BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON EDUCATION AND

THE WORKFORCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

HEARING HELD IN WASHINGTON, DC, SEPTEMBER 14, 1999

Printed for the use of the Committee on Education

and the Workforce

OPENING STATEMENT OF CHAIRMAN PETE HOEKSTRA, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE *

OPENING STATEMENT OF RANKING MEMBER TIM ROEMER, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE *

STATEMENT OF ROBERT ROGERS, CHAIRMAN OF THE BOARD, CORPORATION FOR NATIONAL SERVICE, EAST FALMOUTH, MA AND CHAIRMAN EMERITUS, EWING MARION KAUFFMAN FOUNDATION *

STATEMENT OF LUISE S. JORDAN, INSPECTOR GENERAL, CORPORATION FOR NATIONAL SERVICE, WASHINGTON, D.C. *

STATEMENT OF JULIE McLAUGHLIN, TEACHER, NORTH VIGO HIGH SCHOOL, TERRE HAUTE, IN *

STATEMENT OF BRIAN SULLIVAN, STUDENT, NORTH VIGO HIGH SCHOOL, TERRE HAUTE, IN *

STATEMENT OF REV. TIMOTHY R. SCULLY, C.S.C., VICE-PRESIDENT AND SENIOR ASSOCIATE PROVOST, UNIVERSITY OF NOTRE DAME, NOTRE DAME, IN *

APPENDIX A - WRITTEN OPENING STATEMENT OF CHAIRMAN PETE HOEKSTRA, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE *

APPENDIX B - WRITTEN OPENING STATEMENT OF RANKING MEMBER TIM ROEMER, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE *

APPENDIX C - WRITTEN STATEMENT OF ROBERT ROGERS, CHAIRMAN OF THE BOARD, CORPORATION FOR NATIONAL SERVICE, FALMOUTH, MA, AND CHAIRMAN EMERITUS, EWING MARION KAUFFMAN FOUNDATION *

APPENDIX D - WRITTEN STATEMENT OF LUISE S. JORDAN, INSPECTOR GENERAL, CORPORATION FOR NATIONAL SERVICE, WASHINGTON, D.C. *

APPENDIX E - WRITTEN STATEMENT OF JULIE McLAUGHLIN, TEACHER, NORTH VIGO HIGH SCHOOL, TERRE HAUTE, IN *

APPENDIX F - WRITTEN STATEMENT OF BRIAN SULLIVAN, STUDENT, NORTH VIGO HIGH SCHOOL, TERRE HAUTE, IN *

U. S. House of Representatives

Subcommittee on Oversight and Investigations

Committee on Education and the Workforce

Washington, D.C.

The Subcommittee met, pursuant to call, at 10:30 a.m., in Room 2175 Rayburn House Office Building, Hon. Peter Hoekstra, Chairman of the Subcommittee, presiding.

Present: Representatives Hoekstra, Norwood, Schaffer, Tancredo, Fletcher, Roemer, Kind, and Ford.

Staff Present: Peter Warren, Professional Staff Member; Christie Wolfe, Professional Staff Member; George Conant, Professional Staff Member; Patrick Lyden, Legislative Assistant; Kevin Talley, Staff Director; Robert Borden, Professional Staff Member; Becky Campoverde, Communications Director; Dan Lara, Press Secretary; Michael Reynard, Media Assistant, Deborah Samantar, Office Manager; Gail Weiss, Minority Staff Director; Marshall Grigsby, Minority Senior Legislative Associate/Education; Cheryl Johnson, Minority Counsel/Education and Oversight; and Brian Compagnone, Minority Staff Assistant/Investigations.

Chairman Hoekstra. A quorum being present, the Subcommittee on Oversight and Investigations will come to order.

I am going to submit my written opening statement for the record. My written opening statement talks about two things. It focuses on the framework that the President outlined in 1993 when Congress approved this program; a program that I voted for. The President outlined our expectations for the program as being a cutting-edge model for the federal government that would be a lean organization modeling the best practices found in the private sector.

The written opening statement also is kind of a nice background. Is that the victory march? Was that your introduction, Father Scully?

Rev. Scully. I wish it were. It is coming later.

Chairman Hoekstra. We have all this new high-tech stuff. Mr. Roemer and I are looking at this screen down here, and I didn't know if we were going to have audio background to go along with this.

Mr. Roemer. It is music for your opening statement.

Chairman Hoekstra. That is right. Mr. Norwood is saying he was rather bored with my written opening statement and thought it needed a little punch to it.

The other thing the written opening statement does is it goes into rather explicit detail about the commitments that we have gotten over the last 3 years from Mr. Wofford about the plan for AmeriCorps to address the various financial reporting issues associated with the audit of their books. This is a series of what I would characterize as broken promises and broken commitments to this Committee.

So that is what is in my written opening statement. I will yield to my colleague from Indiana.

WRITTEN OPENING STATEMENT OF CHAIRMAN PETE HOEKSTRA, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE - SEE APPENDIX A

Mr. Roemer. I thank my friend from Michigan for his yielding to me, and I will try to emulate his good example by asking unanimous consent to put my entire statement in the record. But I too just want to share a few opening remarks, and then with my remaining few minutes, if my good friend from Wisconsin wanted to have a minute to make a remark, I would be happy to yield him some time as well.

First of all, I just want to be very clear and very resolute in my support for AmeriCorps and all the great things that this National Service Program is doing and accomplishing throughout the country. My caveat is that I am concerned about some of the initial reports regarding some problems, some potentially severe problems, at the Terre Haute site. If we do have some problems there, we want to get to the bottom of them, we want to solve them, and we want to make sure that those problems are not repeated anywhere else.

It does not appear that they are being repeated in any of the other 15 sites in Indiana with the 20th Century Scholar programs. We want to make sure if somebody has done something wrong that they are punished for it. And I think the National Service Program strongly supports that kind of fair judgment, and then swift and fair penalty as well, too.

But the purpose of today's hearing is not to necessarily say that we have one bad apple in 700 programs or one small problem. I think even Ms. McLaughlin and Mr. Sullivan are going to say many wonderful things about the AmeriCorps experience. We also have Father Scully here who will talk about what I think is a system more typical of the AmeriCorps service with the ACE program at Notre Dame. This has 135 students enrolled in a program serving people throughout the South Bend public school system and scores of schools in the South that cannot recruit enough new, high-quality teachers. These benefits are profound to Americans across this country.

We have 700 programs in AmeriCorps and we have 40,000 Americans engaged in these programs, mentoring and tutoring 2.6 million children throughout the United States. So we think that the benefits of the AmeriCorps program are, simply put, astounding and very, very important in the direction we are going in this country.

I am proud of Father Scully's program and I am proud of the score of good programs we have in AmeriCorps today. We want to get to the bottom of any problems we have and find ways, proactively, to make sure those problems do not exist in other places.

With that Mr. Chairman, I would be happy to see if my friend from Wisconsin has any comments.

WRITTEN OPENING STATEMENT OF RANKING MEMBER TIM ROEMER, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE - SEE APPENDIX B

Mr. Kind. I thank my friend from Indiana for yielding whatever remaining time we have left. I want to reiterate what our Ranking Member has stated. I am a strong and proud supporter of the AmeriCorps program myself.

We have some wonderful programs in the State of Wisconsin, one in my hometown, in LaCrosse, called the YES program, where the Private Industry Council in Western Wisconsin has teamed up the Boys and Girls Club to allow college students to go in with mentoring and tutoring programs dealing with high-risk students.

So I hope today's hearing will be an attempt by this committee to figure out what, if anything, has gone wrong with the programs in Indiana, and how to tighten up and improve on what I view has been a very successful and well-received program throughout our communities and throughout the country. So I am looking forward to the testimony by the witnesses here today, and with that spirit, I will yield back.

Chairman Hoekstra. Thank you.

Under Rule XII(b) of the Committee Rules, any oral opening statements at Hearings are limited to the Chairman and the Ranking Minority Member. This allows us to hear from our witnesses sooner and helps Members and panelists adhere to their schedules.

If other Members have statements, they will be included in the Hearing record. Without objection, all Members' statements will be inserted into the Hearing record.

Let me introduce our first witness. We are going to go a little out of order. We have a vote. What do you want to do?

Mr. Roemer. I am open to just having the witnesses continue to testify, and you and I can work it out and take turns going over to the floor if we need to vote on the Journal.

Chairman Hoekstra. Okay, we will stay in session for Mr. Rogers' testimony.

Mr. Norwood, if you want to go vote and come back.

Mr. Norwood. All right.

Chairman Hoekstra. Our first witness will be Mr. Bob Rogers. Mr. Rogers will present the Board's perspective on the management problems and the progress of the Corporation. He will also discuss the oversight role of the Board.

And I really want to put in context that Mr. Rogers and I have had this discussion.

We want to get a little bit of a different perspective because this is not only about Terre Haute. We have asked Mr. Rogers to testify about what have been the systemic problems since 1993 so that in 1999 we are still not in a position where the Corporation's books are auditable or we can be provided with a clean audit.

Mr. Rogers, thank you for being here.

Mr. Rogers. Thank you, Mr. Chairman and Ranking Member Roemer. I really appreciate the opportunity to assist you in your oversight of the Corporation, as a Member of the Board. I have served as Chairman of the Board for about 2 years now. I came to my position as Chairman of the Board with the fundamental belief that I share with President George Bush, that there can be no definition of a successful life without a good measure of service to others. I think also Marian Wright Edelman was right on target when she said, "Service is the rent we pay for living."

My commitment to service, and doing everything possible to develop a civic society is personal. My dad died when I was only 7, and my mom had a disabling disease. As a young boy, my growing up was dependent upon surrogate parents in a caring community called West Springfield, Massachusetts. The neighbors watched out for me and made sure that I succeeded.

I also benefited from local chapters of many of the great service organizations in this country, especially the YMCA. Quite frankly, I would not have become the person I am today without the support of the community and the people who took interest in my well-being.

I have devoted my professional career to making a similar contribution to others. I am currently Chairman Emeritus of the Ewing Marion Kauffman Foundation, a large philanthropic fund in Kansas City, Missouri, which is committed to the development of self-sufficient people and healthy communities. Before that, I worked with a foundation benefactor for 15 years at the company he founded, Marion Laboratories, which is now Heorscht Marion Roussel, where I served as both chief financial controls officer and chief information systems officer, among other positions in senior management. Earlier in my career, I was an auditor and management consultant on financial systems development for Coopers and Lybrand that now, along with Price Waterhouse, is one of the six largest independent accounting firms in America.

As a member of the Missouri State Commission and as a Board Member of America's Promise: The Alliance for Youth, I have also seen how America works. I am also a volunteer for several service organizations which participate in national service programs both nationally and locally.

The Corporation has a very involved and committed Board of Directors. The Board is bipartisan and actively engaged in its oversight responsibilities. Joining me today is Chris Gallagher, if he will raise his hand. Chris has served several years as Chair of the Board's Budget and Management Committee, which works closely with the Corporation's Inspector General. As you know, Dottie Johnson, of the Chairman's home state, also serves on this Committee, and so do I.

Let me bring you up to date on the management systems and control improvements the Corporation has recently made with the assistance of and at the urging of the Board of Directors.

First of all, a Web-based reporting system that will significantly improve the accuracy of the National Service Trust is in the final stages of implementation. Second, a new imaging system is in place, to retrieve forms sent to the Trust. This will aid in the Corporation getting a clean opinion on its financial statements. The Corporation, as you know, did receive a clean opinion on its balance sheet for fiscal 1998, an important step towards an unqualified opinion on a full set of statements in the future. A highly qualified individual has been nominated to serve as Chief Financial Officer, and we are anxious for the Senate to confirm him. And the new Y2K-compliant financial management system, called MOMENTUM, is up and running and processing transactions successfully. I had to change that testimony as of Friday. It came up over the weekend.

The Board has aggressively pursued improvements in the Corporation's management systems and financial control programs. In fact, we have gone beyond our normal oversight responsibilities by working very closely with staff to make certain they stay focused on high-priority development activities in this area. There have been disappointments, to be sure, in the past because of missed deadlines and slow progress in correcting internal control weaknesses. However, the Board is now confident that Harris Wofford and his current team will build upon this year's outstanding results. We believe it is a break-through year.

Mr. Chairman, from my perspective, an effective organization has three clarities. They are clarity of direction, clarity of structure, and clarity of measurement. The most important role that the Board has is to see that this clarity is present for management and staff. The Corporation certainly has clarity of direction. The service of our Members is fulfilling the purpose as set forth in the Act, and Members of the Subcommittee have given testimony to that.

That Act also created a decentralized structure that presents unique benefits and some significant challenges. Under this structure the Corporation provides grants to governor-appointed state commissions and they, in turn, make sub-grants to local programs. This gives states and localities flexibility in administering AmeriCorps programs, but it also makes success dependent on thousands of local organizations around the country; actually over 700 programs at almost 1,500 sites. Careful monitoring is required to ensure that local organizations provide quality, effective service under the Act.

The Corporation is responsible for monitoring state commissions. The commissions, in turn, are responsible for monitoring local programs. It was not Congress' intent to have the Corporation directly monitor local sites, although we do provide valuable technical assistance in that process.

The structure is still in its infancy. The Terre Haute matter is an excellent example of both the benefits and the challenges we face. In Terre Haute, the Indiana Commission acted quickly to shut down the Ivy Tech site when problems were discovered. The Corporation has worked with the Commission to improve its program oversight, and the Commission has found that the situation in Terre Haute was an isolated occurrence. We are now exploring alternative ways of organizing and measuring the Corporation's performance that will improve effectiveness in the delivery of services and in building solid internal control systems. We will be seeking your help, as well as help from private sector leaders, in that process.

I do thank you for this opportunity to testify this morning, and I will be happy to answer any questions you may have.

WRITTEN STATEMENT OF ROBERT ROGERS, CHAIRMAN OF THE BOARD, CORPORATION FOR NATIONAL SERVICE, FALMOUTH, MA, AND CHAIRMAN EMERITUS, EWING MARION KAUFFMAN FOUNDATION - SEE APPENDIX C

Chairman Hoekstra. Thank you very much. We are going to go a little out of order, because Mr. Rogers has a commitment that is going to pull him out of here in about 25 minutes.

Let me ask you a couple of questions regarding at least one of the concerns that we have had. You have identified this as a break-through year. You are not the first. In 1996, Harris Wofford said, "My understanding was that a 2-year period would be the normal goal for engineering a new financial management system."

With your financial background is that a reasonable expectation, that an organization in a 2-year period could develop a new financial management system?

Mr. Rogers. Well, it has been a very difficult task. When you displace and replace the entire financial database of an organization, it is just a very difficult thing to bring about.

We basically had a couple of false starts in that regard. We tried to fix the federal SUCCESS system to no avail. Then we thought we had a good arrangement with the National Science Foundation. They backed out of that as we were into the process. And now we have a system from the Department of Interior called MOMENTUM.

Chairman Hoekstra. Excuse me. I was hoping Mr. Norwood would be back, but he is not. We are going to break so that Mr. Roemer and I can vote, and maybe work quicker than Mr. Norwood.

We will be in recess until Mr. Roemer and I get back.

Mr. Roemer We will be right back.

Recess.

Chairman Hoekstra. Mr. Rogers, thank you. We will be very mindful of your need to get out. We figure about 11:15. Jon Brandt, on my left and to your right, will have the responsibility for navigating you from here to Washington Reagan National Airport.

Where we left off is what we heard for 5 years. This is a tough job. We have run into stumbling blocks. In your background, how many times did you run into a 6-year process for getting a corporation to financial auditable records?

Mr. Rogers. Well, when you put it that way, it certainly would be rare. Normally, it would not take 6 years.

But I did describe us as having two false starts, if you will. The right start was MOMENTUM. And I think in the interest of time, I know you have some other things you would like to address, I would just love to have the Subcommittee Members and their staff come over and visit as we have done. We have looked at it, we have touched it, felt it, and looked at what is happening now with the financial systems and control program. And I think you will be pleasantly surprised that we now have that under control.

The thing that is really important is that it is going to naturally take care of a lot of the concerns we have from an audit point of view, because of the improved information systems handling that is associated with those systems improvements. So I know you have heard this before. You have not heard it from me before.

Chairman Hoekstra. That is why you are here. We did not believe it was worthwhile hearing it again from Mr. Wofford.

Mr. Rogers. And the Board thinks it is so important that we have gone well over our normal responsibilities as Board Members to assure that it stays the number one priority for the Corporation's development process. If we do not have sound systems, there is no way it can meet the growth goals and objectives that we have.

Chairman Hoekstra. We are at September 14. I just want you to know that Luise Jordan, the Inspector General, is going to testify and in her testimony she has "audit of the Corporation's fiscal year 1997 statement of financial position; OIG is not aware that corrective action has been implemented." That was her report of August 21, 1999 that I am referring to, and I think you mentioned that three or four times.

So as recently as 3 weeks ago, the Inspector General had not been made aware of the kinds of changes that you are describing and that corrective action been taken. But you are now on the record. You have not said when the books will be auditable. When does the Board actually expect the books to be auditable?

Mr. Rogers. Well I tell you that I personally expect we will have a full set of auditable statements for the year ending fiscal year 1999. Now, having said that, there can always be something that gets in the way. But everything I have seen from a systems improvement point of view would suggest we have very few challenges to get to that goal.

One is the fact that the grants management system is on a cash basis, and it needs to be converted to accrual. But we know that, and we are already having conversations with the outside auditors on that subject. Another one is that we have 10 months of the old system and 2 months of the new. So those are problematic, but I think that they are manageable problems. We certainly have full expectations that those will be resolved and we will be in a position to get auditable statements this year. If we do not, it will be because of some extenuating circumstance.

But let me just stop there, because it is our expectation that we will.

Chairman Hoekstra. Actually, I think what you have raised are concerns that I have.

You are going to go through 10 months of this year, or probably 11-1/2 months of this year with systems that have been described as having material weaknesses. Then get to the end of the year and say, we are going to have auditable books. It will be an interesting process.

I have other questions. I have questions about Las Vegas and those types of things, but in recognition of my colleague, I will yield 5 minutes to Mr. Roemer.

Mr. Roemer. Thank you, Mr. Chairman. Mr. Rogers, I appreciate your time today and appreciate your service to the AmeriCorps Board.

Let me start with a question on the CFO. We have been waiting now for an appointment of the CFO. We think once a CFO is confirmed by the Senate this will help us move forward on some of the reforms, new accounting measures and a Web-based system that we need to address some of these concerns with service hour reporting problems and so forth.

Would a letter, signed by Mr. Hoekstra and me in a bipartisan fashion to the Senate encourage an expeditious confirmation process for the CFO? We have talked about doing that in a bipartisan way in the past. Is that something that would be helpful to you?

Mr. Rogers. Absolutely. Please do.

Mr. Roemer. Okay. We would be happy to work with you on that, to get that CFO in place as quickly as possible.

Secondly, with your background as a Republican, and with the extensive professional accounting background that you have as well, you stated in your testimony that we have seen in the Terre Haute situation some service hour reporting problems. Now we are instigating this electronic Web-based reporting system.

Can you tell me how specifically this system is going to help prevent these kind of reporting problems in the future?

Mr. Rogers. Yes. Well, first of all, we also have a new imaging service that supports the National Service Trust. We now are able to retrieve all of the supporting documents. So we have a subsidiary ledger, if you will, that fully ties to the liability that is shown on the balance sheet for that.

Now, to feed that, the Web-based system provides a new tool. For example, a state commission office can go in and look at all of the reporting hours from each of the programs that they are responsible for overseeing. They can look at trends. If something is out of the ordinary, is it an outlier from the normal process? They are also required to have someone other than the person that fills out the time sheet certify before it goes into the National Trust base, that those hours have actually been worked.

So there are number of controls like that, and it is in 10 states now. It will be rolled out to all states by the end of October. So it is a tool that is very flexible and available to the Corporation's Commission Members that will greatly enhance their ability to track those things, and will be used however they see fit to do that. It has that kind of flexibility.

Mr. Roemer. Let me ask you a final question.

When we put the legislation together to create the National Service Program and AmeriCorps, we certainly sought bipartisan support and received bipartisan support for this program. One of the ways that we put this program together to make sure that it would work and also get bipartisan support, was that we devised it by its very nature to be a devolved and decentralized program. A huge bureaucracy in Washington would not be getting its tentacles into every single local program to provide oversight and guidance.

The system that you set up, however, has been one where you issue a reference manual for state commission executive directors and you tell them what they should be doing at the state and local level to monitor these programs. Is this a relationship that you are confident will continue to be able to provide sufficient oversight at the local level without creating big bureaucracies either at the state or federal level?

Mr. Rogers. Again, it is a developing process. One of the things that we have just completed is an assessment and performance manual that is being made available to all of the state commissions in the national direct programs. It will take about 3 years to get to all of the commissions under that kind of a review process. But we are already beginning training on that kind of a process.

The other fact I mentioned is the structure that Congress gave in the 1993 Act for monitoring local programs is somewhat problematic. But the most important thing we can do, once the evolution takes place, is to provide technical assistance and support to local operating people. Now, that takes administrative resources, but training and other capacity-building services are absolutely key to assuring the quality that you are seeking. Without those kinds of resources made available to local people, that will become problematic at best.

In many cases, these are one-person commissions. So basically the point I would make is they need a lot of technical assistance and help from national to support the evolution. Investments in that area are important on the part of the national program to support local people.

Mr. Roemer. So a state-run commission can provide the oversight and monitoring, and get the technical assistance and the supervision that they need to look into a potential problem?

Mr. Rogers. Exactly.

Mr. Roemer. All right. Thank you, Mr. Rogers.

Chairman Hoekstra. Mr. Norwood.

Mr. Norwood. Mr.Chairman, I will yield back to you to finish your questions.

Chairman Hoekstra. I thank the gentleman for yielding.

You have presented the financial information and the changes that the Corporation is implementing. Have you gotten independent verification that these changes will meet the objectives or the needs identified by either the independent accounting firms or by the Inspector General, and that these changes will address the material weaknesses?

Mr. Rogers. There were nine material weaknesses identified that we are working on. I introduced Chris Gallagher earlier, and in his Committee we always review our progress compared to where we need to be to assure an effective internal control system. We look at them one by one.

I will cite the statistic that we have probably half the activities under way. But it is really a moving target. We add some and some get taken off. What is more significant, we are focused on the most important things to assure that control. That is a judgment call on the part of management and the Board as to which ones you respond to and which ones you do not. This makes sure you are effectively using time, which is such a precious resource.

We are trying to be more proactive as opposed to reactive to situations that may not make a big difference to spend time on.

Chairman Hoekstra. I understand being proactive, and hallelujah it is about time. I am glad the Board is focusing. As you are being briefed by the people at the Corporation, are you getting independent verification that the steps and the activities that they have planned will actually address the material weaknesses?

Mr. Rogers. Yes, we are. We monitor that action plan very carefully.

Chairman Hoekstra. So the auditors are coming in and saying, yes, these things are being done and they will address the weaknesses?

Mr. Rogers. I have met independently with the outside auditors, and we meet with Luise Jordan, the IG, on a regular basis as part of our normal Committee work.

Now, are we getting verification that all of those are done? I certainly would not say that. But we are having regular conversations on that and we are trying to address the highest priority items that represent the major weaknesses in the internal control program.

Chairman Hoekstra. You talk about having the focus on priorities; the material weaknesses, the internal controls. The controls from the Corporation down to the grantee levels have been identified consistently for 6 years.

Mr. Rogers. Right.

Chairman Hoekstra. Did you attend the Las Vegas conference?

Mr. Rogers. I did. Very briefly, but I did.

Chairman Hoekstra. I believe there were at least 142 people from AmeriCorps, or from the Corporation, that attended Las Vegas conference.

Mr. Rogers. Right.

Chairman Hoekstra. If the accountability in this is so critical, and I have reviewed the catalogue on all the seminars in Las Vegas but I do not have it here, can you explain why there was only one conference workshop on tightening program accountability?

It seems to be inconsistent if this is a priority that these types of things did not receive more of a focus at the Las Vegas conference. You had 142 people affiliated with the Corporation.

Mr. Rogers. I did not know there was only one, so that is new information to me. But I will say that we had discussed that, and we think there should be more workshops on those kinds of issues and there will be in the future.

One of the important things to understand is that originally it was not our conference. It is the National Committee Service, Points of Light. We joined willingly in the process because it is the only place you really can bring people together for that. As you know, America's Promise, General Powell's organization, is joining in next year.

But I am a strong supporter of what you say. We should have more seminars and workshops on those subjects.

Chairman Hoekstra. For not being part of the original group, the Corporation made a strategic business decision that this was a major effort for them. We have identified at least $500,000 spent in direct costs, or direct grants for this. There were 142 people, and I think there were only about 700 people that went. So I would guess that, by and large, the Corporation was the most significant attendee.

Mr. Rogers. There were actually 3,000 people that went, if you are talking about total attendees. I do not know what the 700 figure relates to, but here is my overall feeling about that.

Partnerships, public-private, are absolutely key to addressing the issues we are talking about. I believe you and I talked about that before, and arrangement or joint ventures with Points of Light and America's Promise are absolutely key. This is the one and only conference I am aware of where you do have those kinds of workshops to address development activities for people in the sector. I think that is a good thing to do, even though if you asked me personally I would not have picked Las Vegas, but that is beside the point.

Chairman Hoekstra. You are right, that is beside the point but I would agree with you.

Mr. Rogers. By the way, it is cheaper there than in most of the other places you might go.

Chairman Hoekstra. I have done lots of meeting planning. Las Vegas is a very inexpensive place to do business.

The Board is not required to do a performance review on Harris Wofford, is that correct?

Mr. Rogers. Yes, we believe we are, and we do it on a regular basis. We have executive committee meetings with Harris and regularly address his agreements with us and how he is doing compared to those agreements.

Now, we have not actually formalized that. And it is interesting that you bring it up, because that may be a useful thing to do. But you realize that we do not have any direct authority there. We only have an implied responsibility under the Act.

But we regularly meet with Harris. We have monthly conference calls with the Board and him. We have special executive committee sessions with him. We do executive sessions of the executive committee to make sure we are, as a Board, addressing issues of performance for the Corporation. And I think Harris benefits by that quite a bit, and so do we.

Chairman Hoekstra. One of the duties of the Board is to prepare and make recommendations to the Congress and the President for changes in the Act resulting from the studies and demonstrations and those type of things.

But you need to leave. We appreciate your time.

Chris, we will invite you to the panel, and you can answer any additional questions after we go through the rest of the panel.

Mr. Rogers. I apologize for having to leave.

Chairman Hoekstra. I understand, and we appreciate your time. Mr. Brandt will drive you to the airport, and thank you very much for your time.

Mr. Rogers. Let me just reiterate, on departure, that we are absolutely committed to the same kind of oversight you are. Our goal is to make sure we have a sound system to support the work of the Corporation for National Service. I believe we are making progress. There is still a long way to go, but this is a good year for that kind of progress.

Chairman Hoekstra. Good. Thank you very much.

Let me introduce the rest of the panel. We have Ms. Luise Jordan, welcome back, who is Inspector General for the Corporation for National Service. Ms. Jordan will discuss the Corporation's financial management status and describe the problems that have cropped up in the administration of the AmeriCorps program.

We also have Ms. Julie McLaughlin, who is a teacher at North Vigo High School, in Terre Haute She will discuss her school's experiences with the AmeriCorps WINCorps program, which she helped to conduct.

We also have Mr. Brian Sullivan, who is a student at North Vigo High School in Terre Haute. Mr. Sullivan will discuss his experiences as a participant in the AmeriCorps WINCorps program.

We were having a debate as to whether our final witness was my constituent or Mr. Roemer's constituent. But out of deference to my colleague and to the current employment of our final witness, I will leave the introduction to Mr. Roemer.

Mr. Roemer. Mr. Chairman, thank you for allowing me to introduce not only somebody that represents the largest employer in my district, the University of Notre Dame, but somebody that I think also represents the kind of ethics and core values and dedication to teaching students, both college students and young students, that I highly respect and value not only as somebody in my constituency, but somebody that benefits this country.

He is not only a very talented and dedicated professor and scholar in the government department; he works in graduate studies with our provost, Dr. Nathan Hatch, and does a fantastic job working with higher education and in administration and in helping recruit a great faculty for the University of Notre Dame. He is also a priest that I look up to and respect with deep dedication and reverence for the job he does, saying everything from mass to working with young people to get them to go into the priesthood.

So, Father Scully, we are delighted to have you here as a representative of maybe the best AmeriCorps program in the United States of America. Keep up your great work at the University of Notre Dame, and we are very proud of this program that you personally devised and sought AmeriCorps' help in promoting and expanding.

It is a delight to have you here today.

Rev. Scully. Thank you, Tim.

Chairman Hoekstra. Welcome, Reverend Scully. Ms. Jordan.

Ms. Jordan. Mr. Chairman and Members of the Subcommittee, thank you for your continued interest and for the opportunity to testify on the Corporation's financial management and program administration. Today I will address the Corporation's action plan and provide information from our audits and our investigations on the administration of the AmeriCorps programs at the grantee level.

In regard to the Corporation's financial management, my previous testimony still stands. Our audits reveal that nine areas of the Corporation's financial management are inadequate, that is, materially weak. The Corporation's August 21st action plan update indicates that it has yet to achieve any of the nine overall goals for improving its operations. Moreover, although the Corporation reports that some of the plan's intermediate objectives have been accomplished, at this time, I have no evidence from which to provide any assurance that the material weaknesses have been corrected.

Regarding the Corporation's administration of the AmeriCorps program, since 1996, we have reported that the Corporation's management and oversight of its grantees is inadequate, materially weak. Most recently, in April, we reported that the Corporation lacks an effective program for performing site visits to ensure financial and programmatic compliance and that the Corporation lacks a routine methodology for tracking whether or not its grantees have required audits, reviewing audit reports or resolving instances of noncompliance.

In August 1998, as a result of an audit of service hour reporting at 40 AmeriCorps sites, we reported the controls over member information in the National Service Trust Fund required improvement. The audit revealed that membership rosters at the Corporation disagreed with membership records at the program sites. Some sites lack effective procedures to monitor the types of activities performed by members. Not all sites have procedures in place to ensure an independent review of education-awarded certifications. These sites were generally unaware of what constitute sound controls for award certifications.

At two sites, prorated awards were granted for questionable reasons, such as to obtain employment or to avoid negative publicity. At two sites we found a total of seven members who had performed prohibited activities. At a site in Arkansas, three members participated in fund-raising activities to raise money to support the site. At a California site we found four members working at a for-profit school. At seven sites members indicated they were unaware of the existence of or the types of prohibited activities.

Typically, members told the auditors that program site management had not communicated this information during training. Unawareness of the existence of or types of prohibited activities, especially at activity sites without a high degree of supervision, increases the risk that prohibited or inappropriate activities will, in fact, be performed.

In responding to the report, however, the Corporation stated that it has no direct contractual relationship with the operating or placement sites, and that its efforts are focused on strengthening state commissions so that they can conduct proper training and oversight at the grantee level.

It is our position that the lack of a direct contractual relationship does not relieve the Corporation of its responsibility as a federal agency to establish effective controls over compliance with laws and regulations. We continue to view the absence of controls that would provide reasonable assurance to the accuracy of information used for federal payments, financial records and programmatic data as an area of high risk. Moreover, we have seen no evidence of significant improvement in the Corporation's monitoring.

Our most recent audit reports on an individual grantee, the Congressional Hunger Center, reported serious mismanagement, including allegation of fraud at one of the program's operating sites. The audit also revealed serious issues with the Corporation's management of the grant and its oversight of CHC.

Recent investigations have also provided the following anecdotal information:

In January, we reported the executive director of an AmeriCorps program falsely certified that his son earned two educational awards, when in fact his son had never served as an AmeriCorps member. The executive director also stole cash from the members by charging them an activity fee and by stealing funds from their savings accounts that they were required to open.

In June, we reported that the comptroller of an AmeriCorps grantee embezzled approximately $12,000 from the grantee and used the grantee's funds to purchase and steal properties valued at approximately $13,000. This person was on probation for previous criminal misconduct and fraud, when he was hired.

In August, we reported that an AmeriCorps VISTA project director and a VISTA participant together stole approximately $4,600 of federal funds when the director failed to report that the VISTA participant was in jail. The participant continued to receive his stipend check during his extended period of incarceration and, with the help of the director, negotiated the checks and stole the money.

We have little or no history of Corporation grant oversight activities detecting fraud or indicators of fraud in Corporation-funded programs. In most cases, our investigative referrals from Corporation management have originated from the grantee, from an audit effort or from some other third party, not as the result of the Corporation's oversight activity.

While our information is anecdotal, absent reliable information from a comprehensive risk-based monitoring process, the results of our investigations, as well as the results of our audits, must stand alone.

This concludes my prepared statement. I will be glad to answer any questions that you or any Members of the Subcommittee may have.

WRITTEN STATEMENT OF LUISE S. JORDAN, INSPECTOR GENERAL, CORPORATION FOR NATIONAL SERVICE, WASHINGTON, D.C. - SEE APPENDIX D

Chairman Hoekstra. Thank you. Ms. McLaughlin.

Ms. McLaughlin. Good morning. Thank you for the invitation to be here. I am an English teacher at Terre Haute, North Vigo High School in Indiana, also an administrative intern, a doctoral student, and the sponsor of a lot of extracurricular activities, which is what started my program in the WINCorps program. I am also one of four teachers at my high school who supervise students pursuing community service as part of their commitment to WINCorps.

My involvement with WINCorps began in June of 1998, when several members of a school club I sponsored asked me about the possibility of earning college scholarships for their service activities in the community. They had been told about WINCorps by an employee of Ivy Tech and were eager to learn more about the program.

The philosophical framework of our high school includes objectives that emphasize the importance of the school's relationship to the community and the benefits to be gained by all parties through the offering of enrichment opportunities to our students. Because of this belief, a core group of students, teachers and administrators met with an Ivy Tech representative in June of 1998 to learn about the program. At that meeting, students were given a verbal overview of the program, and if they desired they completed their enrollment forms. By the end of the summer, approximately 60 students were active in the organization and were beginning their work in the community.

At the school level, several of us who had students participating asked for written verification of WINCorps' expectations and guidelines, but the papers were never produced. Throughout the next few months our requests continued, primarily because our students had concerns about the diversity of the activities that they should pursue and include in their portfolio. Because I could not answer these questions for my students, Ivy Tech sent representatives to meet with the students to attempt to clarify these issues. At each meeting, WINCorps representatives, sometimes the same ones sometimes not, were unsuccessful in aiding the students in their search for answers. Either they did not have the information available, or they contradicted statements they had made previously. This was a frustrating experience for all of us involved.

The students explicitly followed the guidelines given to them by representatives of Ivy Tech's WINCorps program and toward the end of the 1998-99 school year, the students were given answers to their queries and documentation to validate the information. As I understand it, there was a change in both the state and the local AmeriCorps leadership at this time, which possibly could have led to the improved communication.

Because I am aware that the focus of your interest is in the administration of Ivy Tech's WINCorps program, I have described to the best of my ability the process we went through. However, I would be terribly remiss if I did not emphasize how valuable WINCorps is to my students and, I hope, to members of my community. In my group alone, we had nearly 100 percent involvement in organizations such as America Reads, Big Brother/Big Sister, the March of Dimes, the American Heart Association, and a host of others. The students discovered in themselves the power and satisfaction of giving, and the residents of Terre Haute and the Wabash Valley benefited from the students' time and talents.

But most impressive to me is that following their initiation into service activities, as well as the record number of participants in part attributed to the AmeriCorps program, the students have continued their desire to participate in their community with no lure of financial gain. In an area striving to keep its young people at home to share their knowledge and skills, enfranchising these students by showing them they are both needed and welcomed can only strengthen the community.

I appreciate your interest in our experiences and I hope that you will strongly consider the massive potential of the AmeriCorps program while striving to ensure that the administrative problems are eliminated.

WRITTEN STATEMENT OF JULIE McLAUGHLIN, TEACHER, NORTH VIGO HIGH SCHOOL, TERRE HAUTE, IN - SEE APPENDIX E

Chairman Hoekstra. Thank you. Mr. Sullivan.

Mr. Sullivan. Hello. My name is Brian Sullivan, and I am a senior at North Vigo High School in Terre Haute, Indiana. I would like to thank you for giving me the opportunity to present my experiences with the WINCorps program.

In September of 1998, I was asked if I would be interested in tutoring a fifth grader at a local elementary school as part of the AmeriCorps program. The situation was not just a normal tutoring experience. The boy was from a broken home, had no role model to follow, and had very few social skills. I decided this was a challenge that I wanted to take on.

I went to see the boy two or three times a week, depending on our schedules. Each time I arrived at the school, we collected all of his homework and went to the library to work on it together. After he completed most or all of his work, I took him to play basketball or other games offered by the after-school or day care program. I noticed right away that he didn't know how to interact with other kids. And when he tried, others usually wouldn't accept him. I soon realized that when he went home he had no one who took time to help him or even to listen to him. He had very little self-esteem.

As time went on, I noticed a big change in his attitude as well as in his grades. He also began getting along with more people and actually enjoyed himself, as a child should. He had opened up and had begun to feel comfortable in his school environment.

In the beginning, I just thought I would tutor him as a service for which I could receive scholarship money for college. From my experience with this fifth grader, I grew as a person. I looked forward to seeing his smile as much as he looked forward to seeing mine. I was rewarded with the satisfaction of knowing I had made a difference in his life.

I have always appreciated my family's support. But now I especially realize how fortunate I am to come from a stable home with two parents who are always there for me. I also learned that people need each other. I believe that I helped the boy feel secure, and the knowledge has made a difference not only to him but to me.

My time with the fifth grader led me to volunteer my time to others. I have worked with the America Reads, Big Brother/Big Sister, the American Heart Association, and such community youth activities as Halloween hayrides, Easter egg hunts, and youth soccer. In my opinion, AmeriCorps is a wonderful program that not only aids the needy but also helps the person donating his or her time. The program gets students involved much more in the community, which allows us to experience a variety of situations that we may not have been aware of.

The only problem I had with Ivy Tech's WINCorps program was the lack of communication. Sometimes I would call to ask them to check their records to see if they matched mine. They could never tell me anything about my file. For example, they could never tell me my total hours, they had lost some of my documentation sheets, and I didn't find out until later that more information was needed to process my award. I always hand-delivered my time sheets, but hardly ever talked to the same person. Things began to change with about a month left in the school year when a new director arrived. He answered my questions, told me what I needed to complete my documentation, and I began to feel more confident that his answers could be trusted.

In closing, I would like to thank you again for listening to my comments. I hope careful consideration is given to keeping this program which benefits everyone involved. To this day, I am continuing to help those around me and I want to do this throughout my future. Others should have this opportunity.

WRITTEN STATEMENT OF BRIAN SULLIVAN, STUDENT, NORTH VIGO HIGH SCHOOL, TERRE HAUTE, IN - SEE APPENDIX F

Chairman Hoekstra. Thank you very much. Reverend Scully.

Rev. Scully. Thank you, Mr. Chairman.

Tim, while Notre Dame might be the largest employer in the District, I have to tell you that until 2 years ago Arthur Andersen was the largest employer of Notre Dame students. Two years ago actually that changed. The largest employer of Notre Dame students is the AmeriCorps program and the Alliance for Catholic Education. That is something that we are proud of, I think, at Notre Dame.

Now I have to say, Mr. Chairman, I am not nonpartisan on this particular issue, though I am politically. I just briefly want to share with you an experience, I know hundreds of others, that has just been a wonderful thing for Notre Dame and, I think, for service to America's schoolchildren most in need.

Jennifer Aaron, our valedictorian last year and a chemical engineering student who graduated from Notre Dame with a 3.96 average, is serving in Saint John's High School. She turned down a Fulbright and a Rhodes and decided to be a science and computer teacher and teach kids. Just the opportunity to get somebody like Jennifer Aaron into a class of needy kids and force her to take her very sophisticated computer and math skills and to translate that to young kids, who now have an opportunity to watch one of the finest minds to have ever graduated from Notre Dame work, is really quite remarkable.

Believe it or not, over 10 percent of Notre Dame's graduating class apply to belong to this teacher effort; this AmeriCorps program. That allows us to be very selective. And, again, I know this is our experience but I don't think it is singular. We take one in five people who apply to this program. About 80 percent of our participants are Notre Dame graduates, but 20 percent come from other places, including places where we have intense football rivalries, like Boston College; happy to take them.

They teach for 2 years. That is their commitment in our program, to teach for 2 years. We serve in 23 communities in 11 states. And the communities we serve in are the Biloxis, and the Mobiles, and the Charlottes, and the Jacksonvilles, and the Tallahassees, and the Brownsvilles. These are schools that do not have a lot of resources. We don't go to Chicago or New York. We go to school systems that have a hard time recruiting dedicated and talented and well-trained teachers.

We began 6 years ago with 40 teachers in nine communities, and it was really AmeriCorps that promoted and prompted Notre Dame to get involved in education. Twenty-five years ago we closed our School of Education in frustration because of the mediocrity we felt we were producing, and it was AmeriCorps that got Notre Dame back into education.

So in the last 6 years, in this partnership with AmeriCorps, we have trained and selected and given a master's degree now to over 400 exceptionally talented young people. And of those young people who have graduated, and that will be 300 this summer, over 70 percent have stayed in teaching. These are young people who would never have gone into teaching had it not been for this experience. So it is really a blessing, honestly, in under-resourced schools.

Remarkably, this is a 2-year program as I mentioned, 95 percent of those who start the program complete it; two years. And the 1,700-hour requirement for service is almost always tripled in terms of the hours that the students and these AmeriCorps participants give. They are not only teachers, but of course, they are coaches of two and three different sports teams. They are involved in five or six different service learning programs in public and private schools in the Montgomery school system. I could give you anecdote after anecdote of young people getting other young people to build a capacity for service.

I see that, as is often the case with a university professor, I have prepared far more than I should bother to share with you. Our experience has been so powerful that nine other institutions of higher education have come to Notre Dame to learn from our experience and to replicate it. In fact, next week I go to Seton Hall University in Newark, New Jersey, where we have a private benefactor who is going to provide the funds for that.

I understand the oversight concerns that you have. We have not experienced them. We have a regular reporting relationship with AmeriCorps. I guess I am starting to wonder what my staff was doing in Las Vegas. I am going to ask them what kind of experience that was that they had; I am kind of jealous. But I think we did send some people to Las Vegas to that conference. But we have been prompted by AmeriCorps to get serious about evaluating our own experience. I say that quite honestly.

In terms of verifying whether or not our young people are giving those 1,700 hours, we have teachers and mentors and superintendents and principals who live in the community, and there is just no way they can fake it. They are either in the classroom with 40 kids going crazy or they are not.

Just as we speak today, I want to thank you for helping us send 140 young people into America's neediest classrooms, and we are just going to keep doing this. And we would love to continue to be partners with Notre Dame's largest employer. So thank you.

WRITTEN STATEMENT OF REV. TIMOTHY R. SCULLY, C.S.C., VICE-PRESIDENT AND SENIOR ASSOCIATE PROVOST, UNIVERSITY OF NOTRE DAME, NOTRE DAME, IN - SEE APPENDIX G

Chairman Hoekstra. Thank you very much.

You mentioned something about partisanship. I don't think the issue is necessarily partisan. I think in my opening statement I commented that I voted for this program back in 1993 based on all the promises and the expectations that we could have.

I will recognize, or yield my time to Mr. Norwood.

Mr. Norwood. Father Scully, let me follow right up with you, and then I have some other questions I want to ask. Let me understand the Notre Dame program. It sounds a lot to me, like it is similar to programs we have had in the past, where we would lend money to students to go to medical school, dental school, and then agree to not have them pay that back if they would serve in under served areas. And that is basically the program you have at Notre Dame, apparently.

Rev. Scully. That is correct.

Mr. Norwood. They receive AmeriCorps funds if they agree to go teach in underserved areas?

Rev. Scully. That is correct. The financing for our program, Congressman, mostly comes from private sources. Our operating budget is about $1.2 million. Our grant from AmeriCorps is about $120,000.

Mr. Norwood. Let me just say, I commend you, and I like the program, and it is a great idea. As a separate subject from this hearing, particularly if you have private funds, our concerns have to and must be our obligation to programs the taxpayers are funding. But I commend you and hope it grows. You have done a great job.

Ms. Jordan, let me ask you a couple of questions. Where does the buck stop in this thing? Who is in charge? If I wanted to go fire the person in charge, because it has been run so poorly, would it even be possible to figure it out?

Ms. Jordan. The law prescribes the structure of the Corporation. It is headed by a CEO. There are a cadre of top-level managers who report to him, all of whom have some responsibility for AmeriCorps, with the exception of the two managers, who are in charge of the Learn and Serve and Senior programs. So the buck stops, I suppose as Harry Truman said, at the top.

Mr. Norwood. Just speculate with me for a minute. Can you imagine under any circumstances, just use common sense if you are right in your report, is there any CEO in this country that could last in any Corporation that was run this way?

Ms. Jordan. Definitely there would be some scrutiny of a program, and that is what you are doing here today.

Mr. Norwood. Well, I realize that is what we are doing, but we are doing it 6 years later. Nothing's changed, and today we just happen to be talking about one program that we know something about.

My concern is not just Terre Haute, but what is going on in the rest of the country. You alluded to some of that, but we really don't know for sure, and our responsibility, it seems to me, is to protect the taxpayer funding.

Do you know how many students are involved in volunteerism, separate from Father Scully, teaching in schools? How many students are involved in that in the country?

Ms. Jordan. No, sir. I am sure the Corporation can give you that information, but as the IG, I don't maintain that type of information.

Mr. Norwood. Do you know the answer to that, Mr. Gallagher?

Mr. Gallagher. No, sir, I don't. But we certainly will get that information to you.

Mr. Norwood. In addition to knowing how many students are involved, I would like to know how many taxpayer dollars are literally, physically, going just to the students. How much is going to each student in the end?

What I am getting at here is that we are spending $400 million, maybe $750 million. Who the heck knows? I am beginning to think this is a good idea to help kids get through college. But maybe we should just give them the money and stop all this nonsense in between. If they want to volunteer we can tell them, please, go help volunteer in the fashion that we have had volunteerism in this nation for the last 200 years. You want to go help? You don't have to be paid to go help.

Let us have a lottery and give out the money. We will get to a lot more students that way without all of this organizational structure in between and going to Las Vegas. I don't know, maybe that was a great idea. It may have been better to give to some student to go to Notre Dame. Let us get serious about this thing.

Mr. Roemer. If the gentleman will yield, can I ask if the gentleman would sponsor an amendment to just transfer all the money to Notre Dame?

Rev. Scully. I would certainly second it.

Mr. Norwood. No, I probably wouldn't, but I can pick a couple of places I might.

Mr. Chairman, I am not through but your red light is on, and I hope I will have another opportunity.

Chairman Hoekstra. $500 million to Notre Dame...

Mr. Roemer. I like the sound of that.

Chairman Hoekstra. As long as they do not use it for their football team, I'm all right.

Mr. Norwood. They need to use it for the football team this year.

Chairman Hoekstra. Buy a clock for the team, right? Buy a new watch for the coach.

We will go to Mr. Kind.

Mr. Kind. Thank you, Mr. Chairman, and I would just like to pick up on the line of questioning that my friend Mr. Norwood was on, as far as accountability. Maybe Mr. Gallagher and Ms. Jordan can focus on this question a little bit.

With any public-private cooperation, the success of any program is really going to depend on the quality and the dedication and the honesty of people at the local level in charge of administering the program. My understanding on the way the structure was set up in the legislation is that it creates layers. I think it makes it difficult, then, to actually point to a responsible person per se, as far as how the local programs are being administered.

Now, the legislation creating AmeriCorps created a structure, and correct me if I'm wrong, in which the responsibility for the selection, management, and oversight of AmeriCorps is assigned to a governor-appointed state commission back in the individual states participating. The Corporation provides grants to the state commissions and they, in turn, make sub-grants to the individual programs at the local level.

So you have this federal money passing through state-appointed commissions going to the local level. Then I guess our question here today is, where does the buck then ultimately stop? Who has the ultimate responsibility in this current structure? Who do we go to for answers? And perhaps we need to look at changing the structure so we can change the accountability and the ultimate responsibility.

Mr. Gallagher. I would like to answer that, Mr. Congressman.

You have to start with the buck that is the taxpayers' buck, as Mr. Norwood said, and that comes back to Washington. If it is going out and it is going to be expended, it has to be accounted for and it had better be accounted for. At the same time, going back to the Chairman's framework, which he kindly shortened, this had a dual purpose. When the Act was enacted, it was going to stimulate service and going to promise to bring that to bear. I think that has happened, as we hear from Father Scully and others how it has. But it was also going to change government and the way government worked. It was going to devolve power and move power down to the bottom. The difficulty is moving that power down to the bottom and keeping track of that buck and making sure that buck is accounted for.

Now, why not just give it to them? Because there really is a function, and the Act says so. When you voted for it you endorsed, using concentrated effort and skill and benchmarking and best practices to leverage more service so that you get a bigger bang for that buck that goes to the local level. That is what you heard Father Scully talking about.

How do we do that without taking away their creativity? How do we give them autonomy without taking away their esprit de corps, their interest, their creativity, their spontaneity? That is the balance that this Act tries to strike. I will tell you that we have not gotten there yet, but I do want to tell you this, and then I will mention Las Vegas for just a minute.

First of all, no one would design a system like this if efficiency were what was wanted. What happened was, you took the action programs that were out there with no management, no accounting, nothing. You took an existing Commission and then you created the new Commission. You put them all together. You took Points of Light, and you took VISTA, and you took all these others and you put them all in one box and said, make them work and, by the way, start a new one. Get it up and running and call it AmeriCorps. That is how it all started.

What has happened is that we have found that it is a very cumbersome structure, and maybe we ought to change it. Before you do that, recognize that when we get into place management systems, all that cumbersomeness which is really just space and time and distance and repetitive work, the Web management system will solve those problems. Space and time and distance won't matter. We will be able to keep track in real time of that buck and we will know how it is being spent and who is spending it.

We won't be able to consistently guard against fraud, but we will be able to do what you want us to do, which is to devolve power and keep track of it at the same time and be accountable.

Mr. Kind. Let me just raise a concern that I have that the Corporation is in charge of promulgating the rules and regulations, but it is the state commissions who are in charge of overseeing the sub-grantees. What incentive do the state commissions have for doing an appropriate job if it is just federal money passing through them to the local level?

Mr. Gallagher. That brings me right to Las Vegas. I will tell you what my experience was.

I went out and I spoke to an association of state commissions with 200 or 300 people in a room, and the lecture I gave them was the very words I am saying to you. It was longer and more detailed, but it said, you have to make this work. Later that same day I attended a program put on by the Corporation, again 200 or 300 people there, setting up assessment and performance standards.

I then met with the management of the Corporation, the COO, and we discussed how we were going to implement that. A week and a half later, I spoke on an executive committee conference call where we can't make decisions, but I got everyone to commit to making those state assessment programs work, because that is the key to keeping track of that buck. So we are committed to this.

The structure is cumbersome. The management information system, when it is in place will work, we believe. It is designed to work. It is cutting edge. It is new. If it works, it will be a good model for the entire federal government.

Chairman Hoekstra. Thank you. Mr. Schaffer.

Mr. Schaffer. Thank you, Mr. Chairman. I have a couple of questions for Mr. Sullivan. I will start with you.

I read the article that was handed out to some Members of the Committee from the Tribune Star, which I guess is the Terre Haute newspaper, is that right?

Mr. Sullivan. Yes.

Mr. Schaffer. One of the things it says is, "Now a state audit says officials in charge of the program doled out nearly $300,000 to students for work that wasn't documented or didn't qualify under federal rules. Often, according to the audit, work records weren't kept at all. When records were kept, they sometimes gave credit for baby-sitting, athletic practice, and church activities, none of which are likely to qualify under federal guidelines as public service."

I guess my question to you is, what kinds of activities were you involved in for which you were compensated under AmeriCorps?

Mr. Sullivan. The only activities that I did, other than tutoring, they asked me if I had a job. Like if it had something to do with kids, they said it would be a service-learning activity. I told them, yeah, and they told me I could count the hours.

Mr. Schaffer. What job was that?

Mr. Sullivan. I was a camp counselor during the summer.

Mr. Schaffer. So you were a camp counselor at what kind of camp?

Mr. Sullivan. For like a parks and recreation camp.

Mr. Schaffer. Municipal, county, state; who ran that ?

Mr. Sullivan. The city.

Mr. Schaffer. The City of Terre Haute?

Mr. Sullivan. Yes.

Mr. Schaffer. So you were working for the city as a city employee at the camp, and AmeriCorps suggested to you that you could get AmeriCorps credits for doing your job, basically?

Mr. Sullivan. Yes, because they told me it was a service-learning activity, and that I could turn it in.

Mr. Schaffer. So what seemed, in your opinion, to be the standard that was described to you, anything that dealt with kids whether it was a new volunteer activity or whether it was an existing activity?

Mr. Sullivan. Well, pretty much, they said that if you worked with kids, then you could count just about anything.

Mr. Schaffer. So working with kids was the standard. Did you get credit for doing your job with the city?

Mr. Sullivan. As far as I know; they told me to turn it in. If they counted it, I did.

Mr. Schaffer. Did it seem like you did? I read your testimony where it said you would call to find out what kind of hours they had accounted for.

Mr. Sullivan. I never found out my total hours until like the end of the program, when the new director came in.

Mr. Schaffer. Are you aware of any other examples, similar to that, where other people in the AmeriCorps program were given credit for doing jobs for income?

Mr. Sullivan. I was separate from like the other kids who were older than me, and who did it at our school. I didn't start until September, so I didn't go through all the meetings in the summer and everything else. I don't really know about their experiences or what they counted.

Mr. Schaffer. How old do you have to be to be in the AmeriCorps program?

Mr. Sullivan. Seventeen.

Mr. Schaffer. Seventeen.

Ms. McLaughlin, let me ask you. I understand that you have, on occasion, kids that come into the AmeriCorps program that are not 17 and apply to participate. What happens with those kids?

Ms. McLaughlin. Well, we have never had anyone enrolled who was younger than 17.

Mr. Schaffer. Of those who come in when they are 17, are you aware of any examples or instances where the WINCorps program may have suggested that you could receive credit for service accomplished prior to turning 17?

Ms. McLaughlin. At one of the meetings very early in the school year, because a lot of the students going into this program were just getting ready to turn 17, some turning 18, they asked what the criteria were if they had to be 17 when they started their activities. At one of the meetings it was suggested that if some of their service-learning work took place within a reasonable time period before their 17th birthday, that they should alter those dates and put them after the 17th birthday.

Mr. Schaffer. The WINCorps people suggested they alter the dates on which the service was performed?

Ms. McLaughlin. If it was reasonably close to their 17th birthday.

Mr. Schaffer. Were there any parameters put on what constitutes "reasonable"?

Ms. McLaughlin. No, not really. As with the rest of the program, there were very few specific parameters.

Mr. Schaffer. Are you aware of any students that altered the dates?

Ms. McLaughlin. No, because the people that I supervised were members of the National Honor Society, and we addressed it immediately. That is just not something we do.

Mr. Schaffer. Well, congratulations to you and to those students as well. It is nice to have conscientious Americans involved in AmeriCorps.

Ms. McLaughlin. I just wanted to add that throughout the program, the people who initiated all of the questions of the Ivy Tech representatives were the students. They were incredibly conscientious about wanting to do the right thing and wanting to have specific answers about what should be counted and what should not. And it is to their credit that they continued the search even after they were denied for months and months.

Mr. Schaffer. Thank you, Mr. Chairman.

Chairman Hoekstra. Thank you. Mr. Roemer.

Mr. Roemer. Thank you, Mr. Chairman. I want to get back to Mr. Norwood's question about who is responsible for the way the AmeriCorps program is set up and where does the buck stop.

This is the law that the United States Congress passed with bipartisan votes. It set up the devolved and decentralized process so that we could give people at the local level the creativity and the autonomy and the freedom from bureaucracy that we hear we don't want especially from the other side of the aisle. So it seems to me that the buck stops with this Committee and with Congress.

If this is a bad law, and we don't have the adequate resources and funding level or the statutory authority to monitor this or do it adequately, then we need to rewrite the law. If this is just a case of somebody in Terre Haute that did not run the program well, or did not communicate, as Mr. Sullivan said, instructions or guidelines well, then once that person was fired and the investigation proceeded under the auspices of a state audit looking into the problems, a new person was put in place. Then that problem, hopefully, will be turned around.

I strongly and very vociferously disagree with allegedly what happened in Terre Haute. We don't want that to happen any more. We want to get to the bottom of it. If somebody committed some kind of criminal or other kind of offense, we are going to support punishment for that individual or those individuals.

But when you devolve, as we wrote in the law and passed as Members of Congress, authority to the local and state level, and you have individuals at that local and state level that either purposely or by mistake rip the system off, it takes some time for that state commission to come in and find out what has taken place and to what degree.

Ms. Jordan, I just want to say that in your testimony you come very close to saying that it is the CEO and the Head of AmeriCorps that is responsible here. I am sure, as the Inspector General of the operation, you have read the National Community Service Act, and you have read pages 404 and 405 of the law that say that the duties of the State Commission are to administrate the grant program, including the selection, oversight and evaluation of grant recipients. Certainly that responsibility goes up the chain of command. But the way we wrote the law was for us at the local level and the state Commission to provide the oversight.

If the Indiana Commission needs to restaff and reorganize their people, as AmeriCorps recommended as of January of 1998, that is a problem that we also need to address with better staffing.

I don't want to make this too long of a monologue here, but you have to consider the political consequences of this, too. We are currently in a situation where you are advocating in your testimony more resources or something for oversight, for technical assistance and training to help staff these problems. I am sure you are aware that the House of Representatives has zero-funded AmeriCorps right now. They are not going to put more money into AmeriCorps. We are going to be lucky to get the current funding level for AmeriCorps and make sure programs like Notre Dame's and the 698 others that are doing a great job in this country survive.

So we appreciate finding problems and getting to the bottom of these problems and prosecuting those individuals that are responsible for them, but I also think that we, as a Congress, are responsible statutorily for the way this law was set up. And that is why we are having oversight hearings, and that is why we need to make sure that we look at all kinds of answers to make sure this problem is not repeated from Terre Haute again.

So, Mr. Chairman, I appreciate your patience with the gavel and look forward to the next round of questioning or statements, as the case maybe.

Chairman Hoekstra. I was going to say, that is not a question, but it certainly is interesting.

Okay, Mr. Fletcher.

Ms. Jordan. Maybe I respond to that, Mr. Chairman?

Chairman Hoekstra. We will go to Mr. Fletcher. The Congressman chose to make a statement and not ask a question. You are on the record as to what you had to say. It is Mr. Fletcher's time.

Mr. Fletcher. Mr. Chairman, let me yield, first, some time to Mr. Norwood, so much as he may consume.

Mr. Norwood. I thank the gentleman very much, and I want to respond to my friend Tim that, yes, Congress is responsible, but I can assure you that so is the President of the United States. This was his program. He said, back in 1993, that "This act demands that programs meet tough guidelines for excellence and require measurable performance goals and independent evaluations." The President ought to step up like Harry Truman, on this particular subject, so we can get it worked out.

I thank you, Mr. Fletcher, for yielding.

Mr. Fletcher. Well, thank you. I appreciate the testimony here. I certainly appreciate the good work that each of you endeavor to do.

Certainly Reverend Scully the program there really looks like AmeriCorps supports a fairly small percentage of what you do. I am a little surprised that the institution, which is a very outstanding institution, was almost ready to give up until AmeriCorps came along with a pittance and stimulated your interest. I am certainly glad they did. I appreciate your work and would hope that that could be a model for programs throughout the Nation.

It does seem, with the complexity of bureaucracy in an attempt to give local authority, it has been somewhat ineffective in getting as much resources to the people as it could and that it lacked sufficient oversight.

Let me ask Ms. Jordan. My understanding, given some of the other individuals' questions, was the fact that they are looking at trying to push the responsibility back to the states. But, clearly, you have said that from 1996 there have been substantial weaknesses in oversight. These have been identified for a number of years and yet no corrective action, or at least no substantial corrective action has taken place. Is that true?

Ms. Jordan. The actions that have been taken have not been effective.

Mr. Fletcher. Let me ask you this. Some have tried to allude that this is a Terre Haute problem. But looking at your testimony, that is not the way you have addressed this. Is this just a Terre Haute problem or does this exist throughout the Nation in the program?

Ms. Jordan. Sir, the issue is that lacking effective monitoring, we really don't know. That is why I say our experiences, when they are anecdotal, have to stand alone because there is no backdrop, no comprehensive framework.

Mr. Fletcher. It is amazing that we would have managers and an administration that would allow a program like this, with $400 or $500 million to be administered with no proper oversight and no one, really, seeming to be outraged by the fact of such possible waste of taxpayers' dollars.

We could hear of great programs that exist, and we are not here to question whether this has true impact. Certainly we have a deep concern that we improve the quality of our teachers and that we get some of our brightest and best in the classrooms, But what we are here about is this program administered properly. Are we wasting some hard-earned money? These are folks that work very hard to pay their taxes and they expect us to make sure it is paid out properly.

We are talking about $120,000 going to you out of $400 million. That is 25 one-thousandths of a percent that we may be assured here today that are being spent effectively. So I think we have a tremendous problem here. We need to make sure that there is proper oversight, that these weaknesses are addressed. If it is in the law the way the President and the Administration proposed this law to be passed, then it can be done from that standpoint. I have trouble voting for or supporting a program when we cannot even tell if our money is being spent properly.

I certainly laud the folks there in Terre Haute that I think have done a good job of running a good program, in spite of the fact they were not given the kind of guidance they needed. I know your intent was to do what is proper, both of you there, and certainly commend you on that.

If Mr. Norwood or anyone else would like some more time, I will yield the remainder of my time.

Mr. Norwood. Mr. Chairman, I will take that and I will yield the remainder of mine to you.

I wanted to ask Brian a question. Have you ever volunteered for any program back home before the AmeriCorps program?

Mr. Sullivan. Yes, I volunteered for the American Heart Association.

Mr. Norwood. Did you? Did they pay you to do that?

Mr. Sullivan. No.

Mr. Norwood. Would you have volunteered for this particular AmeriCorps program had there not been a stipend at the end for education?

Mr. Sullivan. Yeah, I probably would have. Probably not as much, because 450 hours is a lot.

Mr. Norwood. That money for education sort of pushed you into it a little bit, if you will?

Mr. Sullivan. Yes, because it will help me.

Mr. Norwood. I was not here when AmeriCorps was passed. But, Mr. Chairman, I cannot figure out if the purpose of AmeriCorps is to help young people have dollars to go on to further their education, or if the purpose of AmeriCorps is to stimulate service. If that was the purpose, is that really needed?

I have always been rather amazed at Americans and how much they volunteer their time for service across the country. I was not here in that debate to know the answer to that, but I would love it if someone did know.

I yield back.

Chairman Hoekstra. Thank you. Mr. Ford.

Mr. Ford. Mr. Chairman, if you don't mind, I really just wanted to ask one question of Ms. Jordan, and then I will yield to the Ranking Member, if there is time left.

We have had many hearings with regard to the Corporation, and people have raised questions about the management and the oversight. We hear a lot about how states do a much better job than we do here at administering program dollars and administering programs. I am just curious and I had to leave for one moment and I do apologize. I know my colleague, Mr. Kind, was really getting at whether or not we need to have a more direct, or to borrow his language, "a contractual relationship" between the Corporation and perhaps some of the grantees themselves. It seems as if everyone in government does this well, at the federal, state, and local level when things go bad people can dodge responsibility and accountability very quickly.

It seems there is some confusion, at least among us here, as to who is directly responsible. Who should be held accountable? I know everyone has their thoughts about the Corporation, and I understand my friend from Georgia, and I might add I hope my friends on the other side follow his lead on the managed care reform package, but will probably choose not to. But with regard to who should be held accountable, it would make our jobs a lot easier. I know you have many thoughts, some good, some bad, about the Corporation, but could you respond to that directly as to how we can fix this. We can go on all day talking about whether or not the program was designed to stimulate service or to pay kids to go to school. I think it is a good program, but notwithstanding that, your thoughts on that.

Ms. Jordan. As more and more responsibility and activity devolve to the state, the resources for oversight need to move from Washington to the state. I have said this to the CEO, clearly, and I say it to you now.

The grants are contracts between the Corporation for National Service and the states. The states issue contracts to their sub-recipients. This is not unusual. Lots of federal funds pass from Washington through pass-through organizations and through to the local level. There are basic requirements for audits established in the Single Audit Act, and there is a framework for monitoring.

But the easiest fix that I see is to consider, as you devolve the authority from Washington to the states and to the local level, the devolution of the resources and move the oversight resources to where the responsibility is. Don't keep it all here in Washington.

Mr. Ford. So you think that is the crux of the problem?

Ms. Jordan. I think that is one solution. I think the crux of the problem has been a need for an increased focus on an effective monitoring framework. I don't believe that framework and the establishment of a good monitoring program has been put into place. One of the ways to deal with the issue that we have been talking about is to move some of the resources from Washington through the states and to the local areas.

Mr. Ford. Mr. Gallagher, did you have something you wanted to say?

Mr. Gallagher. Yes, thank you, sir. It is a good question. The answer, however, is not as simple as it might seem.

There are more than 1,000 sites operating right now, 755 or so programs, most of them reporting up through a state commission. There are 50 states. Not all programs, not all sites, not all states are the same. They are not all ready to receive this. They do not have the capacity.

We have to build this capacity first. We wanted to go to where Ms. Jordan states, and I have been working closely with her for 5 years on all these issues, but all of the states are not ready. Before we can be worried about Congressman Norwood's buck, before we can properly account for that, we have to have that capacity at the state level ready and able to accept that authority. We have to still maintain a way to keep an eye on it, because I don't think you ever lose the responsibility to do that, and there should be somebody watching the store for you as well.

Mr. Ford. Mr. Chairman, I will yield the rest of my time to Mr. Roemer.

Mr. Roemer. I appreciate the gentleman yielding me the time, but I will wait my turn for my 5 minutes.

Mr. Ford. If the gentleman will yield back to me.

Mr. Roemer. I yield back.

Mr. Ford. Mr. Chairman, I hope you don't mind if I just go 30 seconds over.

To Ms. Jordan and Mr. Gallagher, how then, if indeed some states are not ready, some states don't have the capacity to receive these dollars. I mean, I understand that we waste a lot of time up here. I am just trying to figure out what we can do, other than bicker back and forth about the program working or the program not working.

Mr. Gallagher. I can tell you what we are doing, and this may have occurred while you were out of the room. We have a performance and assessment standards program well under way. It starts at the corporate level. We are working at it through an association of state commissions that is actually constituted as a peer group to help make that work quickly. We are trying to bring them up as fast we can. Twenty-four of them are on a list to be audited by the Inspector General. It is going to be very difficult to train them and give them confidence while they are being audited, but we are going to do it. We are going to try to make it work, because those states need the capacity building we can give them.

They will be told they are not in compliance with this, they are not in compliance with that, and just hope it will not discourage them. It is our job to get them up to that level.

Mr. Ford. What can we do to help?

Mr. Gallagher. Give us more money for our administration and management. That is what we need.

Mr. Ford. Ms. Jordan, would you concur? I didn't mean to put you on the spot. But you all have come up before, and we have the same conversation every time.

Ms. Jordan. That is a policy decision that I would rather not get into, sir.

Mr. Ford. You got into a lot of other decisions today, and I don't mean to be confrontational, but I am curious as to what can we do to help. Mr. Gallagher has made a recommendation. I am just curious.

Ms. Jordan. The dollars that are given to the Corporation currently exceed $50 million for administration. Some portion of that, by law, goes to the states. If increased funding is given to the Corporation, then I would move, based on the conversations that we have had to date, to recommend that increased percentages of administrative funds go to the state and local level for those purposes.

Mr. Ford. Mr. Gallagher, could you find agreement with that?

Mr. Gallagher. Certainly. And thank you, sir.

Mr. Ford. Thank you.

Thank you, Mr. Chairman, for letting me go a little over.

Chairman Hoekstra. What we have been doing, and you have been watching, is we have had this hearing and this is not the first. I don't know if this is our fifth or sixth because this has been around since 1995, actually since 1993, and that is the question.

I think one of the things that we have decided to do is just keep a focus and a pressure on this issue, because this is one of the promises.

Mr. Gallagher, I have got to tell you, I am thankful to my colleague for asking the question. Nowhere, I think, in 5 or 6 years has the CEO of the Corporation or the Board come here and said this is what we need and this is what you need to do. As a matter of fact, we have testimony month after month, year after year saying, we are almost there.

The last time was in May. This is when I think I told Mr. Wofford, please don't give us a date. It is only going to make you look bad. This is what he said in May, "We really believe we are within striking distance now of wrestling these problems to a solution, a lasting solution."

I mean, what we have heard for 4 years is not, "we need to change the law." It is not "we need more money" or "we need to change the structure." It has been consistently, for 5 years, "we are almost there." That is our frustration, because every time "we are almost there." Ms. Jordan is the only one that comes and consistently gives us an accurate picture of exactly what is going on, because she deals with the facts.

It is not they are there, it is no, here are the milestones the Corporation has set. Here is what the accounting firm has said. They are either there or not. It is not a judgment. It is primarily a statement of fact.

I have a question for you, Mr. Gallagher. What if, and I know this is unlikely, but what if this new Web really doesn't work?

Mr. Gallagher. Then, it seems to me, that we are back to Congressman Norwood's question and Congressman Kind's question If we can't make the structure work we have to change the structure.

The Web-based system isn't the cure-all to everything, it is the beginning of the management of our National Service Trust and some of these other issues. The Web and the Information Age system and the kind of real-time accountability that it offers is the answer to making this ungainly animal that we have created work.

And I think we can do it. It will take time, but we will be the first to do it. We will make it work.

Chairman Hoekstra. When you and Mr. Rogers come back in 6 months, Ms. Jordan will be here, Michigan will win the national championship, and Father Scully will be invited back. He's a nice guy, and he will come back as my constituent next time...

Rev. Scully. Happily.

Chairman Hoekstra. ...and it is not working. What are you going to tell us?

Mr. Gallagher. Well first of all, I will be back here in 6 months. I want to be, and I am grateful that you have invited us to be here now.

Secondly, I will honestly tell you as I have today, what I think the problem is and how I think it works. I think Ms. Jordan would agree with you, and the first person I talked to on my first day on the job as a volunteer board member in the City of Washington was Luise Jordan, and I have tried to see her as much as I can ever since. She has been my teacher in all of this. I think we will be able to come together and report to you that it is working.

Now, we may define working differently. It is kind of like electrical wiring, you cannot put the lights on until it is all connected. We are not all connected yet. I don't know if we will be there in 6 months. But we will be closer than we are now, and I think we will know more than we do now. I will be proud to tell you that.

Chairman Hoekstra. Let me ask another question.

Ms. McLaughlin, you have a number of students where the documentation is not there. I understand that a number of them are off to school now, correct?

Ms. McLaughlin. Yes.

Chairman Hoekstra. With the expectation they have met their requirements, do they have their awards?

Ms. McLaughlin. No. During the last 7 days, after I was issued the invitation to come here, I called as many of them as I could track down throughout the country. No one does.

Chairman Hoekstra. None of them have their awards. Now, that is different than the information I think we have from AmeriCorps; is that correct?

Ms. McLaughlin. I am speaking only of the group I supervised.

Chairman Hoekstra. Your group, all right.

Now, Mr. Gallagher, this is where you have a system that is broken, and this is where the rubber hits the road. You now have how many kids in your program?

Ms. McLaughlin. We started out with 60. I think through the frustrations with the program throughout the year, we may have lost 50 percent of those as active members; so maybe 30.

Chairman Hoekstra. Thirty who don't have their awards. Should those kids get their awards?

Ms. McLaughlin. I am so glad you asked me that question, because I couldn't go home if I didn't get to address it.

So many of the parents that I talked to over the last week have wanted me to emphasize to you that what their students have done, and I can verify this since I was a part of it, is that they did everything they could. All of us at the local level did everything we could to try to verify what was okay and what was not okay. We went to every source that we could find and we never got the verification.

The parents are concerned, number one, that it will turn into a partisan issue, and they wanted me to relate that. Secondly, they are concerned that their children are out there at college, a lot of them, and some of them in financial hardship. All of them are affected directly by the program's promises, to take the title of your hearing, promises that have not yet been kept. The philosophical promise, the principle of the thing is of as much concern to some of them as the financial hardship, and they wanted me to make sure that you are aware of that.

Chairman Hoekstra. This is what the Corporation has told us. Without appropriate documentation of successful completion, these awards will not be available for the members. Those who have allowable service activities that can be accounted for will be allowed to use their awards.

So the Corporation is saying if the documentation in the system is not complete, and I am assuming the Board may support this, those kids don't get their awards?

Mr. Gallagher. I don't think I have to explain anything further to you today other than to say that if I gave one nickel of taxpayer money that we couldn't account for to somebody, that Ms. Jordan would be telling me that I have violated any number of laws.

What I can assure you is that we will do our best to find out where that is.

This is not a typical program. Everybody in the room knows that. But we will do our best to get to the bottom of it and get the funding in the hands of the people who should have it. They have a right to expect it. It was not their fault. It was the state commission, and a program beneath the state commission, and a program beneath a program beneath the state commission that led to all of this.

Again, it is a cumbersome law, but we will try to make it work.

Chairman Hoekstra. One last question for right now. You said that part of the process that you go through is that you need to build up the state organizations, something along that line, right?

Mr. Gallagher. Yes, sir.

Chairman Hoekstra. As a Board, or as a federal agency, why would we be running money through organizations or groups that are not ready to account for and administer the programs? Why would we give them the money to administer in the first place and get into the kind of situation we are in, in Terre Haute? Why wouldn't we say, before we give a grant to a state commission, that we are going to give you some money to build up the level, but the first grant is going to be to put in place in the infrastructure so that you can actually administer grants. Once you have the infrastructure in place, then we will start a stream of money to you that can filter to the other organizations.

Mr. Gallagher. It is a fair question. In the state of Michigan, we probably could have done that. You have a strong Governor, you have a strong commission, you have good programs up and running in Michigan. But all states are not as strong as Michigan.

Why would we pass a law that says, start this process now? That is really where the buck stops for Congress. But where it stops for us is that we have to try to make that system that you described work, and I think we can.

Chairman Hoekstra. I don't think we mandated that you had to spend the money.

Mr. Gallagher. Well, I think the idea was to get the program up and running, and that is what was in the budget. But I will yield to you, sir, on whether that means we are supposed to spend it.

Chairman Hoekstra. That is an interesting concept. We have the money, and we have to spend it, even though the way we spend it won't allow us to do it within the framework of the law.

Mr. Roemer.

Mr. Roemer. Thank you, Mr. Chairman.

We have heard some accusations that the AmeriCorps program is broken and has ultimately failed. I think that we just have to make sure that the problem in Terre Haute, or a system's accountability that needs to be improved, does not mean that programs such as Notre Dame's and dozens and dozens of others are experiencing huge difficulties with monitoring their AmeriCorps volunteers, nor that those programs are failing.

Father Scully, a couple of the things that many Democrats and Republicans were very concerned about when we put this law together was, one, the concept of leveraging money; that the public money would help you leverage private money. Is it fair to say that for every dollar that AmeriCorps gives you, that you are then leveraging 10 private dollars?

Rev. Scully. That is fair, yes. It could even be higher than that, Tim. I am not including the living stipends that these private elementary schools and secondary schools pay. I am also not including insurance in that.

I do want to correct a misperception I may be responsible for, though. Our operating budget, I mentioned, is $1.2 million. Our operating expenses from AmeriCorps that are covered are $120,000. That does not include the awards that the students receive. That is another $700,000.

Chairman Hoekstra. I am disappointed Mr. Norwood is not here to hear that, but I will make sure to tell him.

Rev. Scully. If you would correct that impression. I think our total budget, if you were to take the living stipends and insurance, is probably closer to $3.5 million.

So I suppose, depending on how you categorize it, the match is somewhere between 10 to 1 and 7 to 1, if you include the AmeriCorps awards.

Mr. Roemer. If we put together a bureaucracy that was constantly coming to the University of Notre Dame as a private and a Catholic institution, and the government officials were telling you precisely how to run your program and what to teach and so forth, would you be receptive to that kind of bureaucratic outreach or governmental outreach?

Rev. Scully. I will take your question as rhetorical. Let me take advantage of your question to say Mr. Chairman, that if you are speaking to Mr. Norwood, and also to Mr. Fletcher, Mr. Fletcher did suggest we were getting a pittance for what we were doing, and I couldn't agree more. I would be happy to have the Chairman and Mr. Fletcher recommend to AmeriCorps a certain remedial measure for the University of Notre Dame to get a little more money from the AmeriCorps program. Delighted to receive that.

Chairman Hoekstra. If my Ranking Member will write the letter, I will cosign it.

Rev. Scully. Thank you, Mr. Chairman.

Mr. Roemer. We are already writing our CFO letter together. We don't want to be too bipartisan here today, do we, Pete?

So, Father Scully, we have set up a program that leverages private dollars and gives local autonomy and discretion at the local level. The Trust provides some kind of guidance and oversight at the state commission and from the top. It is working exceedingly well at Notre Dame.

Ms. McLaughlin, you say in your testimony, "In my opinion, AmeriCorps is a wonderful program that not only aids the needy but also helps the person donating his or her time." That was your testimony, Mr. Sullivan? Generally, your experience has been a good one with AmeriCorps?

Mr. Sullivan. Yes.

Mr. Roemer. You support AmeriCorps being a program that, with the right leadership in Terre Haute, can succeed in the future?

Mr. Sullivan. Yes.

Mr. Roemer. And you think that your student has benefited greatly from this experience, as well, too?

Mr. Sullivan. Yes.

Mr. Roemer. Let me jump over to Mr. Gallagher.

Mr. Gallagher, do we have certain states that are running this program at the state commission level and administering it and looking into some of the programs in preventive ways and proactive ways better than other state programs? Do you intend to do seminars, training opportunities and technical assistance programs for those kinds of states that may be weak, that you have targeted or given notice as being weak in this area, to try to share best practices and best experiences and get these other states up to speed?

Mr. Gallagher. We are doing exactly that and have been for some time, but it is a long job and it is a difficult job. These people are political appointees of governors in each of their states. They have their own ideas about these things. They are volunteers themselves.

We have made remarkable progress in that respect. With this assessment program, we have had two states, Montana and Florida, go through this process. They came back to Las Vegas and reported how difficult it was, but how good it was for them to have gone through it. We now have 10 under these programs going through this assessment process, and we hope to get through all 50 within the next few years.

That is a very important key element of the devolution that this law calls for. It is going to take some time and it is going to take more help for some states than others. We have had states ask us to come out and visit them. Now I can not give you chapter and verse, although I could tell you what states they were. There is no need to, but we have sent what you would call SWAT teams out to deal with those states and help get them back on their feet and up and running.

All of those things are under way. They are important, and we would have to have more support for them.

Mr. Roemer. Of the $50 million that we currently spend on administration in AmeriCorps, what part of that money is spent on these technical assistance programs and SWAT teams and efforts to get the state commissions up to speed on their guidelines and requirements for oversight?

Mr. Gallagher. I do not know the answer to that, but I would not hesitate to suggest that it is not enough.

Mr. Roemer. Thank you, Mr. Chairman.

Chairman Hoekstra. I just wanted to comment that the documentation that I believe we require is not really brain surgery. It is Social Security number, birth date, level of education, age, citizenship, hours worked, and these types of things.

It is fairly typical when somebody gets a job that you keep records of this same information. So I don't think we are asking for a huge bureaucratic jumble of information. If you are going to hire somebody, you require people to gather that information. This is basically hiring people for, in many cases, a living stipend and a scholarship and those types of things. So it is not brain surgery. It is amazing. People do this each and every day.

The other thing is the auditability of the books. The structure that we are doing it through for AmeriCorps may be complex, but the things we are asking of grantees and those types of things is not unique. Having a Corporation keep its books is not unique, and I think that is what the frustrating thing is.

It is actually Mr. Schaffer's turn, but Mr. Kind, do you want another round? Do you have additional questions?

Mr. Kind. Brief ones.

Chairman Hoekstra. We will go to Mr. Schaffer and then follow up.

Mr. Schaffer. Thank you, Mr. Chairman.

Father Scully, in your opening remarks, the first thing you said was that the AmeriCorps program is the largest employer at Notre Dame. What did you mean by that?

Rev. Scully. Thank you, Congressman.

More of our graduates join the Alliance for Catholic Education than any other single employer. Arthur Andersen, for about a decade prior to that, had been the largest single employer.

So what I meant to say is that more graduates of our graduating class join this AmeriCorps program than any other single employer. Is that clear?

Mr. Schaffer. Join as employees of the AmeriCorps program?

Rev. Scully. Well, yes. In other words, they are full-time volunteer members of the AmeriCorps program, called the Alliance for Catholic Education.

Mr. Schaffer. Volunteer members?

Rev. Scully. Volunteer members, or participants, depending on what you want to call them.

Mr. Schaffer. So they are not really employees, then?

Rev. Scully. Well, I mean, they are full-time members of this effort that engages their professional and personal time. They are teachers. So what I meant to say is that while our largest employer had been for a decade an accounting firm, a wonderful one, and the other four or five under this AmeriCorps program are as well, the single largest employer of our graduates, or if you want, absorber of our graduates' talents, if you prefer another label, is the ACE AmeriCorps program.

Mr. Schaffer. Thank you.

Ms. Jordan, I am curious, does a calculation exist for the dollars per hour that the American people realize out of the AmeriCorps program?

Ms. Jordan. Not that I am aware of. There are performance statistics that the Corporation puts out, but I don't recall seeing that particular statistic. I am sorry. I don't know.

Mr. Schaffer. As one who pays taxes, and represents 650,000 others who do, the ultimate goal of the AmeriCorps program is to stimulate community service and volunteerism in a community. It would seem that for the dollars we put in, that that would be a question many of us would have. Do you think it is possible to even calculate the cost of every volunteer hour?

Ms. Jordan. The cost of volunteer hours could be calculated, but someone would have to define the parameters. If you are speaking about the cost of an AmeriCorps member's hours, GAO has done reporting on that. But if you are talking about the cost of all the volunteer hours that are generated because of AmeriCorps programs, I know that the Corporation has statistics on volunteer hours that are generated. I don't know that anybody has gone to the cost per ultimate hour, nor could I, at this point, provide any assurance on the reliability of the information.

Mr. Roemer. Would the gentleman yield?

Mr. Schaffer. Briefly.

Mr. Roemer. Just very briefly and I appreciate the gentleman yielding. I think it would be so difficult to put that information together.

The AmeriCorps program tutors and mentors 2.6 million children. They help 564,000 at-risk children through after-school programs. Mr. Sullivan is a great example. He tutored a fifth grader. What is the cost to society, what is the benefit to society if that fifth grader, who might have dropped out of school and become incarcerated in prison, ends up going to college and graduating? How do you calculate that?

Mr. Schaffer. Thank you.

Mr. Rogers, when he was here, commented that the Corporation's new Year 2000 financial system will be up and running within days. Ms. Jordan, do you think that is an accurate statement from what you have seen?

Ms. Jordan. Mr. Rogers modified and indicated that the system was, in fact, brought up over the weekend. My office has not been provided all of that information, and at this point I cannot tell you the exact status of MOMENTUM.

Mr. Schaffer. One more thing, Mr. Chairman. I have given a staffer, and would ask him to share with the other Members, a newspaper article from my district on an AmeriCorps program that I would like to ask unanimous consent to be included in the record.

Chairman Hoekstra. Without objection.

Mr. Schaffer. It is about a project that AmeriCorps undertook in my district. They built a pile of mud, and it is an oven. They shaped it into an oven.

The news article is much more elegant than I can be about the project. It is not there anymore. The rain has washed it away. But these students generated a number of hours building this, and there is a picture of it here. It is a real nice picture, building a pile of mud here with AmeriCorps dollars.

Chairman Hoekstra. The gentleman's time has expired. We will go to Mr. Kind, and you will be the last questioner.

Mr. Kind. Thank you, Mr. Chairman. A couple of quick questions, one of which I will address to Mr. Gallagher.

Mr. Gallagher, is there any problem with turnover at the state commission level as far as getting some of these states up to speed? The fact you have turnover of personnel serving on the state commissions, has that been a problem in the last few years?

Mr. Gallagher. I cannot tell you the answer to that across the system. But with many of the state commissions I am familiar, yes, that is a problem. People have trouble acclimating themselves to all of this, and some of them like it and some of them don't. That is a continuing problem.

Mr. Kind. Ms. Jordan, you indicate in your testimony that one of the administrators of the Terre Haute program was a person who was on probation for some fraudulent activity; is that correct?

Ms. Jordan. No, sir.

Mr. Kind. Maybe it wasn't Terre Haute.

Ms. Jordan. No, sir. The program I am referring to is one that was in Texas. The gentleman who was on probation is now incarcerated as a result of our investigation and his guilty plea.

Mr. Kind. I am just wondering if we need to look into some quick background checks of people in charge of actually administering the grant money? Is that something that needs to be explored.

Ms. Jordan. Yes, sir, that is an obvious thing that should be done. There are certain requirements that background checks be done for certain positions. That would be one of the areas that you could look into strengthening.

Mr. Kind. Father Scully, have you received any specific direction from the Corporation on ways of tightening up the monitoring and the oversight that you do with your particular program?

Rev. Scully. Not to my knowledge, Congressman.

Mr. Kind. There haven't been any directives or letters or memos or anything indicating that this is a serious problem the Corporation is looking into, and they are expecting complete compliance and effective management and oversight at the local level? You haven't received any communication in that regard?

Rev. Scully. Honestly, I can't answer definitively, because I don't have that level of involvement in the day-to-day operations of the program. The AmeriCorps people don't communicate directly with me.

I do know that we have quarterly reports that we are pretty religious about responding to; forgive the reference there.

Chairman Hoekstra. We would expect nothing else from Notre Dame.

Rev. Scully. We take advantages of those responsibilities to respond to all of the oversight questions they have. They are pretty thorough.

I don't know if you have had an opportunity to see what AmeriCorps requires every quarter, but it is not a trivial exercise. While it is not bureaucratic, it does request us to just specify at a very careful level what it is we are doing, how we are accomplishing our goals, and how many volunteer hours we are currently sponsoring. So I am pretty confident.

Mr. Kind. That goes to the state commission in Indiana?

Rev. Scully. In our case, we are a direct grant. We are one of the few direct grants to higher education from the national office.

Mr. Kind. We are going to have to run for a vote here, but I wanted to thank the witnesses for the interesting testimony, especially Ms. McLaughlin and Mr. Sullivan, for your attendance and your insight. And I hope, Mr. Sullivan, that you have not been soured by your experience with AmeriCorps, even with some administrative snafus, because it sounds like the program you were involved with was a very worthwhile one, and we appreciate your participation.

Thank you, Mr. Chairman.

Chairman Hoekstra. Thank you.

On behalf of Mr. Roemer and myself, we would like to thank all the witnesses for being here today and your participation. For Mr. Sullivan and Ms. McLaughlin coming from Terre Haute, we appreciate it very much.

We look forward, Mr. Gallagher and Ms. Jordan, to working with you over the next few months, and we will see you soon.

Mr. Gallagher. Six months.

Chairman Hoekstra. Six months. Thank you.

Whereupon, at 12:45 p.m., the Subcommittee was adjourned.