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75–226 2001

TO INVESTIGATE THE LEGISLATION THAT WOULD INCREASE THE EXTENT AND SCOPE OF THE SERVICES

PROVIDED BY SMALL BUSINESS DEVELOPMENT CENTERS

HEARING

BEFORE THE

SUBCOMMITTEE ON WORKFORCE,

EMPOWERMENT, AND GOVERNMENT PROGRAMS

OF THE

COMMITTEE ON SMALL BUSINESS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

WASHINGTON, DC, JULY 19, 2001

Serial No. 107–20

Printed for the use of the Committee on Small Business

(

(II)

COMMITTEE ON SMALL BUSINESS

DONALD MANZULLO, Illinois, Chairman

LARRY COMBEST, Texas

JOEL HEFLEY, Colorado

ROSCOE G. BARTLETT, Maryland

FRANK A. LOBIONDO, New Jersey

SUE W. KELLY, New York

STEVEN J. CHABOT, Ohio

PATRICK J. TOOMEY, Pennsylvania

JIM DEMINT, South Carolina

JOHN THUNE, South Dakota

MIKE PENCE, Indiana

MIKE FERGUSON, New Jersey

DARRELL E. ISSA, California

SAM GRAVES, Missouri

EDWARD L. SCHROCK, Virginia

FELIX J. GRUCCI, JR., New York

TODD W. AKIN, Missouri

SHELLEY MOORE CAPITO, West Virginia

BILL SHUSTER, Pennsylvania

NYDIA M. VELA ́ ZQUEZ, New York

JUANITA MILLENDER-MCDONALD,

California

DANNY K. DAVIS, Illinois

WILLIAM PASCRELL, New Jersey

DONNA M. CHRISTIAN-CHRISTENSEN,

Virgin Islands

ROBERT A. BRADY, Pennsylvania

TOM UDALL, New Mexico

STEPHANIE TUBBS JONES, Ohio

CHARLES A. GONZALEZ, Texas

DAVID D. PHELPS, Illinois

GRACE F. NAPOLITANO, California

BRIAN BAIRD, Washington

MARK UDALL, Colorado

JAMES R. LANGEVIN, Rhode Island

MIKE ROSS, Arkansas

BRAD CARSON, Oklahoma

ANIBAL ACEVEDO-VILA ́ , Puerto Rico

PHIL ESKELAND, Deputy Staff Director

MICHAEL DAY, Minority Staff Director

SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT, AND GOVERNMENT PROGRAMS

JIM DEMINT, South Carolina, Chairman

FRANK LOBIONDO, New Jersey

MIKE FERGUSON, New Jersey

FELIX GRUCCI, New York

DARRELL ISSA, California

ED SCHROCK, Virginia

SHELLY MOORE CAPITO, West Virginia

JUANITA MILLENDER-MCDONALD,

California

DANNY DAVIS, Illinois

STEPHANIE TUBBS JONES, Ohio

CHARLES GONZALEZ, Texas

MIKE ROSS, Arkansas

DONNA CHRISTIAN-CHRISTENSEN, Virgin

Islands

NELSON CROWTHER, Professional Staff

(III)

C O N T E N T S

Page

Hearing held on July 19, 2001 ............................................................................... 1

WITNESSES

Sweeney, Hon. John E., Member, U.S. House of Representatives ...................... 2

Udall, Hon. Tom, Member, U.S. House of Representatives ................................. 4

Brady, Hon. Robert A., Member, U.S. House of Representatives ........................ 5

Wilson, Donald T., Executive Director, Association of Small Business Development Centers ........................................................................................................ 9

Grumbles, Thomas G., Vice President, American Industrial Hygiene Association ........................................................................................................................ 10

Cartier, Rudolph, Small Business Ombudsman, State of New Hampshire ........ 12

Conroy, Christian, Associate State Director, Pennsylvania Small Business

Development Centers ........................................................................................... 14

Lopez, Leonard, Sun Valley Express (Convenience Store) ................................... 16

APPENDIX

Opening statements:

DeMint, Hon. Jim ............................................................................................. 24

Prepared statements:

Sweeney, Hon. John E ..................................................................................... 27

Udall, Hon. Tom ............................................................................................... 30

Brady, Hon. Robert A ....................................................................................... 36

Wilson, Donald T .............................................................................................. 37

Grumbles, Thomas G ....................................................................................... 45

Cartier, Rudolph ............................................................................................... 57

Conroy, Christian ............................................................................................. 61

Lopez, Leonard ................................................................................................. 67

(1)

TO INVESTIGATE THE LEGISLATION THAT

WOULD INCREASE THE EXTENT AND SCOPE

OF THE SERVICES PROVIDED BY SMALL

BUSINESS DEVELOPMENT CENTERS

THURSDAY, JULY 19, 2001

SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT, AND

GOVERNMENT PROGRAMS,

COMMITTEE ON SMALL BUSINESS,

Washington, DC.

The Subcommittee met, pursuant to call, at 10:00 a.m. in room

311, Cannon House Office Building, Hon. Jim DeMint [chairman of

the Subcommittee] presiding.

Mr. DEMINT. We are officially convened. I appreciate everyone

being here. As you know, we will probably have a vote very quickly

and we will adjourn, but it would probably be a good idea to go

ahead and begin the hearing to see if we can get in some of the

testimony before the first vote.

I do want to welcome all of you and particularly you, Mr.

Sweeney. I appreciate the ideas behind your bill and your being

here to tell us a little bit about it, so I look forward to that.

Today, the Subcommittee has three bills before us that would expand the extent and the scope of the services provided by the Small

Business Development Centers that we usually refer to as the

SBDCs. There are three legislative proposals under consideration

that we will hear about.

The first is H.R. 203, the National Small Business Regulatory

Assistance Act of 2001, introduced by Congressman Sweeney of

New York. This would direct the Administrator of the Small Business Administration to establish a pilot program to provide regulatory compliance assistance to small business concerns through

participating SBDCs.

Under H.R. 203, small businesses would be able to receive confidential counseling regarding compliance with federal regulations,

provided that such counseling does not constitute the practice of

law. In addition, SBDCs would provide to small businesses training

and educational activities, technical assistance and referrals to experts and other providers of compliance assistance. The bill is

aimed at helping small businesses cope with the maze of federal

regulations, a good example of the federal government creating the

problem and then coming in to solve it.

The next legislative proposal, sponsored by Congressman Brady

of Pennsylvania, who I assume will be here after the vote, would

permit the SBA to make grants to SBDCs to enable them to proVerDate 11-MAY-2000 02:25 Oct 06, 2001 Jkt 075226 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 E:\HR\OC\C226.XXX pfrm11 PsN: C226
2

vide technical assistance to secondary schools or to post secondary

vocational and technical schools for the development and implementation of curricula designed to promote vocational and technical entrepreneurship.

The third which has been dropped, H.R. 2538, is sponsored by

Congressman Udall of New Mexico. It would authorize the SBA to

make grants to SBDCs for the purpose of providing entrepreneurial

assistance to Native Americans, Native Alaskans and Native Hawaiians in starting, operating and growing small businesses. The

legislation is aimed at stimulating the economies of areas served

and to promote job creation.

The Subcommittee would appreciate everyone’s views. We will be

looking forward to hearing everyone. John, I think the best idea,

if you do not mind, is we will go vote and come back, unless you

would prefer to make your statement and then we will go vote.

[Mr. DeMint’s statement may be found in appendix.]

Mr. SWEENEY. Well, Mr. Chairman, my statement is very brief,

so I think I could actually make the statement and get us over

there. How much time do we have?

Mr. DEMINT. I would like the Ranking Member to have the opportunity to make a statement. Let us see if we can fit in these two

statements before we vote.

Ms. Millender-McDonald.

Ms. MILLENDER-MCDONALD. Thank you. Good morning, Mr.

Chairman.

Since I will be here for a little while after we return back, I will

defer to our colleague, Congressman Sweeney, if you have a short

one so that we can get to the Floor to vote and then return back.

At that time, I will make my statement if it is okay with you.

Mr. DEMINT. Thank you. Thank you very much.

Congressman Sweeney.

Mr. SWEENEY. I thank the Chairman and the Ranking Member,

and I will shock you both by giving a very brief statement.

Mr. DEMINT. I will be shocked.

Mr. SWEENEY. I also want to compliment you on your choice of

hearing rooms. This is a great historic place, and I think it showed

some real contemplation.

I am going to submit for the record an extended statement.

STATEMENT OF CONGRESSMAN JOHN E. SWEENEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW

YORK

Mr. SWEENEY. For nearly 25 years, Congress has recognized that

small businesses face substantial regulatory burdens. I, like you,

have a substantial number of constituents in jobs created out of my

district by small businesses, some 90 percent in New York’s 22nd

Congressional District, and I think that mirrors the vast majority

of Members of Congress.

In the spirit of helping these entrepreneurs, I have introduced

H.R. 203, the National Small Business Regulatory Assistance Act.

This legislation would assist small businesses in successfully finding their way through the maze of regulations that have proliferated in recent years.

3

Last year, after a great deal of effort during the 106th Congress,

and I was proud to be a Member of this Committee, we breathed

new life into what began as an outstanding initiative, but had little

prospect for implementation. This improved legislation has a proven record of support as witnessed on September 26 of last year

when the House passed the National Small Business Regulatory

Assistance Act by voice vote.

H.R. 203 would amend the Small Business Act to establish a

pilot program in 20 states. The Administrator, in consultation with

the National Association of Small Business Development Centers,

SBDCs, would select two states from each of the ten federal regions

for participation in the program. This is a compromise that has

been worked out over the last year.

Within the pilot program, SBDCs would develop partnerships

with federal agencies and be a point of contact for small businesses

to turn to free of charge for confidential advice concerning regulatory compliance. This type of cooperation, Mr. Chairman and

Ranking Member, is not new. Some SBDCs have already been

thinking outside the box and providing that kind of service. They

have fostered relationships with different federal agencies and

independent compliance groups to build upon each other’s resources.

H.R. 203 is not meant to replace current regulatory compliance

programs, but supplement them when relevant participating

SBDCs may refer businesses to existing regulatory compliance programs. This bill is intended to take these successes and apply them

nationwide to ensure safety in the workplace, to ensure compliance

with all sorts of different regulatory requirements of the federal

government.

There are a number of examples, including examples within my

own district, and I simply would say that as a former regulator— I was New York’s Labor Commissioner before coming to Congress— I recognize both the importance that the government plays, the important role the government plays in providing regulatory oversight

for the safety and health of both people who work at businesses or

people who are using those businesses, and I also understand the

need to try to link and better link those in the business community

to those regulatory underpinnings so that we achieve the fundamental goal.

It simply is not a matter of having more regulation and more

rules, Mr. Chairman. It is really a matter of finding the easy and

the right way or, I should say, the correct way, not the easy way,

for businesses to be able to comply.

With that, I will thank you again, submit my statement for the

record and answer any questions you might have.

[Mr. Sweeney’s statement may be found in appendix.]

Mr. DEMINT. Thank you, Congressman. We do need to leave, but

if there is a quick question from the Ranking Member?

Ms. MILLENDER-MCDONALD. Just one question, Mr. Chairman.

Thank you so much for your indulgence.

Mr. Sweeney, thank you so much for your presentation. We will

submit your statement for the record. I just wanted to ask the

funding source, given that there is no authorization levels in this

proposal.

4

Mr. SWEENEY. And there is not a need to. This is without cost

because the SBDCs have already indicated the capacity to be able

to provide this service, and indeed they have in some areas. This

is an attempt on our part to nationalize what we think is a program within the SBDCs that has worked.

Mr. DEMINT. Thank you. We are adjourned until 10:30.

[Recess.]

Mr. DEMINT. Let us continue with the testimony. I assume some

of our colleagues will join us later, but since we have a bipartisan

mix here in the room, Tom, we will continue.

We want to hear from two additional Congressmen on two additional pieces of legislation. Tom, since you are to my immediate left

we will hear from Congressman Tom Udall from New Mexico, and

then we will go to Congressman Robert Brady.

Is that okay, that order?

Mr. BRADY. Sure.

STATEMENT OF CONGRESSMAN TOM UDALL, A

REPRESENTATIVE FROM THE STATE OF NEW MEXICO

Mr. UDALL. Thank you. Thank you very much, Chairman

DeMint. It is a pleasure to be here with you today.

Good morning, and I thank you for this opportunity to speak to

the Committee about my proposal, which would establish a three

year pilot project providing grants to SBDCs for assisting Native

American, Native Alaskan and Native Hawaiian populations with

their small business development needs.

Today we have demonstrated how important small business enterprise is to the health of our economy, but there are still places

in this country where economic prosperity has often failed to reach.

These areas deserve our attention and assistance.

Consider this. Nowhere in America has poverty persisted longer

than on or near Native American reservations, which suffer an average unemployment rate of 45 percent. However, the number of

businesses owned by Indian tribe members and Native Alaskans

grew by 84 percent from 1992 to 1997, and their gross receipts

grew by 179 percent in that period. This is compared to all businesses, which grew by seven percent, and their total gross receipts

grew by 40 percent in that period.

I would like to continue this growth and expansion of small enterprise with the Native American Small Business Development

Act, H.R. 2538. My bill ensures that Native Americans, Native

Alaskans and Native Hawaiians seeking to create, develop and expand small businesses have full access to the counseling and technical assistance available through the SBA’s SBDC program.

The business development tools offered by the SBDCs can assist

Native Americans with the information and opportunity to build

sustainable businesses in their communities. The Native American

Small Business Development Act would permit state Small Business Development Centers to apply for federal grants to establish

one or more Native American Small Business Development Centers.

In an effort to ensure the quality and success of the program, the

proposal requires grant applicants to provide SBA with their goals

5

and objectives, including their experience in assisting entrepreneurs with the difficulties in operating a small business.

In addition, the applicant must show their ability to provide

training and services to a representative number of Native Americans, Native Alaskans and Native Hawaiians. Most importantly,

applicants must seek the advice of the local native population on

the specific needs and location of these services they will provide.

It is clear we can do more to aid Native American entrepreneurs.

No doubt, not enough has been done to assist Native Americans in

building their businesses, which in turn helps benefit their community. I hope to change that with my proposal.

In closing, I would like to mention that we will be receiving testimony from Mr. Leonard Lopez of Bloomfield, New Mexico. Mr.

Lopez is opening a convenience store called Sun Valley Express on

the Navajo Reservation in Shiprock, New Mexico. I know that he

will provide the Committee with firsthand information on the

strengths of the SBDC and how this proposal will further assist the

development of small businesses for Native Americans, Alaskans

and Hawaiians.

I would also like to acknowledge the presence of Mr. Roy Miller,

who is New Mexico’s SBDC state director. He is here in the crowd.

I thank the Chair for the opportunity to discuss these issues

today. Thank you very much, Mr. Chairman.

[Mr. Udall’s statement may be found in appendix.]

Mr. DEMINT. Thank you, Congressman Udall. Can you stay with

us a few minutes?

I will hold my questions until we hear from Congressman Robert

Brady. Thank you for being here.

STATEMENT OF CONGRESSMAN ROBERT A. BRADY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA

Mr. BRADY. Thank you, Mr. Chairman. I appreciate this opportunity and look forward to discussing my proposal with you and

with this Committee.

I would like to introduce Christian Conroy, who is the assistant

director at our Philadelphia SBDC in Wharton. I asked him to join

me. I believe he is on the panel, but I asked him to join me up here

in case you do have questions that I know he can answer that I

cannot.

It is the American value of hard work and valuable skill that

makes our standard of living possible. From machinists and carpenters to auto mechanics and computer technicians, skilled work

has made our life better for laborers and consumers.

In a more competitive and global economy, it is a bedrock truth

that to succeed you must be skilled, but there is another step to

be taken toward a better life, and it, too, is a part of the American

character. That is entrepreneurship, talented individuals starting

their own businesses. Small business forms the backbone of our

economy.

The businesses create half of all jobs and do it more than 60 percent faster than larger firms. Small businesses employ our mechanics, technicians, builders, machinists and draftsmen. My bill would

6

for the first time create a training program to help these skilled

workers become entrepreneurs themselves.

It is important to realize that many of these very skilled laborers

do not have business experience or training that would help them

succeed. We want them to succeed, so we should help them all we

can. How do we propose to do this? I propose the Vocational and

Technical Entrepreneurship Development Act to provide the resources necessary to help skilled workers learn new skills; how to

build their own business and make it thrive.

My bill would establish a program for vocational and technical

entrepreneurship development. Through SBA we would provide

grants to Small Business Development Centers to provide assistance to high schools, universities or vo-techs to develop and implement curriculum promoting entrepreneurship.

With over 20 years of experience helping hundreds of thousands

of people turn their dreams into profitable businesses, the Small

Business Development Centers have developed excellent education

programs to train people on what is required to operate a successful business.

I thank you very much for the opportunity to speak to this Committee.

[Mr. Brady’s statement may be found in appendix.]

Mr. DEMINT. Thank you both.

I just have a couple of brief questions, and then we can hear

from some of the witnesses that you have been a part of inviting.

Congressman Udall, as we look at providing I guess focused services or special services to particular groups, there are I guess many

individuals who are disadvantaged for socio-economic reasons not

necessarily related to their ethnic connections or whatever.

Is there a reason we should focus these grants on Native Americans instead of including them in I guess a grant package that

would go for disadvantaged areas, particularly areas that might

have socio-economic problems?

I just wanted to hear why the focus on just particular groups

rather than a focus on the nature of the problem as a whole?

Mr. UDALL. Thank you very much, Chairman DeMint, for that

question.

The issue of unemployment in Native American communities is

really a chronic and a longstanding one, and I do not think there

is any place else in the country that has the dismal unemployment

record of Native Americans. You heard me mention in my testimony an average of 40 percent. Many of the reservations in my

state the unemployment is closer to 75 and 80 percent, and it has

been like that for over 100 years.

What we are trying to do with this bill in setting up a pilot is

see that if we move some of these centers nearer to the reservation

we cannot stimulate the kind of activity that could bring down

those unemployment rates. Up until now, SBDC centers, which I

think are required under current law to serve everyone in a state.

In my state, which is a very large, rural state with hundreds of

miles to travel, it may well be that an entrepreneur that needs assistance cannot travel 300 miles in order to get to that center, and

so I think if we have this pilot that tries to locate these centers

7

closer to where the problem is and to where the high unemployment is we may see more assistance. That would be my answer.

I have also been joined up here, and I neglected to mention it,

by Don Wilson, who is the president of the Association of Small

Business Development Centers. He may assist me in some of these

questions, too.

Thank you for that question.

Mr. DEMINT. Thank you very much.

Mr. WILSON. Mr. Chairman, if I could interrupt——

Mr. DEMINT. Sure. Please.

Mr. WILSON [continuing]. And just add to that? I know, for example, I believe the county in South Dakota, Congressman Thune’s

district and state, the Pine Ridge Reservation, I think that county

has the highest level of poverty of any county in the nation.

These patterns on Native American reservations are fairly consistent. SBDCs have done outreach in a number of these reservations and so forth, but when they go they may be out there once

a month or, you know, once every two weeks, this sort of thing, because of the limited resources we have.

I believe if we could concentrate it on the reservation and have

a full-time operation that we could begin to break this terrible cycle

of poverty that Congressman Udall has so eloquently referred to.

Mr. DEMINT. Let me see if I have a question for Congressman

Brady here.

Congressman Brady, I know that particularly in the post secondary vocational schools, community colleges, that sometimes they

do have funds available to contract for various types of educational

services. Do you envision that with the additional funds for the

SBDCs we will provide free services to these colleges or look at

doing it on some kind of partnership basis where there is some

funding on a contract basis?

To put the question in the context. Are there things like this

happening now where the SBDCs are actually working with community colleges, vocational colleges? Is there payment for this? Is

it being done free now, or are we proposing something that is actually different?

Mr. BRADY. I do not know other than where I am from. In the

City of Philadelphia, that does not happen. Our vo-techs are gone.

Mr. DEMINT. Right.

Mr. BRADY. I really do not know about the rest of the parts of

the country, but in the City of Philadelphia there is hardly any

more vo-techs out there.

It would be a partnership. The school would have to apply. They

would apply, and there would be a clearinghouse, one clearinghouse throughout the country, that would supply maybe up to 33

schools or universities that would get these grants. It would be a

partnership, but I do not know about the rest.

Maybe Christian can help. I know in the city we do not have

many more vo-techs that use your services. I do not know again

through the rest of the country. Do you know?

Mr. CONROY. Sure. Actually, part of the reason for the development of this proposal is in, for instance, Lancaster, Pennsylvania,

we have worked with the Stevens College of Technology, which is

8

a vocational school, and we have an outreach office that is located

there.

The reason we are able to have an outreach office there is that

the college provides funding to the local Small Business Development Center that serves that area, which is operated out of the

university.

What we envision would happen with this is that yes, it would

be a competitive process where vocational schools would apply to

offer this type of training to their students.

Mr. DEMINT. Would the grant go to the school or to the SBDC?

Mr. CONROY. It would go initially to the SBDC, and then we

would put it out for competitive bids to various vocational-technical

schools throughout the state.

What that would allow then is the flexibility for different schools

to tailor their programming to best reflect the strengths of the programs that they have. For instance, if one school is particularly

strong in doing computer IT type of training, we could tailor the

program so that it focuses on those areas that are relevant to that

particular industry.

Mr. DEMINT. If there are no additional comments, we will dismiss this panel and move to Panel II. I want to thank both of my

colleagues for being here.

Let us just take a couple minutes and rotate the witnesses.

Mr. UDALL. Thank you very much.

Thank you, Mr. Chairman.

Mr. SWEENEY. Thank you, Mr. Chairman.

[Pause.]

Mr. DEMINT. Let us convene our second panel. I want to thank

all of you gentlemen for taking the time to share your thoughts

with us today.

We have with us today Thomas Grumbles, who is vice-president

of the American Industrial Hygiene Association. We have Don Wilson, president and CEO of the Association of Small Business Development Centers. We have Mr. Rudy Cartier, small business ombudsman for the State of New Hampshire; and Christian Conroy,

the associate state director for Pennsylvania Small Business Development Centers; and Leonard Lopez, Sun Valley Express, Navajo

Reservation, Shiprock, New Mexico.

Congressman Udall would like to say a few words about our

guest, Mr. Lopez, before we get started.

Mr. UDALL. Thank you, Chairman DeMint. Let me just say about

Mr. Lopez, who is one of my constituents, and give you a little bit

of an introduction and background.

He is presently the president of L&A Enterprise, Inc., in Bloomfield, New Mexico. He is an enrolled and registered member of the

Navajo Nation. Mr. Lopez was born in Geezi, New Mexico, and attended high school in Bloomfield, and he attended San Juan College in Farmington, New Mexico. He received his B.S. in Business

Education from Brigham Young University.

Leonard has worked extensively in the field of natural gas production in gas control analysis and training. He was the lead plant

operator and was responsible for managing his crew. He has also

worked in the field of education, teaching accounting and computer

applications at the high school level. He is married and has five

9

children. It is an honor to introduce and have a member of my constituency of the 3rd Congressional District here.

Thank you very much, and I look forward to hearing from all of

the panel members here today. Welcome to all of you.

Mr. DEMINT. Thank you, Congressman Udall.

Gentlemen, will you try to keep your comments within about five

minutes. We will let you all have a chance to speak, and then we

will ask a few questions if that is okay.

We will run the clock, so you will have some idea of how long

you are taking. When you see it turning yellow, you will know the

red light is right after that.

We will begin with Donald Wilson. Donald?

STATEMENT OF DONALD T. WILSON, PRESIDENT AND CEO,

ASSOCIATION OF SMALL BUSINESS DEVELOPMENT CENTERS

Mr. WILSON. Mr. Chairman, thank you very much. I am Don Wilson, president of the Association of Small Business Development

Centers. The Association represents 58 small Business Development Center programs in all 50 states, the District of Columbia,

American Samoa, Virgin Islands and Guam.

I want to thank you for letting us testify this morning on legislation that I think is extremely important to the nation’s small business community, H.R. 203, Congressman Sweeney’s legislation.

I think, Congressman, you and your colleagues probably know

that small business views federal regulations and state regulations

to be somewhat of a burden. I think my written testimony documents that very well. For example, since April of 1996, federal

agencies have adopted 21,653 major and minor rules. The Code of

Federal Regulations as of 1998 filled 201 volumes with a total of

134,723 pages. The Code currently occupies 19 feet of shelf space.

If you are a small businessman, you are looking at dealing with

IRS regulations, social security regulations, medicare regulations,

federal unemployment insurance regulations, Fair Labor Standards

Act, workers compensation, the Equal Pay Act, the Americans With

Disabilities Act, Family and Medical Leave Act, Title VII of the

Civil Rights Act, Federal Mine and Safety, the Rehabilitation Act

of 1973, the Worker Adjustment and Retraining Act, Migrant and

Seasonal Agricultural Worker Protection Act, Immigration Control

Act, et cetera, et cetera, et cetera.

I think, you know, if you are a small businessman, a mom and

pop operation, and you are trying to be familiar with all of the

rules and regulations that you must comply with it is a pretty

daunting task.

In 1996, the Congress asked the SBDC program to begin to provide compliance assistance. Unfortunately, the program did not get

the resources that were needed to fully implement that. From 1996

to 1999, in fact, 44 of the programs in the country were level funded, and in 2000 and 2001 we basically received cost of living increases.

I believe Congressman Sweeney’s legislation, H.R. 203, the pilot

program proposed for 20 SBDCs in the ten SBA regions, will provide the resources to bring on staff the necessary core competencies

to begin to work in an expanded program of compliance assistance.

A number of our states have developed very solid partnerships with

10

the 507 SBAP program and SBO programs. Some of ours already

refer, constituents and clients, to industrial hygienists and others

to assist them.

I envision in some degree that your SBDCs would be like a general practitioner dealing with the less complicated cases, and the

more complicated cases they would be referring them to the partners. I believe with the 600,000 or 700,000 small businesses that

come through our doors needing compliance assistance, you will

probably actually see those numbers grow when they became fully

aware of the assistance that was available.

We have worked with the Department of Labor on a cross cut

program, the IRS and others on pilots, but this would expand it.

This would give additional dollars that are badly needed so that

small business people who are disproportionately affected, Mr.

Chairman, by regulations could cope with those regulations and

run their business and focus on the requirements of marketing and

finance and the core issues rather than being absorbed in spending

inordinate amounts of time and dollars complying with federal regulation.

We would like to commend this legislation to you. We would like

to see it grow. We believe funding would be absolutely necessary

to implement this to the extent that we believe the small business

community needs it, and we look forward to working with you and

the other Members of the Small Business Committee to try to

make this legislation a reality.

[Mr. Wilson’s statement may be found in appendix.]

Mr. DEMINT. Thank you, Mr. Wilson.

Mr. Grumbles.

STATEMENT OF THOMAS G. GRUMBLES, CIH VICE PRESIDENT,

AMERICAN INDUSTRIAL HYGIENE ASSOCIATION

Mr. GRUMBLES. Chairman DeMint and Members of the Subcommittee, my name is Tom Grumbles, and I am vice-president of

the American Industrial Hygiene Association. I am a certified industrial hygienist and have been in the occupational health and

safety profession for more than 25 years.

I appreciate the opportunity to provide testimony on H.R. 203 to

improve small business compliance with the federal regulations.

AIHA is particularly interested in regulations addressing occupational health and safety in the workplace. AIHA is the world’s largest association of occupational and environmental health professionals, and our members serve on the front line of worker health

and safety. One of AIHA’s goals is to bring good science and the

benefit of our experience to public policy issues.

A.I.H.A. supports H.R. 203, specifically ways to comply with the

numerous and complex regulations of OSHA. I have not quantified

it to the extent that Don did, but they are large. Of the myriad of

federal regulations small businesses must comply with, in our opinion none is more important than protecting the health and safety

of workers.

As the front line stewards of occupational health and safety,

however, we are aware of government and business limitations.

OSHA, like the rest of government, has to accomplish more with

less. No one is sure of the time it might take for an OSHA inspecVerDate 26-SEP-2001 01:52 Oct 06, 2001 Jkt 075226 PO 00000 Frm 00014 Fmt 6633 Sfmt 6602 E:\HR\OC\C226.XXX pfrm03 PsN: C226
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tor to visit all covered sites, but most agree it is unlikely more than

once every 50 to 80 years. It is also difficult for business to receive

OSHA consultation service because of the length of time required

before OSHA can respond to those requests.

A 1990s NIOSH study found over 90 percent of the work sites

are comprised of 50 or fewer employees that may have no industrial hygiene or safety expertise on staff, are not regularly inspected by OSHA and may have little information about health,

safety or industrial hygiene. If Congress is interested in improving

worker health and safety, small business concerns must be met by

working with them to address this issue.

A.I.H.A.’s effort in this interest is not new. In the mid 1990s,

AIHA decided to proactively assist small businesses unlikely or unwilling to look at occupational health and safety in their workplace.

In consultation with OSHA, AIHA developed a pro bono assistance

program for small businesses utilizing AIHA members. Five pilot

projects were conducted.

While the training that was provided was good and well received,

the real success was one-on-one follow up consultation. Many small

businesses, however, were uncomfortable with OSHA’s involvement. While OSHA’s profile was very low, most were convinced

that OSHA would place them on a list of upcoming inspections if

they attended.

A.I.H.A. believes the approach taken in H.R. 203 is correct. Any

successful program targeting small business should target businesses with less than 50 employees, have as a goal one-on-one consultation, be administered through a third party such as the SBDC,

involve occupational health and safety professionals when addressing health and safety regulations, and assure that only competent

and qualified individuals are involved in providing the education,

training and/or consultation services.

This last point is of great interest to AIHA. AIHA would like to

offer a suggestion relative to the experts. The bill does say that assistance to small business concerns should include referrals to experts. We are pleased this section was added from previous

versions of the bill. This was a recommendation from AIHA made

in earlier testimony.

However, we would like to see this section expanded. We recommend the referral of experts section be amended by adding language stating, ‘‘provided that such experts meet educational, technical and professional standards established by the Administrator.’’

This would provide assurance that only competent and qualified individuals are involved in providing the training and education.

Further to that point, AIHA also suggests the legislation or report language and language that clarifies the competency requirement stating that, ‘‘In the case of small businesses needing assistance with the rules promulgated by OSHA, the committee believes

an expert should be a certified industrial hygienist, a certified safety professional, an occupational health physician, an occupational

health nurse or their equivalent in other professions.’’ A copy of our

recommendations is attached to our testimony.

This language should relieve the Small Business Association,

OSHA or the SBDCs from having to develop regulations to identify

12

certified individuals to conduct the education, training or consultations.

The occupational health and safety profession has nationally recognized certification programs to qualify individuals and assure

competency. As an example, a certified industrial hygienist must

have at a minimum a Bachelor’s degree in one of the sciences, five

years of experience and undergo a two-day examination for being

certified.

In closing, most workplaces will never see an OSHA compliance

officer. The new OSHA is one that does not focus necessarily on enforcement, but builds partnerships with business. AIHA has long

supported pro bono assistance or a third party workplace review

program such as that proposed by Senator Michael Enzi in the

106th Congress.

We appreciate you giving us this opportunity to testify and ask

that our written testimony be put in the record. Thank you.

[Mr. Grumbles’s statement may be found in appendix.]

Mr. DEMINT. Thank you, Mr. Grumbles.

Mr. Cartier.

STATEMENT OF RUDOLPH CARTIER, JR., SMALL BUSINESS

OMBUDSMAN, STATE OF NEW HAMPSHIRE

Mr. CARTIER. Thank you, Chairman DeMint. Good morning,

Chairman DeMint and Members of the Subcommittee. I thank you

for the invitation and the opportunity to present testimony to the

Subcommittee on H.R. 203.

As stated, my name is Rudy Cartier. I am the New Hampshire

Department of Environmental Services Small Business Ombudsman. I appear before you today as the chair of the National Steering Committee of the Small Business Technical Assistance Programs and Small Business Ombudsmen created under Section 507

of the Clean Air Act amendments of 1990.

Section 507 of the Clean Air Act directed each state to develop

a state specific technical assistance and advocacy program to help

small businesses understand, comply with and have representation

in the development of regulations promulgated under the Clean Air

Act with an impact on small business.

In addition, most programs have an appointed Compliance Advisory Panel made up of small business owners or their representatives, a representative from the environmental regulatory agency

and at least two members of the general public to oversee the effectiveness of the programs.

Although initially created to address Clean Air Act issues, all the

programs have evolved into repositories and/or referral agencies

where small business owners and operators can go for a myriad of

environmental assistance and direction to other business services.

This is accomplished through a variety of options, including formal

and, in some cases, informal state level expansion of the program

responsibilities, development of networking systems and, most importantly, the development of strategic partnerships with other assistance providers.

Indeed, the vast majority of states have developed effective outreach assistance efforts in conjunction with state pollution prevention programs, Small Business Development Centers, economic deVerDate 26-SEP-2001 01:52 Oct 06, 2001 Jkt 075226 PO 00000 Frm 00016 Fmt 6633 Sfmt 6602 E:\HR\OC\C226.XXX pfrm03 PsN: C226
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velopment agencies, trade associations and local government agencies, to name a few. In addition, the partners regularly conduct regional and national conferences, seminars and workshops to increase our effectiveness to provide accurate, timely and appropriate

assistance.

The programs were also instrumental in the formulation and development of what is called the 507 Enforcement Response Policy

and the Small Business Compliance Incentives Policy with the Environmental Protection Agency, which for the first time granted

‘‘safe haven’’ status for small business owners who voluntarily identified and agreed to remedy violations of environmental regulations. These policies encourage sound environmental practices and

minimize the threat of punitive fines or the need to remain confidential.

I am very pleased to be able to report that the programs are active in all 50 states and U.S. territories and are very well received

by small business. Collectively, we provide environmentally related

assistance to over 1,000,000 businesses and owners yearly through

direct contact and in partnership with others.

I appear before the Committee today to offer our support of legislation such as H.R. 203, which has the potential for increasing the

effectiveness of all our efforts to provide the highest level of service

to our small business clients. We see this bill as an opportunity for

Congress to provide incentives to continue the cooperation and coordination among all programs that deliver regulatory assistance to

small businesses, especially our SBDC partners.

It is essential that the expertise found in all small business assistance programs be woven together through partnerships utilizing the expertise presently in place in each of these programs to

ensure we are appropriately meeting the true needs of businesses.

Our programs, along with those of our numerous partners, are

proof that well crafted and coordinated technical and compliance

assistance programs are extremely valuable to small businesses.

We applaud Congress for recognizing the successes that have

been the hallmark of each of these programs. We encourage your

efforts to build and expand on this experience in delivering small

business assistance to cover these and other pressing small business issues. We would note, however, that although pilot programs

can provide support for creative breakthroughs, we would encourage Congress to also recognize the critical nature of the continuing

need for stable financial support for these programs.

The Small Business Technical Assistance Programs across the

country are committed to remaining on the path of continued cooperation and coordination of our environmental assistance services. We appreciate your work to support this effort and look forward to additional targeted assistance by federal agencies with a

commitment to specific, accurate and timely assistance.

We on the state level will continue our commitment to fostering

strategic and appropriate partnerships within our individual states.

We have found that the most appropriate method for delivering

useful assistance must be developed to meet the unique needs of

businesses in each of the individual states. We certainly are supportive of efforts to direct any potential federal funding to these

14

partnership programs to increase the resources availability and capabilities of assistance providers in meeting these needs.

Again, thank you for this opportunity to provide this testimony

to you today. I would be pleased to make myself available to the

Committee for any other assistance deemed appropriate.

[Mr. Cartier’s statement may be found in appendix.]

Mr. DEMINT. Thank you, Mr. Cartier.

Mr. Conroy.

STATEMENT OF CHRISTIAN CONROY, ASSOCIATE STATE DIRECTOR, PENNSYLVANIA SMALL BUSINESS DEVELOPMENT

CENTERS

Mr. CONROY. Good morning. Chairman DeMint and Members of

the Committee, I am Christian Conroy, the Associate State Director of the Pennsylvania Small Business Development Centers. I

would like to thank you, Mr. Chairman and Members of the Committee, for inviting me to testify at this hearing on the Vocational

and Technical Entrepreneurship Development Program Act of

2001.

As you are all very well aware, small business is the engine of

the economy in Pennsylvania, as well as in the nation. There are

currently over 22,000,000 small businesses in America. They account for 99 percent of all businesses and employ 53 percent of the

private workforce and contribute over half of the nation’s gross domestic product.

For the past 20 years, the Pennsylvania Small Business Development Centers have been helping entrepreneurs start and grow successful businesses. During that period, we have seen a number of

changes that have affected small firms, things such as the development of sophisticated management software tools such as spreadsheets and databases, the increasing globalization of trade, the advent of the internet just to name a few. One thing that has remained constant, unfortunately, is the lack of entrepreneurial educational experience that the majority of people who come to the

Small Business Development Center for help in starting their business have.

What we continue to see on a daily basis is many people who

have excellent technical skills and an entrepreneurial disposition,

but no formal training that will prepare them to start and grow a

business. Eighty percent of our pre-venture clients have not owned

or operated a business before, and 80 percent of our clients do not

have an educational background to prepare them to start and operate a business.

If you consider the courses of study that are offered in our principal educational systems—high schools, community colleges and

vocational and technical schools—the lack of preparation should

not come as a surprise. With few exceptions, these institutions do

not offer a comprehensive, coherent course of study to prepare students to become competent business owners.

What we have in Pennsylvania, and I would argue in the nation

as well, is an economy that is dependent upon the initiation and

growth of small business for its vitality and a set of educational institutions doing little to prepare students to participate in that entrepreneurial economy.

15

When Congressman Brady requested information on how to increase support for entrepreneurship, we were delighted to work

with him on developing the Vocational and Technical Entrepreneurship Development Program Act of 2001, which will provide resources to the Small Business Development Centers to adapt and

apply our curriculum on how to start a business in select vocational

and technical schools throughout the country.

You are likely asking yourself why are the Small Business Development Centers not already doing this? Simply it is because our resources are such that we cannot currently meet the demand for assistance in starting a business.

Present survey research indicates that five in ten people in the

21 to 30 age bracket are considering starting a firm, and about 7.7

million Americans are actively engaged in starting a business. That

number is substantially greater than the number of people who get

married each year.

Currently in Pennsylvania, the SBDCs are operating at capacity,

and we can only assist a tiny fraction of this huge population so

thus if the Small Business Development Centers are going to serve

a greater proportion of these potential entrepreneurs we must

transfer our knowledge of the entrepreneurial process to those educational systems that have the capacity to reach and to educate a

much larger segment of the population than can currently be

served by the SBDCs.

With this bill, what will happen is the SBDCs will adapt their

business management training programs to develop a cohesive curriculum on starting and operating a successful business that can be

provided to students in vocational and technical schools. The training will focus on the essential business operational areas such as

management, marketing and finance, and additionally the programs will be modified to provide information that is relevant to

the particular industry sectors in which the students are learning

skills.

The SBDCs will not conduct the training of students, but rather

will train teachers on how to deliver training on starting and operating successful businesses. Thus, far more students will benefit

from this training than if the SBDCs use their limited resources to

conduct the training.

As we see it, there are three benefits to this bill. The first and

most obvious benefit is the training of potential entrepreneurs so

when they do decide to start firms they will be prepared to succeed.

The second benefit accrues to employers of individuals who have

gone through this training. Whether or not a person starts a business, the knowledge of such key aspects of operating a business as

customer relations, controlling costs and how money is made creates a more effective employee.

Third, once we demonstrate the value of this type of training in

the context of one set of educational institutions, it will, we believe,

be easier to transfer these processes to other educational systems

such as high schools, community colleges and universities.

In the long term, we believe entrepreneurship education should

be an option available through high schools, community colleges

and four year colleges and institutions. This bill represents an excellent vehicle to combine the resources of two well established

16

proven programs, vocational and technical schools and the Small

Business Development Centers, to begin to make entrepreneurship

education available to more students. Our economy and our communities depend upon it.

I urge the Committee’s approval of this bill. Thank you.

[Mr. Conroy’s statement may be found in appendix.]

Mr. DEMINT. Thank you, Mr. Conroy.

Mr. Lopez.

STATEMENT OF LEONARD LOPEZ, SUN VALLEY EXPRESS

(CONVENIENCE STORE), NAVAJO RESERVATION, SHIPROCK,

NEW MEXICO

Mr. LOPEZ. Good morning, Mr. Chairman and Members of the

Committee. My name is Leonard Lopez, and I live in Bloomfield,

New Mexico. My wife and I are members of the Navajo Tribe, and

we both grew up on the Navajo Reservation in New Mexico.

I appreciate the opportunity to appear before the Subcommittee

today on behalf of Congressman Tom Udall’s bill to provide Small

Business Development Centers with resources to assist National

American populations.

My wife and I began working on the idea of opening our own

business, a convenience store/filling station, on the Navajo Reservation in Shiprock, New Mexico, in April, 1995. Four years later,

after much red tape with the tribal and BIA regulations and the

required signatures, we were finally granted our business site

lease.

For five years we aggressively wrote our business plan, gathered

our financial projections, completed the environmental and archeological studies, the traffic study surveys, and the list goes on. We

knew we were in for a long haul of getting a business started on

the reservation. We were told that it would be discouraging and

difficult to work with the tribal officials. Our friends were right.

When it came time for us to approach the lending institution for

a loan on our business, we received minimal support. We thought

we were well prepared to submit our application for a business

loan, but later found that there was just as much information needed and time required to secure a loan as getting a business site

lease with the tribe.

We are proud of ourselves that we were able to be convincing

enough to be approved for approximately $700,000 from Bank of

America and an SBA 504 loan of $330,000 that we are close to finalizing the agreement. I believe that had we been guided and

coached from the beginning by a knowledgeable small business

counselor like Orestes Hubbard at our SBDC, we would have avoided many unnecessary delays. Not only would this have been to our

advantage, I believe we would have had our doors open for business by now.

There are a few small business assistance providers we received

assistance from, which are Southern Utah College Small Business

Department in Blanding, Utah, and the Regional Business Development Office, RBDO, of the Navajo Nation in Shiprock, New Mexico. Basically we were left to ourselves to figure out what we needed to do.

17

My wife and I did all the work in seeking our resources that

helped us complete our project. I am not saying that someone

should have done all my work while I sat around. No. I only needed directions.

We finally received the directions we needed when we approached Mr. Orestes Hubbard, manager of the Small Business Development Center, SBDC, at San Juan College in Farmington, New

Mexico. I first met Mr. Hubbard when I attended a Meet Your

Lender seminar held at the college by the SBDC a year ago last

spring.

I was hesitant at first to solicit his help because I figured he

might direct me to speak with the RBDO people in Shiprock, as

has been the case with the previous directors. After explaining to

him my goals and my desire of opening a business on the reservation, Mr. Hubbard made arrangements to meet with me personally

to discuss my project. He evaluated my business plan and suggested a few changes and recommendations.

According to his list of requirements, we had met all the requirements. He then recommended a number of lending institutions that

we should contact for a loan. At this time, three lending establishments had already turned us down.

The SBDC has been following up on the progress of our project.

It was either Orestes personally or one of his staff who contacted

us for updates. He has invited us to small business seminars and

conferences held at the college. He keeps abreast of our progress

and is very helpful in giving suggestions.

I believe a Small Business Development Center on the reservation would be an advantage and benefit to those Native Americans

who desire to start their own business. With an SBDC nearby, anyone can plan to work on starting a business. They will learn the

techniques of starting a business, as well as how to manage a business.

The center could also provide information on available resources.

The personnel could be there for consultation. They could provide

guidelines for writing a business plan, the implementation and the

components of a business, namely financing, marketing, operations,

management and technology.

The Native American SBDC could also work closely with the San

Juan College Small Business Development Center where they

have, in addition, a department specializing in business incubation

that helps companies grow and succeed.

For these reasons, Mr. Chairman, I support Congressman Udall’s

effort to strengthen the outreach of the SBDC program to more Native Americans. I urge your Committee to support Congressman

Udall in his efforts.

[Mr. Lopez’s statement may be found in appendix.]

Mr. DEMINT. Thank you, Mr. Lopez, and all our witnesses. It has

been very informative and persuasive.

I would like to offer my colleagues the opportunity to ask any of

you questions. We will begin with Congressman Udall. Would you

like to ask any of the panelists questions?

Mr. UDALL. Yes. Thank you, Chairman DeMint.

My first question is for Don Wilson. Earlier Congressman

Sweeney testified that his proposal would not require additional

18

funding. Can the existing funding for the SBDC program accommodate Mr. Sweeney’s proposal?

Mr. WILSON. Congressman Udall, I do not know how that would

be possible under the appropriation recently approved by the House

Appropriations Committee. Although it is level funding for the network, due to the census and the way our formula is tied to the census 24 states will lose up to 20 percent of their funding. To anticipate that we could now launch the Sweeney bill or the Udall bill

with those kinds of cuts in our program funding is just simply not

realistic.

As I believe my testimony mentions with regard to the Sweeney

bill, from fiscal year 1996 through fiscal year 1999 roughly 44 percent of the state programs did not see a dollar’s worth of increase

in funding. Then in 2000 and 2001 they basically received roughly

cost of living increases, so you see since 1996 over the last half decade these programs have been struggling. In fact, considering cost

of operating the program, paying cost of living increases to counselors and so forth, the program has been going backwards.

To launch initiatives like this, which I think are incredibly

worthwhile, would just not be possible without some new authorization, some new resources.

Mr. UDALL. Thank you, Mr. Wilson. We obviously feel the SBDC

program is an important one and should be funded at a level that

is really going to provide the assistance out there.

My next question is for Mr. Lopez. You mention in your testimony that it took you four years, and you say after much red tape

with the tribe and the BIA regulations. Was it actually four years

to get through the tribal process and the BIA regulatory process?

Mr. LOPEZ. In the beginning there was the submission of our— Mr. Chairman, I am sorry. I am not used to this.

Mr. Chairman, at the beginning of our idea of starting our business we submitted an application to the tribe which generated the

process to get the lease. From the time that we started to the time

that we had the paper signed it took three years and nine months

to complete.

Mr. UDALL. That is pretty surprising to me.

Mr. LOPEZ. And this was with exerted effort, too, being at their

doorstep as frequently as we could.

Mr. UDALL. Trying to push it along?

Mr. LOPEZ. Yes.

Mr. UDALL. Have you had contact with other business people

that have had similar experiences?

Mr. LOPEZ. Yes, sir. Some of them have said it took them about

almost ten years just to get the lease on the reservation.

Mr. UDALL. One of the issues we talked about earlier in my testimony and others that have testified here is why you would locate

an SBDC either near or right on a reservation.

Can you tell me why you think it might be more helpful to have

an SBDC on the reservation, for example, at Windowrock or

Shiprock or someplace like that and why it might generate more

business activity and more people would be employed?

Mr. LOPEZ. See, I have also worked with the RBDO, which is the

Regional Business Development Office, with the tribe, which is located in Shiprock, and through the agencies. There are several

19

agencies on the reservation. We worked with the Shiprock agency.

Often times it was difficult to get information from them. As far

as expertise in setting up a business, they lacked so I had to seek

assistance from elsewhere.

I feel if we were to set up an SBDC right there in Shiprock, let

us say, I believe that if we were to staff it with professional business oriented people and those who would be familiar with the

laws of the Navajo Nation in conjunction with their expertise, I believe that it would lessen the time frame in which to start a business.

Mr. UDALL. And do you also believe that it would be more accessible and more business friendly to budding entrepreneurs that

would want to seek assistance?

Mr. LOPEZ. I believe it will be, and I also believe that the SBDC

has to become very much aware of what the laws are of the Navajo

Nations as far as business and economic development.

Mr. UDALL. So the second part of your answer is that there are

a number of requirements that the Navajo Nation has, that the Bureau of Indian Affairs have, that are an essential part of starting

a business and so the SBDC personnel would have to specialize in

those in addition in those kinds of regulatory hurdles in order to

assist the entrepreneur to get their business started, up and running and going?

Mr. LOPEZ. Yes, sir.

Mr. UDALL. Okay. Thank you very much, Mr. Chairman.

Mr. DEMINT. Thank you, Mr. Udall.

Mrs. Christian-Christensen.

Mrs. CHRISTIAN-CHRISTENSEN. Thank you, Mr. Chairman. I do

not have any questions. I just want to thank the panelists for taking the time to come and give us their testimony. The SBDC program is very important to my community, as it is to communities

across the country, and I think any way that we can enhance its

services helps our communities to grow even more.

I am just glad that you were able to come with some of your

opinions and your experience and bring it to bear on our discussions this morning. Thank you.

Mr. DEMINT. Thank you very much.

Ms. Tubbs-Jones.

Mrs. JONES. Mr. Chairman, thank you. Mr. Chairman, to my colleagues and to the people who are testifying this morning, welcome

to Capitol Hill, and thank you for your testimony.

I want to tell you, Mr. Lopez, I made it to Shiprock, New Mexico.

I managed to get there with my colleague, Mr. Udall, and President Clinton when we were doing the digital divide tour. I regretted only that I did not have enough time to really get around and

get to meet and greet the people of Shiprock, New Mexico. I also

wanted to do a little bit of shopping. I wanted to leave my $2 in

the economy of Shiprock, but I did not have time to do that either.

I am glad to have you here and want to say that this is my second term as a Member of the Small Business Committee, and I am

very happy to serve here and I am very supportive of SBDCs. We

have a great network of SBDCs in the State of Ohio. I hail from

Cleveland, Ohio, and the Growth Association is actually in my

20

area. I have been working very hard. I support increased dollars

for SBDCs.

I also have had the pleasure very recently of, and I do not travel

all the time, but every once in a while I get a chance. I went to

visit the Small Business Development Center and the Women’s

Business Center in the State of Hawaii. Actually, I was on the island of Honolulu, and I forgot what city. I am really just learning

that there is an island called Hawaii in the State of Hawaii. That

was new for me. My geography kind of got lost somewhere in the

process.

One of the issues that was faced in Hawaii was the fact that

there are so many different islands all around that it is very difficult for them to be able to provide services to the small businesses

around the islands. What they were really excited about was recently having the opportunity to get computers wherein they were

able to have the person being interviewed, the new small business

person, on the computer talking to the counselor/advisor on another

island and be able to see them face to face and provide advice.

I would hope that each of you would think through over and

above your testimony recommendations that you could give to us

that would improve the operation and opportunity for small business in this country.

We are all alarmed by the fact that the Small Business Administration budget was cut so significantly and did have a little success

yesterday on the Floor of the House through the leadership of our

Ranking Member, Nydia Vela ́zquez, and Sue Kelly to increase

some of the dollars for small business.

I would encourage you to have all your members write to the

President to encourage him to increase funding for small business

and just keep doing all the work that you do, but as well to let us

know what is not working. We may not always have the opportunity to have a hearing where you come and testify, but our offices

are available to each and every one of you to provide information

and service.

After that long good morning and so forth and so on, I would give

any of you who want to comment over and above your testimony

some of my time to so do. If you do not, fine also.

Mrs. CHRISTIAN-CHRISTENSEN. Would you yield so that I can—— Mrs. JONES. Absolutely. I will yield.

Mrs. CHRISTIAN-CHRISTENSEN [continuing]. Bring in a question?

Thank you.

I do have a question, and it is an important question to Mr. Wilson in follow up to the question that Mr. Udall asked about the

funding. Can you tell us how much money you would need to implement Mr. Sweeney’s bill?

Mr. WILSON. I would envision roughly $5 million, Mr. Chairman,

would enable us to launch the initial 20. That is roughly a quarter

of a million dollars per program, which I think would be a good

start.

If we are going to launch it, what we would envision is perhaps an authorization that would provide $5 million the first year, $10

million the second and perhaps another $10 million the third because it will take roughly $5 million to do 20, and we have 58 programs. You can do the math. I think it would take roughly $15 milVerDate 26-SEP-2001 01:52 Oct 06, 2001 Jkt 075226 PO 00000 Frm 00024 Fmt 6633 Sfmt 6602 E:\HR\OC\C226.XXX pfrm03 PsN: C226
21

lion when the project is completed to be able to provide these type

of services nationwide.

Obviously, you know, if you have 40 states that are not participating they are going to be very anxious. It is a competitive process, and the Sweeney bill is designed and the language is such that

it will reward those grant applicants who already have or can demonstrate partnerships with folks like the 507 program from SBA,

the SBO programs that Mr. Cartier represents, working with the

industrial hygienists and others.

I think that will get the biggest bang for the buck is those who

can demonstrate the partnerships, but I think there is a commitment to the partnerships throughout the network, and I believe it

would be ideal if after three years we could have all 58 programs

active in the program in the pilot. That would require roughly $15

million by the third year.

Mr. CONROY. Is there any way to proceed without additional

funding?

Mr. WILSON. I truly do not know how that would be done. Simply

the resources are not there.

For example, Representative Tubbs-Jones, in Ohio I believe with level funding, $88 million level funding, I believe Ohio will lose

about $150,000 if my memory is correct. I cannot cite all of our

states, but I believe $150,000 or $157,000, if I recall.

Holly Schick, who is an outstanding director, state director in

Ohio, is facing those kinds of cuts in her program. You are facing

closing centers. We are in crisis.

Mrs. CHRISTIAN-CHRISTENSEN. Thank you.

Mr. WILSON. The key thing, if I may interrupt one more time, is

with the slowdown in the economy the Department of Labor recently released a report that said when unemployment goes up selfemployment goes up. We are seeing that around the country.

When major industries or major plants have layoffs, those people

who are now unemployed and often do not find jobs in their fields,

they may be creative. They may be talented. They turn to the idea

of trying to start their own business using perhaps pension funds,

savings or whatever to start their own business. They come into

the SBDCs.

It is just a pattern that is repeated over and over. When there

are periods of slow economic growth, the demand for our services

increase. Right now we are seeing that demand increase when we

are seeing the resources decline in 24 states. I think that is very

unfortunate.

Mrs. CHRISTIAN-CHRISTENSEN. Thank you.

I yield back.

Mrs. JONES. Just finally I meant to mention this, and I forgot.

I am very much supportive of the vocational and technical entrepreneurship development portion.

In the City of Cleveland, we have a school system that really

needs some stirring up, and I think part of the need comes from

the lack of recognition that all young people are not going to college. What do we do to teach them a trade or a skill that they can

be useful citizens in our community and maybe pass it on through

their entrepreneurship, going on and being able to be successful?

I just want to also add that in of how supportive I am of that.

22

Mr. Chairman, if I have any time I yield back the balance.

Thank you very much.

Mr. DEMINT. Thank you very much. I think as the witnesses can

tell, you have a lot of support for all three of the ideas today. Our

hope is to get adequate funding.

I would like to just ask a couple of brief questions. One of the

primary goals of this Committee is to reduce the regulatory burden

on small businesses, make it easier for them to start so that we

will not have to have experts to help them navigate the regulatory

process.

Mr. Wilson, I mentioned to you before we got started an idea, if

we are adequately funded and if we can expand your services to include support of small businesses in dealing with compliance

issues.

One of the best helps to us as a committee would be if there was

some formal reporting system back to us about the regulations that

cause the most trouble and for the SBDCs to give us specific recommendations on what changes they would recommend to us so

that we can be an advocate for changes in federal policy.

Is that possible, and would you have any brief recommendations

on how we could do that?

Mr. WILSON. Historically the program has tried not to get involved in policy issues, but I think there would be no problem with

the network reporting back to the Committee on what it finds the

most troublesome and burdensome to the small business clients

that we see on a regular basis.

We would be glad to work with you and your staff to try to develop something like that, Mr. Chairman.

Mr. DEMINT. Yes. A similar question, Mr. Conroy. As we begin

to fund cooperative arrangements with secondary/ post secondary

schools to train for entrepreneurship, can you envision any way

where we can actually measure the impact of such an effort, or is

that just wishful thinking?

Mr. CONROY. Oh, no. Actually, impact and measuring the impact

and outcome of the program is something that we take very seriously. It is something that we do on an annual basis for the basic

program, and as part of this proposal actually the legislation does

call for an evaluative component.

I would envision that that would entail a number of different

things. We would have an evaluation of the course once it is completed so that we can make adjustments and adapt it to go forward

to make improvements to it, and then I would look to see that we

would do follow up studies with the students who went through the

program to find out really what kind of value was it and how did

it affect and impact their efforts to start a business.

Then what we would do also is compare that to a base group of

folks who did not go through the training to make a determination

as to really what is the value of that kind of training.

23

Mr. DEMINT. I think the key to long-term successful funding of

all of our programs is to be able to document success and to what

degree. You can be helpful with that long-term. I think it would

help us in considering additional funding for a program.

If there are not any additional questions, I would like to again

thank the witnesses and my colleagues for being here.

This hearing is adjourned.

[Whereupon, at 11:40 a.m. the Subcommittee was adjourned.]

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