STATEMENT OF MICHAEL MICCICHE, DIRECTOR, CALIFORNIA DEPARTMENT OF COMMUNITY SERVICES AND DEVELOPMENT, SACRAMENTO, CALIFORNIA *

STATEMENT OF CARLTON S. MITCHELL, DEPUTY COMMISSIONER FOR COMMUNITY DEVELOPMENT, DEPARTMENT OF YOUTH AND COMMUNITY DEVELOPMENT, THE CITY OF NEW YORK *

STATEMENT OF LLOYD THRONE, DIRCTOR, REDWOOD COMMUNITY ACTION AGENCY, EUREKA, CALIFORNIA *

STATEMENT OF MELISSA GLATZ, FORMER PROGRAM PARTICIPANT, CARLISLE, PENNSYLVANIA *

STATEMENT OF STEVEN MUSSELWHITE, PRESIDENT, MUSSELWHITE AND ASSOCIATES, AND CHAIRMAN, TOTAL ACTION AGAINST POVERTY COMMUNITY ACTION PROGRAM, ROANOKE, VIRGINIA *

STATEMENT OF MARY NELSON, PRESIDENT, BETHEL NEW LIFE COMMUNITY DEVELOPMENT CORPORATION, CHICAGO, ILLINOIS *

STATEMENT OF MARY DUPONT, DIRECTOR, WOMEN'S CENTER FOR ECONOMIC OPTIONS, YWCA OF NEW CASTLE COUNTY, WILMINGTON, DELAWARE, ACCOMPANIED BY BARTHENIA ROCHESTER, PROGRAM PARTICIPANT *

STATEMENT OF JANICE McCREE, PRESIDENT, LANGSTON RESIDENT COUNCIL, WASHINGTON, DC *

STATEMENT OF JERRY RICKETT, PRESIDENT AND CHIEF EXECUTIVE OFFICER, KENTUCKY HIGHLANDS INVESTMENT CORPORATION, LONDON, KENTUCKY *

APPENDIX A -- WRITTEN STATEMENT OF MICHAEL MICCICHE, DIRECTOR, CALIFORNIA DEPARTMENT OF COMMUNITY SERVICES AND DEVELOPMENT, SACRAMENTO, CALIFORNIA *

APPENDIX B -- WRITTEN STATEMENT OF CARLTON S. MITCHELL, DEPUTY COMMISSIONER FOR COMMUNITY DEVELOPMENT, DEPARTMENT OF YOUTH AND COMMUNITY DEVELOPMENT, THE CITY OF NEW YORK *

APPENDIX C -- WRITTEN STATEMENT OF LLOYD THRONE, DIRCTOR, REDWOOD COMMUNITY ACTION AGENCY, EUREKA, CALIFORNIA *

APPENDIX D -- WRITTEN STATEMENT OF MELISSA GLATZ, FORMER PROGRAM PARTICIPANT, CARLISLE, PENNSYLVANIA *

COMMUNITY SERVICES BLOCK GRANT PROGRAM

June 5, 1998

House of Representatives

Subcommittee on Early Childhood, Youth and Families

Committee on Education and the Workforce

Washington, DC

The Subcommittee met, pursuant to call, at 10:00 A.M., in Room 2175, Rayburn House Office Building, Hon. Frank Riggs [Chairman of the Subcommittee] presiding.

Present: Representatives Riggs, Goodling, Martinez and Scott.

Chairman Riggs. Good morning. I call the Subcommittee on Early Childhood, Youth and Families hearing on the Community Services Block Grant Program, and specifically legislation pending in this Congress to reauthorize that program. I especially want to welcome our witnesses, who will provide us with guidance as we prepare to reauthorize CSBG.

I have visited CAP agencies in my district on numerous occasions, and I know of the important work that they do in helping families break the cycle of poverty. In fact, one of the witnesses today is from my district, Mr. Lloyd Throne, who is the executive director of the Redwood Community Action Agency in Eureka, California. Another of our witnesses is the Director of Community Services and Development for California.

As I mentioned today, we anticipate acting on this legislation sometime later this year, probably late summer, early fall. Unlike the tradition in the past, our initial thinking is that we would move the CSBG reauthorization legislation forward as a separate stand-alone bill, although it could be in tandem with the reauthorization of Head Start and LIHEAP so they will form a legislative package.

While we haven't yet reached any final decisions regarding the specific changes that will be made to the CSBG statute, there are some prevailing themes that we hope to build the authorization around. I should mention that I very much hope that this legislation will be bipartisan in nature.

First of all, we think it is very important to build on the strengths of local flexibility, local authority, and especially on the strengths of the local tripartite boards in each local community. Local control and local decision-making are central, of course, to the Republican philosophy, and I think many of our Democratic colleagues embrace the concept of local control as well.

The unique structure of these boards, including the direct involvement of low-income individuals in the community, the beneficiaries of the programs is the key to the success of your local efforts.

Secondly, accountability. While we don't want to tell States and local communities what to do, we do need to have a better understanding of how Federal funds are spent from the CSBG account or fund, and on CAP-related programs and services. We expect new legislation will ask for reporting on how program funds are being spent and on the performance of the programs and the real world results achieved by those programs.

We will take great pains not to create additional paperwork or some sort of regulatory nightmare that exists in many other programs. So while stressing calling for more accountability, I want to assure the practitioners in the field that we are cognizant of their regulatory burdens and we need to streamline paperwork.

We will also continue to encourage effective partnerships between government, local communities and charitable organizations including, I want to note for the record, faith-based organizations. These partnerships are important to meeting the needs of impoverished individuals.

We hope to encourage a broadening of the resource base for programs directed to eliminate poverty, so as to secure a more active role for private, religious, charitable and neighborhood-based organizations in the provision of services. CSBG's more than $4 to $1 leveraging of every Federal taxpayer dollar invested is exemplary, and we want to continue that kind of leveraging effect and build on this positive record.

We will also continue to stress the importance of local community action programs in filling in gaps and in crisis intervention, providing a true safety net in each local community. This is especially important in making our Federal welfare reform efforts successful, and as States and local communities participate in partnership with the Federal Government in an effort to essentially help single mothers who struggle to make the difficult transition from welfare to work.

The first panel of witnesses includes individuals who have been involved in running CSBG programs, or who have been participants in these programs. The second panel of witnesses is made up of individuals who are involved in the implementation of other innovative programs designed to move individuals out of poverty, but not directly through the CSBG system. We very much look forward to the testimony of our witnesses today.

With that, I would like to recognize my good friend and ranking member, Congressman Martinez.

Mr. Martinez. Thank you, Chairman Riggs. I am very pleased to join you at this hearing. This hearing is probably going to be the only reauthorization hearing on this important program. I know that both of us are looking forward to the testimony of today's witnesses.

The Community Services Block Grant Program is truly one of the most successful anti-poverty programs the Federal Government funds. Since its inception in 1981, local community action agencies have been fighting poverty and its devastating effects through innovation and determination.

This program, which allows local agencies to respond to poverty with a hands-on approach, has produced some of the most innovative and successful approaches at developing self-sufficiency in low-income individuals. Whether these local agencies help an adult learn how to read or assist them in obtaining or keeping a job, the CSBG program is a necessary and important Federal investment.

As many know, I have introduced the Human Services Amendments of 1998. In addition to reauthorizing the Head Start and low-income home energy assistance programs, my legislation proposes several changes in the CSBG program.

The bill would give preference to private, nonprofit organizations should an existing entity running a local program authorized under the statute terminate. This would ensure that local private non-profits take over programs when existing local agencies terminate. The bill would also provide that CSBG carryover funds are reprogrammed at the local level.

Lastly, the bill would explicitly allow local community action agencies to offer services to improve literacy in the community. I hope as we proceed through the reauthorization process that this Committee and the Chairman will give strong consideration to these issues.

In closing, I want to express my support for the CSBG program and my belief that this Subcommittee can, and will, produce a strong, bipartisan reauthorization bill. Thank you, Mr. Chairman.

Chairman Riggs. The Chair will now recognize the Chairman of the Full Committee.

Mr. Goodling.Thank you. I want to join Chairman Riggs in welcoming all of you here today. It is a program that has worked and worked well.

I have to admit that some of the best programs that I know of just happen to be in the 19th Congressional District in Pennsylvania and surrounding areas. I have worked very closely with many of those folks. Today I am very happy to have one of the witnesses here, Ms. Melissa Glatz from Carlisle, Pennsylvania. She is one of the many success stories that have come out of this system. Today she is a nurse supporting her daughter and herself, and that was due to her own self-determination but also due to the Community Action Commission in Carlisle. So I commend her on her hard work and her determination to succeed and we look forward to her testimony.

She is accompanied by Mrs. Linda Figueroa, who is director of the community action program in Harrisburg which also runs the program in Carlisle where Melissa got her assistance. I have had the pleasure of working with her for we will not say how many years because we are still less than 39, but a long time. And they do an outstanding job. I am happy that they are here so you can hear their success story.

Chairman Riggs. Thank you, Mr. Chairman. Congressman Scott, do you have an opening statement that you would like to make before the first panel of witnesses?

Mr. Scott. No, Mr. Chairman.

Chairman Riggs. We will proceed with the first panel of witnesses, if you would take your places at the table.

Our first witness is Mr. Michael Micciche, Director, Department of Community Services and Development, Sacramento, California.

Mr. Carlton Mitchell, he is the Deputy Commissioner of Community Development for the City of New York, the Big Apple.

Mr. Lloyd Throne is a friend and constituent, and is the Executive Director for the Redwood Community Action Agency in Eureka, California.

Ms. Melissa Glatz has just been introduced by our Chairman, and our last witness is going to be introduced by my good friend and colleague, Congressman Bob Goodlatte of Virginia.

Mr. Goodlatte. Mr. Chairman, thank you for the opportunity to introduce this witness. It is a particular pleasure to introduce Steve Musselwhite, who is the Chairman of the Board of Directors of Total Action Against Poverty, an outstanding community action agency based in my hometown of Roanoke, Virginia.

It is also a pleasure to introduce him because he introduced me the same way a few weeks ago, and that was to say six years ago he called me and I called him my opponent when I first ran for Congress, and now I call him my good friend. One of the reasons for that good friendship is our shared interest in community action agencies because we have both seen firsthand the great work that they do.

Total Action Against Poverty is, in my opinion, the exact kind of organization that can have bipartisan support for funding here in the Congress. It is an example of how to reach out and help people up and out of poverty, not make them dependent upon big Federal Government programs which may keep them chained to poverty for a long period of time.

It is a block grant program, the Community Service Block Grant, something we have in the last two Congresses have pushed for more of, and so I have been strongly supportive of this block grant program. It is one that works and an example of where I think we could use that in other areas. So, 2 years ago I joined with you and other Members of Congress in pushing the leadership, particularly the Speaker, for a big increase in this program. We were fortunate in getting a $100 million increase in the program that has helped to invigorate the community action agencies with all manner of programs. They use these resources to provide the core funding to reach out and get assistance from local government, state governments, private businesses, individual contributors, this truly is a kind of public/private partnership that makes these agencies as effective as they are.

So it is my hope that this program will continue. I like it in the form that it is. I like the funds passed through directly to local community action agencies. They are the proven workhorses that make the system work, and it is my real pleasure to not only put in a plug for community action agencies but to introduce Steve Musselwhite. Thank you, Mr. Chairman.

Chairman Riggs. Thank you, Congressman Goodlatte. We thank you very much for joining us this morning. We welcome your participation and your comments and certainly your introduction of our witness, and maybe the two of you have some lessons about bipartisanship that you can teach the rest of us. We are delighted that you could be here.

I am now going to go back down to the other end of the table and recognize Mr. Michael Micciche.

The witnesses should know that their entire statement will appear in the record, the transcript of today's Subcommittee hearing, and so we ask you to abbreviate your remarks if your remarks might run much longer than the 5 minutes. That allows us the maximum time possible for give and take, and we find that interaction, that Q and A is critically important for helping us frame the kinds of policy questions that we need to decide with respect to the reauthorization of CSBG.

Thank you, Mr. Micciche, for coming all of the way from California. I assume that you are based in Sacramento?

Mr. Micciche. I am.

Chairman Riggs. Thank you again for being here, and please proceed with your testimony.

Mr. Micciche. Thank you and good morning. Thank you again for inviting me. My name is Michael Micciche, and I am the Director of the Department of Community Services and Development, and I am also here as the Chairman of the National Association for State Community Services Programs.

Before I start, I guess I have to respectfully disagree with Congressman Goodling and indicate that the best programs are in Mr. Riggs' and Mr. Martinez's districts in the State of California, and I hope to prove that as we go through this a little bit.

I have been in this position since --

Chairman Riggs. Whatever you do for the fate of the future of the program, you don't want to disagree with the Chairman.

Mr. Micciche. That is true. He is a good Chairman. Can we give him second place?

I have been in my current position since 1992, appointed by Governor Wilson at that time, but I spent a number of years in the community action agency in the State of Massachusetts, ten years, so overall 32, 33 years I have been in and out of this activity.

In February of this year, as you know, Mr. Riggs, at the National Governors' Conference in Washington, Governor Wilson helped cosponsor CSBG and has also sent you a letter in support of the Community Services Block Grant program. We believe and he believes very strongly in the purposes of it, very strongly in the fact that it really helps California leverage tremendous amounts of money and works very, very well towards our ultimate goal of self-sufficiency and preventive problems.

From the point of counseling to nutrition assistance, CSBG offers States and localities flexibility, maximum flexibility to design anti-poverty strategies to best meet the needs of their communities and residents. Particularly in this era of welfare reform, we are finding that the community action agencies are more and more becoming directly involved as major resources in helping people move from welfare to employment and hopefully down the road to self-sufficiency.

Our State-wide priority in California through the department and with its network is self-sufficiency, and we emphasize a family and a coordinated approach to solving the problems of poverty.

Contained in the full text of my testimony, which I will not go into this morning for the sake of time, are a number of anecdotal accounts of how the CSBG program locally assist low-income people to move toward self-sufficiency. Both examples are in California and some national examples, two of which, I might add, are from Pennsylvania. So you see we are very fair about this. These success stories are across the country and we do not have only a few. There are many, many more to talk about.

For example, the community action agency in New Hampshire, Southern New Hampshire Services, certainly is a lead agency for the development of the Manchester Resource Center, a project located in the enterprise zone.

In Pike County, Idaho, Pike County has created a unique committee comprised of bankers and community leaders to help those in poverty gain entry into the work program through a micro-loan program.

Pennsylvania empowers individuals by revitalizing communities through targeted tax credits to attract businesses, and the targeted businesses will join with neighborhoods to develop programs which serve low-income people. There is much more in the way of program detail and empirical evidence that is contained in the full testimony, and subsequent to my opening statement if you would like to ask me more detail and more examples, I would be more than happy to talk about them.

Looking at this from a national perspective, CSBG provides a comprehensive, coordinated approach in delivering services. The key element, as the Chairman mentioned, is local determination and local control. It is a true block grant, I think the purest of the block grants and it has been around the longest. It is inclusive. The tripartite board provides that by the makeup. Theses tripartite boards consist of public officials, other non-profits and businesses, and of course low-income representatives.

CSBG operates in 96 percent of the counties in the United States and cities, serving the poorest of the poor. For example, 48 percent of those served by CSBG have incomes below 75 percent of the national poverty guidelines. Over 30 percent of the adults have not finished high school.

The CSBG generates, as the Chairman said, $4 in private funds for every dollar of CSBG funds appropriated, and we serve 11.5 million people nationwide. We elicited nearly 25 million hours of volunteer time, which is equivalent of 12,250 full-time employees. About 30 percent of that is attributed to Head Start and about 70 percent of that volunteer time is non-Head Start.

Just some observations, if I may.

No one is better suited at the local level to respond to disasters, and I don't have to tell my friends from California what that is all about. We have had our fair share, thank you. But our networks in all parts of the country have dealt with the front lines, floods, and freezes. And the Northridge earthquake, as you know Congressman, the southern California agencies were right out front helping people get readjusted to that.

I think there is evidence that the government trusts community action agencies, that the government trusts them doing things even outside of the so-called norm of what community action agencies might do. Our governor in California has trusted addressing disasters to much of our community services network. They have also participated this current year in providing food vouchers to those otherwise ineligible for food stamps. There is a State food budget program and our networks delivered those food vouchers.

The State of California and NASCSP strongly recommend that Congress retain the flexibility that has been the hallmark of the grant approach implemented in 1981 under the block grant. This allows each State to provide guidance, ensure local management accountability and encourage innovative responses to existing programs and new challenges.

The Nation's network of CAAs and other community service providers represent and are accountable to the local community in which they pursue their mission, as well as the way they use resources of CSBG. We welcome in California, both at the local and State level, the opportunity to talk about performance and outcomes. We have a very unique and one of the earliest examples of a system in the county, and we are very proud of it and we love to talk about it, and we will talk about it as the days and months proceed.

The Nation's CAA service providers engage in annual community action planning processes with all sectors of the community, including faith-based organizations, community development organizations and private foundations. Recipient agencies reach out and network with other organizations in the community in order to develop a collaborative approach to department issues.

This process works in a strong working relationship with churches, private groups and others in the delivery of CSBG services. Some examples, just quickly: Riverside County works with all churches in their area to provide shelter beds. In the City and County of Los Angeles they have over 150 to 160 subcontract delegate agencies, community-based organizations, many of which are faith-based.

The States recommend also that Congress not enact revisions to restrict the ability of States and localities to plan and implement self-sufficiency strategies tailored to local circumstances. Specifically, States would like the flexibility to reallocate funds rather than mandating the carryover dollars remain with the same agency. It is and should be the responsibility of States to determine that financial and/or programmatic factors warrant changes in the funding allocations to local agencies.

If the need arises, States should be able to establish new agencies, public or private, based on local circumstances and local determination and in conjunction with local folks. It is important to note the existing Federal law addresses this issue already, but probably needs a little refinement, in our opinion.

We believe strongly in performance outcomes, and we want to share those outcomes with anyone who listens. State and local agencies use CSBG funds to promote self-sufficiency, using a variety of methods tailored to local circumstances. Each year State and local government, private industries, charities, and faith-based organizations commit an additional $4 in non-Federal funding for each $1 appropriated in CSBG. These resources, along with substantial contributions from volunteers, are used to locally design programs and, with wide community support, bring more help and understanding to those in need.

I thank you for this opportunity to speak, and I will be happy to answer any questions as the hearing proceeds. Thank you very much.

Chairman Riggs. Thank you. We have a series of votes underway on the House floor, so we are going to have to excuse ourselves shortly.

Mr. Commissioner, if we can proceed with your testimony, and then upon the completion of your testimony recess our hearing and we will reconvene, obviously, when the votes conclude on the House floor.

Mr. Micciche went a little over the 5 minutes, but obviously he had a lot to say of a very important nature. I am sure that you all feel that way. We are now going to go to our lights which kind of give you an idea of how much time is remaining. When you see the red light, you should try to conclude your remarks, but our intent is not to cut anybody off who has important points to make.

Commissioner Mitchell, please proceed with your testimony.

Mr. Mitchell. Good morning. I am Carlton Mitchell, Deputy Commissioner for the New York Department of Youth and Community Development. I want to thank you for the opportunity to appear before the Subcommittee to offer testimony regarding the reauthorization of the Community Services Block Grant program. On behalf of Rudolph W. Giuliani, the Mayor of the City of New York, and Martin Oesterreich, our Commissioner, I am particularly pleased to provide an overview of New York's Community Action Program.

In 1996 Mayor Giuliani signed into law legislation which created the Department of Youth and Community Development which is a consolidation of the Department of Youth Services and Community Development Agency. The merger of these two departments builds on the interrelationship of youth and community support services provided through contracts with a broad network of approximately 1,800 community-based organizations throughout New York City. Under this legislation, DYCD assumed the responsibilities of the community action agency which served as a local community action agency for New York City.

As the mayoral agency responsible for the administration of the New York City Community Action Program, the Department of Youth and Community Development awards CSBG funds to approximately 300 community-based organizations. These organizations provide a wide array of services to residents of low-income areas throughout the five boroughs of New York City. The agency also provides a variety of literacy classes targeted to low-income adults and public assistance recipients which are provided, again, through this extensive network of community-based organizations. These programs are also funded with a combination of New York City and State and Federal dollars.

We also participate in the city's Begin Employment Gain Independence Now, which is designed to assist welfare recipients in acquiring the skills necessary to enter the world of work and is one of the city's welfare reform initiatives.

Finally, the agency also administers the nonpublic assistance component of the New York City Low Income Home Energy Assistance Program.

Currently our program structure consists of four components: One is the agency itself which administers the program; the City-Wide Community Action Board which is our tripartite advisory board; and 44 Neighborhood Advisory Boards which serve as vehicles for community participation in each of the targeted areas; and finally, the community-based organizations themselves, which serve as the delegate agencies responsible for the delivery of services.

As the designated community action agency, DYCD has the overall authority and responsibility to supervise and monitor the conduct of the program, as well as to enforce compliance with all applicable New York City and States and Federal regulations.

The level of program dollars available to each Neighborhood Development Area is allocated proportionately according to a formula that takes into account the most currently available public assistance recipient data, Supplemental Security Income data, and the U.S. Census data of households with incomes at or below 125 percent of the Federal poverty level.

In addition to the funds allocated to each neighborhood development area, the agency sets aside a portion of the total CSBG funding to engage in city-wide initiatives. These city-wide initiatives are designed to assist in the development of permanency planning for HIV victims, to assist in strategies to overcome the results of violence, to assist new immigrants, and to provide technical assistance to community-based organizations in an effort to enhance their capacity to deliver quality services.

The Neighborhood Advisory Boards, which are a key component of our program, are maintained in 44 different funds under the program. These boards are composed of a maximum of 12 members, all of whom are representatives of the poor. Half of the members are appointed by local elected officials, including Members of Congress, and half are appointed by agencies. All members of the board are required to live in the district.

These boards establish program priorities through a consultation and public hearing process. They also participate in the review and evaluation of proposals that are submitted by the community-based organizations.

As you can see, the purpose of the Community Service Block Grant program is implemented through community-based organizations which serve as the primary service providers. We believe that the unique flexibility of the CSBG program has proven successful, enabling community-based organizations already familiar with their clients and respective neighborhoods in responding to emerging needs. We therefore strongly recommend maintaining the current structure of this program.

Thank you, sir, for giving me the opportunity to present testimony on behalf of DYCD. I would be happy to answer questions.

Chairman Riggs. Thank you, Commissioner. I am sure that we will be able to delve further into the workings and successes of your program in New York City. We very much appreciate the succinctness of your testimony.

With that, the Subcommittee will stand in recess until the completion of the votes currently underway on the House floor. The witnesses should feel free to move around if they need to stretch their legs or get a cup of coffee. I would estimate that we will be returning in 10 to 15 minutes.

[Recess.]

Chairman Riggs. The Subcommittee will come to order. We will reconvene the hearing, hearing next from a private nonprofit agency that is very involved in the implementation of the CAP program at the local level, and we look forward to Lloyd's perspective as a practitioner in the field. Please proceed with your testimony, Lloyd.

Mr. Throne. Good morning. My name is Lloyd Throne and I am the executive director of the Redwood Community Action Agency, which is a nonprofit community action agency located in Humboldt County, California, which is on the beautiful north coast of the State.

Mr. Chairman, it is a privilege to discuss the critical importance of CSBG to our successes, and on a personal note, I would like to express my gratitude to you for your support of RCAA over the years. As you know, I am the third person from RCAA to appear before this Subcommittee, and it is indeed a great honor.

RCAA was founded in 1980 with $160,000 in CSBG funding. Our mission then, as now, was to respond to local need by local people and to create self-sufficiency for those in need in Humboldt County. Our governing body, RCAA's board of directors, is typical of the approximately 1,000 community action agencies in the United States: one-third private, one-third public, one-third low income.

Specifically, four of our 15 members are physically disabled. We have a graduate of our homeless shelter on our board. We have a dean of a local college on our board. We have business people. We have a health care professional who is our chair. We have senior advocates, to name a few. We also have a Humboldt County board of supervisors member on our board.

Let me assure you that this is not a rubber stamp board of directors. Rather, it is local representative leaders in our community who take their roles very seriously. In 18 years, through hard work, complete dedication, and community input, we have leveraged the initial $160,000 CSBG startup into an $11 million community action agency with 128 programs that respond to local need.

As of this day, we receive but $17,000 more annually than our original startup. RCAA receives a $187,000 from CSBG. Approximately 10 percent of our total is generated privately. Our mission today is the same as it was in 1980, and I quote our bylaws, "to enable low income disadvantaged persons to gain the necessary skills, education and motivation to become self-sufficient."

Last year we provided over 121,000 services for over 30,000 clients, and this is in a county of 120,000 people. RCAA is made up of six major divisions: our energy division, our community development division, housing, youth service bureau, natural resources division, and family services. A list of our programs is in my written testimony.

I am most proud of our over 50 collaborative efforts with local partners, including the public sector, faith-based organizations, charity, schools and the private sector. For example, RCAA works closely with the St. Joseph Health Care System run by the sisters of St. Joseph of Orange. They have contributed over $200,000 to support youth programs and a transitional shelter for abused homeless females and their children. They are also members of an advisory board for these programs and provide medical screening for our homeless clients. Recently RCAA was one of seven agencies in California, both public and nonprofit, chosen to operate a pilot employment job readiness demonstration project for Welfare to Work.

Our partners here are local government, PIC and the Humboldt County Department of Social Services. Our transitional family homeless shelters and case management programs have an over 80 percent success rate in transitioning families back into productive lives and in their own homes. With this is an in-depth case management program for homeless children who are often forgotten, severely impacted at an early age. And I do wish I had the time to feature all of our program efforts.

CSBG today, as in 1980, is the keystone for the Redwood Community Action Agency. This truly is the core from which everything else is developed. It is our essence that allows flexibility, it is our essence that allows local control to meet local need.

I am extremely proud of RCAA's reputation among the public and private sector as a very well-managed agency. We have not had one penny of disallowed audit costs in the past 13 years. By necessity our administrative costs are between 5 and 6 percent. This type of fiscal integrity is essential to our 43 funding sources, our partners, the community and all future program development.

I see the red light on. My wife would love one of those.

CSBG works in Humboldt County, California. With it we are able to respond to local need. The distinguished director of California CSBG, my friend Mike Micciche, a board chair, two public community action agencies, an extraordinary community leader, all here to tell the CSBG story.

I am here to answer any of your questions concerning the nuts and bolts of running a community action agency. Thank you very much.

Mr. Goodling. [Presiding.] I am surprised that you would pay that much attention to your wife's red light.

Mr. Throne. You have to.

Mr. Goodling. Ms. Glatz.

Ms. Glatz. Thank you for allowing me to speak before you. Thank you, Mr. Chairman, and thank you for letting me come before you and tell you how Community Action Commission has helped me as well as many other young mothers.

I understand that you will be considering whether to keep the Community Services Block Grant funding. The Commission has explained to me that my wonderful case worker, Kim, is paid through this program. I feel that without Kim my daughter and I might not be independent and moving ahead in life. Today I am a licensed practical nurse, currently working towards my RN, and the mother of the world's cutest three-year old.

When I was 19, I was referred by my welfare case worker to the commission's teen parenting program. This is where I met Lori and later Kim. Their program has taught me a lot of necessary life skills. Kim has helped me plan how I would reach my goal: The goal of getting a job to support my family by myself.

I volunteered at a local nursing home full-time to see if I really liked nursing as I always thought I would, and I did. Kim has happened me plan for support, schedules and school requirements at Franklin County Career and Technology Center. I could never have made it without child care or a vehicle, so the Commission has even found me a car to use.

I felt like I was not alone. Kim knew how to push me and how to find help when I really needed it. It is like having a family that is completely on your side and is very involved.

As I graduated with my LPN, I went back to that same nursing home where I had volunteered and I was hired for my first job and so far my only nursing job. I love this work, and it can be very hard, but I am sure I will make it to my next goals.

Mr. Chairman, many mothers on welfare need this kind of help. There is no other group that offers this kind of support and helps you stand on your own two feet no matter what it takes. The other agencies in the government just do not offer this assistance.

I sure hope that you will make sure that more people are entitled to this kind of help. Thank you for allowing me to speak this morning.

Mr. Goodling. Mr. Musselwhite.

Mr. Musselwhite. Thank you, Mr. Chairman. I am also delighted to be here this morning. I am sorry that Bob Goodlatte could not be here to hear my comments, but he did to me exactly what he did to me 6 years ago, he covered almost everything that I was going to cover in my comments. It has been a delight to work with Bob Goodlatte and to look at the issue of community action and work so closely with a friend on this, and Bob has been a real friend to our community action group.

My name is Steve Musselwhite and I am a businessman. My company, Musselwhite & Associates, is an insurance agency in the Roanoke Valley area of Virginia. And I am proud to say that I am currently Chairman of Total Action Against Poverty, which is an agency serving low-income citizens and neighborhoods in 5 cities and 6 counties in southwestern Virginia.

Back during the campaign in 1992 I was embarrassed because a reporter looked at me and said "Mr. Musselwhite, we are extremely impressed with your resume, but what have you ever done to help the poor?" Immediately after the campaign I got involved in Total Action Against Poverty because of that very thing, because I wanted to help people that needed help, and I felt called to do that as a result of that.

TAAP has been the most important human service and community development agency in the Roanoke Valley for more than 30 years. No other agency has done more than TAAP to create opportunities for the poor and help low-income citizens to earn their way out of poverty. Literally tens of thousands of our citizens have had a Head Start. They have also had remedial education when needed, job training, and assistance in finding and maintaining living wage employment. They have received access to safe and clean water and waste water systems, to safe and affordable low-income housing, and have participated in neighborhood organizations to improve their communities.

In addition, TAAP has created new program models which no one else wanted to attack or to be involved with, which have been replicated in the State of Virginia and throughout the United States.

The Virginia Water Project, now operating in a multi-State region, and the Southeastern Rural Community Assistance Program has brought safe water and waste water systems to 180,000 Virginians who lived for decades bailing water from streams and using toilet facilities outside. The Virginia CARES program has proven successful in helping over 25,000 former inmates live crime-free lives as productive tax-paying citizens. Project Discovery has helped more than 15,000 low income minority students to gain access to higher education. The Comprehensive Health Investment Program brings primary health care services to poor children and their families.

TAAP's transitional living center is one of my favorite. It is a model for welfare reform. When people come into that system, they have to sign a contract which has expectations, and unless they meet those expectations they are taken out of the system. But we have helped over 2,000 homeless individuals and families during the last number of years to find work and to find safe and stable housing.

TAAP saved the Harrison School, which was the first African American high school in southwestern Virginia, and renovated it into 28 apartments for elderly and handicapped people. The Food Bank, the Southwestern Virginia Second Harvest Food Bank has been involved with TAAP for a number of years, and we are feeding 2.9 million meals this past year, and over 4 million pounds of food were distributed.

TAAP started Legal Aid to Older Americans, the Southwestern Virginia Development Fund, and so forth. We are excited about the fact that we just revamped our employment training programs based on successful models, and we have just received one of the United States Department of Labor's Welfare to Work contracts for $2.7 million over the next three years.

We have been involved in a lot of different things, and I am very proud of that. But I would like to close with three things.

We are very dependent on the core funding of CSBG programs which enable us to leverage additional resources. We are proud of our Congressman, Bob Goodlatte, and all of the leadership he has given us over the last number of years. But we need to continue to pass the 90 percent through to local community action agencies. Please do not tinker with mechanisms which have worked for more than three decades. An old statement is, "If it ain't broke, don't fix it." Community action agencies are not broken and they are doing a great job.

Secondly, I am a businessman. In my business I continue to look at the bottom line, and that is what TAAP is doing in our community.

Thirdly and lastly, I would like to say that I am a Christian and I am thankful and feel blessed to be a Christian. I am a proud member of Thrasher Memorial United Methodist Church in Vinton, Virginia.

Community action works best because it is non-sectarian. TAAP has outstanding relationships with many religious organizations throughout our area Roman Catholic, Jewish, Protestant, Muslim, and other faith organizations, and persons of all religious persuasions. More than 20 churches are responsible for furnishing rooms in our Transitional Living Center. TAAP Southwestern Virginia Second Harvest Food Bank alone works with more than 100 religious groups to distribute food to the hungry.

Community action belongs to the entire community of faith. Community action is where the rubber of faith meets the road of action. It is not about creed, it is about love and compassion and justice, and creating a Nation where all people have the opportunity to live in decency and dignity, to work and to truly participate in the American way of life.

Thank you so much for giving me the opportunity to be here today, and on behalf of the millions of decent low-income Americans, I certainly hope that you will do everything you can to continue to support this program. Thank you.

Chairman Riggs. Thank you, Mr. Musselwhite. And I have to apologize to you and to Ms. Glatz, and my good friend Mr. Throne. I was summoned back over to the House floor and I must apologize for missing your testimony. But at least I was able to return in time for the real meat of the hearing, which is our opportunity to pose questions to you, seeking additional comment over and above, obviously, your oral statements or your prepared testimony.

For all of you on this panel, when we look at your testimony, when we look at the history and the track record of CSBG on its face. I hasten to point out on its face, there appears to be some duplication if not significant duplication with other Federal programs providing education, employment, training, housing, nutrition, economic development and health care assistance.

Do you feel. . . let me rephrase that. To what extent do you think duplication is occurring, and how would we avoid duplication in the reauthorization legislation, or at least ensure that the duplicative-type services you are providing are compatible with these other Federal programs? And let me give all of the witnesses on this panel a chance to respond to this question, but let me reverse the order and ask you, Mr. Musselwhite, to respond first.

Mr. Musselwhite. In the Roanoke Valley area we don't see a duplication. We find most often we are involved with projects that no one else wants to be involved with, and we are taking on issues and involved in areas that are left out of the system. And so we feel like what we are doing is not in any way competing with other programs in the small area that we come from in the southwestern part of Virginia.

Chairman Riggs. That is fine. Let me give you a chance to respond to my follow-up question, and then I will afford the same opportunity to all of the witnesses.

How are you working with State and local agencies that are involved in implementing the federally mandated welfare reforms in the State of Virginia?

Mr. Musselwhite. We have members at every locality on our board of directors, and we are working with each group.

The president and executive director of our group, Ted and I met this past year with all of the legislators, both on the city councils and State and Federal Government. We have worked with them very closely trying to put together the best plan that will work for our area because I think every area is unique to some extent. We have local problems and we have local solutions put together by local people, and that is a conglomerate of everyone, including governmental agencies.

Chairman Riggs. But what part of the welfare reform equation do you provide? That is to say, obviously we have imposed time limits and work requirements on welfare benefits. Where do you fit in?

Mr. Musselwhite. Our Transitional Living Center, as I mentioned in my testimony, we are working with individuals that are homeless. We have them sign a contract. In that contract they have to be willing to go through the training that is provided to them. They have to be prepared. We prepare them to go out on job interviews. We help them in that entire process. That is at least one area that our group is working very closely with low-income families to try to do everything that we can to get them back on the road to success.

We will not allow them to be in the Transitional Living Center unless they comply with the contract that they signed at the beginning, so I think it is a real model for welfare reform.

Chairman Riggs. Maybe you could tell me what percentage, if you happen to know it, of your overall clientele are receiving benefits. Ms. Glatz, you may want to borrow the microphone.

Ms. Glatz. I feel that the commission is different, mainly because they are always there to help me. They are always someone to turn to when I need a hand, when no other agency seems like they want to give me the time of day. I can always rely on calling Kim, who always has an answer or if she doesn't know the answer, she gets back to me as soon as she can. She is more than an agency, she is a friend. She is someone to turn to when I need something.

Chairman Riggs. That is fine, Lloyd?

Mr. Throne. Thank you. In Humboldt County, Mr. Chairman, I don't see any duplication with CSBG funding, and I say that because many of our programs are categorical and they do not allow the flexibility of CSBG.

Added to this, as Mr. Musselwhite said, we are most able to respond to local need in the quickest manner. The public sector, and I must say the private sector, too, look to the Redwood Community Action Agency and CSBG to provide many of the services that are not provided right now. We are not duplicative of our other programs.

And in addition to that when, as Mr. Micciche said, when we have our natural disasters, we have FEMA, the Red Cross, the county OES all coming to RCA to coordinate services. That does not stop with natural disasters. Homeless services, the more than 50 collaboratives that I mentioned in my prepared testimony, RCAA is looked upon as the leader of the collaboratives.

In addition to that, when innovation is needed, and I don't want to insinuate that we are the only ones that innovate in Humboldt County, but we are looked upon as an innovator to create new ideas to solve problems.

As far as Welfare to Work goes, in my testimony I mentioned that RCAA is partnering up with the local PIC and with the Department of Social Services in a pilot demonstration program from Sacramento for job readiness for the very hard to serve, that one-third very hard to serve who need in-depth case management to even get ready to be job trained.

In addition to that, we operate, as you know, Mr. Chairman, most of the transitional homes and shelters for runaway youth who you met with when you visited RCAA, and families who are homeless. So we are very, very involved in Welfare to Work.

Chairman Riggs. Lloyd, I know that you are involved in the LIHEAP program as well. Are you also a Head Start operator?

Mr. Throne. No. Head Start was in operation in Humboldt County prior to 1980.

Chairman Riggs. Mr. Musselwhite, does your program operate both programs, Head Start and LIHEAP?

Mr. Musselwhite. Yes.

Chairman Riggs. In addition to being the local CSBG or CAP?

Mr. Musselwhite. Yes.

Chairman Riggs. Mr. Mitchell?

Mr. Mitchell. In terms of duplication of services, we see very little of that. I have to emphasize that the local communities determine what the priority needs are for their particular communities. What they are looking at is the gap in services within their community, specifically those services that are not coming in, and New York City is a collection of neighborhoods. The basic unit of governance is the community board. There are 59 community boards throughout the city. Based on the qualifications that were established, only 44 of those communities actually receive Community Service Block Grant money.

We look to the CSBG funds to also supplement and enhance programs. To give you an example, there is a senior program which we currently fund in the northern part of Brooklyn. The program also operates Title V money, finding employment for low-income seniors. What CSBG dollars are used for in that program is to enhance the job development efforts that are taking place, to put on additional job developers so they can go out and find jobs that are paying above the minimum wage for elder seniors who are looking for employment.

So we see very little duplication but more supportive systems that CSBG dollars are used for.

In terms of Welfare to Work, we participate with the local department of social services, which is our Human Resource Administration, in administering the job readiness program, particularly the Begin Employment Now which is part of our welfare initiative, where welfare recipients are mandated to attend these programs for six months. These programs are providing job readiness skills, and it is through again the network of community-based organizations that we work with that, provide these services.

CSBG dollars again provide support to those organizations to build their professionalism, to build their ability to go out and do things like job development. Another example is a program started by the Franciscan Brothers up in north Bronx called the Highbridge Project, and that is within our empowerment zone. They started the program with UPS where they are training employees for UPS, and many of these people are coming through the Welfare to Work program. Their program typically begins at 4:00 in the morning, physical training which is required to perform some of the duties that UPS workers are required to perform.

Again, it is the glue that pulls a lot of these programs together and enables them to enhance currently funded programs that are funded by other agencies and other funding sources that come into the city.

Chairman Riggs. Mr. Mitchell, is your department involved in the administration of the program Older Americans Act at the local level in New York City?

Mr. Mitchell. No, that comes through our Department for the Aging, but we work very closely with them.

Chairman Riggs. So you ensure coordination and linkages, because you mentioned using CSBG funds to supplement what seniors can earn.

Mr. Mitchell. Our designated areas, again, the local neighborhood advisory boards, pretty much determines what the priority needs are. And if they see that there is a senior program that needs that additional support, our dollars can be used programmatically in any way that agency feels best. In this case it is working very closely with the Title V employment for senior citizens.

Chairman Riggs. New York City obviously has attracted a great deal of attention and notoriety in recent years for its efforts to crack down on crime and improve the quality of life, and specifically this get tough approach or the zero tolerance approach with misdemeanants, people who commit misdemeanor crimes.

I understand central to this is the idea of refurbishing crime-ridden neighborhoods. Has your department been involved in that effort at all? And do you see a potential use of CSBG funding in conjunction with those local efforts in New York City?

Mr. Mitchell. Absolutely. Part of the mayor's strategy is prevention and intervention, and particularly working with young people. And a major part of that initiative is our Beacon Program, which is administered by the department on the youth side but there is a great deal of coordination with the CSBG side of the program as well.

So yes, we are very much involved in funding youth violence intervention programs in particular to keep young people off the streets, to keep them otherwise engaged in productive activities.

Chairman Riggs. That is a perfect segue to Mr. Micciche, because he mentioned that Governor Wilson and Mr. Micciche are using the CSBG funds for the mentoring project underway in California.

Mr. Micciche. Yes.

Chairman Riggs. I am interested in knowing about that because we have a bipartisan bill, H.R. 1818, sponsored by Congressmen Scott and Martinez on the Democratic side, and on the Republican side Congressman Greenwood, Congressman Goodling, and that legislation would create a block grant for early intervention and education, prevention services to at-risk youth. This legislation will target youth at risk for engaging in criminal behavior, and is now languishing in the Senate.

However, it would allow States and local communities to have a comprehensive plan for combating juvenile crime in place that emphasizes the interagency or multi-disciplinary approach. When you combine the schools, the juvenile courts, the police and the social and community action agencies, you would allow them to use the funding for mentoring which has had some proven success in helping young people turn their lives around.

So we are interested in seeing that legislation pass and knowing more about this particular project in California. And I just find it interesting and wanted to note again for the record that California has chosen to use the lion's share of its CSBG discretionary funds for this State-wide project known as the California Mentor Initiative.

Now, Mr. Micciche, I will give you an opportunity to respond to the comments that I just made and answer my question.

Mr. Micciche. It is tough being last because everybody has said pretty much what you want to say, but from a State-wide perspective, my observations about duplication are that we don't see it. That doesn't mean it does not occur on a minor basis because I think it is totally impossible to avoid it in total.

But for the most part we do not see that because, as other people have said, CAAs are the coordinated, comprehensive deliverer of the service. They are able to provide a menu of services to the people. They are the agency with the caseworkers who, if people come in, if they have a particular need that the CAA does not have, they know where to go to get it. They know who the PICs are and where the employment and training classes are being held, the tutoring and literacy programs.

Chairman Riggs. Let me interject and ask you from your perspective, you are the director of CSBG, the California Department of Community Services and Development in the largest State in the country, so what steps or what measures or what systems do you have in place at the current time to avoid duplication?

Mr. Micciche. The local claim process is done on an annual basis, and those plans are submitted to the State for aggregation and we submit them to Washington. In that process we review all of the programs that are both being funded by CSBG and non-CSBG, so we see right up front whether there is an obvious duplication. Whether or not the dollars are being used to coordinate the delivery of the service or they are responding to an ongoing crisis or a short-term disaster. And so we use that, and then the monitoring, our field staff, which monitors all of the programs in California on a periodic basis, every 6 months or twice a year, are obviously made aware to be sure that there is not duplication.

Chairman Riggs. And also can you respond on the implementation of welfare reform in California?

Mr. Micciche. Yes. California has a decentralized welfare system, one of 12 States that has that. As you know. It is run by the counties. Most of the focus has been on local delivery, and CAAs in individual cases and I am very proud to say on a consortium basis have worked to provide the kinds of services that may not be available totally in the package that TANF has to offer.

For example, a number of CAAs are focusing on the toughest to employ, that group that really needs a lot of basic skills, everything from how to organize yourself to get work in the morning, people who have no work history. That is going to be the toughest group to move into permanent employment.

Chairman Riggs. For example, that would be getting the services that Mr. Musselwhite's agency provides, the transitional living existence in the shelter?

Mr. Micciche. Exactly. More basic than that, people need to learn what it takes to get yourself to work. Everything from getting dressed to getting to the job, and what it means to be on time and so forth and so on.

And those folks who have never worked before, it is not as simple as it sounds. They are providing services, for example, supplemental and ancillary services like LIHEAP. It means the assistance through a utility payment or having your home weatherized allows more funds to be used in necessities. Transportation and day care, for example, is a very, very demanding service. Unfortunately, supply is not meeting that demand, so CAAs are involved in providing day care.

Temporary employment agencies in California are becoming popular because some of the small businesses are concerned. Over the initial six-month period, they are concerned regarding legal liabilities if they have to terminate somebody, whether or not the person is going to stay. So, some community action agencies and non-CAAs have been working with temporary employment agencies that take that initial liability for the first six months. Once the six months is over, employees feel it is going to be between them and the employer, but that first six months they have gotten that interim assistance.

You asked also about the number of clients. In California it is 45 percent traditional welfare clients versus working poor.

Mentoring, I would love to offer any assistance we can in helping get that passed. It has been a tremendous program in California, and we have had our difficulties in getting some money out of the legislature. We have also had some lean times up until last year and this year, but we did kick the program off with discretionary funds 3 years ago and have been putting in $1 million on an annual basis. The number of kids, the mentors that have come out to volunteer, is staggering. We have a cooperative agreement with the Attorney General's office to get people cleared and fingerprinted and it is working.

Chairman Riggs. This is one-on-one mentoring?

Mr. Micciche. And group mentoring. We are going to look at peer-to-peer mentoring, kids who have benefited from mentoring and are 19, 21 years old working with other kids. Congressman Martinez in southern California has initiated some mentoring programs. Larry Clark from the City of L.A. testified on the Senate side, and I think he talked a little bit about that.

Chairman Riggs. I want to defer to my colleagues. I have some additional questions for this panel. We are putting a lot of emphasis in Washington. We passed a resolution yesterday in our Full Committee markup stressing the importance of fatherhood and stressing the single greatest threat to child welfare in America today is family breakdown and that which contributes to societal disintegration.

Maybe we can revisit the question on the next go around. This is a potential requirement in the reauthorization and this would be part of the other reporting requirements, but a reporting requirement where you would indicate how you are working in coordination or in conjunction with local welfare reform efforts. In other words, tell us the role that you are playing in helping to implement the congressionally mandated welfare reform.

I personally believe that legislation is probably the most important piece of legislation that we have passed in the last four years. That is just my personal editorial opinion. I am sure that some of my colleagues might disagree with that. I recognize Congressman Martinez.

Mr. Scott. Mr. Chairman, would the gentleman yield just very briefly?

Chairman Riggs. Sure.

Mr. Scott. I have to go to another meeting, but I just wanted to welcome Mr. Musselwhite. Total Action Against Poverty in well-known in Virginia. My district is not anywhere close to Roanoke, but the reputation of Total Action Against Poverty, Ted Atlick and Cable Brand, who I think is your predecessor as the Chairman of the Board?

Mr. Musselwhite. The one before.

Mr. Scott. I want to thank them for their good work. Your reputation is all over the State [of Virginia].

Mr. Musselwhite. Thank you very much.

Mr. Martinez. I am like you, Mr. Micciche. When you are the last or even second to last, all the good questions have been asked, and you don't disagree with the Chairman if you want to get anything done.

Mr. Micciche. I would take that statement back if I could.

Mr. Martinez. I am glad you mentioned the mentoring program because with me that has been an important aspect of life as far as I was concerned. There were people that mentored me, and if they had not mentored me I probably, whether you think that I turned out bad or good, turned out the way that I did. But the fact is that not every parent will accept the responsibility of parenting, and sometimes these young people have to go outside the home to get that mentoring they need, and these programs fill that gap.

I want to follow-up on what Mr. Riggs was talking about, the duplication, because to me it depends on how you think about duplication, whether it is good or bad. You know, if you are talking about the same program in even the same geographic area but let's say on opposite ends of a community, because of lack of transportation or comfort zone, a person will go here rather than there, and as long as you are serving different clientele, duplication in that case is not bad, would you agree?

Mr. Micciche. Yes.

Mr. Martinez. So, I want to caution my colleagues when they worry about duplication. I think as you describe the plans, that the plans have to come to the State, that there is a great safeguard there in not allowing duplication, so I don't think that is something that we have to worry about to that extent.

Let me discuss something that I do think we have to worry about, and let me qualify that before I ask the question.

I believe in targeting in many cases. I think it is necessary in many programs to make sure certain populations are served. However, not every program, and I am not necessarily a super advocate of the block grants, but here again in this particular program I think that is the best way to go.

Having said that, I am wondering because there is some talk about maybe targeting a particular group of people within that 90 percent pass-through, and all of you commented, I think, on the importance of that 90 percent passthrough. So I would want to know from you, do you feel that any particular group of people or organizations should be targeted in that 90 percent? And I will start with you, Mr. Micciche.

Mr. Micciche. If I understand your comment about targeting, I think that there is the current flexibility to do that, and some local agencies do that in their local planning process. For example, when they hold public hearings on a local level, community groups come to them and they have a particular problem which may be very critical, and in determining those they may decide to target a neighborhood, or they may decide that they are going to target a particular segment of the population with some special projects. So I think that does go on.

On the State level we stay away from that kind of specific targeting. However, in conjunction with our local agencies we do talk about State-wide priorities. As the Chairman mentioned, it was mentoring, and before that it was family self-sufficiency. They are broad categories that you can work towards through those goals and objectives.

Mr. Martinez. Since the States already do that to a degree where they target priorities, you would not see the necessity to target one particular type of organization?

Mr. Micciche. No.

Mr. Martinez. You are trying to stay away from offending the Chairman, but what I am talking about is faith-based organizations.

Mr. Micciche. I did misunderstand your question.

I think I said in my comments and in my written testimony that I think that is really being done at the local level. It is an inclusive process. I don't know where any organization has been left out because they were faith based or non-faith based or they were the Elk's Club, for that matter.

If people are providing a service, everything from literacy problems to helping the blind and so forth, as long as the client meets the requirements of the poverty guidelines, those organizations are included. And we have not had to enforce that in the sense that, you know, you are not being inclusive because the process just dictates it.

Mr. Martinez. Mr. Mitchell?

Mr. Mitchell. I would say that we strongly encourage targeting. Again, New York City is a community of neighborhoods. Neighborhoods change from block to block. To use an example of north Brooklyn, there are very many ethnic neighborhoods, and because of the culture and the background and the religion, different neighborhoods need services delivered in different ways and need organizations that are best suited to deliver those services. We don't dictate to the communities which organizations are the best to serve those particular populations.

For example, in our Flushing area of Queens there is a large Korean community. The Methodist Church in the community is the organization that is best suited to provide services to Koreans. Whether it is domestic violence issues, literacy issues, they have chosen that organization to deliver that service to them. They know the community best. They know how to outreach to them.

It is very different in south Brooklyn where there is a heavy Russian immigrant community and there may be other types of organizations. Particularly if they are Orthodox Jews coming from Eastern Europe, the synagogues best serve those communities in terms of delivering services.

Do we have problems with that? Our requirements are that that they be community-based organizations. Whether they are faith-based, whether they are charitable organizations or business organizations, it is the community itself that decides which type of organizations best serve their particular needs. The solutions for problems in one community and one neighborhood are not necessarily the same solutions for the same problems in another community.

What happens is the solutions for areas in the south Bronx which are heavily Latino, whether they be Puerto Rican or South American, are very much different. Even within the Latino community, what serves the Mexican population is not necessarily what is good for the Puerto Rican population or Ecuadorian or Peruvian. Communities in New York City are organized around ethnic lines, and I think that makes New York City the vibrant city that it is, recognizing that there are differences but addressing those differences and those needs in individual ways.

Mr. Throne. A safe answer to your question is, yes, we do; no, we don't. Specifically as to faith-based, we work very closely with faith-based organizations. I mentioned the incredible collaboration we have going with the Sisters of St. Joseph and our homeless programs.

We also work very closely with our Ministerial Alliance in Humboldt County. So we are very inclusive in many of our programs. In other ways Humboldt County is a huge geographical area. It is almost 120 miles long. So we would target North County, South County, East County, et cetera.

Other issues we would target are the categorical grants we receive, and because we have so many coordinative bodies in Humboldt County and we have such scant resources on the north coast of California, there are so many coordinated bodies to prevent the duplication that the Chairman alluded to.

We are very careful to put our resources in the priorities of the county, welfare reform, for example. So we have targeted, meaning RCAA, welfare reform as one of our priorities. We are putting an awful lot of our resources in trying to find people as they transition from welfare to work, and a good percentage of our new programs over the last year are targeted to that priority. And I must add that we are doing that in concert with the public sector and the private sector.

Mr. Martinez. Do you have an opinion, Ms. Glatz?

Ms. Glatz. No, I don't.

Mr. Martinez. Mr. Musselwhite?

Mr. Musselwhite. Yes, in terms of the faith-based organizations, at TAAP we work very closely with other organizations to make sure that we are not stepping on each other's toes and we are not duplicating services.

We interface with the Presbyterian Center which does some of the type things we do, and we work with the Rescue Mission, both faith-based organizations but we are sort of reaching out to a different segment of the population. We work closely to make sure that we are in referral with one another and help the people that we are trying to serve.

I serve on the Board of Pensioners of the United Methodist Church and the Board of Missions and Church Extensions, and we donate money to TAAP because we know that TAAP is willing to do things that many of our churches, most of our churches do not want to do. So we have been giving grants from the Methodist Church and the district to TAAP and the Food Bank for a number of years because of that very thing.

Mr. Martinez. If I could summarize, I would say that you enjoy the flexibility that the program provides now under the current structure, and you would just as soon leave it alone?

Mr. Musselwhite. Yes, sir.

Mr. Martinez. Let me ask you one other question, because it seems to me rather amazing because I am the kind of individual who loves to see the Federal money that we send out to these programs on this level. You receive money, and that is when we talk about private-public partnerships, and in this program it seems that you have leveraged for every dollar something like $4 to $5.1 billion in service and hours contributed. Can you tell me why this program is so successful in doing that?

Mr. Micciche. Well, I think it is because it is unique in what it does in the community. It is unique in the respect and trust that it has in the community and it has been around over 30 years, and so in many cases it is institutionalized, sometimes as part of county government. Lloyd is a specific example of this. He is a private nonprofit, and in a county like Humboldt with limited resources, public officials look for somebody to deliver these services effectively and cost efficiently, and they are it. And it is true up and down the state of California and across the country.

They are in a unique position to leverage because the CSBG dollars are seed money, we have used a lot of terms for what they do, and that varies from place to place, which is why it is difficult to put your finger on what CSBG does. It varies from place to place because of local leads.

Because of that nature, because of the tripartite board and its history and the involvement in these programs, they are able to generate a lot of additional resources to provide people what they need to move from one place to another.

Mr. Mitchell. I think when funding sources are looking for organizations that are delivering services, again this may be unique to New York City, but those organizations that already know their clientele, that know the service population, that know their neighborhoods, those are the organizations with those particular strengths where you are going to look to continue funding because they have established their reputation. They have established their accountability.

An example is the Source Foundation. George Source, when he was looking to assist immigrants in becoming citizens, looked at those organizations already providing those services. He looked to the churches helping with the ESL classes and the literacy classes, and he was looking to the organizations that were providing citizenship assistance, and those are the organizations that that foundation decided to enhance.

So certainly organizations that are currently very familiar with their constituents are the ones that are going to get support. And I think it is clearly recognized in New York City that government can't do everything and that local community-based organizations have to be very involved, and they are very involved, and in many cases that means the synagogues, the mosques, the churches where people naturally come together and congregate.

Mr. Throne. We are most fortunate to have the respect and trust of the public sector. Many of our programs are decentralized from the public sector. We operate a lot of CDBG programs for the county. We operate the food stamp distribution center because we are more cost effective, and they realize that.

But I really appreciate your question on CSBG for seed capital. I wanted to give you some quick examples.

We started thrift shops in Humboldt County to support our youth bureau service programs which deal with troubled youth. That was a $500 investment. Right now the thrift shops, which sell clothes at a very reasonable rate, are grossing over $300,000. In economic development, they provide over 30 jobs for ex-welfare recipients.

With welfare reform we have to create over 200 jobs a month in Humboldt County just to keep pace with the people that are leaving welfare. We have come up with a deconstruction project. As you know, old growth redwood is very much in demand but there is none, so we came up with an idea to deconstruct all of those old, falling down barns and water towers. We are working with the private sector, with the timber companies, to deconstruct some of these hundred-year-old barns and water towers which frankly are a public hazard. We provide jobs and beautiful old growth redwood that could be recycled, and we will be of great service to the environment.

Another example, low-income disabled people. In Humboldt County, believe it or not, there is not one ramp program that could supply a disabled person with a way to leave their house. So we put together with very, very little money a demonstration program to build ramps that we have the Rotary, the Humboldt Area Foundation joining in, and we are turning that into a low-cost rental program to construct ramps.

Finally, years ago our board of directors that represents the Society of Humboldt County decided, and truthfully so, that our occupancy rate for low-income working poor in Humboldt County is 2 percent. They cannot afford to live in our county, so we decided to get into property management and buy rental units for low-income working people. That was with a very small investment then, and now we own over a hundred units, and this was all done with very minimal CSBG seed capital.

Mr. Musselwhite. Yes, we have been involved for 32 years at TAAP in starting organizations and spinning them off and they become independent organizations. Some of those are Legal Aid, the League of Older Americans, the Southwest Virginia Development Fund, and Habitat for Humanity, the Blue Ridge Housing Authority. All of those have been a part of TAAP. They were given birth in TAAP, but as soon as they were able, we had them out on their own and completely independent of our organization.

Mr. Martinez. One last question, and that is for Ms. Glatz. Simply I want to ask you, have you ever wondered what your life would be like if you had not received the help that you needed when you needed it?

Ms. Glatz. I can safely say that eventually I would have made it. I don't know how long it would have taken me, 10-15 years. With the help of the Commission, it forced me to do it now, to take control of my life, to get on with my life and get over problems that I had had. It forced me to look ahead to my future.

Currently I am a licensed practical nurse working towards my RN, and I plan to go back to the Commission to have them help me look into home ownership one day. So I am very grateful to the Commission for being there to help me, to push me whenever I felt like giving up, which is occasionally an everyday thing dealing with being a single mother of a 3-year-old. I am very grateful to the Commission for being there for me.

Mr. Martinez. Anybody that goes through a struggle like that, it is not easy and if you don't have help or support, sometimes you want to give up. But you have to want to help yourself in order to take advantage of that. I commend you for that.

Chairman Riggs. Thank you again for being here, Ms. Glatz, and I join in Mr. Martinez's comments.

I understand that Mr. Micciche has to excuse himself to catch a plane, but I want you to know if you have to leave, you leave, we will understand.

I know that you did disclose pursuant to our rules, but I want to ask Mr. Musselwhite and Mr. Throne, what other sources of Federal funding do you receive?

Mr. Musselwhite. I am not aware of any other Federal funding.

Chairman Riggs. Okay.

Mr. Throne. We have 43 funding sources. We receive CDBG money. We receive FESG, Federal Emergency Shelter money. We receive FEMA money. We receive a lot of block grant money. I have the complete list in my written testimony.

Chairman Riggs. That is fine. LIHEAP?

Mr. Throne. We receive LIHEAP money.

Chairman Riggs. And you receive funding under the Juvenile Justice and Deliquency Program.

Mr. Micciche, do you have any idea how many of the community action programs in the State of California receive Federal taxpayer funding from multiple sources?

Mr. Micciche. I would think that all of them do. I don't know of any that doesn't have more than one source.

Chairman Riggs. One of the issues that concerns me the most, and that is, and I know that this may appear to conflict with the flexibility and the local control aspects of the program that you all have mentioned as really integral to the program and key to its success, and that is the idea of greater accountability.

Let me preface my remarks by saying at the beginning that we understand the National Association for State Community Services Programs has done a good job compiling the voluntary reporting of information on State and local CSBG programs. Let me further stipulate that, as I think at least one of you mentioned in your testimony, we are now able to glean some data on how the money is being spent. The result of those expenditures is what the money is accomplishing under GPRA, the Government Performance and Review Act that passed Congress in 1993.

And lastly I also know that the CSBG network, the nationwide system, has initiated a voluntary performance measurement system working with HHS, called ROMA. So given what we have in place today, I guess my question is two-fold. Do you think that we ought to change the statute to require all States and local eligible entities receiving CSBG funding to participate in ROMA or some similar performance measurement system, where local CAP agencies working with the State would prioritize and select their own performance measures that they would be held accountable for meeting or exceeding? That is question one.

The other question is: Do you feel, as I suspect some of my colleagues do, that there is a need to have a better understanding of how these funds are being spent in the system, and in that regard would you support a requirement in the upcoming legislation that would require State and local CSBG grant recipients to report on the expenditure of their funds?

I hope that the four of you, excluding Ms. Glatz, have a grasp of what I am asking, and we will start with you, Mr. Micciche.

Mr. Micciche. I think as I said, Mr. Chairman, in my testimony and in the writing, we look forward to accountability. We feel very proud in California of what we have accomplished and what we are accomplishing.

Chairman Riggs. We will stipulate that for the record.

Mr. Micciche. We initiated the ROMA program, so we don't have any problem on a requirement because we look at it as a requirement. We may be voluntarily participating in ROMA, but we have instituted it in the State, and the agencies have bought into it and it is a given as far as we are concerned.

Chairman Riggs. What about requiring that all State and local recipients report on the expenditure of funds?

Mr. Micciche. Not a problem.

Mr. Mitchell. I want to commend my colleagues from the State of California in the work that they have done because it has provided a lot of the background work for us in New York City. Let me also add that Mayor Giuliani has created a city-wide task force to look at outcome measurements for all social service agencies, and we are probably one of the lead agencies because we are somewhat ahead as a result of ROMA.

My initial thoughts, when we began to look at how we are going to implement ROMA, were that we would have agencies yelling and screaming about having to report the effect of their programs on the lives of their clients. I thought social service practitioners had focused more on the efforts that they have expended in delivering services rather than the transformation that their clients have gone through as a result of coming through their doors, but I didn't find that.

I found that as we began implementing ROMA in New York City by doing it as a collaboration between the community advisory boards and our clients, our agencies and our contract management staff. Let's look at what we are doing. We know that empirically what we are doing is successful, but how do we measure that and how do we report out on that?

What we found was that a lot of the agencies began to look at their own efforts a lot differently. I remember in one of our early sessions there was a program coming out of Harlem, a homeless program, where they thought that their mission was simply to get someone who has been put out of his apartment or his home, back into the home.

When they began to look at ROMA and results, and that the goal is to assist someone to reaching a level of self-sufficiency, to be able to support himself, you can't just look at the homeless problem. You have to look at your client in a more holistic nature. Maybe there is a drug problem or abuse problem that needs to be addressed, and you will not solve the homeless issue until you address some of these other problems. So it enabled them to look at their programs in much different way.

It is a paradigm shift, and it is not just the numbers of people walking through the doors any more, it is how you are affecting the lives of these people. And I think that is the kind of concept, that we have been helping our agencies and our clients and our neighborhood advisory boards to look at effectiveness more so than looking at just the numbers. I think it has been well received throughout the city and I am glad to see that we are moving in that direction. We are providing some of the leadership for the rest of the social services agencies within the City of New York.

I think taxpayers certainly are entitled to know what their tax dollars are going for and what they are being used for and that they are effective. I think in New York City we can demonstrate now our effectiveness in the same terms that economists can talk about the economy and how well the economy is doing and being very precise about the results that we have achieved.

Chairman Riggs. Thank you, Commissioner. I hope you agree with me, then, that without ROMA or some performance measurements system in place and without some reporting requirement, what we really have is more of a revenue sharing program and not really a block grant program.

Mr. Throne and Mr. Musselwhite, do you want to take issue with anything that the commissioner or the director has said?

Mr. Throne. Not at all, but I am thrilled that you asked that question because this pile of paper is the result of 1 year of fiscal accountability to our funding sources. So fiscally on the local level we are very accountable.

More important than that, our grantors are 43 funding sources. All of them at present have standards of effectiveness built into these grants, every last one of them.

More importantly even than that is on the local level we are accountable to our community. We are accountable to our local elected officials. We are accountable to the taxpayers, and we are very accountable to our very clients. So on the local level we are very accountable, and the folks on the local level know that.

Mr. Musselwhite. I don't have anything to add, but I did misspeak a few minutes ago.

We do receive other Federal dollars for Head Start from the Department of Health and Human Services, the Department of Labor for the employment in summer youth programs, from HUD, FEMA and Department of Agriculture for our Food Bank, so I did misspeak and I apologize.

Chairman Riggs. That is one reason, the potential, I am not saying the actual prevalence or presence, but the prevalence for duplication we may want to tighten up.

On the reporting requirements, the other or the current requirement, accountability requirements and procedures that Mr. Throne mentioned notwithstanding, I wish, I don't know to what extent, Lloyd, you can do a single audit --

Mr. Throne. We do. It is required.

Chairman Riggs. Very quickly, to conclude, just right down the panel, what are the top five human or social service needs in the jurisdiction that you serve?

Mr. Musselwhite. That is difficult. Housing obviously is a major issue in our area. We have a problem with that, and it is being addressed with the Transitional Living Center and the Blue Ridge Housing Group that I mentioned earlier.

Water has been a problem in our area, and we have been working with that for a number of years and have been successful in bringing indoor plumbing to a lot of people in our area.

The Head Start program continues to be a great program. We are still trying to serve those needs.

Inmates coming back into our community, we feel very strongly that we need to continue the Virginia CARES program to help inmates come back into society and not end up back in prison, for a number of reasons.

Off the top of my head, those are the first four I can think of.

Chairman Riggs. Ms. Glatz, would you like to respond?

Ms. Glatz. Definitely child care is a big one. Without child care, single mothers or anybody cannot do anything. It is very difficult.

Housing. I know that I am in a situation with my housing right now.

Transportation. There is no local transportation in the area that I live in which is available for people like me who may not have a vehicle to use.

Food. I know it is very difficult to try to live off of a set limit of food stamps per month, and many people turn to different means to try to feed their families. That is pretty much . . .

Chairman Riggs. That is fine. Lloyd?

Mr. Throne. Yes, the top five, number one is job creation in rural Humboldt County to absorb the people transitioning from welfare.

Number two, in no order of priority, would be crisis intervention, and I am not solely referring to LIHEAP or ESIP but people who need all sorts of intervention.

We desperately need more youth programs. Families are dissolving. We have an awful lot of youth runaways, not solely from Humboldt County, but we are on the 101 corridor. We have them coming from Montana down into south state.

We also desperately need more services for homeless families. RCAA operates the only homeless family transitional shelters north of Santa Rosa and south of Eugene.

And, five, we need services for the children of the homeless. These children are impacted at an incredibly early age, and we found that providing in-depth case management to the children and just them gives us an opportunity to break that cycle.

Chairman Riggs. Obviously four and five are interrelated.

Mr. Throne. Yes.

Chairman Riggs. Commissioner, the top five in the largest city in the country?

Mr. Mitchell. Top five, no particular order: youth leadership, educational support for young people, keeping them in schools, getting them through graduation, acquiring the skills that are necessary in order to compete in the world of work. I think that is very important.

Economic development, finding the jobs, creating the jobs that are above minimum wage so that people can earn a decent living to take care of their families.

Family support services. Keeping families together, keeping families strong is very important.

Senior services. We are seeing Americans getting older and older, and there is a tremendous effort to keep seniors in their home and independent longer, and supportive services enable them to do that.

Housing programs. In New York City affordable housing is a big issue and continues to be a big issue.

I think those would probably be the most important issues for us.

Chairman Riggs. And to the director of the program for the largest State in the country?

Mr. Micciche. On a State-wide basis all of the needs and programs necessary for TANF to work, day-care and job training.

Clearly youth and violence, all things related to school dropout and drug abuse and teenage pregnancy and all of those kind of preventive things.

Thirdly, parental involvement, family togetherness and keeping families involved in the family's life.

Health. Health, access to health is a constant problem, and we are addressing that in California with a healthy family program, and the CAAs are very much involved in that.

And I would say homelessness and the related issue of housing.

Chairman Riggs. For the very patient witnesses on the next panel, that is a heads-up because I am going to ask them the same question, as I am going to ask them this question. I hope it will be taken in the right vein because it is meant potentially as a form of tough love, and that is:

I am seeking your reaction and your opinion as to whether the same paternity requirement that is contained in welfare reform and TANF should be applied to participation in the CSBG program, as well as any form of drug testing for CSBG participants. And I see Mr. Musselwhite shaking his head.

I am just looking for your off-the-cuff response.

Mr. Micciche. I think those are both important issues, and whether or not they can be practically implemented because of the way CSBG delivers services may be the question, but we are certainly supportive of looking at that.

Mr. Mitchell. Again, I think the flexibility of the program is the strength of the program. There are a lot of people that do fall between the cracks, that are not serviced anywhere else, and CSBG is able to do that. Again, I would say that we prefer to maintain the flexibility that we do have.

Mr. Throne. As far as tough love, I have no problem with that. Many of our shelters have tough love rules and we already do drug testing in a lot of our programs.

As far as the paternity aspects of it, when it can be done. To give you an example, we have had four babies born in our homeless shelters just last month, and we don't have a clue nor does the mother who the father is, so some of this is very hard to implement.

Chairman Riggs. I don't know if Ms. Glatz has a comment.

Ms. Glatz. I have no comment.

Chairman Riggs. Mr. Musselwhite?

Mr. Musselwhite. No comment.

Chairman Riggs. Very good. Congressman Martinez, if you have any final comments?

Mr. Martinez. No, I think the testimony was very inclusive and supportive of the program as it exists today. I think there may be some fine tuning, but overall I think the program has served everyone well and should remain very much the same.

Chairman Riggs. I join Congressman Martinez in thanking each and every one of you for being here today. We look forward to working with you in the coming days on this very, very important piece of legislation, and we are committed to getting the reauthorization through Congress between now and the final adjournment in late September, early October.

What I will do is, I think before when we called our first panel of witnesses forward we introduced everybody at that time, but what I would like to do is introduce our witnesses as we recognize them to provide their testimony. You know our ground rules because you had to very patiently sit through the first panel.

So we will go to Ms. Mary Nelson, who is the Director of Bethel New Life Development Corporation of Chicago. New Life is a faith-based organization which focuses on economic development in an economically depressed community called West Garfield Park on the west side of Chicago. She is president of the National Congress for Community Economic Development. Ms. Nelson, thank you for being here. Please proceed with your testimony.

Ms. Nelson. Thank you. Thank you, Chairman Riggs, and Congressman Martinez, and the others on the Committee. Obviously we are here in support of the reauthorization of CSBG, particularly the CED component of it.

Our organization grew out of a neighborhood church, a 125-year-old neighborhood church in a very low-income community where 40 percent of the people in this square mile area live on incomes below the poverty level. We are happy to say that the unemployment rate has gone down from 27 percent to 15 percent in the last 5 years, thanks to both our efforts and the good economic times and the work of many organizations.

Bethel New Life is a 19-year-old organization. The church had to mortgage itself to create the original dollars to begin to do some of the economic development things that we are involved. Since our inception we have done 900 units of low-income housing, brought $90 million into a credit-starved community, placed almost 5,000 unemployed people on jobs, and we currently employ 350 people ourselves doing many of the things that need to be done in the neighborhood.

In terms of development, Bethel has taken over, bought and closed down an old city hospital, a 9.2 acre site, and turned that into elderly housing and a small business center and day-care center and created 180 new jobs in the community. We have turned the disaster of the Brownfield environment problems in our community into an opportunity to create jobs and small businesses doing environmental remediation and created 100 jobs in that sector, and we are now bringing a grocery store to our community where there isn't one.

There are a lot of opportunities in neighborhoods like ours to make a difference, but I hear also, in my hat as Chair of the Board of the National Congress of Community Economic Development, there are some 2,500 CDCs all over the country doing good grassroots effective kinds of things. CDCs have done 400,000 units of housing, 25 million square feet of industrial development, and brought in over $200 million in lending in our low-income communities.

I am also here, our organization is a member and affiliate of the Evangelical Lutheran Church of America, as well as I am on the board of the Christian Community Development Association. John Perkins is the chair, and we are struggling faith-based initiatives. We get 3,000 to 5,000 people at our conferences each year of churches trying to make a difference in their own neighborhood.

So there is a whole movement, good things going on in neighborhoods, and I think we get the job done. The problem with all of the categorical grants that come down is that they are missing pieces, and in a neighborhood with the resources knit together you can begin to figure out what it is going to take to really make a difference in people's lives itself.

I want to describe one of our CED grants that we had a number of years ago, and that was, Bethel was a part of the White House Interagency Working Group and did a welfare-to-work demonstration. We had in our square mile area 500 AFDC recipients, helping them get from welfare to work.

We found that day-care was the single most difficult thing. It wasn't accessible and it wasn't affordable, and we found that some of the women had good skills as caregivers. We helped them provide, connected with the city colleges to provide training for them to become day-care home providers, and then found that the places that they lived weren't licensable, and so we had to help them get new housing construction. Then we had to get banks using the Community Reinvestment Act to make those loans.

So then we built a resource center among the day-care centers to be the major source of assistance of day-care homes. $5,000 brought in $3 million investment in the community, created 48 permanent jobs, and has radically transformed the day-care system in our community.

We are here in support of the Community Economic Development, CSBG grant because it is so flexible. It allows us to do what needs to be done to fit the missing pieces, whether it is equity dollars, whether it is staff to make the connections, et cetera, et cetera. Secondly, its target is low-income communities. And, thirdly, it encourages leveraging, so you get a big bang for a small government dollar in terms of making that happen.

And finally, it is working. It is making a difference, so don't mess with it. So we would strongly encourage you to reauthorize this discretionary program as it currently exists in the legislation today.

Chairman Riggs. Miss Nelson, thank you. And we are now going to move to Ms. DuPont, in the hopes we can get her testimony in before we have to go back over to the Floor here.

As you might notice, we are constantly paged when we are voting on the Floor. This is a single vote apparently underway on the House Floor now, so we will be able to go over and vote and come back immediately.

Let me check with my good friend and colleague Mr. Martinez on what he would prefer to do. Would the gentleman prefer to go over and vote now and then come back?

Mr. Martinez. That is a good idea.

Chairman Riggs. Let's do that. We will go directly to the Floor, vote, and come right back so we can resume and complete our hearing, if you will just bear with us. I know last time I said we would be back in 10 or 15 minutes, and it was more like half an hour because there was a series of votes. This apparently is just a single vote, and we should be able to return in just about 10 minutes.

[Recess.]

Chairman Riggs. All right, we are going to reconvene and turn now to Ms. Mary DuPont, who is the director of the Working Capital Program at the YWCA of New Castle County in Wilmington, Delaware, right in the heart of Congressman Castle's district, I guess, since he represents the whole State. He is the Vice Chairman of the Committee and was here earlier, and I know spoke to Ms. DuPont and then had to leave for a meeting with the Speaker.

Ms. DuPont will testify about her work in development of a program offering Individual Development Accounts, an intriguing concept. One that I think Senator Coats, who is my counterpart in the Senate, has been promoting and is potentially interested in incorporating into the CSBG reauthorization, if there is such a way to do that. These are savings accounts for individuals in poverty.

And Ms. DuPont, thank you for being with us. Please proceed with your testimony.

Ms. Dupont. Thank you very much, Mr. Chairman, and members of the Subcommittee. It is an honor to be here today and to have an opportunity to talk to you about some innovative programming that we are initiating now at the YWCA of New Castle County. I am going to tell you a little bit about our program and about my experience in human services and how we arrived at where we are today.

I have been in human services for over 20 years, working with individuals and communities, helping them to develop strategies that would improve the quality of life. I thought that I was always on the cutting edge of the work that I was doing in community organizing and community service delivery, but recently I had an opportunity to travel to India as a part of my involvement with a women's micro-enterprise development organization in Philadelphia.

I was going there to visit micro-enterprise development programs that were helping the poorest women in India to gain access to credit and training. What I discovered when I was there was not only were they involved in micro-business development, but I visited several villages in the north and the south of India where women were organizing, coming together and saving just pennies on a weekly basis, and these are women who make an average of $150 a year. And yet they were able to come together and put their pennies together and collectively, the accumulation of their savings, they were able to create their own bank which today has millions of dollars in assets based solely on the savings of the poorest of the poor.

So my mind was completely blown by this, and when I came back to Philadelphia, where I was working at the time, I told my staff about it and I said, "What do you think about starting a savings program for the micro-businesses that we are working with, who are all low-income women from disadvantaged communities?" And my staff just said, "Forget it. These women don't even have enough money to pay for bus fare, and we are not going to make this unrealistic demand on them." So I listened to them.

And then I was showing all of my wares and telling my story to the women in the program, and after they heard about it, they said, "Hey, we would like to do that." So I said, "Well, then, let's do it." And right then and there we formed our first savings group. Since then that has become a major program in Philadelphia which the Governor of Pennsylvania has now supported by allocating funding to match the savings, so the State of Pennsylvania has become very actively involved in creating IDA accounts.

Since then I have moved my work to Delaware, where I am the Director of the Women's Center for Economic Options, and I run a State-wide microenterprise development program and a career enhancement program for low-income men and women. And we have put together a savings program based on this model, a group savings program in conjunction with another program at the YWCA, which is the Centers for Homeownership, and they do counseling for first time homebuyers.

So we have combined the skills that we have in our two departments. It is a group savings program that includes credit counseling and budget counseling and financial literacy training, and we also offer matching incentives on the savings for home ownership, postsecondary education and business development.

We have raised those matches. We don't have any Federal funds or State funds that have been offered up for this, but we have been out there working with the community, with banks, and also with the Federal Home Loan Bank through our partnership with a local community bank, to match the savings for home ownership.

But I urge you to support the Assets for Independence Act, which would allocate the resources that we need that would help to leverage more matches that are desperately needed so that poor people can realize their dreams of home ownership, college education for their children, and business ownership, just like middle and upper income Americans have been privileged to in this country. Thank you.

Chairman Riggs. Fascinating concept, and I was kind of whispering aside, as you concluded your testimony, to Mary, getting a sense as to where Senator Coats is at on this. Apparently he is keenly interested, and is thinking about explicitly authorizing Individual Development Accounts as a new function or a new activity, if not an altogether new program, within CSBG reauthorization.

So we are very interested in that, and hopefully we will have an opportunity to go into a little more detail here in just a moment. Thank you very much for being here. And I would observe that anyone by the last name of Dupont probably belongs in Delaware.

Ms. Dupont. Well, my name is Mary Dupont, NR. I would be happy to give you my card. That is no relation.

Chairman Riggs. You have to make that clear, I guess, all the time.

Ms. Dupont. Yes, absolutely. Otherwise, I wouldn't be here asking for money, I would just write a check.

Chairman Riggs. Thank you for your testimony. And we are now going to turn to Ms. McCree. And Ms. McCree, as soon as I introduce you, I am going to excuse myself just for a moment to step out into our anteroom here and say hi to a constituent, and then I will be right back in.

Janice McCree is president of the Residents Association.

Ms. McCree. President of Langston Resident Council.

Chairman Riggs. That is Langston housing?

Ms. McCree. Yes, public housing.

Chairman Riggs. Public housing in Washington, D.C. You, as I understand, are sort of pitch hitting for Ms. Hartsfield?

Ms. McCree. Yes. She fell sick.

Chairman Riggs. Thank you for being here, and please proceed with your testimony. And, like I said, I will be right back in to the hearing room, so please proceed.

Ms. McCree. My name is Janice McCree, I'm the President of Langston Resident Council. Mrs. Hartsfield was supposed to be here to speak, but I am here in her place.

I have lived in public housing for 41 years. I came from a rat-infested neighborhood. I raised two children in public housing; both have finished college. My son graduated from North Carolina State and my daughter from the University of Florida. They are now on their own. My daughter is in Europe.

I am in the community to bring it back up where it was when I came there in the 50s. Mrs. Hartsfield is the President of Carver Terrace, which has 1,818 privately owned units, and Langston has units of 308. I am here today to testify as far as UPO. They have really helped the community.

We have a 24-hour hotline, which is in Carver Terrace. It has been there for a while. We have case management with UPO. They have hired several of our residents. Langston has an influx of people that were from the shelter and on welfare, so UPO came in with the grant. We selected them to do the community outreach for our neighborhood. They have gotten our employees off of welfare, a lot of them, and given them jobs in UPO.

UPO has always stood for commitment to the community and this is what I like about them. Mr. Ben Jennings, he has been very helpful. Carver-Langston coalition is a realization. We are a 501(c)(3) because of UPO. We are in a collaborative of doing different projects in our neighborhood; of family self-sufficiency in each neighborhood.

So right now I want to ask your support for UPO because they have supported the community. They are for the community.

The Carver community is involved with the schools for our junior high student boys. They have an after-school program at Carver Terrace that helps over 400 kids with computers, and they have a library they just had installed maybe about a year and a half ago for the residents of Carver and Langston. The UPO, I just cannot say enough about them.

When the program closed down, UPO hired some of our residents. They hired some of the residents from the case management. This is how committed they were. Some were on drugs. They are off drugs. They are into a different environment, a working environment. A lot of them not working for UPO, but a lot of them have gone on to other jobs in the government and in private industry.

And I would like to thank the UPO for being there for us. When I need assistance, I know where to come. A lot of programs have come into the Washington area for the money, but UPO, when their money dried up as far as Langston. I could always get technical assistance from them, advice from them, even though some of the advice I did not like, but they were very honest with me and up front.

Thank you for letting me come here today to tell you about my experience in the community and the UPO commitment to the community. Thank you.

Mr. Martinez. [Presiding] Thank you, Ms. McCree. Mr. Rickett.

Mr. Rickett. Thank you, Congressman. I appreciate the opportunity to be here today. My name is Jerry Rickett and I am president of Kentucky Highlands Investment Corporation.

Kentucky Highlands Investment Corporation is a community development corporation created in 1968 to reduce chronic poverty and welfare dependency in southeastern Kentucky. KHIC carries out its mission by investing in businesses that provide job opportunities for residents living in the area. KHIC was formed as a Title VII CDC, one of the Nation's first. It received both operating support and funds for investments from the Office of Economic Opportunity, the predecessor to the Office of Community Services.

In the 30 years since its creation, Kentucky Highlands has invested more than $45 million in more than 100 businesses which have created more than 5,000 jobs. The companies have provided goods and services in excess of $1 billion and have paid more than $400 million in wages to employees in southeastern Kentucky. Kentucky Highlands estimates that almost 10 percent of all households in the Kentucky Highlands service area has at least one breadwinner employed in one of their investments.

I am here to indicate our support for reauthorization of the Community Economic Development program. CED provides grants for community development corporations to furnish technical and financial assistance to private business enterprises and community development projects which create job and business opportunities for low-income people. No other program targets as well the very poor communities.

CED grantees work in communities with poverty rates and unemployment rates almost double the national average. The CED program has been an important tool for CDCs to attract private and bank capital for communities. For every dollar of Federal funds received, the CDCs attract dollars with bank financing. Beyond the bank funds, CDCs raise another $2 from other sources. So the overall average is $3 in private funds to $1 in Federal funds.

The CDC program requires 75 percent of the jobs created be targeted to low-income people. The CDCs have done better. Ninety-four percent of the jobs created through the CED funds go to low-income people and people on public assistance or unemployed people. The cost has been $6,650 per job.

No other Federal program provides CDCs with the flexible capital which can be used, based on local priorities, to invest in projects which improve urban neighborhoods and rural areas. As a result, there is a great demand for these funds, which are used by large and small CDCs alike. CED funds organizations like Kentucky Highlands, but also new CDCs to help build their capacity and form important partnerships, such as the CED funds that go to go historically black colleges and universities.

Included in my testimony are examples of successful CED programs in Maine and California. I would like to focus for a second on our work in Kentucky.

Kentucky Highlands has received $565,000 in CED funds to develop industrial real estate. There is a shortage of usable industrial land and infrastructure to support it because of our mountainous terrain. These $565,000 in CED funds leveraged an additional $3 million in local banks, industrial authorities, State, Federal, local government and private company dollars.

In 1994, Kentucky Highlands was awarded a $491,000 grant from the CED program to help Manufacturers Services Corporation expand its manufacturing operation in Knox County, Kentucky. MSC was a contract manufacturer for commercial dishwashers for the food service industry. The CED grant was instrumental in obtaining other financing for the development of stainless steel metal fabrication capacity and to design an employee assessment and training system. The employment system was developed in conjunction with Kentucky State University, Kentucky's historically black college.

Development of a trained workforce for production capacity made it possible for Manufacturers Services to be sold to a Fortune 500 company in 1996. The company has plans to maintain the current operation and expand the facility. It can better employment benefits for the 260-member workforce and expand the workforce. Because of its financial stability, MSC now has access to mainstream sources of credit such as banks and other financial institutions.

Thus, not only did the CED program provide the initial grant that was used to assist MSC, it facilitated a significant private sector capital investment in Knox and surrounding counties, one that has created other valuable employment opportunities for residents of southeastern Kentucky.

In conclusion, CDCs rely on the CED funds to enable them to invest in their communities. The funds are valuable to the organization because they provide flexible capital to invest in projects which improve both urban and rural communities like ours. No other program targets as well the poor communities, because it requires 75 percent of the jobs created to be targeted to low-income or unemployed people. And finally, the CED program has been an important tool for CDCs to attract private capital to poor communities.

Thank you.

Chairman Riggs. Mr. Rickett, thank you. And thank you to all of our witnesses. I want to note for the record that our good friend and colleague Hal Rogers, Representative Harold Rogers, sent a letter of strong support for the good work that you are doing, and he praised you personally as well as the Kentucky Highlands Investment Corporation.

I also want you to know I am a Kentucky boy. Even though I represent a northern California congressional district, I was born and raised in Kentucky, outside Louisville, so I do know where London, Kentucky is.

That leads to my first question for you, since I understand you are under some time constraints, and that is: Have you observed any kind of tension or problems, say, for example, in your home State, my native state of Kentucky, regarding the intrastate distribution of CSBG funding between rural communities where the need for such funding to combat poverty. I certainly am aware of the poverty problems or poverty-stricken areas of rural Kentucky versus the needs of the inner cities? And what steps are we taking today, in your experience, to ensure an equitable geographic distribution of funding in Kentucky?

Mr. Rickett. Well, Kentucky, as you know, is a rural State. We have three urban areas, as we call them, of any size. But our experience with the CED program has been it has been a very fair distribution of funding, both urban and rural. Because of the large percentage of the population in Kentucky that works in rural areas, we have found it to be a fairly equitable distribution of funds.

We like the CED program, from my company, because it is nationally competitive. It doesn't go through Frankfort, so you get to compete with you are aware of the politics in Kentucky, if you are from there.

Chairman Riggs. I am aware of the politics everywhere.

Mr. Rickett. Sometimes it is hard to get the block grant programs out on an equitable basis to all the rural areas. This program has worked particularly well.

Chairman Riggs. Is there a particular agency in Kentucky that is tasked with the challenge of combating poverty in Appalachia?

Mr. Rickett. Sir, there are several. The primary agencies, the State human resources cabinet, which is responsible for the welfare-to-work programs, the administration of all the public assistance programs, we do coordinate with them.

Every application you submit to OCS, you have to indicate in there the collaboration between those agencies, the local providers of services, to be sure that you are not duplicating, or at least you are adding onto their efforts to address the problem of unemployment.

Chairman Riggs. And who is doing that review to ensure that there is not any unnecessary duplication of services?

Mr. Rickett. This project in Kentucky has dealt through the State clearinghouse, which the State agencies review for the activities that are defined in your application compared to others. As well in the application that you send to OCS, you have to indicate support and coordination with the agencies involved in similar fields.

Chairman Riggs. And that clearinghouse is required under Kentucky State law?

Mr. Rickett. Yes, sir.

Chairman Riggs. I see. For you and for Ms. Nelson, what relationship have you seen in the last say 18 to 24 months, as welfare reform has been implemented by the States, between community development efforts and the effort to move individuals from welfare to work?

Why don't you go first, Mr. Rickett?

Mr. Rickett. In Kentucky we have had, or in my area we have had a large part of the population impacted by the welfare-to-work rules. Our biggest issue is the lack of jobs. The second issue we have is the challenge to go from being on a public assistance program to being a responsible employee.

Congressman Rogers talks a lot about our literacy rates. We have a real challenge to get our people up to speed that way, but we have seen a real sense of coordination. Every time we have worked with a project that is going to have employment directly related to it, we work with the State agency that handles the welfare-to-work program and we try to include as many as we possibly can.

As I said earlier, the CED program mandates that 75 percent of the people that you benefit are low-income. So we coordinate very well, or feel we coordinate very well. We were unsuccessful on a recent application for welfare-to-work, but hope to get in there the next time.

Chairman Riggs. Do you know what percentage of your clients are receiving TANF benefits?

Mr. Rickett. Four years ago the Ford Foundation did an audit on Kentucky Highlands to see if we had been a good investment for the public. At that time 65 percent of the people that worked in companies that we had investments in, when they initially came to work, were on public assistance.

The Chairman. Do you know what that figure is today?

Mr. Rickett. We estimate that it is somewhat larger now.

Chairman Riggs. Somewhat larger?

Mr. Rickett. Yes, sir.

Chairman Riggs. Ms. Nelson?

Ms. Nelson. We at Bethel New Life were fortunate to receive one of the new Department of Labor discretionary grants on the welfare-to-work, building on our existing experience in job creation and job training in environmental, health careers, child care, and straight employment.

In developing these systems, this notion of partnering is really important, whether it is the city colleges or the local public aid office, but there are a bunch of different channels there. And I don't know if our State is different from the others, but there is the whole earlier legislation that helped to promote one-stop career centers, which was meant to be the coordination. Well, at least in Illinois the one-stop career centers don't include the public aid offices, and that is a different channel.

So you have got a series of efforts going on, and they are not always coordinated because there is a lot of kingdom building that we all somehow do. So even though the application, for instance, the Department of Labor required us to have sign-offs from our local PIC, which is the workforce board, and the State, we still need to work harder to figure out how can we work together for a good flow between CDCs and the work of other social service organizations and these government agencies.

So there is room for improvement, but at least the beginnings are there and the possibilities are there, and we just are going to have to work at it a whole lot harder.

Chairman Riggs. How critical do you think private faith-based organizations are to the overall effort? Obviously they have a clear role in the mix, but since you are there doing it.

Ms. Nelson. Right. In the earlier days most people thought that, oh, being faith-based, we couldn't do government kinds of things. It has never bothered us because we serve our community. We are a community development corporation, and our faith is the reason why we do what we do, but we don't try to proselytize people in the process.

Certainly now it seems to me we have a terrible choice that has helped raise the consciousness level, I think of both government and churches, that you can work together and not lose your faith and not go against that in the process of doing this.

I think faith-based initiatives, in terms of transforming people, the struggle that it is to move from welfare to work, to change a whole variety of things, the obstacles that are there, especially if you are on drugs or something else, that a faith basis gives you the stuff and a support system to carry through some of these difficult things. It is a possibility of transformational kinds of results.

Chairman Riggs. Let me ask you, I know the Bethel New Life organization is faith-based, but is it affiliated with a particular religion or --

Ms. Nelson. We came out of the ministry of the local Lutheran church, only they call us that Lutheran-Baptist church because we have gospel music and altar calls and all the nontraditional Lutheran things going on there, and the church is the sponsor of the organization.

It is a community church but it didn't have any assets, except that it owned the church building free and clear. So it mortgaged the church building five and six times as collateral against loans that otherwise would not have been made. So it is an integral part, and I always say it is the glue that keeps us going; that keeps us together when a lot of things would pull us apart. It is the gasoline for the long haul, and it is the guts of making the tough decisions of risking our assets and our lives to really say we have to try to do this, because it is holds promise of being better than what it is.

Chairman Riggs. And I think therein lies the critical importance of faith-based organizations. But the overall CSBG and community economic development efforts today, if you subscribe to the notion, which I want to, that a rising tide lifts all boats, I think you have to be honest and admit that it is only lifting the boats of those at the bottom rungs of the economic ladder, marginally at best. I see a very clear role for the charitable/religious sector in helping to provide that safety net to meet the needs of the ‘have-nots’ and the ‘have-littles’ of our society, particularly, again, as we struggle with the implementation of welfare reform.

Ms. Nelson. I think we are a critical ingredient but we can't do it by ourselves. We have to have these partnerships with the private sector, with government, like the seed money of this CED. These things never would happen. We have the stuff to hang in there and to figure out how to make it work, but we cannot do it by ourselves. It is just overwhelming.

Chairman Riggs. Agreed. Ms. McCree, thank you again for being here. I don't want to catch you off-guard with this question, but it occurred to me that several years ago, and in effect my first term in Congress, back between 1991 and 1993 during the Bush administration, that then Secretary of Housing and Urban Development Jack Kemp attempted to promote the concept of tenant ownership in housing. He actually had a program at HUD, I think it was called HOPE, Home Ownership and Opportunity for People Everywhere.

Ms. McCree. HOPE.

Chairman Riggs. But we weren't able to muster the votes in Congress to effectively implement that program. We had then, as we have today, divided government, where it was just reversed. The Republican Party, as you well know, controlled the presidency in the executive branch, the Democratic Party controlled the legislative branch of government.

Do you think that this is an area, this idea of helping to empower tenants to own their own homes, their own housing units, do you think this is a potential use of CSBG funds?

Ms. McCree. Yes, I do.

Chairman Riggs. Do you know that is it being done at Langston?

Ms. McCree. It is being done. Langston is an historical site, which we have Langston addition. And Langston, which 274 units is an historical site, which has not had any work has been done on it. It is 60 years old this month. But the addition, what we plan on doing is to hopefully manage and then hopefully own, ownership for the residents there. This is what we are talking about.

And around the city in other public housing, the people, you have to take control of where you live. So I think people are really beginning to see this and they are beginning to work towards it. It is a hard struggle, but I think some will make it.

Chairman Riggs. This will tie back into what Ms. Dupont mentioned in her testimony, and I want to ask her about momentarily, but that is, I also wonder if CSBG funds can help people accumulate the money they need to make a down-payment on their own home. Many times that is the greatest obstacle to being able to purchase a home, is the lack of capital, the lack of the ability to accumulate the capital necessary to meet the down-payment requirement.

Ms. McCree. Well, scattered sites are being sold off by the receiver, David Gilmore. We have some programs in place in the District and different foundations that will help people with housing, but first they have to get a job in order to obtain a house.

Chairman Riggs. Of course. We will look at that, and we will look at the compatibility of CSBG funding with HUD funding and the various programs that HUD and local housing agencies, like the one here in D.C., may already have in place to help people.

Ms. Dupont obviously it sounds like you are sold on the IDA concept because you have implemented the program there, but I want to know more about how it actually works in Wilmington. Obviously, you probably don't require people to contribute, or do you?

Ms. Dupont. Oh, yes.

Chairman Riggs. You do. How much do they contribute to their IDA accounts on a monthly or yearly basis?

Ms. Dupont. Actually, just to clarify this, this is a savings program for the participants, and the matches are kind of a bonus for them. So, primarily, what we are encouraging them to do is to open up a savings account. We have a local community bank, Artisan's Bank, which has volunteered, very generously, to house all the accounts and do all of the account administration, which is at some significant cost to them.

So the participants come into the program, they will form a group, and then each one goes to the bank and sets up an account. They will meet on a regular basis, and they will save at least a minimum of $20 a month. They could save as much as they could set aside out of their budget, but the average tends to be around between $20 and $50 a month.

Then they will work with the credit counselor and attend the financial literacy training. And they have to be in the program for a minimum of a year to qualify for any matches. During that time they usually know what they want to save for, but that could also change depending on circumstances. Let's say a lot of people want to save for home ownership, they want to have their own homes. So when they are ready to use their savings at the end of the year, then the Federal Home Loan Bank has given the funds to Artisan's bank, where the accounts are being housed. The participant would leverage that money to match the amount of the savings. So then it would go into the down-payment and settlement costs.

Chairman Riggs. Right. But these are individual savings accounts?

Ms. Dupont. Yes.

Chairman Riggs. They earn a market rate of interest?

Ms. Dupont. Yes, it is. And each person has to make a commitment to be in there for the long haul. We don't put the money into their account, but they are earning it as they go along.

And depending on their income level, that is what determines the size of the match. So those who are at 50 percent of median or below, according to the Federal Home Loan Bank rules, can qualify for up to a three-to-one match. And then the cap, the upper cap is 80 percent of median, and that would be a one-to-one match.

Chairman Riggs. So it is a sliding scale, sort of graduated?

Ms. Dupont. A sliding scale.

Chairman Riggs. That determines the level of the match.

Ms. Dupont. Right, for the housing. Now, we raised money from Whirlpool Financial Services to set up a pool to match business development. And since we have only raised a very little bit, our maximum match at this point would be one-to-one regardless of the income of the saver.

For the postsecondary education, we have put together a scholarship fund committee with some corporate sponsors and some bankers. We are planning on doing a scholarship campaign to try to get the corporate community to come forward and put some funds into that, but currently we have not raised the money that we need for the education matches.

But since people have to be in the program for a full year before they qualify, we are hoping that we will be successful with that and by the time they are ready to go to school themselves or send their kids to school, we will have some funds in that scholarship fund.

Chairman Riggs. To date, you have not received any taxpayer funding for the match?

Ms. Dupont. No taxpayer funding.

Chairman Riggs. Would you be interested in taxpayer funding?

Ms. Dupont. Would we be?

Chairman Riggs. It is not a facetious question. Because there are lots of groups and organizations that say, no, we don't want any Federal funding or taxpayer funding because we don't want the involvement or the potential strings attached or the red tape. So I want to be sure I ask you that question for the record; that you would be interested in having further leverage.

Ms. Dupont. That is why I am here today.

Chairman Riggs. I assumed it was.

Ms. Dupont. We are definitely interested in the Federal funds for several reasons: Number one, the way that the legislation is proposed, the Federal funding would give us a base which could help us to leverage other private sector investments. So we would not be depending completely on the Federal funding, but it would certainly help us to leverage those other dollars. As I have seen in my fund-raising for my other programs, once you get a major supporter in there, everyone else kind of falls into line. But without that, you are still out there scrambling.

The other issue, I think, on the Federal funds is that the Federal funds have been used to provide incentives for savings for myself, for example. I am a homeowner, and I get tax deductions for that. I get benefits, education benefits, for my children. I have a 401(k) program at my place of employment. So I have enjoyed and my family has enjoyed many Federal benefits that have helped me to save and to accumulate assets in my life.

So I think that it would be fair and equitable to have a program like this that would provide equal opportunity for people in lower income brackets, because even if you are saving $50 a month, that would be $600 a year. How long would it take to save enough money to put a down-payment on a house?

Chairman Riggs. Good point. Are you aware of any IDA programs anywhere in the country that is receiving taxpayer funding as a source of matching funds?

Ms. Dupont. I have to confer with my experts here.

Chairman Riggs. Okay, confer with your expert.

Ms. Dupont. Nine States are receiving State funding, but there are no Federal funds to date. So my State of Pennsylvania, as I mentioned, I know has allocated funds for this because I am from there, and CFAD says 8 other States in addition.

Chairman Riggs. So this would be blazing new grounds for the Federal Government and Federal taxpayers.

Ms. Dupont. This is blazing new grounds. This is new social policy that encourages savings by economically disadvantaged people. It is where we need to be going. People are poor because they lack assets, and they will continue to be poor if they don't start to build that up at some point in time.

Chairman Riggs. Very timely for you to make these comments because, as you may be aware, there has been a savings summit underway here in Washington, I think for the last 2 days, talking about expanding the savings base here in America and creating greater incentives for Americans to plan, save, and invest for their own retirement.

Ms. Dupont. Right, and this should be for all of us, all Americans.

Chairman Riggs. I am wondering, is the concept of Individual Development Accounts being raised at this savings summit, do you have any idea?

Doesn't look like it. Okay.

My last question is, how important is the peer support element in this kind of program?

Ms. Dupont. That happens to be a part of our program design. I think that in a lot of the many programs across the country that are sprouting up are now being matched by private sources. But in our program we chose the savings group model because I also run a Statewide peer lending program called Working Capital. We have a lot of experience working with groups and in seeing the impact of peer support. And based on the experience in India, we chose that program design.

I think that the support is important. I can't say because I have not run the individual program, but I see that those have also been very successful, where people would probably meet up with each other in the financial literacy training program rather than at the support group level.

Chairman Riggs. Okay. Very good. Congressman Martinez?

Mr. Martinez. Thank you, Mr. Chairman. I really don't have a lot of questions for these individuals because I would be preaching to the choir. You have all experienced, through your different organizations, the wonders of the program that I have always considered to be the best-kept secret in the world in terms of what they have done for communities.

I will just cite one community I am very familiar with, and have visited there, and also a lot of people would be aware of it if they have ever watched the movie "The Day After" which depicted the nuclear holocaust. Many people thought that was probably a photograph taken from Hiroshima or Nagasaki that was blasted by the nuclear device, but in actuality that was Kansas City, Missouri. That is how blighted that area was.

Visit there now, after a gentleman by the name of Don Maxwell took a small grant, I think it was $500,000 or so, and built it into a multimillion-dollar business venture. He took a block company that was in receivership and got a loan to revitalize that company, buy capital equipment and retrain the workers. He created incentive in the workers, and it became the second largest block building company in the State of Missouri, which is kind of an accomplishment on its own.

But the Chairman asked earlier about if these CDCs and monies used through these CDCs are building low-income housing, which is one of the things that people have always been concerned about. Well, they have. And in Kansas City, Missouri, they not only build low-cost housing for people, but they build senior citizen facilities and shopping malls, and you name, they have done it.

Even closer to home, an organization that I have been associated with for the last few years because of interest in what they are doing, TELCU. The East Los Angeles Community Union, which took a very blighted area and built an industry park on it, and has been very successful. But more than that, they have created an untold number of jobs, and that from a very small original Federal grant that now is worth several million dollars. They have created thrift loans. They have gone on and on.

So you can go on with your enterprise in Chicago, the one in New York that is very successful. And all over the country where these programs have been used, there is a tremendous amount of resurgence in broken down, economically distressed communities. I have seen it and I have visited a lot of them, and I see where this is doing great things.

Your comment, Ms. Dupont, and it is funny that we take a lesson from a country like India, where the pennies they save are so small, but it is a tremendous idea. It reminded me of something an individual told me a long time ago when I first went to work after I got out of the Marine Corps. I was boxing at the time, and I figured from my job I would support my family and from my boxing I would save. At that time I got $46 from the fight. The manager got $23 and I got $46, and I figured I would save that $46 but I could never manage to do that. The needs always seemed to be greater than my income.

So I went along, and pretty soon I quit that enterprise and concentrated more on going into a trade. And I did, and I thought, well, as soon as I get through the apprenticeship into the journeyman status, I would then be making so much money, it would be more than what I am getting by on now so I will save all the balance.

But every time I seemed to get a raise, I seemed to need to spend it, until I ran into an individual that told me, with that attitude you will never save. With that attitude, you will never save. I said, what are you talking about? He said, put the money that you are going to save aside first and learn to live on what you have left.

You know what, that was a real turnaround for me, because it wasn't too long before I did buy a house and other things. I never had the advantage of somebody helping me like this. I think I could have used it. I think anybody can. If you think it makes a person dependent on government or dependent on a program, it does not.

What it does is instill pride in them for the fact they can accomplish something, and that first little success leads to greater successes in almost every aspect of your life. That first success of saving money and being able to buy a house led me to have the belief that I could start my own business. I started my own business and became very successful at it. Today I have investments in real estate. If I didn't have any other retirement, I wouldn't need any other retirement. I have my retirement plan there in that real estate investment, all through the business I started.

So, I think if we can provide that opportunity for more people, we will invest not only in the economy of the United States but in the healthy well-being of the United States. We won't have so many people dependent on welfare, so many people dependent on somebody carrying them when they can carry themselves.

So I want to commend all of you for the testimony you have given here. I don't think today, in both panels, we have heard one bad word about this program. So I would hope that with my colleague, Frank Riggs, and the Chairman, as we move forward to reauthorize this program, that we keep this in mind. This is a positive program in so many places in the United States, that has done so much about breaking the cycle of dependency by individuals and done so much about eliminating blight in communities, and so much for giving people in those communities great hope to believe that government does work for them and that there is a chance in this great world to have what we all call the American dream. Thank you, Mr. Chairman.

Chairman Riggs. On those very beautiful, poetic, inspirational, and uplifting words, I want to thank all of our witnesses. I appreciate the fact we are now here at 1:30 for a hearing that started at 10 o'clock, but I agree with Congressman Martinez that your testimony, your advice, and input has been very valuable.

Hopefully, we will soon produce what we call a discussion draft of the legislation that we can circulate to interested parties and various stakeholders, seeking, obviously, your very important comments and further advice as we move forward to formal deliberation and consideration of the legislation.

Thank you again, and the Subcommittee stands adjourned.

[Whereupon, at 1:30 P.M., the Subcommittee was adjourned.]