings from our prior work, we anticipate a need for follow-up in those important areas, and we are considering the possibility of convening a forum to look at what attention should go as we go forward.
I mentioned earlier that our youth activities will continue this year. We want to build upon the convening that we did with the young people in two ways: One, to articulate some policy goals from young people through the convening at the summit which will occur in June; and, number two, to begin to look at how can the Council facilitate integrating young people with disabilities both into Government leadership development operations such as internships and fellowships, but also in the private sector. We will begin a concerted effort to try to bring a multiagency approach to this important area.
Finally, our work in the area of return-to-work and employment will continue, although in a slightly different way. I sit on the newly created Task Force for Employment of People With Disabilities, and I hope to bring to that role a conscience, a grassroots link from people with disabilities into the work of that body. Number two, we hope to continue our work as the legislative proposals evolve that are currently working their way through the Congress, to provide guidance and insight and a voice from a disability perspective.
There are several other issues I have not addressed in the interest of time. I would certainly welcome any questions that you may have.
[The prepared statement follows:]
"The Official Committee record contains additional material here."
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Mr. PORTER. Ms. Bristo, thank you very much for your very fine opening statement. We are, unfortunately—and I apologize for this—going to be interrupted by two votes, and it will be necessary for us to stand in recess briefly. Do you have time to stay and we can come back?
Ms. BRISTO. Certainly.
Mr. PORTER. It is going to be probably 25 minutes or so. We will therefore stand in recess for these votes, and then resume.
[Recess.]
REMOVING BARRIERS TO WORK
Ms. NORTHUP [now presiding]. We are back in order. I am Anne Northup, and I will chair the meeting until Mr. Porter gets back.
I have several questions and, because we are a little fragmented, they may be repetitive.
I would like to return to the question of Social Security and SSI. I guess you were talking about the disability question. I have had a number of people in the disabled community, and actually the Department of Rehabilitation in Kentucky bring to my attention the disincentive to work due to the elimination of benefits. I just wondered if you had brought this to the attention of Social Security, and whether you have proposed some sort of remedy.
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I think that, if I could just editorialize a little bit, I think it is the strong feeling of this Congress that SSI should not be awarded easily, and that you should be truly disabled in order to receive it. But for those that are disabled, every opportunity to live as productive and independent life as possible should be reinforced by everything we can do through the Social Security disability payments. And I just wondered if you had had a chance to focus on that problem.
Ms. BRISTO. In fact, this has been one of the main priorities of the Council during the last year. I did mention earlier, but we convened a gathering of about 40 disability leaders who are really expert in these issues about a year and a half ago. Out of that, we formulated some recommendations for change, and then we took those recommendations to 13 different communities to make sure that we were on the right track, and that resulted in the formulation of a report from the Council that was followed up by a congressional briefing, and we have subsequently met both with Commissioner Apfel as well as with people over here. There are now two legislative vehicles that are being proposed. The Council believes that they are both good steps in the right direction. We would have liked to see them go further in some respects.
You were absolutely correct to point out that having the opportunity to work is an essential component of economic self-sufficiency, one of the promises of the Americans With Disabilities Act, and we believe that it is all of our collective responsibility to untangle the web that keeps people with disabilities in a state of usually unwanted dependency.
Ms. NORTHUP. Well, I am eager to see what those legislative vehicles are, and hope that we can take action on that. As I said, I think that that is extremely important, especially when Americans are reassured that only those that are truly disabled are awarded SSI. They will be very enthusiastic about ensuring that those opportunities can be combined with work, so that people derive the most benefits from their efforts rather than the least.
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ACCESSIBILITY FOR PEOPLE WHO ARE BLIND
I represent Louisville, Kentucky, and recently I have become aware of the fact that it is now identified as the area that has the highest concentration of the blind community. My husband and I have been very involved in the blind community over the years, and would like to invite you to possibly come to Louisville to visit and to hold hearings there on the obstacles faced by people who are blind.
REHABILITATION
I want to thank you for responding to my concerns last year. You may remember that I was concerned about requiring states to combine their Department of Rehabilitation with their Department of the Blind, and I really felt like you were very responsive to those concerns, and I want to thank you and extend an invitation to visit.
Ms. BRISTO. Thank you very much. I did not attend all 13 of our hearings, but Ethel reminds me that one of our hearings on Return-to-Work was, in fact, in Louisville. However, I would love to take you personally up on your offer to visit.
We are now, as I mentioned, turning our attention more also to the issues of minorities with disabilities and people living in rural communities, and we would like to stay in touch with your office as these projects unfold.
Ms. NORTHUP. One of the things that Kentucky has tried to do in providing the best network of services is to provide services all over the state. But the most advanced and comprehensive service systems are best when they are grouped in certain areas. Louisville is, for Kentucky, one of those centers. There is really a lot of work to combine all rehabilitative services, but also the American Printing House for the Blind and Kentucky Industries for the Blind are all located in that community, and so there is a lot of experience and a lot of camaraderie, and I feel like you would gain a lot.
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TECHNOLOGY
Ms. BRISTO. Thank you. I hope you will take a moment to look at our most recent report about Access to Multimedia Technology, inasmuch as you expressed a particular interest in issues of persons who are blind. This is the wave of the future, and many blind people are being left behind because we are not gaining the public's attention on the impact that the changes of the technology revolution are having on people who are blind and visually impaired.
Ms. NORTHUP. Well, I was going to ask you about that, actually, and I look forward to seeing that report because I do believe that technology is the best link for many people to a job and to self-sufficiency. And I was interested in what sort of efforts your department was identifying and directing resources to.
In particular, I would just like to bring up one example that the blind community has raised to me. There are a lot of ATM machines now that we are all aware use the braille keypads. Braille is often really not helpful unless we have a way to actually know what is on the screen through braille. That is the sort of thing that strikes me that somebody who is blind can pick out really fast and the rest of us might overlook.
Ms. BRISTO. Yes. And I might point out, from our perspective, that that is the tip of the iceberg. Since technology drives so many different things, and the underlying problem with graphical user interface for people who are blind—we are seeing it in ATMs. We cannot even imagine how technology three generations from now will look at many, many other areas of our life.
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Specifically to your question of what we are doing in this regard, we have for sometime been seeking guidance from folks with disabilities who have expertise in technology through an advisory body to the Council called Tech Watch. Tech Watch, on their request, we convened a representative from the Department of Justice to begin some dialogue as to what are the relevant civil rights laws that may be covering this issue.
There is clear intent in the Americans With Disabilities Act to not allow discrimination in a variety of areas, obviously, and we are really looking for every possibility to tackle this issue.
Another thing we have done, we began a process some time ago to get the Federal Government to utilize the existing tool of another civil rights component called Section 508 of the Rehabilitation Act. That section prohibits the Government from purchasing equipment that is used by employees, if that equipment will discriminate against the Government's employees. And we have been asserting that statute with GSA and other partners in the Federal Government. We are really happy to see this year that the Department of Education has released some guidelines regarding how their agency can comply with Section 508.
We are seeing them as model guidelines that we hope will get the support, in part, through the Presidential Task Force on Employment of People With Disabilities so that other Federal Agencies will use the buying power of the Government to help the industry move in the right direction in this regard.
Ms. NORTHUP. Well, if I may suggest, besides the input of the disabled community that is affected and empowered by technology, you might also consider bringing in people from the development industry, the electronics industry, because they also know what the capability of machines are, and electronics, but may not know what the problem is. The people who know what the problems are might be able to ask for exact and more advanced remedies if the technology community could be included.
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Ms. BRISTO. Earlier I referenced the meeting that Bill Gates and Microsoft convened recently for their corporation to dialogue with the disability community, though that is just one example. I believe we have been in communication with Sun Micro Systems and some others as well, so we have not left that stone unturned either.
Ms. NORTHUP. Okay. Well, I want to thank you for your visit today. I am going to just recess the committee briefly. I know that Mr. Porter is coming back anyway, but I have a vote, and I thank you for being with us today.
[Recess.]
PRESIDENT'S COMMITTEE ON EMPLOYMENT OF PEOPLE WITH DISABILITIES
Mr. PORTER [now presiding]. The subcommittee will come to order. Again, I apologize, Ms. Bristo. Sometimes the number of agencies is confusing. Can you tell us about the President's Committee on the Employment of People with Disabilities? Do you interact with that group?
Ms. BRISTO. Yes, of course, very much so. The President's Committee was established by Executive Order a long time ago, to promote the employment of people with disabilities and to look for opportunities in the private sector to facilitate that.
A great deal of the President's Committee's work, therefore, is targeted outside the Government to promote existing policies and to, in essence, market people with disabilities and create linkages with the business community.
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TASK FORCE ON EMPLOYMENT
Mr. PORTER. Now, you talked about, and we have been approached about, reallocating funding for a National Task Force on the Employment of Adults with Disabilities.
Ms. BRISTO. Yes.
Mr. PORTER. And you mentioned it. Were you consulted about the establishment of this task force?
Ms. BRISTO. Actually, it was our recommendation. We feel immensely proud of this. This is something that came from the grassroots during our meeting. I guess the best way I can characterize this to you, Mr. Chairman, we believe that the Nation's proper goal around people with disabilities is to really pursue the values laid out by all of you in the Americans With Disabilities Act, a portion of which is to remove the discriminatory barriers. However, one priority in the ADA was that of economic self-sufficiency. With 70 percent unemployment of people with disabilities right now, costing the taxpayers an enormous amount of money, it is a national problem that calls out for a mega solution.
Part of the problem is many people still do not think disabled people can work. Some of those attitudes are possessed even within our Government. This is something that requires a campaign on the stature of the Say No to Drugs campaign.
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It is a travesty that in this greatest country in the world where we have visitors coming from all over the world to look at the important strides we have made in this area, that we have not figured this out. We know, therefore, that a concentrated amount of energy in this area at the highest level of Government can make a big difference.
Mr. PORTER. How does that differ, the National Task Force, differ from the President's Committee? In other words, why do we need a new task force if we have a committee that is focused on the same thing?
Ms. BRISTO. Well, as I said to you, the President's Committee does not have policy authority. It does not have any charge or ability to permeate the Federal Agencies. They cannot go over to HHS or the Department of Labor and say, ''You need to do this''. Their focus is primarily external, and they are not policymaking.
If we could have seen that done, if the President's Committee had that authority and that clout, we believe it would have been done already.
I have to tell you, yesterday as I sat with Secretary Shalala, Secretary Herman, and many of the other Cabinet agencies, they were hearing information about people with disabilities at a level of detail that I am not sure we have seen in our country before. The level of commitment was evident in the room. The President charged his Cabinet with tasking people, resources, time, commitment and energy to solve this problem, and I am very optimistic.
I also look at the dollar amount that we are investing in this, and when I juxtapose it against the dollar amount that we are spending not tackling the problem, it seems to me to be a modest investment.
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Mr. PORTER. Now, the National Task Force is not authorized, is it?
Ms. BRISTO. The National Task Force is established through Executive Order.
Mr. PORTER. No, that is the President's Committee, is it not?
Ms. BRISTO. No.
Mr. PORTER. Both of them are created by Executive Order.
Ms. BRISTO. There are different Executive Orders. The Executive Order that establishes the National Task Force was signed by President Clinton on March 13 of this year.
Mr. PORTER. If we have a National Task Force, do we still need a President's Committee?
Ms. BRISTO. Absolutely, because the focus of the National Task Force is to look within Government, how can the Government, under existing law, get its agencies—
Mr. PORTER. All right, that is within Government, you are saying?
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Ms. BRISTO. That is within Government.
Mr. PORTER. And the President's Committee, you said, deals with the private sector.
Ms. BRISTO. That is right, and they are providing an invaluable resource. Their job accommodation network, for example, is called upon by corporations all over America to provide help in figuring out how do we provide reasonable accommodations to the employees that we want to employ.
BUDGET INCREASE
Mr. PORTER. Now, Ms. Bristo, you described this as a modest increase, but we computed it at something over 30 percent, which usually is not modest, but what do you need new additional funding for? What is it going to be spent for? Is it salaries, or travel, or printing?
Ms. BRISTO. Some of it goes into the natural cost-of-living expenses that go with administering any agency. However, the lion's share of it will go into our contractual line and will support our youth leadership initiative.
REAUTHORIZATION OF THE REHABILITATION ACT
Mr. PORTER. Last year you listed reauthorization of the Rehabilitation Act as a top priority for you. Could you tell us the status of the reauthorization?
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Ms. BRISTO. I understand that it is still sitting in Congress. Can you advise a little more detail on that, Andy?
Mr. IMPARATO. Right now, the Senate has passed through the Labor Committee version of the reauthorization, and it is stuck there. It is attached to the broader workforce bill, and there are problems with the workforce bill in the Senate. So, as far as we know, that is where it is right now, and our hope is that those problems are getting worked out and the reauthorization will proceed.
STRATEGIC PLANNING
Mr. PORTER. All right. Ms. Bristo, last year you testified that you were engaged in a five-year strategic planning process related to the Government Performance and Results Act. What is the status of your strategic plan, and can you give us kind of a brief summary or outline of it?
Ms. BRISTO. The strategic plan was completed on target and submitted. It basically focuses our attention in the priority areas, some of which we have described here today. It laid out for us a broad stroke of where the Council's energy should go.
I have a copy of it here, and I believe we have submitted it for the record. I would be happy to do that, if you do not have it.
Mr. PORTER. That is fine.
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Ms. BRISTO. I will say it was a challenging thing to develop for a policy advisory body. However, we did complete it, and the consultant that we worked with scratched his head quite a bit in trying to make this tool work for an entity of our type.
YEAR 2000
Mr. PORTER. Ms. Bristo, we had a full hearing with our largest departments and agencies last week on the Y2K matter, and we wonder if you can tell us as to whether you have any problem with your computer systems and will have any problem in the year 2000.
Ms. BRISTO. I think I would like to say no. We think we are on top of it, but I would like to defer to our Executive Director who has been managing that.
Mr. PORTER. We will hold her responsible. [Laughter.]
Ms. BRIGGS. We feel right now our computer system, we will not have a problem with the year 2000, and basically for some of those support services like payroll, we contract with the General Services Administration, which was one of the top agencies in terms of the leadership in the year 2000 turnover. So we think we are ready.
INTERACTION WITH OTHER ORGANIZATIONS
Mr. PORTER. Thank you. Ms. Bristo, last year I asked you whether you work with other organizations that are funded in our bill, for instance, Recording for the Blind and the American Printing House for the Blind. Do you have any ongoing interaction with these agencies?
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Ms. BRISTO. Not in any active manner, that I am aware of. Ethel?
Ms. BRIGGS. No.
Ms. BRISTO. Not those specific agencies. We certainly have an active role with quite a few of the other entities that are funded through your committee.
Mr. PORTER. Why would you not have interaction with those agencies? Seems to me sort of a natural thing.
Ms. BRISTO. Well, I guess I can just honestly say I do not know. Their scope of work and our scope of work have not crossed paths in any significant way.
Mr. IMPARATO. I think our Multimedia Report would be of interest to those agencies in terms of access for blind folks to technology, so it may be that they are more aware of what we are doing than we are of what they are doing.
Mr. PORTER. They are actually providing services to blind people, but then you are interested not only in employment of disabled people, but services to them as well. So it seems to me that it would be the kind of thing that you might run into one another.
Why is technology shutting the doors on blind people? Recording for the Blind, for example, is using digital and voice synthesizing technology to make books much more accessible to blind people. Instead of listening to a tape end-to-end and having to rewind to reread passages, a blind person can use a keyboard and a voice synthesizer to jump immediately to any point in the text they wish. Why is it cutting them off?
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Ms. BRISTO. I want to be clear that not everyone with visual impairment experiences the same level of difficulty, and also there are many advances in the technological area that have really opened many, many doors.
The particular issue I was focused on was as industry has moved from a text-based system to a graphical user interface system or a symbol system which requires pointers to access, the technology that would convert those images in a manner that blind users could have come back to them through their voice mechanisms and their computers have not been keeping pace with each other. And as I understand it, the people who are in the development side of the industry are equally frustrated by the problem because just as soon as they solve one problem, the next generation of product is there. Critical to this, clearly, is having people who are users, customers, blind people, involved in the testing and the product development, and that is one thing that the Council's efforts have been reasonably successful in getting at least within the Microsoft network, a much higher commitment in their staffing ratio of people who are affected by these systems, but the problem still continues.
Mr. PORTER. Well, you just answered question ten. We have several more questions that we will ask you to answer for the record and, obviously, we thank you for the fine job you are doing and for your appearance here today.
Ms. BRISTO. Thank you.
Mr. PORTER. Thank you so much.
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The subcommittee will stand in recess until 10:00 a.m., Tuesday.
[The following questions were submitted to be answered for the record:
Offset folios 1141 to 1196 Insert here
Tuesday, April 21, 1998.
MEDICARE PAYMENT ADVISORY COMMISSION
WITNESS
GAIL R. WILENSKY, CHAIR OF THE MEDICARE PAYMENT ADVISORY COMMISSION
MURRAY N. ROSS, THE COMMISSION'S EXECUTIVE DIRECTOR
INTRODUCTION OF WITNESSES
Mr. PORTER. The subcommittee will come to order.
We continue our hearings on the fiscal year 1999 budget, and we are pleased to welcome Dr. Gail Wilensky, the Chair of the Medicare Payment Advisory Commission. Dr. Wilensky, why don't you proceed with your statement and then we will have a few questions.
Ms. WILENSKY. Thank you, Mr. Chairman. I am pleased to be here. I have with me Murray Ross, who is our Commission's new Executive Director. We are here to talk very briefly about the work for fiscal year 1999 and also our appropriation request.
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OPENING STATEMENT
As you know, after a couple of false starts, we were able to have the 2 predecessor commissions, the Physician Payment Review Commission and the Prospective Payment Assessment Commission put together. That was part of the Balanced Budget Act. It formally occurred October 1st. We have 15 commissioners rather than the 17 and 13 that had previously existed. We have brought the staffs together. We have actually moved finally at the end of February into a single new office so that we can work more efficiently together.
And we have gotten out our first two mandated reports, one of which was to the Appropriations Committee in the House and the Senate. It was a report on Urban Critical Access Hospitals. It came out in December. And, also, our March 1st report, which is the first of the two recurring reports that we are obligated to provide the Congress. The March 1st report is generally a payment report, and then there is a June 1st report, which we are busily trying to finish.
Our final commission meeting is this week, on Thursday and Friday, to give the recommendations and information for that. That is a broader report. It deals with issues about access and liability and the relationship between Medicare and the rest of the health care system.
We are very pleased with the quality of the first reports that we have delivered to the Congress. It is a little different than what we have done as a report in the past. In the past, both PPRC and ProPAC, made specific recommendations about payments under Medicare. In this case, because there was so much included in the Balanced Budget Act, we are mainly assessing the reasonableness of the payments and payment reductions that were a part of the Balanced Budget Act. In general, we thought that the payment levels that were included in the Balanced Budget Act for the various groups providing services to the seniors appear to be reasonable, although this is something we will obviously monitor each year to see whether or not that continues.
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We are also going to be devoting time to looking at the issue as to whether Medicare pays similar amounts for services that are provided in different settings and, if they are not the same amounts, whether the intentions in terms of signals that are being sent is, in fact, desirable. People get very similar services in outpatient versus physicians' offices, and sometimes these incentives are unintended in terms of the messages that we send.
APPROPRIATIONS REQUEST
These are obviously broad issues with which we deal, but in terms of the appropriation, we are requesting a continuation of the same level that we had requested last year. It is approximately $7 million. In my formal testimony, there is an allocation shown of that $7 million and substantial detail that we have provided in the normal course of our appropriations. While in many ways we hope that having the same level to some extent speaks for itself, we do want to be sure that it is noted that we are requesting to spend the money somewhat differently, in large part because our first year both had a number of expenses that were unusual but also we were forced into doing things somewhat differently than we normally would like to do them.
We had some expenses associated with bringing the staffs together and also getting ourselves in our new facility, but we were also forced to rely more on some contract work because of transition bumpiness problems, with staff leaving and our being in the position of now doing some aggressive recruiting, particularly for some of our experienced senior staff who took this transition time to look for other opportunities around Washington. There is a very high premium on skilled and experienced health policy analysts, and we are having to work hard to replace some of those that we have unwittingly donated to other parts of Washington.
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So while our total allocation is the same, we will be spending more on labor next year relative to this year, but less on some of the contract work which we have had to do on the outside this year in order to get our two reports out.
We are comfortable that having gotten through the reduction that occurred in the year before our last, and settled down with that as a spending level, that as you and others had predicted, a single commission does allow us to operate more efficiently. And we are comfortable that it was a wise decision and have gotten through the worst of our transition and will be able to provide the same kinds of high-quality reports as requested by various Members of Congress, plus our usual mandated reports, in a timely and high-quality way.
Let me stop there with my prepared statement and answer any questions you might have.
[The prepared statement follows:]
"The Official Committee record contains additional material here."
MERGER ISSUES
Mr. PORTER. Thank you, Dr. Wilensky. Have you noticed any disadvantage in combining the two agencies into one?
Ms. WILENSKY. There were several short-term disadvantages, none that I hope will have a permanent effect. The staff that we rely on were unsettled by the changes. They were trying to put together a single report, operating out of two different offices, and, as I mentioned, we lost a number of senior experienced researchers who had substantial institutional knowledge.
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And I think it is not uncommon to have that kind of change occur. But when you take two commissions that had been unusually stable, especially for Washington—had had a single executive director in the one case and a deputy who became executive director in the other case—from its inception, it is very unusual for those of us who have otherwise been involved in government, but I think it was a little unsettling. But I think it was a short-term cost that will, in the end, continue to be justified. At a substantive level, it made an enormous amount of sense.
We don't have quite the depth of commissioner talent in some areas. The 15 commissioners is a little short, particularly with only a minority being able to represent the provider community. I initially had thought fewer rather than more commissioners was a good idea, because they can get a little unruly if their numbers grow, but one or two additional commissioners, I think, actually might allow us to reflect the many, many, many interests in the $178 billion program that we call Medicare. It is a lot of interests that we need to hear from, and I think we lost some talent among the commissioners that we had had.
But the commissioners, actually, came together very quickly and are a very good group of commissioners. So it is only off by maybe one or two.
BUDGET CATEGORY CHANGES
Mr. PORTER. In your budget justification, it appears that you have realized efficiencies in areas such as printing, supplies, and equipment. However, why is there no change in the budget request for the line items related to travel, computer programming, and main frame computer?
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Ms. WILENSKY. Well, I will leave the mainframe computer for last, because that is a little more difficult issue, at least for me to respond to.
With regard to the travel, that is mainly the travel of the commissioners. And the commissioners are who they are, and they can be from other places. If anything, we have actually slightly more nonEast Coast people at the interest of the appointing parties, and so that travel more or less stays with the number of commissioners. It was anticipated it would be 15.
There is a little bit of staff travel, but there is not very much. So the travel line was set up the year before last on the basis that we would have a combined commission of 15 members, and everybody estimated that line pretty well.
Again, the printing—it was printing or main frame that you wanted?
Mr. PORTER. Computer programming and then main frame.
Ms. WILENSKY. The programming, in large part, is a question of how much of the enormity of the information that we need to be assessing as a result of BBA we are actually able to do. That is not something that ought to go down, frankly, in the future.
The Congress made more changes in Medicare in BBA than probably the 33 years previous to that, and rightly have directed MedPAC to report on the effects of these changes in terms of participation by physicians and access for the seniors, the effects of attempting to do risk assessment and risk adjustment.
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So there is an enormous amount of work to be done in terms of programming. And we tend to do most of our programming not by contract outside of the group. We actually have some contractual work with a software analyst group that help do it, but we don't typically—this year is a little exception—we don't farm out the entire research budget. So it is a question of being able to actually do the research.
And I think the same is more or less true in terms of computing expenses, although, to be perfectly honest, we will have a better assessment of exactly what are our computer costs when we have been in existence more than six months.
MEDICARE REIMBURSEMENT POLICIES
Mr. PORTER. While we only have jurisdiction over your administrative budget, can I ask you a question about policy?
Ms. WILENSKY. The most interesting part.
Mr. PORTER. Often, people will say that there is no sense to what HCFA decides in terms of reimbursement devices or pharmaceuticals, and that the whole process needs to be looked at and have some sense made of it.
This is fairly harsh criticism. As director of HCFA, and now of the commission, can you tell me whether you agree with that or whether you see a need for changes to be made to make decisions as to what HCFA pays for and what it doesn't pay for?
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Ms. WILENSKY. Well, I think there is a lot of truth to it, and it goes to the very heart of how we run Medicare now. Medicare is basically an administered pricing program. Another way to call that is it relies on price controls to try to slow down spending. And for the most part it doesn't even do it in a way that really produces savings, because it doesn't have a spending limit, except for the physician part where the fee increases are tied to total spending on physician care.
As an economist, I don't think that is a terrific way to run a program. But if you choose to run a program through administrative pricing, you shouldn't be surprised if you get some arbitrary pricing. It makes economists remember why relying on markets has some advantages. The relative value scale is attempting to price 9,000 codes—that is a lot—and trying to get them to make some sense with each other relative to each other is very difficult.
We are still basically using the framework of the 1983 DRG payment system. We have updated them for inflation and we have added a dozen or 20 new codes, but basically the relative prices that were constructed in 1983 are the relative prices that exist in 1998 DRGs. And, undoubtedly, the real relative prices of what it takes to do a hospital stay have changed significantly.
But in order to try to get around that problem, it is not really an issue of directing HCFA to be more sensible, because that goes along with the territory of having administrative pricing. I think there are better ways to redesign Medicare. Personally, I would rather have the government have a premium contribution role, more like it does with the Federal employees' health care plan, and be responsible for making sure that plans deliver the benefits that they promise, and that they don't discriminate, and they provide good information to seniors, or the government provides good information to seniors, and not try to be in the business of deciding what price a particular service or a particular piece of equipment should get and whether it's appropriate that it be delivered and whether the quality is adequate, because I think that's a hopeless job for the Federal Government to do.
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But as long as the bulk of Medicare is traditional fee-for-service medicine, and it is 87 percent that way now, and according to CBO even in another 10 years will be predominantly fee-for-service, HCFA will have all those jobs and they will continue to do them as best they can but with an arbitrary component.
Mr. PORTER. Why, when we have capitated alternatives available, will it continue to be so heavily in fee for service?
Ms. WILENSKY. For several reasons. Probably the biggest one—well, the most important one for an economist who looks at financial incentives—is that financial incentives neither encourage nor reward seniors to make the most cost-efficient plan. In order to do that, you would want to have the payment by the government be the same, no matter what plan is chosen.
And now there is a very big difference between what the government spends in traditional Medicare and what may be spent in the capitation programs. And that is going to grow over time because there are a bunch of rules that got included in the Balanced Budget Act about how fast the capitation program should grow.
So part of the reason is that the kind of financial incentives that might have seniors look more seriously at their options are not present because of the way the government pays.
Up until now, the options that have been available to seniors have been quite limited. Unlike the under-65 market where it is flexible, and getting the advantage of a low premium if you stay in the plan but being able to opt out and go to anybody outside the plan, other kinds of more flexible networks have not generally been available to seniors. So the people who had the least history of using capitated plans had the most rigid options offered to them.
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Now, it's gotten better, or it will begin to get better as these get phased in over time. But it does raise the final issue, which is that for a lot of the Medicare population, it is a less common way of receiving care, although they are now clearly outside the mainstream. In the mid-1960s, a lot of effort was made to make Medicare look like the health care everybody else got. And, in fact, it is what happened.
We sometimes describe Medicare as being vintage 1965 Blue Cross/Blue Shield, because that is more or less what it is, both in terms of the benefits and the way that providers are paid. So all of those have come together to keep that small but growing.
PREMIUM CONTRIBUTIONS
Mr. PORTER. As an economist, you said, I think, you would provide premium subsidies or premium——
Ms. WILENSKY. Contributions.
Mr. PORTER. Contributions. In other words, you would basically give every eligible person a voucher and they could go buy in the marketplace, except I guess that the government would designate a minimum package that had to be provided.
Ms. WILENSKY. And provide—I always get a little nervous.
Mr. PORTER. Provide some ombudsman services for giving people some help in making those choices.
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Ms. WILENSKY. And that is very important. Vouchers got a bad name in the 1980s, so I usually shy away from them. But the idea is to have plans that meet some government set of approval, the way they do for the Federal employees plan, to make sure that people have information they need—and that is already a requirement of the Balanced Budget Act—maybe even information like the Consumer Checkbook, which is very good, that Federal employees are able to obtain—and to then have people choose the kind of plan that suits them.
Personally, I would have that contribution be higher for low-income people and smaller for high-income people. But that would be against what we have had in the past in terms of the social insurance program. That is a decision Congress can make independently.
Mr. PORTER. You would means test it, to some extent?
Ms. WILENSKY. I would.
Mr. PORTER. Don't we really have this kind of system when you say, as seniors, you can choose among these options and we will pay? In effect, they have a voucher to go to any of the capitated programs.
Ms. WILENSKY. Yes, it is——
Mr. PORTER. Isn't it the same thing?
Ms. WILENSKY. Except you are missing a really important component, and that is if you stay in the more expensive a la carte fee-for-service world, Medicare will pay that, and that has no natural limits.
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Mr. PORTER. But on part of that you have a premium.
Ms. WILENSKY. You have a premium anyway. It is only a question of whether or not the HMOs choose to invoke the premium. You do have the premium. And in the past, you not only got to save the premium frequently, but most people had zero or low monthly payments.
Now, that might start to change, because with putting a floor under payments to make sure that cappings didn't get less than $365 per senior per month, we might have some redistribution going on that seniors would be asked to pay some premium, although far less than the Medigap, which runs about $1,200 or $1,300 a year.
But the real way to change what it is that seniors would see and therefore probably choose, is to have a premium contribution that is the same, adjusted for health status. If someone takes a fee-for-service plan or a network plan or a Kaiser or other staff model HMO, it ought to be the same payment, given their age and sex. In many ways, more or less like the Federal employees. It is not a perfect plan, but it is pretty close to what I am describing.
Mr. PORTER. And would you have any restrictions on what providers can be assembled to compete? In other words, could doctors and hospitals provide a PPO?
Ms. WILENSKY. Right. Yes
Mr. PORTER. And compete with an insurance company, HMO, or any others?
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Ms. WILENSKY. Absolutely. I think the doctors and hospitals would find managing financial risk harder than they think, but they ought to have the opportunity to try. And, in fact, with the new Medicare rules, once HCFA issues the regulations, they will have the opportunity; although, as HCFA always does things, with a big regulatory hand of government on top of it.
HCFA has a PPO, a network where you can opt out. But if you do not opt out and go to a doctor outside the network, almost all the rules that apply under Medicare anyway still exist for that doctor. So it is a PPO, but it is a very funny kind of PPO. And one of the questions is might we have a few less regulations on some of these network plans.
Mr. PORTER. And how much is HCFA going to listen to the commission in regard to all these matters?
Ms. WILENSKY. We will see. Nancy Min Deparle, the new administrator, has at least indicated an interest on several occasions of my opinion. She has a very nice style about her. I think there will be a better relationship than sometimes exists. That relationship has been sometimes good and sometimes rocky. We are going to be meeting in the next week with HCFA to try to establish that.
Basically, though, we assume that even when HCFA won't, the Congress frequently will listen to these commissions, and it would be better if both did.
Mr. PORTER. Well, we are delighted that you still have your hand officially in this really most important subject for the American people, and we hope that HCFA will take your advice. Because, very frankly, Dr. Wilensky, I was saying the same thing—and maybe I got it from you at the time. I can remember back in 1992 when we began really discussing how to organize health care and the Clinton plan was put out there—we were saying why don't we just empower our senior citizens to make their own judgments in the marketplace and move government largely out of the micromanagement that the President wanted to get us deeper into.
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Ms. WILENSKY. They are very price sensitive, and if given some information, they and their helpers, their children and family members, can help make good decisions for them.
Mr. PORTER. Oh, surely. And they network and talk to one another so much that they determine where the good care comes and where it doesn't come very quickly. And I think it would work very well.
Well, we have a lot of questions for the record. I am sorry, Mrs. Northup.
Mrs. NORTHUP. I was so quiet, you didn't see me.
Mr. PORTER. You snuck in there.
HOME HEALTH CARE
Mrs. NORTHUP. That is fine. I am so glad to hear what you have to say and have such appreciation of your perspective on these issues, and I have to share the Chairman's interest in how much this administration and HCFA and Medicare authorities listen to your advice, because I think we are all eager for out-of-the box new paradigms on approaching these questions. Sort of what the relationship is, is of great interest to me.
I do want to ask you a couple of very specific questions. First of all, I want to ask about home health; in particular, the venipuncture rule. I have gotten really fewer people that have had home health and no longer have it than probably the anger that comes from the home health companies, visiting nurses, organizations that are so angry about the new rules. And I just wondered if you are all having any second thoughts; whether or not you think we drew the line at the wrong place.
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Ms. WILENSKY. Four months ago, I wouldn't have been able to explain clearly what the problem was, but because I did a number of call-in radio shows between Christmas and New Years, and that was the single most frequently asked question, I did find out more about it.
I don't think it was a wrong decision. Let me explain it, at least as I understand it, what the decision was and why I believe it was appropriate.
HCFA and Medicare will continue to cover the services for people who need a needle stick for venipuncture. What was happening before is that if you needed that alone done, you not only had Medicare pay for it, but you were then eligible to receive every home care benefit that was available, whether or not you had anything else that would justify that.
Mrs. NORTHUP. Can I interrupt?
Ms. WILENSKY. That is at least my understanding. Yes.
Mrs. NORTHUP. When you say HCFA will still pay for the needle stick, do you mean they will pay for it in your home, or if you go to the doctor?
Ms. WILENSKY. No, no. My understanding is that the actual venipuncture visit will be continued to be paid for by Medicare wherever provided for, including in the home. What it will no longer do is cover unrelated home care visits, and this was something that was happening.
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People who had nothing else that would otherwise qualify them to receive home care, by virtue of needing the venipuncture would then qualify for all of home care, which as you probably know has no coinsurance and basically unlimited use as long as you meet the home-bound definition and are certified by a doctor.
So what HCFA did—through administrative ruling, it was not something, anything the commission had anything to do about, but I actually believe this was a reasonable decision—is to say we will continue to pay for that event, but we will not automatically make you therefore eligible for any and all home care. If you have something else that would qualify you other than needing the venipuncture, then you continue to be.
Mrs. NORTHUP. Well, is the problem that the home health companies will not take a patient that just needs a needle stick because it is not profitable?
Ms. WILENSKY. No; I think they are just unhappy there were a lot of other services they were providing, some of which may well have had some benefit but don't meet the requirements of the definition to qualify for home care.
The home care, as you know, has grown explosively in this decade.
Mrs. NORTHUP. Yes.
Ms. WILENSKY. Both the number of people served and the number of visits. And if you have people who are older and frailer, there is a line between whether somebody could benefit by having somebody drop in and take a look and provide some services and whether they meet what at least nominally ought to have been pretty strict requirements as being home bound and needing certain kinds of skilled care.
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What I think has happened through a number of avenues, this just being one of them, is that people who previously would never have qualified became eligible by virtue of something, and in this case having a real medical need, that is the venipuncture, but not otherwise having something that would qualify them for home care. And I think that there really—if we want to redefine the need criteria for home care, Congress ought to do that explicitly. I think this was just slipping through the back door.
LONG-TERM CARE
Mrs. NORTHUP. Let me now broaden the question about home health care and tie it to long-term health care.
It strikes me one of the arguments people make for home health care is that it helps keep people from having to go into nursing homes. I certainly understand that as being a good objective. But the fact is that Medicare does not cover for long-term care.
Ms. WILENSKY. It covers 100 visits. And those are skilled nursing requirements, not chronic care that is not requiring a skilled component.
Mrs. NORTHUP. So are you telling me that if somebody needs a needle prick, and maybe more services, that Medicare will pay for it, but at the end of 100 visits it is—
Ms. WILENSKY. No; the needle prick is part of home care. On that, there is no limit. In addition to home care, there is a skilled nursing facility that has 100 visits.
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Let me explain what people usually get, because it will clarify the kinds of people. If you have a stroke and need some rehabilitation, if you have a hip replacement or a knee replacement and you need some rehabilitative services, those are the kinds of people that frequently will go for 30 or 50 days to a nursing home, have this kind of skill; or, they may go to a rehab hospital, have this; then sometimes they go from there to home care, and then they may or may not continue.
Mrs. NORTHUP. But my point is this.
Ms. WILENSKY. Does it really save money?
Mrs. NORTHUP. I feel like if you walked out on the street today and you stopped 25 people that were 30 years old or 40 years old and say when you are 85, if you need nursing home care, who do you think is going to pay for it, they would say Medicare. And then what happens is their mother or they themselves get to that age where they need to go into a nursing home and they are surprised to find out that there is no long-term care associated with Medicare.
And so politically you have candidates or people that say Medicare ought to pay for long-term care. But, of course, there is no money in Medicare. That was never the insurance policy you paid into. And so one of the ways to access care and also not be in a nursing home, where your Medicare doesn't cover it, is to have in-home care.
I would say in terms of quality of life, and staying out of a nursing home is a very valuable objective, and most of us would want our moms to be home, but if there is a way to get Medicare to pay for it, that is better than paying for it ourselves if we don't have long-term care. So home health was a way to have those people that were too fragile to live without any care to actually not have to go into a nursing home.
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And a lot of the stories we are hearing seem to be maybe people that are medically fragile, and I just sort of wondered if we are having trouble overall drawing the line between what is long-term care and what is the care that Medicare is supposed to provide.
Ms. WILENSKY. Well, you have hit on some issues that definitely are going on. People do prefer staying out of institutions, although sometimes if they have multiple problems, it is very difficult to care for them any other place.
And there is little doubt in my mind that one of the reasons that home care has increased so dramatically is people who might otherwise have found themselves in a chronic care facility are finding themselves on home care. States have been quite interested in that, since they were paying the Medicaid for them to have skilled nursing facilities. And if they get home care provided, the Federal Government pays all of that rather than only 55 percent of that.
The experience has shown that while it is intellectually appealing to think that you could prevent a lot of nursing home visits by having a lot of home care, in fact it is very hard to predict who is going to otherwise really be at risk for a nursing home. So our experience hasn't been very good that providing home care keeps people out of nursing homes. But maybe for some of the people it is a wash.
The question of what we really want in that Medicare package is a very difficult question, and it needs to be reexamined. I spoke this morning before the Bipartisan Commission on Medicare. That is clearly an issue they are grappling with, as well they should.
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Medicare not only pays doctors in terms of vintage 1965 Blue Cross/Blue Shield, but the benefit package is vintage Blue Cross/Blue Shield of 1965 as well. So the whole configuration—and where pharmaceutical coverage outside of the hospital is, because we do so much more out of the hospital than we used to, where it belongs, where nursing home belongs.
My view is if we continue making discrete payments a la carte, we will just spend more money. The only way to try to capture those savings is through some kind of a premium contribution support, a capitated support, where people can pick different kinds of plans. It would be better if they included long-term care in the plan, because you have the best ability to provide care in the most sensible way if it covers the whole continuum. But if we already pay home care separately and skilled nursing separately and hospital separately and physician separately, we will not see any savings.
Mrs. NORTHUP. That was where I was finally going with this, is that we have never figured out what happens at the end of Medicare. More people are living beyond the Medicare. In other words, you may have gone in the hospital, had a heart attack, had Medicare pay for it, and maybe you didn't live another year, or the stroke or whatever. Now, more and more people are living later and later, and it seems to me that we did offer last year some, some, a little bit of tax credits for long-term care. But if we don't leverage money, private money——
Ms. WILENSKY. Right.
Mrs. NORTHUP. Because there is no public money for long-term care, unless we dramatically increase what everybody's contribution is. If we don't leverage private money in, so that I have an incentive to get out there and get a long-term care policy, so that if I am one of the people—so that those people who don't use it pay for those people who do need it—we are going to sink the Medicare and the Medicaid budget.
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When you start talking about a smorgasbord or a cafeteria of plans, if long-term care were included in that, you really could cut out a lot of the sort of decisions that we are finding torturously difficult today.
Ms. WILENSKY. I agree, and I think encouraging it, on the same footing as acute care insurance, is important.
You have to be careful. We don't need to duplicate all of the mistakes we have made in terms of how we have encouraged insurance, but we do need to encourage people to be fiscally prudent and take care of their own long-term care needs. Before 1990, there really were not any options around. That is no longer true. And the Portability Act started that, and making it a more rational integration with the rest of insurance would be a good idea.
Mrs. NORTHUP. Okay. I know I went over my time.
Mr. PORTER. You can have all the time you want. Do you have other questions?
Mrs. NORTHUP. I have one more question.
Mr. PORTER. Fine.
MANAGED CARE
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Mrs. NORTHUP. One more area. I want to ask you about managed care. We are looking at PARCA legislation and other legislation that is being proposed, and being from Kentucky and having been through health care reform that drove our prices through the ceiling, I am very concerned about the popularity of that.
I do know that you all are conducting a study right now that is due out in June, and I wondered if you could give us any sort of a preview.
Ms. WILENSKY. Let me make a plea first. There is so much change going on right now that you need to be really careful not to stop the evolutionary changes that are going on with regulation. People need information. They need to know what they are buying into. And any way that you can help make sure that people have good information about the plans they are buying, whatever we know about outcomes, whatever we know about consumer satisfaction, that is terrific. That would help them.
I am very worried that in the name of protecting consumers, we will basically just make these plans very rigid. So much of what has happened in the last 20 years is because we are finding we can do things out of the hospital that we couldn't do before because of technological changes. We can do things in the home that we used to have to do in a physician's office or the hospital.
We are finding that because people don't like it if they can't see a specialist, the HMOs that are growing are the ones that have open access programs or that are finding different ways to pay the specialist versus the primary care physician so they can make their enrollees happy. Otherwise, they are not likely to be with them very long. The market really seems to be in enormous change, and the Congress can help make sure people have good information. But I worry that some of the other requirements don't do anything to improve quality and could do a lot to increase cost or to rigidify the system.
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Medicare may provide some interesting insights because of the requirements that were in the Balanced Budget Act to provide information to seniors starting in the fall. It is going to be hard. HCFA is really struggling, and they probably aren't going to do so terrific a job initially, but we need to remember relative to what. We have had seniors choosing Medigap plans and HMOs for 35 years and HCFA hasn't helped them one whit. Whatever you found out, sometimes there was a good aging administration in your area, or your church was really active, but in terms of formal information, seniors have managed for 35 years and the world hasn't stopped.
I say that only because the first year this information will be better than they have had, but not perfect. And we shouldn't judge it relative to what we like but relative to where we have been. So I just hope that you won't——
Mrs. NORTHUP. I agree that the worst thing we could do is to solidify sort of what we have now and stop the evolution. Because I do think there are some policies that are coming in some States that are very creative in both containing costs and giving choices and giving—where people have some bit of choice, not just of who serves them but exactly what the payment scheme is and so forth.
But if the report that comes out on HMOs and Medicare is very negative about HMOs' management, it could feed this frenzy that is going on on both sides of the aisle and at the other end of Pennsylvania Avenue.
Ms. WILENSKY. I don't think there will be anything in our report that would suggest that, although I will certainly go back to look. Right now we simply, among other things, don't know very much. What we have seen in the past, in work that the Physician Payment Review Commission did, is that for the most part seniors who were in managed care were satisfied. They got a lot of extra benefits at very little cost: preventive care and vision care and mainly outpatient pharmacy care. And if they weren't happy, it was a mistake, I believe, but the fact is in 30 days they could be out and into something else.
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So there is very little reason to believe, I think, that we have significant problems with HMOs per se. What we do need to do is figure out how to better adjust payments to acknowledge that small numbers of people use a lot of health care resources because they are very sick. That is always true; true in this country and every other country; true for the elderly and true for the under 65.
And this process of being able to figure out how to risk adjust is a difficult problem and we have to start that. The Secretary is due to report next spring and to implement changes the year after. I am not aware, though, of anything that would suggest we are seeing something that ought to make us try to stop the forward progress. I am more concerned that the Congress not do something that stops this forward progress.
If the Congress really wanted to respond to what I sometimes hear as the most serious complaint, that an individual doesn't like the plan that their employer is providing, they might think about whether they would ever let people deduct their health care premiums if they chose something other than their employer-sponsored plan. You can't both take the exclusion of having your employer sponsor a plan and deduct your own plan, but you might have it as an alternative and let people really vote with their feet if they didn't like what their employer offered.
That is a little more aggressive than Congress may wish to be at the moment, but there is some legislation already being raised.
Mrs. NORTHUP. Another example would be to allow private institutions, whether associations, maybe Chambers of Commerce, to collectively contract for like a Federal employees smorgasbord, so a small business that doesn't have the capacity to negotiate eight different policies for just 60 employees, for example, could offer those employees their purchasing alliances.
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My worry with purchasing alliances is we will wind up with government being the purchasing alliance instead of private contracting. But if we allowed associations to be that and provide them the ERISA protections that we provide right now, we could probably offer pretty affordable insurance through company policies
too.
Mr. PORTER. Thank you, Mrs. Northup.
Dr. Wilensky, why was 30 days a mistake?
Ms. WILENSKY. It encourages bad behavior on the part of both people in the plans. When you go into a capitation program, the way you gain any advantage is by having the plan make a commitment to you because they have got you as a patient, and you make a commitment to the plan. Being able to move in and out in 30 days exacerbates risk selection.
What we know is that while almost everybody who chooses a capitated plan stays there, usually in their original plan, occasionally they go to another plan, especially if they run through their prescription drug limit. But some of the people, the 3 or 4 percent of the people who leave, tend to have very high expenditures right when they leave.
Now we don't know whether they knew they were leaving and decided to go back into a la carte fee-for-service medicine where they could pick anyone and anyplace they wanted, as much home care as they wanted, get that all done and then go back; or whether they might have been nudged out by their plans. But the 30 day in and out, which nobody in this room has, exacerbates the kind of behavior that we would like to discourage.
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Mr. PORTER. So you would keep them in whatever plan they choose for a year.
Ms. WILENSKY. A year. I think, in fact, where the Congress moved, which was slowly over 4 or 5 years to an annual enrollment, giving seniors the first 60 days to change their mind is not unreasonable. I wish it happened 5 years ago instead of 5 years from now, but I think that is a much more sensible approach. And for most people it will be the approach they always knew; that is they chose a health care program for a year.
Mr. PORTER. I think that is probably right. Although I think the authorizers were concerned, they didn't want to—they wanted people to experience alternatives without feeling captured by them; in other words, failing to take the opportunity to go to an alternative plan because they felt they would have to stay a year and if they were dissatisfied, there was nothing they could do about it.
Ms. WILENSKY. And I think that is a legitimate concern. And there also needs to be some protection so that if a plan makes a wholesale change in their primary care providers, that ought to be a justification for allowing people to make a change. You ought to have some rules that if a plan does X and Y during the course of the year, then that automatically opens up until you get back into the rest of the cycle.
And I understand, especially for those seniors who haven't been as familiar with capitated plans, it was a way to try to encourage them. But it takes the single most troubling part of Medicare right now, risk selection, and it worsens it. So while I appreciate your concern, on balance I will be glad when we get into the annual enrollment.
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RISK ADJUSTMENT
Mr. PORTER. How do you risk adjust?
Ms. WILENSKY. Well.
Mr. PORTER. Isn't the concept you have to take anybody, regardless of what the risk is, if they want to enroll?
Ms. WILENSKY. That is really an open enrollment, in terms of who comes in. The risk adjustment has to do with the payments; how you pay plans.
Right now the way we pay plans is it depends on the spending in your area, in certain age and sex categories. And while age predicts some health care use—older people do use more health care—it isn't nearly the predictor that you would like. And so what people are proposing, although there is a lot of debate about how to exactly do this, is to use some health status measures and/or some diagnoses combinations.
Mr. PORTER. Of the region where—
Ms. WILENSKY. No; of the people actually in the plan.
Mr. PORTER. In the plan? Oh.
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Ms. WILENSKY. So that if you happen to be unlucky as a plan and get lots of cancer patients or AIDS patients, that you would get an added payment; or if you had an unusually small number of sick patients, you would get a reduction from your average payment.
And you don't have to predict whether you are going to be sick this year or I am going to be sick this year, which is good because we will never be able to do that; what you really agree to do is look at the distribution of high spenders and high users in a plan, whether that follows a distribution that you would expect in a sizable population. And to the extent that there are health risks or diagnoses that are well correlated to be high expenditures, that is really what you have to capture. You don't want to look at just the high spenders, because that would encourage plans to spend a lot of money, but to look at some measure that is correlated with the need for a lot of medical resources that is not the dollars spent.
There is a fair amount of work that HCFA has been sponsoring, and some work that PPRC had been doing to try to push that along, and initially we won't be as good as ultimately we will become, but what is really important is to capture the 5 or 10 percent of the high spenders, because that's where all the money is. And you want to make sure that if they are systematically in traditional Medicare or in certain health care plans, that they get some acknowledgment. If they are mostly in traditional Medicare, you will spend more if you give the average payment to HMOs. If they start congregating in certain plans, for whatever reason—because the plan has the world's best endocrinologists or cancer specialists—if that plan doesn't invest some extra money, it will be put out of business and it will probably find a way to shed its expertise.
So it is really to try to acknowledge that relatively small numbers of individuals account for high spending, and we need to adjust for that. They need to know they will get some adjustment after the fact if that happens to them; otherwise you will encourage them as a plan to behave in bad ways, and you will not give the kind of care to sick people that you want.
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Mr. PORTER. I can see that, except I can see also that is a kind of a guarantee that normal markets don't make.
Ms. WILENSKY. Well, you can make an adjustment to the payment—I mean, what you need to have is a pool, like a catastrophic risk pool, that you can use to provide added payments to plans that end up with unusually sick people. Otherwise, what you will do is reward plans that aren't more efficient but are successful at swinging out or shooing away sick people.
Mr. PORTER. I see the reason why it is there.
Ms. WILENSKY. But it actually messes up the market if you don't acknowledge that. Now, to the extent it is just random, just happens in one year, and you have a big population, that is really not a problem. It becomes a problem when it is predictable and recurrent as opposed to random and unpredictable.
Mr. PORTER. So this will be part of your advice?
Ms. WILENSKY. We have been looking at this issue for a number of years. We will continue to look at it. It is difficult. There are several people on the commission—I have a lot of interest but only some expertise. There are a couple of commissioners who have a lot of expertise in this area and some staff as well, and we will continue to both observe what HCFA does and assess critically what they are doing.
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Conclusion
Mr. PORTER. Well, it is always fascinating to talk with you, and we planned to get you out of here in 15 minutes, but, obviously, we have spent a whole hour talking with you. We very much appreciate getting the chance to do so and really are happy that you are there and providing the kind of expertise and advice that HCFA definitely needs.
Ms. WILENSKY. Thank you for your support in making it one commission. I think that it was a good decision, and I know that you and your staff were very helpful in that role. So thank you.
Mr. PORTER. Thank you. The subcommittee will stand in recess until 10:00 a.m. tomorrow.
[The following questions were submitted to be answered for the record:]
"The Official Committee record contains additional material here."
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