DEPARTMENTS OF LABOR, HEALTH AND HUMAN 

SERVICES, EDUCATION, AND RELATED AGENCIES 

APPROPRIATIONS FOR 2011 

HEARINGS 

BEFORE A 

SUBCOMMITTEE OF THE 

COMMITTEE ON APPROPRIATIONS 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

SUBCOMMITTEE ON THE DEPARTMENTS OF LABOR, HEALTH AND 

HUMAN SERVICES, EDUCATION, AND RELATED AGENCIES 

DAVID R. OBEY, Wisconsin, Chairman 

NITA M. LOWEY, New York 

ROSA L. DELAURO, Connecticut 

JESSE L. JACKSON, JR., Illinois 

PATRICK J. KENNEDY, Rhode Island 

LUCILLE ROYBAL-ALLARD, California 

BARBARA LEE, California 

MICHAEL HONDA, California 

BETTY MCCOLLUM, Minnesota 

TIM RYAN, Ohio 

JOSE ́ E. SERRANO, New York 

TODD TIAHRT, Kansas 

DENNIS R. REHBERG, Montana 

RODNEY ALEXANDER, Louisiana 

JO BONNER, Alabama 

TOM COLE, Oklahoma 

NOTE: Under Committee Rules, Mr. Obey, as Chairman of the Full Committee, and Mr. Lewis, as Ranking 

Minority Member of the Full Committee, are authorized to sit as Members of all Subcommittees. 

DAVID REICH, NICOLE KUNKO, STEPHEN STEIGLEDER, DONNA SHAHBAZ, 

JOHN BARTRUM, LISA MOLYNEUX, and MIKE FRIEDBERG, 

Subcommittee Staff 

PART 7 

Page 

Combating Health Care Fraud and Abuse .................................................. 1 

Testimony of Interested Individuals and Organizations/Labor and 

Education Priorities/ESEA Reauthorization .......................................... 103 

FY 2011 Budget Overview: Jobs, Training, and Education .................... 230 

FY 2011 Budget Overview: Social Security Administration ................... 356 

Printed for the use of the Committee on Appropriations 


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Part 7 


pwalker on DSKD5P82C1PROD with HEARING
DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION, 

AND RELATED AGENCIES APPROPRIATIONS FOR 2011 


pwalker on DSKD5P82C1PROD with HEARING

pwalker on DSKD5P82C1PROD with HEARING
DEPARTMENTS OF LABOR, HEALTH AND HUMAN 

SERVICES, EDUCATION, AND RELATED AGENCIES 

APPROPRIATIONS FOR 2011 

HEARINGS 

BEFORE A 

SUBCOMMITTEE OF THE 

COMMITTEE ON APPROPRIATIONS 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

SUBCOMMITTEE ON THE DEPARTMENTS OF LABOR, HEALTH AND 

HUMAN SERVICES, EDUCATION, AND RELATED AGENCIES 

DAVID R. OBEY, Wisconsin, Chairman 

NITA M. LOWEY, New York 

ROSA L. DELAURO, Connecticut 

JESSE L. JACKSON, JR., Illinois 

PATRICK J. KENNEDY, Rhode Island 

LUCILLE ROYBAL-ALLARD, California 

BARBARA LEE, California 

MICHAEL HONDA, California 

BETTY MCCOLLUM, Minnesota 

TIM RYAN, Ohio 

JOSE ́ E. SERRANO, New York 

TODD TIAHRT, Kansas 

DENNIS R. REHBERG, Montana 

RODNEY ALEXANDER, Louisiana 

JO BONNER, Alabama 

TOM COLE, Oklahoma 

NOTE: Under Committee Rules, Mr. Obey, as Chairman of the Full Committee, and Mr. Lewis, as Ranking 

Minority Member of the Full Committee, are authorized to sit as Members of all Subcommittees. 

DAVID REICH, NICOLE KUNKO, STEPHEN STEIGLEDER, DONNA SHAHBAZ, 

JOHN BARTRUM, LISA MOLYNEUX, and MIKE FRIEDBERG, 

Subcommittee Staff 

PART 7 

Page 

Combating Health Care Fraud and Abuse .................................................. 1 

Testimony of Interested Individuals and Organizations/Labor and 

Education Priorities/ESEA Reauthorization .......................................... 103 

FY 2011 Budget Overview: Jobs, Training, and Education .................... 230 

FY 2011 Budget Overview: Social Security Administration ................... 356 

Printed for the use of the Committee on Appropriations 

U.S. GOVERNMENT PRINTING OFFICE 

58–234 WASHINGTON : 2010 


pwalker on DSKD5P82C1PROD with HEARING
COMMITTEE ON APPROPRIATIONS 

DAVID R. OBEY, Wisconsin, Chairman 

NORMAN D. DICKS, Washington 

ALAN B. MOLLOHAN, West Virginia 

MARCY KAPTUR, Ohio 

PETER J. VISCLOSKY, Indiana 

NITA M. LOWEY, New York 

JOSE ́ E. SERRANO, New York 

ROSA L. DELAURO, Connecticut 

JAMES P. MORAN, Virginia 

JOHN W. OLVER, Massachusetts 

ED PASTOR, Arizona 

DAVID E. PRICE, North Carolina 

CHET EDWARDS, Texas 

PATRICK J. KENNEDY, Rhode Island 

MAURICE D. HINCHEY, New York 

LUCILLE ROYBAL-ALLARD, California 

SAM FARR, California 

JESSE L. JACKSON, JR., Illinois 

CAROLYN C. KILPATRICK, Michigan 

ALLEN BOYD, Florida 

CHAKA FATTAH, Pennsylvania 

STEVEN R. ROTHMAN, New Jersey 

SANFORD D. BISHOP, JR., Georgia 

MARION BERRY, Arkansas 

BARBARA LEE, California 

ADAM SCHIFF, California 

MICHAEL HONDA, California 

BETTY MCCOLLUM, Minnesota 

STEVE ISRAEL, New York 

TIM RYAN, Ohio 

C.A. ‘‘DUTCH’’ RUPPERSBERGER, Maryland 

BEN CHANDLER, Kentucky 

DEBBIE WASSERMAN SCHULTZ, Florida 

CIRO RODRIGUEZ, Texas 

LINCOLN DAVIS, Tennessee 

JOHN T. SALAZAR, Colorado 

PATRICK J. MURPHY, Pennsylvania 

JERRY LEWIS, California 

C. W. BILL YOUNG, Florida 

HAROLD ROGERS, Kentucky 

FRANK R. WOLF, Virginia 

JACK KINGSTON, Georgia 

RODNEY P. FRELINGHUYSEN, New 

Jersey 

TODD TIAHRT, Kansas 

ZACH WAMP, Tennessee 

TOM LATHAM, Iowa 

ROBERT B. ADERHOLT, Alabama 

JO ANN EMERSON, Missouri 

KAY GRANGER, Texas 

MICHAEL K. SIMPSON, Idaho 

JOHN ABNEY CULBERSON, Texas 

MARK STEVEN KIRK, Illinois 

ANDER CRENSHAW, Florida 

DENNIS R. REHBERG, Montana 

JOHN R. CARTER, Texas 

RODNEY ALEXANDER, Louisiana 

KEN CALVERT, California 

JO BONNER, Alabama 

STEVEN C. LATOURETTE, Ohio 

TOM COLE, Oklahoma 

BEVERLY PHETO, Clerk and Staff Director 

(II)


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(1) 

DEPARTMENTS OF LABOR, HEALTH AND 

HUMAN SERVICES, EDUCATION, AND RELATED AGENCIES APPROPRIATIONS FOR 

2011 

THURSDAY, MARCH 4, 2010. 

COMBATING HEALTH CARE FRAUD AND ABUSE 

WITNESSES 

WILLIAM CORR, DEPUTY SECRETARY, DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

GARY GRINDLER, ACTING DEPUTY ATTORNEY GENERAL, DEPARTMENT OF JUSTICE 

DAN LEVINSON, INSPECTOR GENERAL, DEPARTMENT OF HEALTH 

AND HUMAN SERVICES 

OMAR PEREZ, SPECIAL AGENT, OFFICE OF INSPECTOR GENERAL, DEPARTMENT OF HEALTH AND HUMAN SERVICES 

OPENING STATEMENT BY CHAIRMAN OBEY

Mr. OBEY. Well, good morning or good afternoon or whatever it 

is. Let me thank our four witnesses for appearing here today, and 

let me simply make a few short remarks before I turn it over to 

them. We are going to have a couple of votes in about an hour to 

hour and a half, so you can bet that they will be timed to provide 

maximum ability to screw up this hearing. But nonetheless, we will 

try to have some sense of order before that creates chaos. This committee has a very special responsibility and a special meetings. And 

it is our job to, among others, to try to help meet the needs of people who qualify for programs covered by our appropriation bill, and 

those programs are desperately needed by millions of Americans. 

But in doing that, what else we also have a concurrent obligation 

to try to see to it that taxpayer money is used effectively not wasted on fraud or abuse or anything else. There isn’t any specific line 

item in the budget for waste, fraud and abuse, so ugliness is in the 

eye of the beholder, I guess. But nonetheless, we have an obligation 

to try to limit it as much possible. That is why this committee increased funding to nearly $1.1 billion for program integrity activities designed to reduce improper 

payments, fraud and abuse. That is nearly double the previous 

year’s amount. The potential savings to the taxpayer, we are told, 

many times larger than the investments. A large part of that appropriation went to the Social Security Administration who worked 

on a backlog of continuing disability reviews to determine whether 

benefits are being properly paid. It is expected to provide a 

$6,000,000,000 return to the taxpayers over the next 10 years. 


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Some went to the Labor Department to conduct more eligibility assessments under the unemployment insurance program. 

The other major use of the appropriation is in preventing, detecting and prosecuting fraud and abuse in Medicare, Medicaid and 

other health care programs, which is the many focus of our hearing 

today. 

The program integrity fund is in last year’s Labor-HHS bill in- cluded $311,000,000 specifically for that purpose. The appropriations were provided to the Centers for Medicare and Medicaid Services to review and audit claims, looking for patterns that suggest 

improper payment or fraud and to expand program integrity efforts 

in areas like Medicare Advantage and prescription drug plans, the 

HHS Inspector General to conduct investigations of schemes to defraud Medicare and Medicaid and the Department of Justice for investigations by the FBI for criminal prosecution of wrongdoers and 

for civil litigation that recovers funds for taxpayers and the Medicare trust fund. Among other uses, $41,000,000 of those funds was 

used for joint HHS and Justice Department strike teams that are 

now operating in seven cities. 

We are holding this hearing to ask the agencies involved how 

they are using the amounts provided in the fiscal 2010 bill to combat health care fraud and abuse. What specific activities are being 

undertaken? What is being done that could not have been done 

without this increased investment, what savings to the taxpayers 

and recoveries to the Medicare trust fund can be expected as a result? Do the witnesses expect the savings to exceed the cost of the 

effort by any appreciable amount? I understand the administration is asking for a $250,000,000 increase in health care program integrity funding for 2011. That may 

very well be justifiable, but frankly, before we consider the administration’s request for next year, this committee wants to have a 

better understanding of exactly how previously provided funds are 

being used and have been used and what benefits have accrued to 

the taxpayer by the prior appropriation of that money. 

I should also note that health care fraud and abuse covers a wide 

range of misdeeds. Wrongdoers come in all shapes and sizes from 

individuals operating out of a store front somewhere to large health 

institutions and drug companies. We need to be going after fraudulent schemes of all types and crooks of all sizes, big and small. I 

would hope that the primary focus is on the whales rather than the 

minnows. But they are all stealing from taxpayers and from patients. 

Let me say a few words about our panel of witnesses. Last year, 

the Obama administration established the Health Care Fraud and 

Prevention Task Force or HEAT, which brings together high level 

lenders from the department of HHS and the Department of Justice to share information and coordinate strategy. Our first two witnesses are the cochairs of that task force, Bill Corr, the Deputy 

Secretary of HHS and Gary Grindler, the Acting Deputy Attorney 

General. Both of their departments receive substantial funds from 

the appropriation we are discussing today. 

In addition, we have Dan Levinson, the HHS Inspector General 

whose investigators and auditors are on the front lines of the war 

against health care fraud. 


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And finally for review from the field, we have one of those investigators. He is Omar Perez, a special agent from the HHS IG’s Office and one of the leaders of the Miami Health Care Fraud Strike 

Force. 

The administration’s funding requests for next year would increase these by 13 cities to operate in 20 cities. 

We appreciate all four of you appearing here today. Before we 

hear from you, let me first turn to the committee’s ranking member 

for today, Mr. Rehberg. I expected to turn to a good looking fellow 

by the name of Todd Tiahrt, but I have been grossly disappointed. 

For the record, I am only kidding. 

Mr. REHBERG. That is probably because I took a shot at a cockroach on the way. I am sorry I did that. 

Mr. Chairman, it is always a pleasure to be in your company and 

back with you for this year’s hearing. 

I am particularly interested in this topic, and I presume all of 

my colleagues are as interested as I am in rooting out the waste, 

fraud and abuse in the entitlement programs run by CMS. As we 

all know, the Federal Government is hemorrhaging money. Last 

year we tallied up by far the highest deficit in the history of the 

country. While we ran that deficit, we heaped another trillion dollar plus of debt on our children and grandchildren. 

While Republicans and Democrats can disagree on the level of 

Federal spending that has been going on recently, it is my hope 

that we can all agree that to the extent we spend money, it would 

be spent on the purposes for which it was intended. We must hold 

agencies accountable for improper payments, and we must identify, 

pursue and prosecute those who would defraud the American taxpayer. 

As I was preparing for this hearing, I came across a series of 

alarming statistics, many of which I am sure we will hear from our 

witnesses. According to the OMB report, Medicare improper payments totaled an estimate of $10,800,000,000 in 2007. On November 16, 2009, The Washington Post reported more than 

$47,000,000,000 in improper payments were made. 

I understand that there has been a change in how these improper payments are categorized, but that still seems like a pretty 

substantial increase, regardless of whether or not the methodology 

has changed. I am glad to see that the administration is taking 

this problem seriously. It would be my hope that savings that are 

recovered are being used to shore up the Medicare trust funds and 

not immediately spent on something else. In any case, I am interested to hear from the witnesses. 

Thank you, Mr. Chairman. Again, it is a pleasure to be in your 

company. 

Mr. OBEY. Thank you. Why don’t we begin with Mr. Corr and let 

me ask you to summarize your statement and, we will get to the 

questions. 

OPENING STATEMENT BY MR. CORR

Mr. CORR. Mr. Chairman, Mr. Rehberg, thank you very much for 

the opportunity to appear today. Mr. Chairman I provided a rather 

lengthy statement. I will summarize. I realize it was quite long but 

we have a lot we wanted to tell you. As you both noted very clearly, 


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the health care fraud is a national problem. It is a Federal and 

State as well as private insurance program problem. Fraud is on 

the rise and the criminals who perpetrate it have become more organized and more sophisticated. We are responding with every tool 

at our disposal, and we are asking for new tools where our authorities are insufficient, and additional funds where current resources 

are not enough to get the job done. 

In the last year, we have launched major new operations against 

criminal and civil health care fraud. We are employing new technologies to identify fraud and prevent it where possible, including 

the construction of sophisticated new computer databases. 

At the Centers for Medicare and Medicaid Services, we are consolidating program integrity functions to make them more efficient, 

and for the first time have appointed a deputy administrator whose 

sole focus is the prevention of fraud and other improper payments. 

We are shifting program operations to the greatest areas of waste, 

fraud and abuse and we are coordinating anti fraud programs 

across the Federal and State governments and seeking partnerships throughout the private sector. We are doing more than ever 

before, but we are just getting started. 

The President signaled health care fraud is a priority of his administration with his fiscal year 2009 budget last May when he established a joint task force between HHS and the Department of 

Justice to strike against fraud hot spots in targeted cities across 

the country. Our joint operation, as you noted, known as Project 

HEAT is working well and we seek your support to expand it. 

This subcommittee was instrumental in securing an additional $311,000,000 in discretionary funds to fight waste, fraud and abuse 

in the current fiscal year. We immediately poured that money into 

our program integrity operations and have seen immediate returns 

on the investment. The discretionary dollars funded a new approach to health care fraud involving innovative uses of claims 

data. 

First, working with law enforcement, we used new methods of 

analyzing the data to identify spikes in claims and geographic regions and among types of services. In some cases, we see spikes 

1,000 percent higher than the national average. Then we have targeted regions and specific types of claims using analytic tools and 

concentrated law enforcement efforts involving the Department of 

Justice, the HHS office of Inspector General and CMS experts as 

well as State and local law enforcement agencies. 

We now have evidence that this approach works. Deputy Attorney General Grindler and Inspector General Levinson will tell you 

about the criminals we have put in jail, and I can tell you how your 

investments in program integrity have saved dollars on the front 

end. 

We use the funds to crack down on durable medical equipment 

fraud, one of our largest problems. For example, by enforcing new 

standards of participation in Medicare, conducting onsite visits and 

investigating the fraud itself, since October 1, 2009, 6,000 suppliers 

have dropped out of the program and we revoked enrollment on another 10,000 suppliers. That is 16,000 less potential abusers. With 

the new discretionary funds, we expanded site visits to high risk 

DME suppliers in seven States. The result, 265 supplier numbers 


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pulled, two payment suspensions, and $5,400,000 in claims denied 

in the last 5 months. 

We also used discretionary funds to focus on home health care 

fraud in high risk areas like Florida and Texas. In just 3 months 

in south Florida, we conducted inspections of 300 beneficiaries and 

discovered 200 of them did not meet the definition of a homebound 

patient. The added scrutiny saved $2,200,000 in the Miami area 

alone. 

We already knew targeting fraud works. Within 1 year after first 

establishing the Miami strike force, DME claims dropped by 

$1,600,000,000. 

Our contractors focusing on part C and part D of the Medicare 

program have reviewed thousands of cases and referred hundreds 

of fraud cases to Federal and State law enforcement agencies. If we 

are achieving major savings in one metropolitan area, we know additional investments will save or recover substantial sums. That is 

why the Obama administration is requesting a record 

$1,700,000,000 in fiscal year 2011 for Project HEAT and other initiatives to fight waste, fraud and abuse. 

The President’s latest health insurance reform proposal includes 

aggressive new program integrity authorities. These proposals 

range from imposing tougher disclosure requirements to identifying 

high risk providers who have defrauded the taxpayers. Details of 

these proposals are in my written testimony and submitted for the 

record. 

As the President indicated yesterday, he is committed to passage 

of health reform in the next few weeks. Without it, insurance premiums will continue to increase and the deficit will rise. The President is committed to health reform that addresses these problems 

and fixes our broken health insurance system. 

Only 5 weeks ago, HHS Secretary Sebelius and the Attorney 

General convened a national summit on health care fraud. The 

summit inspired a new framework of strategic principles to improve our program integrity operations. Strategic principle one, we 

will tailor additional interventions toward the areas where fraud 

and abuse are greatest. We will redirect resources to significant 

areas of fraud, waste and abuse and our experience in Florida 

shows that this strategy works. Second principle, continuous improvement of program integrity operations for Medicare and Medicaid. We are already consolidating program integrity policies at 

CMS and revamping specific contractor functions relating to the 

control of improper payments. Our contractors process 

3,600,000,000 claims each year. 

We need to help them do a better job of weeding out fraud and 

improper claims. The third strategic principle is to strengthen prevention of improper payments at the front end of our claims payment system. Due to prompt pay requirements in statute for Medicare and Medicaid, currently our systems are primarily focused on 

processing claims. Oftentimes, improper payments are not discovered until after expenditures have been made, which are required 

within 30 days for clean claims in the Medicare program. 

We are constantly in a pay and chase mode. We are steadily 

working to shift our emphasis to prevention. Part of this involves 

redesigning our computer processing networks, but it also involves 


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stricter provider enrollment criteria and the conduct of onsite visits 

of providers. 

Fourth strategic principle is to establish new partnerships with 

the private sector, to share information and methods to detect and 

prevention fraud. The public and private sectors have many common problems, and we should find common solutions. 

As we move forward, we must keep in mind that these programs 

are designed to provide health care to needy, disabled and aging 

Americans. We also need to remember that the vast majority of 

health care providers are honest people who do the right thing and 

are able to help millions of people every day. So we must strive to 

strike the right balance between providing health care and preventing improper payments. 

The fiscal year 2011 budget the President includes $1,700,000,000 for the HCFAC or the Health Care Fraud and 

Abuse Control program, including mandatory and discretionary resources. Of this total, the discretionary request is $561,000,000, 

which is a $250,000,000 increase over fiscal year 2010. The request 

is part of a multi-year strategy to implement our strategic principles and goals, and the budget assumes this funding level will 

grow each year for the next 10 years and save the American taxpayers $25,000,000,000. 

In summary, Mr. Chairman, across the Nation, health care fraud 

and improper payments have undermined the integrity of our public and private health insurance programs. As a result, taxpayer 

dollars have been stolen, fraud has driven up health care costs, and 

in a few cases patients have been endangered. Reversing the problem will require a long-term, sustainable approach. We believe we 

have the right approach to succeed in overturning fraud and abuse. 

We want to work with you as we move forward, and we ask for 

your guidance and support. Thank you, Mr. Chairman. 

Mr. OBEY. Thank you very much. 

Written Statement by William Corr, JD follows: 


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Mr. OBEY. Mr. Grindler. 

Mr. GRINDLER. Thank you, Mr. Chairman, Chairman Obey, 

Ranking Member Rehberg and other members of the subcommittee. 

Thank you for inviting me here today to testify about the administration’s fiscal year 2011 budget request to support the joint efforts 

of the Department of Justice and the Department of Health and 

Human Services to fight and deter health care fraud. 

As you know, every year, the Federal Government spends hundreds of billions of dollars to provide health care for some of our 

Nation’s most vulnerable populations, the elderly, the poor and the 

disabled. While most medical providers and health care companies 

are doing the right thing in their dealings with Medicare and Medicaid, it is indeed a sad fact that there are unscrupulous individuals who will attempt to game the system for their personal gain. 

It is for these reasons that the Attorney General and Secretary 

Sebelius have made the fight against health care one of paramount 

importance to both Departments. 

As referenced by the Chairman in his opening remarks, in May 

2009 they announced the creation of HEAT, a senior level joint 

task force which I oversee along with Deputy Secretary Corr. This 

task force is designed to marshal the combined resources of both 

agencies in new ways to combat all facets of the health care fraud 

problem. The goals of HEAT are clear, to prevent and deter fraud 

through increased prepayment reviews and audits, to strengthen 

enforcement efforts through the expansion of the Medicare fraud 

strike force and expanded capacity for false claims cases, to leverage our partnership and include increasing private sector outreach, 

improving coordination with State and local antifraud efforts, and 

expanding education on health care fraud to health care providers, 

and finally, to identify and eliminate statutory and regulatory impediments to our health care fraud prevention and enforcement efforts. 

I believe that our two agencies have a proven track record of success and the HEAT program, as we will discuss in the question session, has been very successful. Through fiscal year 2008, we have 

returned more than $15,000,000,000 to the Federal Government 

with $13,100,000,000 of that amount being returned to the Medicare trust fund. And the remaining amounts—— 

Mr. OBEY. Would you say those numbers again. 

Mr. GRINDLER. $15,000,000,000 returned to the Federal Government through fiscal year 2008, with $13,100,000,000 of that 

amount being returned to the Medicare trust fund, with the remaining amounts primarily being returned to Federal agencies in 

the form of restitution and compensatory damages. 

Since January of 2009, we have recovered more than 

$2,300,000,000 in health care fraud matters brought under the 

False Claims Act. As important as these recoveries to Medicare and 

other Federal health programs are, equally important is the significant deterrent effect that our enforcement efforts have had. For example, 12 months after we started and launched our first Medicare 

fraud strike force operation in the Miami area in 2007, there was 

an estimated reduction of $1,750,000,000 in durable medical equipment claims submissions. And this is an example of success that 

isn’t measured in terms of getting dollars back. This is an example 


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of success where fraud going forward, we believe, was stopped as 

a result of the strike force efforts. In addition to these strike force 

activities, our other enforcement efforts run the gamut from a solo 

provider who bills Medicare for services not rendered to more sophisticated and far reaching schemes. 

Just last week the former owner of City of Angels Hospital in Los 

Angeles was sentenced to more than 3 years in jail and ordered to 

pay more than $4,000,000 in restitution for scamming our Medicare 

system by preying upon homeless people. 

In my written testimony I have outlined our fiscal year 2011 

budget which includes an increase to the Department of Justice of 

$60,000,000 in discretionary HCFAC resources bringing the total 

fiscal year 2011 discretionary request for DOJ to $90,000,000. The 

Department intends to use this funding to increase the number of 

strike forces from the current seven cities to as many as 20 locations throughout the Nation. In addition to the strike forces, these 

additional discretionary dollars will be used to focus additional attention on illegal activities, including alleged fraud by pharmaceutical and medical device manufacturers. Of course the largest 

expenditure of funds by the Department of Justice in the area of 

health care fraud enforcement funding is on our people. The expertise and commitment of our litigators, prosecutors, strike force 

team members, and analysts are the reasons the Department of 

Justice’s health care fraud strategies have been so successful and 

why we expect them to be successful in the future. The return on 

investment we have achieved with those resources is approximately 

$4 per every $1 spent from the HCFAC account. And this is testament to the hard work and dedication of the career professionals 

in the Department of Justice. Our ability to effectively investigate 

and prosecute health care fraud is directly related to our ability to 

retain personnel year to year. 

Mr. Chairman, my written testimony outlines in much greater 

detail the important work of the Department of Justice and its various components to bring justice to those who would prey on vital 

government programs. I thank you and the subcommittee for inviting me to testify today and I look forward to your questions. 

Written statement by Gery Grindler follows: 


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Mr. OBEY. Thank you. Mr. Levinson. 

Mr. LEVINSON. Good afternoon Mr. Chairman and members of 

the subcommittee. Thank you for the opportunity to appear before 

you today and for your commitment to furthering OIG’s mission to 

protect the integrity of HHS programs and the health of their beneficiaries. Medicare and Medicaid fraud, waste, and abuse cost the 

taxpayers billions of dollars each year and put the programs’ beneficiaries at risk. You have asked me to discuss our efforts in fighting fraud and to address how we utilize our resources to protect 

American taxpayers and beneficiaries. 

OIG combats fraud and abuse through a nationwide program of 

investigations, audits, evaluations, and enforcement and in compliance activities. OIG invests in people. Our new funds are used to 

hire the professionals who enable us to expand the scope and depth 

of our work. 

Two thousand and nine marked the first year that this subcommittee increased funding through the HCFAC discretionary allocation. The $19 million supported approximately 140 full-time 

staff. This year, we received an additional $11 million in HCFAC 

funding. With these funds we are hiring 45 new staff. 

Currently, our office employs over 1,500 people comprised of over 

45 percent audit, 34 percent investigations, 10 percent program 

evaluators; legal technical and other support making up the rest. 

New staff will array similarly except for a higher percentage of investigators to expand our Medicare fraud strike forces. Based on 

historical production rates, these 45 new staff will investigate an 

estimated 165 more health care fraud cases and conduct approximately 20 more Medicare and Medicaid audits and evaluations. 

Our program integrity activities are a sound investment. Last year, OIG investigations yielded $4 billion in settlements and court 

ordered fines, penalties and restitution. OIG audits identified nearly $500 million in receivables. We uncovered scores of program 

vulnerabilities and recommended effective remedies. So far this 

year, OIG work is producing billions of dollars in expected recoveries as well as improvements to program integrity and fraud deterrence. 

Based on early successes in Miami and Los Angeles, we launched 

strike forces in two new cities, Detroit and Houston, last May. In 

December, we extended our strike force coverage to Brooklyn, 

Tampa and Baton Rouge. With the enhanced funds, we are doubling our strike force staff to 42. 

Collectively, the strike forces have resulted in about 270 convictions, indictments of more than 500 defendants, and more than 

$240 million in court-ordered restitution, fines, and penalties. 

Miami is ground zero for Medicare fraud. There we have uncovered rampant fraud among durable medical equipment suppliers, 

infusion clinics and home health agencies. 

Early results from our Detroit and Houston strike forces demonstrate that this model is successful in other fraud hot spots. In 

the 9 months since we launched in Detroit and Houston, these 

teams have secured indictments of more than 100 defendants. 

For 2011, the increases in funds requested by the President’s 

budget would enable OIG to expand our strike force presence from 

seven to 20 cities, supported by 130 new staff. We fully expect our 


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new strike force teams to root out fraud with similar success as our 

existing teams. We also direct our HCFAC resources to investigate 

civil fraud cases. In our biggest settlement to date, in September, 

as the deputy AG noted, Pfizer agreed to pay $2.3 billion to resolve 

its liability for illegally promoting its drugs; the largest criminal 

fine in American history. In January, FORBA agreed to pay $24 million to settle allegations that its Smiles Dental Clinics were performing unnecessary 

and often cruel treatments on children to maximize Medicaid reimbursement. Criminal investigations of individual dentists are underway. 

Investments in OIG also help prevent fraud and waste. Our 

HCFAC-funded evaluations this year will recommend improvements to Medicare contractor operations, services provided to nursing home residents and reimbursement for drugs. We are also auditing payments to hospitals, home health agencies, and Medicare 

Advantage and Part D plans leading to potential recovery of 

misspent funds and actions to improve payment integrity. 

Unfortunately, fraud persists. Continuous strong monitoring results show us there is a need for more oversight and more enforcement. 

Each year, we turn away viable allegations that we do not have 

resources to investigate. The funds provided by this subcommittee 

and our proposed increase for next year will enable us to expand 

our efforts to continue to protect these important programs. 

Thank you for your support for this mission, and I welcome your 

questions. 

Mr. OBEY. Thank you very much. 

[Written statement by Daniel R. Levinson follows:] 


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Mr. OBEY. Mr. Perez, we will hear from the field. 

Is it Perez or Perez? 

Mr. PEREZ. However you like to pronounce it. 

Mr. OBEY. With me it is either Obey or Obey. 

Mr. PEREZ. I did make that mistake earlier. I pronounced your 

name obey. 

Mr. OBEY. It is O-b-e-y just like the stop sign. 

Mr. PEREZ. Ranking member Rehberg and distinguished members of the subcommittee, my name is Omar Perez. I am a special 

agent with the U.S. Department of Health and Human Services, 

Office of Inspector General. And I am a member of one of the Medicare fraud strike force teams in Miami, and I am honored for the 

invitation and the opportunity to discuss our efforts in combating 

Medicare and Medicaid fraud. I am here to share my experiences 

as a criminal investigator on the front line in the fight against 

health care fraud. And in Miami, Medicare fraud is not only perpetrated by independent scattered groups but also by competitive 

organized businesses complete with hierarchies and opportunities 

for advancement. 

Medicare fraud is discussed openly on the streets and is accepted 

as a safe and easy way to get rich quick. The money involved is 

staggering. People from all walks of life are gravitating toward 

Medicare fraud. I see high school dropouts making anywhere from 

$100,000 to $1,000,000 a year. 

Typically, we would see business owners, health care providers, 

doctors, and Medicare beneficiaries participating in the fraud. But 

now, we are seeing that drug dealers and organized criminal enterprises are also joining in. 

Today I will describe the typical fraud scheme, provide an agent’s 

perspective of the strike force investigative approach; I will share 

some examples of some success stories and, finally, discuss the evolution of fraud in south Florida. 

Now prior to the strike force, south Florida was riddled with 

sham DME companies, and the owners of those companies had one 

idea in mind: steal from Medicare. In order to perpetrate these 

frauds, nominee owners are recruited. And these owners place their 

names on corporate documents, lease agreements, corporate bank 

accounts, and in exchange, receive between 10- and $20,000. They 

obtain lists of stolen patient information from corrupt employees of 

hospitals, physician offices and clinics, and they also obtain stolen 

physician information. With these two key pieces of information, 

fraudulent claims are submitted to the Medicare program for 

equipment that is never provided. 

Once the money is deposited into the account, it is withdrawn 

within days using multiple check cashers. The idea is to deplete 

the account before Medicare discovers that fraudulent billing is occurring, and this way there is no money left in the accounts. These 

DME schemes are executed within a matter of months. 

By the time traditional investigative referral methods come to 

fruition, criminals have absconded with millions of taxpayer dollars. And so we developed a streamlined investigative approach for 

strike force investigations. Now the model includes the following 

steps: obtain and analyze Medicare claims data, obtain the corVerDate Mar 15 2010 09:09 Nov 16, 2010 Jkt 058234 PO 00000 Frm 00051 Fmt 6633 Sfmt 6602 E:\HR\OC\A234P2.XXX A234P2

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porate documentation, identify and obtain banking information, 

and identify the medical billing agents. 

To highlight the successes of this strategic model, I offer the following examples. My team discovered an aberrant billing pattern 

for City Wide M.S. Corp, a DME company. 21⁄2 Weeks after Rodolfo 

Gonzalez purchased this company, he submitted $1,800,000 in 

fraudulent claims. And this included claims for 42 deceased beneficiaries. We contacted the bank and learned that over $100,000 

was still in the account. 

One day later, we were advised that someone was at the bank 

trying to deplete that account. So we rushed to the bank. We didn’t 

find the person there. So we went to Gonzalez’s home. We found 

him there and on our way we spoke with the highest referring physician who told us that they had never seen any of the patients nor 

had they prescribed any of the equipment that City Wide had billed 

on behalf of this physician. So Gonzalez admitted he owned the 

company and he was the signer on the account and that day City 

Wide ceased to submit any claims to Medicare. 

Gonzalez voluntarily forfeited the money that was still remaining 

in the account, and he was subsequently indicted and found guilty 

of conspiracy to commit health care fraud. He was sentenced to 48 

months incarceration and ordered to pay over $300,000 in restitution. 

In yet another example, my team received a phone call from a 

bank advising that Reinel Pulido was at the bank inquiring about 

a hold that had been placed on his account. Soroa Medical was another DME company this time submitted over $15 million and had 

been reimbursed over $1.5 million. We immediately went to the 

bank and interviewed Pulido, who admitted to being recruited to 

place his name on the company documents and was paid approximately $50,000 to do this. So we arrested him immediately. 

He voluntarily forfeited the money that was remaining in the account and subsequently he was sentenced to 36 months incarceration and ordered to pay $1.5 million in restitution. 

We are finding that criminals have shifted their schemes from 

purchasing DME companies to establishing store front shams. The 

store fronts are set up by criminals who have the required equipment to pass the Medicare onsite inspections, but once the provider 

number is obtained, they simply pick up their equipment and all 

that remains is an empty store front. We have also found that 

criminals are now migrating to other services within the Medicare 

program to perpetrate this fraud. The other services impacted include home health agencies, community mental health, physical 

therapy and occupational therapy. 

Now historically, Medicare beneficiaries and physicians were not 

involved, but we are now finding that in many cases they are getting paid to participate in this fraud. 

Thank you for the opportunity to discuss strike force operations 

in south Florida and the strategies and investigative methods that 

we have utilized to protect taxpayer interests and I would be happy 

to answer any questions that the committee would have. 

Mr. OBEY. Thank you all very much. 

[Written statement by Omar Perez follows:] 


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Mr. OBEY. Mr. Rehberg. 

RECOVERY AUDIT CONTRACTORS (RACS)

Mr. REHBERG. Mr. Chairman, as I recall, Congress is part of the 

Medicare Modernization Act, and later through the Tax Relief 

Health Care Act of 2006, established a program where recovery 

audit contractors assisted CMS in identifying and recouping improper payments under the Medicare program. My understanding 

that of that legislation is that CMS was required to implement a 

permanent and nationwide recovery audit contractor program by 

January 10 of this year. Are these RACs now fully operational? If 

not, what additional steps need to be taken to ensure all States are 

covered? And can you tell me how much funding in improper payments has been recovered to date by these RACs? 

Mr. Corr. 

Mr. CORR. Mr. Rehberg. 

Mr. REHBERG. By the way it is Rehberg. I don’t care either. It 

is a silent H. 

Mr. CORR. Mr. Rehberg, there are four Recovery Act contractors 

that are responsible for taking post payment data and reviewing it 

to be sure that we have identified any improper payments. The 

focus is not so much fraud as it is on improper payments. Focus 

is oftentimes on hospitals to assure that the payments included on, 

claim forms that have been submitted were properly, those services 

were actually provided, there was no upcoding and no improper 

work done. 

The four RACs are up and running. We still have, I will I have 

to get you a more thorough report. I apologize I don’t have exactly 

where we are with each of the four. They are in place. We have 

consulted with each of the 50 States talking about what the Recovery Act contractors will be doing. They will be looking at both part 

A and B claims under the—— 

Mr. REHBERG. Do you know how much has been brought back by 

the RACs that are in place? 

Mr. CORR. The initial, I believe, it was seven States produced, I 

think it was $60,000,000 in savings in FY 2010. We are projecting 

substantially higher savings as we expand the program because the 

initial savings were developed from pilots that were done. We are 

projecting what will happen nationwide, but we expect within a 

couple of years to have hundreds of millions of dollars in savings. 

Mr. REHBERG. Is there a report that is available as a result of 

the January 10 deadline? 

Mr. CORR. We will develop one for you. We will give you an update. That would be the best way for me to give a more thorough 

report on exactly where we are with each of the four. 

[The information follows:] 

RECOVERY AUDIT CONTRACTORS PROGRAM

Deputy Secretary CORR. CMS is in the process of finalizing the FY 2009 status 

report, which focuses on the implementation efforts CMS and the RACs undertook 

in FY 2009 to implement the national RAC program. Section 302 of the Tax Relief 

and Health Care Act 2006 made the RAC Program permanent and required the Secretary to expand the program to all 50 states by no later than 2010. CMS expects 

this full report to be released soon. The CMS website and presentations given to 


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various stakeholders have released most of the information that will be in the report. Additional information on RACs can be found at www.cms.hhs.gov/RAC. 

Mr. REHBERG. Anybody else? Of the strike teams that are going 

to be created to get up to the twenty sites, what is the criteria you 

are using? I was listening to the testimony. I read the testimony. 

But I didn’t see anywhere where it established where the criteria 

was going to be. In looking at places like my colleague’s community 

of Baton Rouge, I would not have thought of that as a hot bed of 

Medicare fraud. So what goes into decision making? 

Mr. GRINDLER. Congressman Rehberg. 

Mr. REHBERG. You are a quick study. You must be a lawyer. 

Mr. GRINDLER. The approach in identifying these cities is really 

a data-driven approach where data that has been developed by the 

Department of Health and Human Services is analyzed by a group 

of people both from the Department of Justice and from HHS to determine whether there are trends, there are aberrational billing. 

Mr. REHBERG. Could you use Baton Rouge as an example, since 

it is established, it is in place, what in the data told you that that 

location more than Houston or Seattle or Boston? 

Mr. GRINDLER. I can’t give you—— 

Mr. REHBERG. I could tell you why but he won’t appreciate it. 

Mr. GRINDLER. I can’t give you all the specifics now other than 

to say that we are looking at cities in which the aberration of billing patterns seem to be most pronounced. For example, we are 

looking at trends that involve billing in a certain category that may 

exceed 1,000 percent of the national average or we may be looking 

at a DME provider—— 

Mr. REHBERG. Are you going to share with us then before they 

are established, the Congress, of where they are going to be established or are we just going to pick up the newspaper one day and 

find out where the new locations are? 

Mr. GRINDLER. I think there are law enforcement reasons why 

we wouldn’t be discussing our analysis of all the cities, but I will 

tell you it is a rigorous process and as part of the HEAT program, 

we actually have a committee that has that responsibility in order 

to analyze it. And that is how, initially Miami and then you have 

heard the other cities, Houston, LA, Brooklyn, Detroit and now 

Tampa and Baton Rouge, so we are looking at, and there is a ranking, but there are a lot of categories to look at. And then I will say 

even beyond that, there needs to be some interaction with people 

in those jurisdictions to try to get some specifics as to what the 

agents think is going on there. It is not totally number driven 

where you can just rank them by a data analysis and know what 

those cities are. 

Mr. REHBERG. Mr. Chairman, if it is possible maybe we can have 

a classified briefing on how they use their, if they are looking for 

additional money from us. 

Mr. OBEY. Are you cleared? 

Mr. REHBERG. No but I have staff that is. It would just be interesting to know if they are asking for additional money, I don’t 

know if they would get it or not, it would be nice to know ahead 

of time what criteria you use to establish—— 

Mr. OBEY. We will talk about it. 

Mr. REHBERG. Thank you. 


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Mr. OBEY. Ms. McCollum. 

Ms. MCCOLLUM. Thank you. Medicare and Medicaid serve 79 

million Americans. Fraud, waste and abuse in these programs cost 

taxpayers billions of dollars. And according to an article in Health 

Affairs by the Chief Counsel of the office of Inspector General at 

HHS, Louis Morris, ‘‘The FBI estimates that fraudulent billings to 

public and private health care programs are 3 to 10 percent of total 

health care spending at $75,000,000,000 to $250,000,000,000 in fiscal year 2009.’’ 

This is an unbelievable amount of money being stolen or swindled from both the taxpayers, private companies and that costs 

every American family. So Chairman Obey, I thank you for having 

this hearing today. This is important. It is important to protect taxpayers dollars and the future of Medicare. 

Now you have talked today about the success of the health care 

fraud and abuse programs, and I commend this administration for 

making fighting waste, fraud and abuse a priority. 

My concern is that we need to get smarter and tougher in beating crooks and the companies that cheat taxpayers. A lot of attention was paid by my colleagues on the other side of the aisle, when 

one small nonprofit that assists those in poverty was accused of 

wrongdoing, it made sure that they would not receive one single 

penny of Federal funding. 

Now Mr. Grindler, you discussed in your testimony Pfizer. Pfizer 

pled guilty to a felony violation of intent, intent to defraud or mislead Medicare or Medicaid, and they agreed to pay $2,300,000,000. 

This was cited as the largest health fraud settlement in the history 

of the Department of Justice. But for Pfizer, is it was the equivalent of 3 weeks worth of sales. 

Now the attorney general for Massachusetts said Pfizer violated 

the law over an extended period of time. The director of the defense 

criminal investigations service and I quote, the off-label promotion 

of pharmaceutical drugs by Pfizer significantly impacted the integrity of TRICARE. And that is a program for our servicemen and 

women. This illegal activity increases patients’ costs, threatens 

their safety, and negatively affects the delivery of health care services to over 9 million military members, retirees and their families 

who rely on that system.’’ 

Assistant Attorney General for Civil Division said ‘‘Illegal conduct and fraud by pharmaceutical companies puts the public health 

at risk, corrupts medical decisions by health care providers and 

costs the government billions of dollars.’’ 

Do you gentlemen agree that these quotes are accurate? 

Mr. GRINDLER. Ms. McCollum, I have to caveat my statements 

and extend my apologies that while the ethics experts allow me to 

state the outcome of the Pfizer matter, I am actually recused from 

the matter. So I can’t give you more details. But on a more general 

level, I will tell you that we have tremendous focus on prosecuting 

both companies and individuals. And I think that the sentencings 

that we have been getting have been greater by at least 10 percent 

than what you have seen in the past. So we agree that it is a very 

high priority, and we need to be aggressive in this area. 


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Ms. MCCOLLUM. Mr. Chair, I will put into the record then the 

Justice Department announces the largest health care settlement 

in history in the record to back up my words here. 

A corporate analysis described the Pfizer settlement and criminal 

penalties by saying, it ain’t chicken feed, but it is affordable. Crime 

against the American people cannot continue to be affordable. In 

the Pfizer case, could you please tell me how many officials went 

to jail? 

Mr. GRINDLER. I can’t, but I will get someone to get you that information. 

[The information follows:] 

PFIZER OFFICIALS WHO RECEIVED FEDERAL SENTENCES

In May 2009, Thomas Farina, a former district sales manager at Pfizer, was found 

guilty of obstruction of justice for altering documents on his computer during a federal investigation of off-label sales of Bextra. Mr. Farina was sentenced to six 

months of home confinement with electronic monitoring and three years of probation. 

In March 2009, Mary Holloway, a regional sales manager, pled guilty to violating 

the Food, Drug, and Cosmetic Act by inappropriately selling Bextra. In June 2009, 

she was sentenced to pay a $75,000 fine and twenty-four months of probation after 

pleading guilty to an Information charging her with distribution of a misbranded 

drug. 

Ms. MCCOLLUM. I believe, I could be proven wrong, but I believe 

we will find no one went to jail. 

Mr. GRINDLER. I believe the settlement to which you refer to 

where you quoted assistant Attorney General Tony West was settlement with the civil fraud section of the Department. 

CONTRACT ELIGIBILITY

Ms. MCCOLLUM. Civil, not criminal. So Pfizer was not found 

guilty of any criminal charges. Is Pfizer still eligible for government contract to be reimbursed by Medicaid and Medicare? 

Mr. CORR. I am not aware of any change in, I don’t know that 

they sell directly to the Federal Government, but I will find that 

out for you Congresswoman. 

[The information follows:] 

GOVERNMENT CONTRACTS

Deputy Secretary CORR: CMS has no direct contracting relationship wit Pfizer Inc. 

Ms. MCCOLLUM. Well, Mr. Chairman, I bring this up because if 

we really are going to get tough on small crooks and swindlers and 

organized crime, we have to get tough on corporate crime. We cannot make it so 3 weeks of sales becomes a cost of doing business. 

So getting a Federal contract is a right, if you are taking that 

contract and you are using it to serve the American people. But it 

is not a right, it is a privilege for the most part. It is a privilege 

and white collar crooks need to be punished. 

And I said that backwards, Mr. Chair. I am just so passionate 

about this. It is not a right to get a contract. It is a privilege to 

get a contract. And if you defraud the Federal Government, you 

should not even have that privilege. No one should expect to come 

in and just get a contract from the Federal Government, then turn 

around, defraud hundreds, billions of dollars, and then turn around 

and ask for a contract again. 


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So Mr. Chair, as we move forward, I would like to hear the recommendations where Congress can be tougher, what we need to do 

to change the level of penalties of fraud, to send a signal to small 

time crooks and corporate crooks who use fraud as part of their 

business plan that it will not be tolerated. And Mr. Chair thank 

you. 

[The information follows:] 

CONTRACT ELIGIBILITY

Ms. MCCOLLUM: I would like to hear the recommendations where Congress can 

be tougher, what we need to do to change the level of penalities of fraud, to send 

a signal to small time crooks and corporate crooks who use fraud as part of their 

business plan than it will not be tolerated. 

Deputy Secretary CORR: Many of the most important actions or authorities needed 

to identify and prevent fraudulent activity in federal health care programs require 

statutory changes that would strengthen the Medicare and Medicaid programs. As 

a result, many new authorities have been sought within health reform. 

For example, CMS does not prosecute crimes, but is seeking additional staff for 

Medicare Integrity efforts that will enable the Agency to create rapid response 

teams to investigate the highest priority leads received and support law enforcement 

as they pursue appropriate follow-up action. 

Mr. OBEY. Thank you. Mr. Alexander. 

Mr. ALEXANDER. Thank you, Mr. Chairman. 

Fellows, when you were going through your numbers a while ago, 

I don’t have a calculator with me, but I would think that the numbers that you mentioned about fraud would total a gazillion dollars 

anyway. Some of you used the words organized crime. I know Mr. 

Perez did. You know I have watched some of the movies, Godfather 

and stuff and usually ‘‘organized’’ means more than one, you know, 

two at least. 

So the question is, all these problems that we have encountered, 

do we ever catch anybody on the inside? I mean, if somebody on 

the inside has to write that check and when they see that a physician in Miami has charged for the same procedure 6,000 times in 

one day, do they just write a check and say boy this guy is good 

or does a bell ever ring and say something is wrong out there? 

[The information follows:] 

HEALTH CARE FRAUD

Mr. ALEXANDER: So the question is, all these problems that we have encountered, 

do we ever catch anybody on the inside? 

Deputy Secretary CORR: To successfully conduct investigations into health care 

fraud, HHS/OIG uses all means available, including undercover agents, informants, 

and cooperating individuals. However, not all situations lend themselves to agents 

being active participants in the organizations. These decisions are made on a caseby-case basis. 

So, it is good that we can pat ourselves on the back about all 

these people on the outside that we are catching. But somewhere 

on the inside, do we ever find anybody that is playing footsies with 

those out there? 

Mr. GRINDLER. I think the answer to that is yes, we do. And I 

think in the investigations we are talking about, we have prosecuted a variety of people, categories of people, including individuals who are involved with the sham companies that are stealing 

information about patients and physician numbers. But we are also 

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tainly using cooperators in an effort to get as high as we can in 

whatever entity that may be involved in this so that is our goal. 

Mr. ALEXANDER. Well, for instance, we were talking about Baton 

Rouge. And that is fine. If we find somebody down there breaking 

the law, let’s put them in jail. But I would also like to know if 

there are people inside this department that are working down 

there if they get caught we need to know about those too, the public needs to be aware. And names need to be brought to the attention of the public, insiders if they are, in fact, found guilty. 

That is all, Mr. Chairman. Thank you. 

Mr. OBEY. Mr. Ryan. 

INFORMATION TECHNOLOGY INVESTMENTS

Mr. RYAN. Thank you, Mr. Chairman. I think they are going to 

call votes here in a second, just a couple of questions. One is, is 

there any technology that we can use, computer programming that 

you currently use now or that we should be considering as an investment? As great of as a job as you do, it is very expensive to 

put people in the field as opposed to maybe having a computer program that could analyze a lot of this data that is coming in, suspicious patterns that may exist, is there any of that going on? Are 

you making any of those investments and is that something that 

we should be looking into? 

Mr. CORR. Mr. Ryan thank you for that question. Because as we 

talked earlier, pay and chase, we can do that and we are doing it 

very well. You have heard stories about it. But what is very important is that we get on the front end of this with prevention tools, 

much better enrollment practices that stop people from joining, 

from getting into the program. And it is HHS’ responsibility to 

move our database to a point where it is of maximum use to law 

enforcement officers. 

The ideal that we are working towards, and our plans have us 

by the end of 2011, having the capacity to have a single, integrated 

database for the entire country, for all benefits, for all beneficiaries, 

and for all providers, so that law enforcement officers will be able 

to see trends that develop as claim forms are filed with Medicare 

and Medicaid. And in this case, I am talking about the database 

that we run for the Medicare program. It is imperative that we develop that database. It substantially improves the law enforcement 

officers’ ability as investigators to identify fraud, and it allows us 

to begin to take advantage of new technologies, new analytical 

tools, that will enable us to identify aberrancies in the billing as 

they are occurring so that we don’t wait a month to find out that 

someone has billed us $6,000,000 and closed up his shop and 

moved on. 

Mr. RYAN. How far along is that database? What is your projections of getting that to a spot that it is going to be beneficial? 

Mr. CORR. With the discretionary funds that this committee and 

the Congress have provided to us in fiscal year 2009 and in fiscal 

year 2010, we have been building that database. We currently have 

access, law enforcement has access, for post payment data. 

By this summer, we have been able to do this in stages. It is a 

massive undertaking to organize this data and to develop the software so that law enforcement can take advantage of this. Our curVerDate Mar 15 2010 09:09 Nov 16, 2010 Jkt 058234 PO 00000 Frm 00065 Fmt 6633 Sfmt 6602 E:\HR\OC\A234P2.XXX A234P2

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rent target date is by the end of FY 2011 to have that single database developed. Right now we have parts A and B and D and DME, 

in a post payment database. We have beneficiary information in 

another database that law enforcement has access to now. We have 

just begun to develop these resources. We are working very closely 

with our Inspector General and with the Department of Justice. 

This is the number one request that law enforcement and our Inspector General have had of the Department is develop a database 

and give us access as files, as claims are filed, so that we can immediately take advantage of technology and analytical tools that 

allow us to identify. 

Mr. RYAN. How much money are you putting behind this effort? 

Mr. CORR. Our estimate this year is that we will be spending 

$14,500,000—let me just be sure of my numbers, an additional 

$15,000,000 to $20,000,000 this year that would continue to build 

this database. And I will get you some more precise numbers so 

you will know exactly what it will take. 

[The information follows:] 

INTEGRATED DATABASE

Deputy Secretary CORR: The Administration recognizes that to meet the challenges of our evolving health care system, CMS needs to make substantial investments in its overall information technology infrastructure. CMS’ data infrastructure, 

security apparatus, and claims processing systems are antiquated. They can neither 

meet the demands for ‘‘real-time’’ data needed to fight fraud, waste, and abuse, nor 

facilitate innovative solutions that reward quality instead of quantity of care 

through initiatives such as value-based purchasing and comparative effectiveness 

research. The President’s FY 2011 Budget Request proposes a five-year investment, 

called the Health Care Data Improvement Initiative (HCDII), which will revamp its 

data infrastructure, making it possible for CMS to meet these future challenges. The 

requested $110 million investment would fund initial planning, designing the architecture, and laying the foundation of this multi-year effort. A more complete estimate of the total needed funding will be provided in the HCDII Strategic Plan in 

late spring 2010. 

The One Program Integrity (One PI) tool provides an easy way to search and access CMS’s vast repository of data. Much like Google and Bing allow us to navigate 

the massive repository of information within the Internet, and provide us with the 

tools needed to secure data to assist with our everyday lives, the One PI portal will 

allow CMS and its law enforcement partners to navigate through the data within 

CMS’s databases, providing a better tool to effectively combat fraud, waste, and 

abuse. 

While One PI improves our ability to search for data, HCDII takes the next step 

in improving the underlying data and its frequency. Past experience demonstrates 

that current, relevant data is a highly-effective tool in detecting and preventing 

fraud, and prosecuting individuals who commit fraud. HCDII will play an integral 

part in CMS and our law enforcements’ efforts to prevent fraud by providing One 

PI with a data infrastructure that makes near ‘‘real-time’’ data monitoring and analysis possible. The President’s FY 2011 Budget Request builds on this concept and 

requests an investment of $32 million to accelerate the development and final implementation of the One PI portal. The budget also requests continued funding of the 

Integrated Data Repository (IDR) at $7 million in FY 2011, a vital interim step to 

revamping our data infrastructure, to serve as One PI’s data backbone. It is anticipated that the addition of prepayment claims data and new data sources will be of 

great value to CMS and its law enforcement partners in combating fraud, waste, 

and abuse. 

It is important that we continue to invest in our data systems and the analytical 

tools that go on top of them not only today, but in the future in order to best equip 

the government to catch fraud on the front end and enhance program integrity activities. 

Mr. RYAN. That doesn’t seem like all that much money for that 

large of an endeavor. 


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Mr. LEVINSON. I would like to add that as a result of this committee’s funding, the discretionary dollars have been devoted in 

large part to training. We have been able to train 130 of our investigators and our evaluators in claims database training. That 

would not have happened without the funding that has been made 

available as a result of this committee’s approval. 

So it not only requires getting the systems up and running, but 

then understanding them. We have a level of complexity that is unusually substantial because of the volume that we deal with. And 

it is especially valuable for our investigators and our evaluators to 

have this kind of training because they use it both to identify fraud 

and then to be able to do the investigation in a proper and a safe 

way and I think it is, I would like to just drop a footnote about organized crime because that is an issue because of the significant 

dollars that have been in play, in these programs, organized crime 

is a serious issue and that involves safety. 

And one of the many reasons to admire the work of Special 

Agent Perez and his colleagues is that they not only supply knowledge, skill, and ability to their investigative work, they put themselves in harm’s way, and the strike force work in particular is 

dedicated to some of the street level kinds of issues in which one 

actually puts his own life in danger. There are people out there 

who would just as soon try to kill you as to try to cure you. So I 

think the strike force dollars especially are valuable at that level. 

Mr. OBEY. Thank you. Perfect timing. We are going to have two 

votes, and we will take about at least half an hour maybe 45 minutes before we reconvene. So I am frankly not sure whether we 

should continue the hearing or not. But let me ask a few questions 

before we absolutely have to leave to meet the clock on the vote. 

I get nervous when I hear all of this discussion about databases 

and computers, because unfortunately I have the experience of 

watching the FBI on three different cycles, screw up their computer 

modernization program. How do we know that the same thing isn’t 

going to happen to you and that we will wind up wasting a huge 

amount of money building that system? 

Mr. CORR. Mr. Chairman, we have that process underway. We 

would welcome the opportunity to bring in the people that are 

building the database and sit down with your staff or with you if 

you prefer and walk you through exactly what we are doing. We, 

as a part of the national summit, we are talking with technology 

experts, we are talking with the private sector, we are talking with 

credit card companies. 

[The information follows:] 

INTEGRATED DATABASE

Deputy Secretary CORR: CMS will schedule a meeting for the Committee with appropriate program experts to discuss the integrated database and existing information technology initiatives in more detail. 

Mr. OBEY. So was the FBI. They still got it wrong. 

Mr. CORR. I certainly appreciate your concerns and your skepticism. And we are going to do everything in our power to get it 

right, and we would welcome the opportunity to keep you apprised 

of the steps we take as we go. 


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HCFAC DISCRETIONARY FUNDS

Mr. OBEY. Two questions relating to the funds that we provided 

last year. One, what wouldn’t you be able to do today that you are 

doing if we hadn’t provided additional increase? 

Mr. CORR. Mr. Chairman, the funds that this committee has provided in fiscal year 2009 and 2010 have all added to the activities 

that were occurring only with the mandatory funds, so everything 

that we have used these additional moneys for are new activities 

that expand our capacity. 

In 2010, we have $311 million as you know. About half of that 

is creating for the first time a comprehensive oversight program, 

program for parts C and D. With our fiscal year 2009 money, we 

began new systems for the first time and we are completing it this 

year. 

Mr. OBEY. Let me interrupt you because Mrs. Lowey came in and 

what I would like to do is make sure that she can get a couple of 

questions in before we go vote, and then I am going to ask you to 

stay if you don’t mind so I can go back and toss a few questions 

of my own at you. 

PERFORMANCE MEASURES

Mrs. LOWEY. You are very gracious. And my absence has nothing 

to do with the significance of this hearing, but we have had several 

hearings scheduled at the same time. Let me be quick and I thank 

you. 

As I understand from looking at the testimony, all of the witnesses, almost all, said there is no single estimate as to the total 

cost of fraud. Inspector General Levinson stated that 7.8 percent of 

Medicare fee for service claims paid in fiscal year 2009, did not 

meet program requirement. Sounds like the same tune we have 

been hearing for many years. So my question is, if Congress were 

to fully fund the budget request, how much of a decrease would we 

see on the 7.8 percent figure, and in addition to difficulties in determining the overall level of fraud, I am curious to how HHS, DOJ 

and others measure success? 

So if you can describe the metrics that you are going to use and 

how you can tell us that by investing this money we are really 

going to do something about this because the American people are 

angry. They feel we spend too much money and we want to be sure 

that when we are spending money, we are going to get some results. 

Mr. CORR. Thank you, Congresswoman. And I will be brief because I realize there is very little time. The most recent improper 

error rate is 7.8 percent for the Medicare program. We estimate 

that about half of that has to do with improper documentation by 

providers and with physicians not signing forms properly. Our 

rules require that they have proper documentation in their medical 

records so when we come back and do the survey to determine the 

error rates, I am just trying to explain to you that half of those 

may very well be appropriate services but they weren’t properly 

documented or they weren’t properly signed. 

The other half we believe are payments that could very well be 

fraud or otherwise are improper, and the data systems that we are 


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developing, the contractor review of claim forms as they come in, 

we have, the moneys this committee has provided to us have been 

used in parts A and B with our contractors and in parts C and D 

to do a much more thorough job of oversight on providers to try to 

bring that rate down as low as we possibly can. 

Mrs. LOWEY. So you have evidence that expanded government 

enforcement has deterred and prevented fraud? 

Mr. CORR. Fraud and improper payments. In the funds for fiscal 

year 2010 that we have received, the CMS actuary and the Congressional Budget Office have projected a return of about $1.50 for 

every dollar spent. Previous estimates of spending through our 

health care fraud, waste and abuse program have return on investment of $6 for every dollar spent. It depends on whether you are 

talking about an administrative service that can be implemented 

through technology or whether it requires a great deal of staff to 

actually go out and evaluate records as to how high those returns 

are. 

But we believe these efforts all have a significant return on investment and that additional funds will be put to good use and will 

bring down both improper payment and fraud. 

Mrs. LOWEY. Now, the strike force teams appear to be successful 

and you have asked to expand those. At first glance, this seems to 

be a good idea. But I want to make sure that the existing strike 

forces which created in the cities with the highest levels of fraudulent claims continue to receive the support they need. Could you respond? 

Mr. GRINDLER. Yes. The existing cities that have the strike 

forces, our plan is to continue receiving the support for their effort. 

In addition, though, part of what the strike force concept is to take 

the people that are experts in this sort of enforcement strategy and 

train assistant U.S. Attorneys in these cities so that as time goes 

on, the U.S. Attorney’s offices, on their own, can be continuing this 

effort in perpetuity to the extent that it is needed. And then those 

resources will be extended to another 13 cities we hope through 

2011. And in terms of the metrics there we not only have what has 

been a 4:1 ratio where the money collected—this is civil and criminal—is $4 per every dollar spent. 

But the other part of it is, and it is really important is the deterrent value and sometimes that is hard to measure and that is why 

the strike force that has real time prosecutions with sentences that 

are significant we think have a deterrent value and we have one 

example in Miami which I mentioned in my opening remarks that 

where if you look at what was being billed for durable medical 

equipment the year after the strike force had done its initial effort 

that billing and that category went down over $1,000,000,000. 

Now that isn’t money collected, but that is deterrent, that is a 

measurement of deterrent and I think we can look at that kind of 

metric in other cities as the strike forces move forward. 

Mrs. LOWEY. Thank you, Mr. Chairman, for your consideration. 

I will submit other questions for the record. 

Mr. OBEY. I am going to suggest that we go and vote and those 

who can come back, God bless you, and those who can’t, well, we 

will see you in a few minutes. 


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Mr. OBEY. Well, frankly I have forgotten where I was when we 

stopped the questioning. You have been talking today mostly about 

fraud affecting Medicare and Medicaid and other Federal programs. What about private insurers and private health care plans? 

What kind of problems do they typically face as far as fraud and 

abuse? Are they just as susceptible to fraud as the public programs 

and to what extent do your agencies get involved in investigating 

and prosecuting that kind of fraud? 

[The information follows:] 


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Mr. GRINDLER. Well, I don’t have data to tell you what the difference is. I think there is probably a lower prevalence of fraud in 

that category, but certainly we do to the extent that we can identify insurance companies that may be engaged in fraudulent activity, we have and will—I just don’t have the numbers for you, but 

I can try to get them for you. 

[The information follows:] 

INVESTIGATION AND PROSECUTION OF PRIVATE SECTOR HEALTH CARE FRAUD

The Department of Justice is involved in the investigation and prosecution of 

many types of private sector health care fraud and abuse. While the Department 

of Justice participates with the Department of Health and Human Services in investigations of Medicare fraud, the Department also works with other federal agencies 

such as the Department of Labor’s Employee Benefits Security Administration and 

Office of the Inspector General by assisting their anti-fraud and abuse enforcement 

programs involving privately funded health care plans. Private insurance companies, self-funded health care arrangements and employer or union-sponsored employee health benefit plans are often defrauded together with the Medicare program 

in false billing fraudulent and provider scams. While fraud and abuse of private sector health plans may not create direct losses to federal governmental programs, 

such criminal activity places a financial burden on the whole health care system 

which raises the cost of health care coverage for all Americans. 

In addition, some schemes which target private sector group health plans may result in the collapse of the group’s health care coverage leaving victimized participants in these plans with devastating hardships such as personal liability for unpaid medical bills, denial of future medical treatment and the inability to obtain insurance from other carriers for pre-existing conditions. Particularly egregious are 

those persons who fraudulently operate unlicensed insurance companies and sell 

health care coverage to group health plans with no ability to ultimately pay medical 

claims as promised. Such entities evade state insurance regulation by falsely claiming federal preemption from state regulation under provisions of the Employee Retirement Income Security Act of 1974 (ERISA) governing employee health care plans 

in the private sector. These corrupt unlicensed insurers target employers, unions 

and professional associations offering group health care coverage for their employees 

and members at attractive prices which underbid legitimate insurers by falsely 

claiming to be exempt from costly state regulatory requirements such as minimum 

claims reserves and premium taxes intended for state funds guaranteeing benefits 

of insolvent insurers. 

Mr. LEVINSON. Mr. Chairman, although HCFAC has jurisdiction 

only over Medicare and Medicaid, Special Agent Perez has some 

special experience that might shed some light on your question. 

Mr. PEREZ. One of the impacts that I think the strike force teams 

have had in Miami is that we have pushed some of the criminal 

enterprises into other segments of the Medicare programs. And one 

of them is the Part C or the Medicare Advantage Plans. And while 

those plans are private insurance companies that have been awarded contracts that treat Medicare beneficiaries, what we have seen 

are the HIV infusion therapy schemes that have now been perpetrated against Part C plans and the scheme is very easy to do. 

They de-enroll Medicare beneficiaries from their Part B plan and 

they enroll them without their knowledge into a Medicare Advantage Plan, usually using the Internet to do that. 

Once they have done that, they basically just bill for services 

that these patients are really not receiving. Now, unfortunately the 

patients in some instances are actually taking part in this fraud in 

that they are receiving kickbacks to go to the clinics and sign as 

though they have received some services. The payments range from 

anywhere between $100 per visit up to $300 per visit. So we have 

seen that and we actually indicted several companies and individVerDate Mar 15 2010 09:09 Nov 16, 2010 Jkt 058234 PO 00000 Frm 00072 Fmt 6633 Sfmt 6602 E:\HR\OC\A234P2.XXX A234P2

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uals that have perpetrated the HIV-infusion fraud under the Part 

C plan. 

MEDICARE TRUST FUND

Mr. OBEY. That was my next question. So you took care of that 

nicely. Thank you. The health care bill that passed the House, I 

don’t want to comment on the Senate bill because I am supposed 

to keep my language clean. But if you take a look at the House bill, 

here that bill contains over $400,000,000,000 in intended reductions and cost in Medicare over the next decade. My understanding 

is that Medicare will spend over the next decade somewhere between $7,000,000,000,000 and $8,000,000,000,000. So that would 

indicate it would seem that the savings that we are talking about 

achieving in Medicare would be somewhere around 5 percent of 

what the program will be outlaying over the next 10 years. You 

have been talking today about some pretty large numbers in terms 

of waste and fraud in Medicare. 

Would you explain to us how increased screening and background checks on enrollment of medical providers and equipment 

used by Medicare will help, the revised payment rules such as requiring face-to-face encounters between patient and physician to 

prescribe durable medical equipment, some of those changes. Can 

you quantify what you expect to see saved over a decade with actions like that? The reason I ask this question is because when you 

talk about ‘‘Medicare cuts,’’ people think you are talking about benefits. We are not talking about cutting benefits. 

We are talking about trying to eliminate waste, duplication. And 

so it would be useful if we could quantify some of the pieces of that 

so that people get a more accurate understanding of what it is we 

are talking about. 

Mr. CORR. Mr. Chairman, let me give you an overall number and 

then we will see if we can find estimates that are as refined as you 

just asked for by service. That may be hard. But just to give you 

one example of the returns in terms of a money to the trust fund, 

in 2008 with just mandatory spending before this committee provided additional resources, the actual returns to the Medicare trust 

fund were $12,500,000,000, and there was $1,100,000,000 spent in 

terms of the mandatory funds. Those monies were focused on the 

basic program integrity program at CMS as well as a focus on 

fraud. But that focus is—has been expanded significantly by the 

discretionary resources that the committee has made available to 

us. 

The return on investment that I mentioned earlier, while the 

mandatory funds back in 2008 have been estimated to return $6 

for every dollar spent for law enforcement activities and $14 for 

every dollar spent for administrative activities, in part that larger 

number happens because the administrative expenses are significantly lower than the cost of standing up a strike force and those 

activities. So that is the level of return that we have seen historically. Being conservative, our actuary and CBO have projected savings from the increases that we are now spending of anywhere 

from 1.5 to 1.8 dollars to every dollar spent. And we think it is 

going to turn out larger. But those are the conservative projections. 

So what those do is they take into account the comprehensive 


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range of activities that we are pursuing. It is very hard to take one 

piece out and say—except anecdotally. 

For example, because of the strike force work in Miami-Dade 

County and because of some of the on-site work we were doing with 

DME providers and other activities. The billings from DME providers in Miami-Dade County went down $1,600,000,000. So that 

is sort of a cost avoidance if you would. $1,600,000,000 less was 

paid out because of the work that the strike forces were doing and 

the attention we were bringing to the issue. 

So it is hard, again, to pull out one piece of this. We view this 

as a comprehensive effort. We need investigators and law enforcement. We need the prevention work that you just described. But we 

need to do a better job with physicians and other providers enrolling and we need to do a much better job with our database as credit card companies and others do, we need to bring in the absolute 

latest technology so that when claim forms come into CMS, we can 

see any kind of aberrance that is occurring across the country. And 

all of that together will produce these substantial returns. 

Mr. OBEY. Any other comments? Senator Bill Proxmire, who used 

to represent Wisconsin, was a crusader against unnecessary spending at the Pentagon. And he used to be criticized by his opponents 

who said he was trying to weaken our defenses by cutting military 

budgets. And his response to that would be that he would simply 

ask in any audience, he would ask how many people in the audience had ever served in the Armed Services, and then he would say 

okay, now let me ask you, is there anyone here who has never seen 

any example of waste in the Army and the veterans would start 

to laugh because they obviously had seen a lot of it. 

I would suggest the same thing in the medical area. Anybody 

who has ever filled out the same forms two or three times in a doctor’s office or anybody who has ever seen some of the strange 

charges on some hospital bills would never again say that there 

wasn’t significant waste in the health care system. Mr. Perez, 

would you tell us, is there anything that you think that people like 

you in the field need that you are not getting or that you wouldn’t 

get even under the administration’s budget request increase for 

next year? 

Mr. PEREZ. Thanks for the question. I need to echo what I think 

some of the other panel members have already said in terms of access to data. And I will highlight the reason why I mention that 

with some examples. We need real-time data. We know that there 

are buildings or strip malls that house nothing but fraudulent companies. And I think any strike force team member should be able 

to drive and park across the street and see the name of XYZ medical billing company, open a laptop, plug in a wireless card, enter 

the data and actually see if XYZ has submitted any claims today 

or yesterday, who the physicians are that are attached to that 

claim, who the beneficiaries are that are attached to those claims, 

how much has already been billed, how much is sitting on the payment floor about to be paid out or how much has already been paid 

out. That would allow us to then contact the contractors or maybe 

even CMS and say here is what we have got, this particular provider needs to be placed on prepay review, while we create enough 

probable cause to actually do some enforcement action. 


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The reason why prepay review, I think, in that type of model 

would work is that the provider would have to submit documentation to justify the claims. These individuals aren’t providing any 

service. So there is no documentation, so we are preventing monies 

from going out for fraudulent claims. So I think aside from that, 

we would—we would love to see in the field additional bodies to 

help support what we have currently got. And I think that one of 

the things that the panel is looking to get, aside from reaching out 

to 13 new cities, is actually beefing up the strike force teams that 

we currently have on the ground now. 

Mr. OBEY. Ms. Roybal-Allard. 

Ms. ROYBAL-ALLARD. Thank you, Mr. Chairman. And I apologize 

for being late. Mr. Corr, I understand that you discussed the audit 

contractor—the Medicare recovery audit contractor program with 

Mr. Rehberg earlier in this hearing, but I want to come back to this 

issue because when I have met with my hospitals in my district a 

few weeks ago, they identified several major problems that they 

had experienced during the demonstration project in California and 

these problems included reviewers who lack sufficient medical 

background to understand the claims that they were reviewing, 

perverse incentives such as rewarding all denials of coverage and 

consequently encouraging oversampling of cases and an extremely 

laborious and costly appeal process. 

Now that this program is being rolled out across the country, 

what has HHS done to address these issues? And for example, is 

there some standardized certification or training for new reviewers 

to ensure that these reviewers have adequate skills and background to properly review the records? 

Mr. CORR. There certainly is the latter, Congresswoman. And as 

well an effort for CMS to be clear about what the standards are 

that will be applied as we review the expenditures of providers. I 

don’t have personal knowledge of the specific complaints, but we 

certainly will look into those and find out how we—I assume we 

have heard that back in our work with—through our contractors 

and we will find out. And maybe Mr. Levinson, the IG has heard 

more. But we will find out about those specific problems and 

whether we have addressed them properly. 

[The information follows:] 


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Ms. ROYBAL-ALLARD. I will be happy to put you in touch with my 

hospitals. Also during the demonstration, a round of audits, my 

hospitals have also told me that when a claim was challenged, that 

funds were immediately taken out of their CMS payment even 

while the claim was still in dispute and that some hospitals reported that when an appeal had been settled in their favor and 

often that took several months, that most but not all of their 

money was returned to them. 

This has created a very difficult budgetary problem for California 

hospitals, I am sure other hospitals that are already operating with 

very limited funds. And I would like to know why hospitals are 

being considered guilty until proven innocent basically and especially given the difficult economic situation this creates for them, 

what possible justification is there for not returning every penny 

of the original billed amount when an appeal is settled in the hospital’s favor? 

Mr. CORR. I cannot answer the question about why if the appeal 

is settled in the hospital’s favor, the money is not returned immediately. But I will certainly get you an answer. 

Ms. ROYBAL-ALLARD. I appreciate it and I will be in touch with 

you in terms of the hospitals, I am talking about. Thank you, Mr. 

Chairman. 

Mr. OBEY. Mr. Grindler, I know you have to go. So let me ask 

one more question to wrap it up. We have been talking about what 

has been happening in the last 2 or 3 years. How do all of you see 

this problem changing over the next 5 years or so? What fraud opportunities do you think are likely to grow? Which do you think 

you are going to get a better handle on? 

Mr. GRINDLER. Well, I mean, it is very clear from what we have 

seen so far that when we prosecute in one area, people move to another area and that is why the real-time data is so important. For 

example, now you see people going into the home health care area. 

Once we were focused on DME and HIV infusion and you are also 

seeing movement from one city to another city, so we saw people 

involved in one of our strike force cities move to another of our 

strike force cities before we went into that city. So these are the 

kinds of ongoing changes that I am not sure we can predict, but 

that is why the importance of the real-time data is there. And I 

know work is being done on that challenge because then we can see 

it because it is an identification of an abnormal billing pattern that 

allows us to say in this city, this location; here is a new way that 

people are engaging in fraud and we have got to be able to attack 

immediately. 

Mr. OBEY. Any others? 

Mr. LEVINSON. I would certainly echo that. I mean, we see in the 

migration of these issues in Miami, DME, infusion therapy, home 

health, all of the sudden we also have it in Detroit, we have it in 

Tampa, Houston’s DME problems shortly thereafter become Baton 

Rouge’s DME problems. The Brooklyn strike force has important 

connections to what is going on in Florida as well. So these are 

viral issues that really require a national approach and therefore 

getting this real-time data straightened away and being able to 

stay on top of the data is crucial now and in the years ahead. 

Mr. CORR. Mr. Chairman, may I add one thing very quickly? 


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Mr. OBEY. Sure. 

PROVIDER ENROLLMENT

Mr. CORR. Just to give you a sense of—on the prevention end 

where we are trying to screen providers better, just to give you a 

sense, every month 18,000 new provider enrollment applications 

are submitted to Medicare and 900 DME supplier applications are 

submitted to Medicare. The statutes require us to allow any willing 

provider to provide services to Medicare beneficiaries, but even 

though these numbers are large, it is just all the more reason why 

we have to do much more effective prevention work. We have to do 

better screening with—in the enrollment process. And we have to, 

through computer technology, take full advantage of our ability as 

providers to immediately understand and track what they are 

doing. So as Mr. Perez said, when some aberration occurs, we are 

immediately on it. So we need both the prevention side and we 

need the capability to go after people once they start fraudulent activities. And that is the approach that the administration is taking, 

as I said earlier, all of the discretionary resources that we have received in 2009 and 2010 and are proposing in 2011 add to the work 

that was being done with the mandatory resources that has been 

available the last 13 years. So everything is add on and we are all 

trying to get to the place where we have a comprehensive prevention system as well as an investigation and enforcement system in 

place. 

Mr. OBEY. Thank you. 

Mr. GRINDLER. If I could add one other point on that. It is not 

just the mandatory money and the supplemental money, there is 

a base amount of money at the Department of Justice has to allocate to all of its enforcement priorities, terrorism, drugs, white collar crime, et cetera. And with the Department of Justice, United 

States attorneys offices already are allocating money out of their 

base to health care. So that is how important the Department feels 

about this effort. So it is not just what we get under mandatory 

funds and the supplement, it is our existing base that we are taking—a part of that to fight health care also. 

Mr. OBEY. Mr. Rehberg. 

Mr. REHBERG. Thank you, Mr. Chairman. It just seems like the 

numbers you are throwing out of the number of new providers is 

inordinately large. Are people getting into the business because it 

is an easy business to get into? And wouldn’t it seem from a regulatory standpoint you would apply some business principles as 

auditors to go in and prioritize based upon the amount of time the 

people have been in business? When I go to like a restaurant in 

business since 1922, chances are they are going to pass the health 

inspection, but a restaurant that opened last week, maybe not. Do 

you prioritize within communities or is there not a flag that—— 

Mr. CORR. In terms of the number of new providers that can enroll and provide service? 

Mr. REHBERG. Well, certainly we will want to have as many people providing services because we want to provide the services. We 

don’t want the beneficiaries to have to sit and wait. It just seems 

like—is that a flag to you all that when somebody establishes the 

business and they have been in business for less than a year, they 


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ought to be audited immediately and constantly until such time as 

they are in business. I would think with the hospital situation, 

chances are they are not going to want to lose their hospital franchise, their license, their business. The same with a doctor. We 

don’t want to punish doctors that have been in business for 20 

years. It is the new ones that are coming out that are maybe 

scamming the system. Maybe that is wrong. 

Mr. CORR. There are some benefits, Medicare benefits like durable medical equipment, infusion therapy, home health where there 

are much lower barriers to entrance. 

Mr. REHBERG. That is my point. Why wouldn’t we as regulators 

establish a little higher standard to be in the DME business so that 

me or you can’t just get into the business because I don’t know anything about crutches or—I do actually, but for other reasons. It just 

seems like you make it too easy to get into the business. It certainly is not government’s job to try to keep people out, but it 

seems like there ought to be a little bit of a higher standard. You 

have to go to law school to become a lawyer. You ought to have 

some kind of standard to get into the provider business. 

Mr. CORR. Well, we do have criteria by which—— 

Mr. REHBERG. But it doesn’t seem to be working. 

Mr. CORR. That is correct. And as special agent Perez was talking earlier about criminals coming in and buying up legitimate 

medical equipment suppliers. 

Mr. REHBERG. You can establish a standard there that makes it 

very difficult to transfer the old business to the new owner. 

Mr. CORR. We need to look carefully at our criteria. And in some 

States, there are restrictions on the number of providers that can 

exist. For instance in Florida, there are none. So we have thousands upon thousands of durable medical equipment suppliers. And 

part of the problem is—— 

WORKING WITH THE PRIVATE SECTOR

Mr. REHBERG. Well, punish the State of Florida for that. It would 

seem like it would be fairly easier to get to—let me ask another 

question real quickly. I apologize, Mr. Chairman. You walk faster 

than I do. It is because of my crutches. Private insurance, I think 

it was your testimony that talked about a conference or a summit 

or something that was held and you are not able to establish that 

Medicare fraud is any greater than private. 

I don’t want to say I don’t believe it, but I have got to believe 

that private industry should be a little smarter because they are 

paying a little closer attention. Is there no way to establish any private sector improvements that they are doing within GEICO on insurance—car insurance fraud? I see most of your background is either government or law. 

Do you have any business people that are actually working with 

you in your task forces to use business practices to try and crack 

down on insurance? Or maybe they are just as inefficient and bad. 

Mr. CORR. Congressman, one of the goals of the summit that the 

Department of Justice and HHS held was to involve with the private sector. They face many of the same problems, there were extensive conversations. We will continue those conversations. We 

think there is a lot to learn from the private sector. They tell us 


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they have many of the same problems. And together we—since 

they are facing the same things and as was mentioned earlier, as 

we shut down providers in Medicare and Medicaid, they are shifting. So we are in this together with the private sector and we want 

to work very closely with them and will. 

Mr. REHBERG. Thank you, Mr. Chairman. I would like to work 

with you on that. I just happen to have a new hire as of Monday. 

I won’t call him a senior intern, but he is 71 years old. And he was 

formally the president of the National Association of Independent 

Insurers. And his background is GEICO and Allstate and all the 

rest of them. And he is a plethora of information. He just came 

most recently from the insurance industry in Florida, the number 

three in the minority auto insurance. And he tells me that they do 

have practices that could be applied to the government that are not 

being readily accepted by the agencies at this time. So I would like 

to—— 

Mr. CORR. We would welcome that conversation. 

STATE COOPERATION

Mr. OBEY. Thank you. Just one last question. States, which 

States—with which States do you have the most cooperative relationships in terms of dealing with waste, fraud and abuse, whether 

you are talking about Medicare and Medicaid or any other avenue? 

Mr. CORR. Mr. Chairman, just from a prevention standpoint, I 

would have to get back to you and let you know what our folks 

think in terms of their relationships possibly from a law enforcement perspective. 

Mr. GRINDLER. What I can tell you, which doesn’t give you all the 

details, but in some of the cities where we have the Medicare fraud 

strike forces, we have representatives from the State attorneys general offices that sometimes are assisting us in that effort both from 

an investigation point of view. So in that sense, we are trying to 

cooperate with States. And to the extent they are able to give us— 

provide us with resources that will help, we take advantage of that. 

Mr. OBEY. I just know it has been my experience that some 

States are aggressive in dealing with problems like this and others 

are a good imitation of sleepy hollow. And I am just curious if you 

can provide for the record a more detailed analysis of where we 

have strong players and where we don’t. 

Mr. LEVINSON. Certainly we really count on the States when it 

comes to Medicaid fraud enforcement to be the frontline and there 

are many strong units around the country. For an on-the-ground 

look, I don’t know whether the special agent might want to add 

something about Florida in particular. 

Mr. PEREZ. I know we participated in investigations with the 

Medicare fraud control units which are part of the State Attorney 

General’s office. But in the State of Florida, they also have the 

Florida Department of Law Enforcement or FDLE and we work investigations with that entity, as well as local police precincts in 

other parts of Miami-Dade County. So we do have a collaborative 

effort in the State of Florida to do as much as we can to try to curtail this fraud. 

Mr. OBEY. I understand you have one question. 


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PROVIDER ENROLLMENT

Ms. ROYBAL-ALLARD. Yes. Thank you, Mr. Chairman. Just very 

quickly. My understanding is that under the new requirements 

that were issued for the suppliers, that 17 health—medical and 

health professionals were exempted, but pharmacists were not. And 

what I am being told by my pharmacists, especially those in the 

neighborhood pharmacies, is that the cost of the redundant licensing, the requirements, the surety bonds really outweigh their profits and many of them are thinking of just not having these products in their neighborhood pharmacies altogether. 

Could you explain to me why pharmacists which have to go 

through licensing, like some of the other professionals that were 

exempted, why they were not exempted? 

Mr. CORR. Congresswoman, I believe you are speaking of our requirement that durable medical equipment providers be recertified? 

Ms. ROYBAL-ALLARD. Yes. 

Mr. CORR. It was an attempt to get a handle on who was providing services and to be sure that people were—met our enrollment criteria. What we could do is again take some specifics and 

see if we can give you some answers as to why they didn’t meet 

the requirements. It was voluntary. The vast majority of pharmacies did seek recertification under the durable medical equipment program and our sense was that we were providing coverage 

throughout the country that we weren’t going to wind up with communities without access to durable medical equipment, but there 

were a number of pharmacies across the country that did not seek 

to be recertified. But I would be happy to take a look at the specifics and give you an answer. 

PROVIDER ENROLLMENT

Deputy Secretary CORR: The Medicare Improvements for Patients and Provider 

Act (MIPPA) allowed CMS to exempt ‘‘eligible professionals’’ that were specifically 

defined in statute and ‘‘other persons’’ as specified by the Secretary. However, pharmacists bill as pharmacies, and pharmacies are considered ‘‘organizational entities.’’ 

As a result, pharmacists are not eligible for exemption from this important quality 

requirement. 

HHS and CMS value the contribution that the pharmacists give to Medicare beneficiaries. However, we also have to make certain that the services and items that 

beneficiaries receive are always of the highest quality and meet all standards for 

safety, efficacy and timeliness. Our experts at CMS believe that it was Congress’ 

intent to legislate quality standards for all DME providers in order to achieve these 

positive outcomes. To date, the vast majority of pharmacies have already been accredited. As such, beneficiaries will be able to continue to obtain their durable medical equipment and supplies from a local or national chain pharmacy. 

I assure you that we are closely monitoring the implementation of the accreditation requirement so Medicare beneficiaries, especially those residing in rural areas, 

have access to needed items and supplies. 

Ms. ROYBAL-ALLARD. All right. Thank you. 

Mr. OBEY. Gentlemen. Thank you all for coming. I appreciate it. 


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WEDNESDAY, MARCH 17, 2010. 

TESTIMONY OF INTERESTED INDIVIDUALS AND ORGANIZATIONS/LABOR AND EDUCATION PRIORITIES/ESEA 

REAUTHORIZATION 

WITNESSES 

KAREN LEE, PRESIDENT, NATIONAL ASSOCIATION OF STATE WORKFORCE AGENCIES 

EVELYN GANZGLASS, DIRECTOR, WORKFORCE DEVELOPMENT, CENTER FOR LAW AND SOCIAL POLICY 

BRIAN JOHNSON, EXECUTIVE DIRECTOR, ALLIANCE FOR WORKER 

FREEDOM, A SPECIAL PROJECT FOR AMERICANS FOR TAX REFORM 

PEG SEMINARIO, DIRECTOR OF SAFETY AND HEALTH, AFL–CIO 

NANCY DONALDSON, DIRECTOR, WASHINGTON OFFICE, INTERNATIONAL LABOR ORGANIZATION 

OPENING STATEMENT BY CHAIRMAN OBEY

Mr. OBEY. I think my partner in crime, Mr. Tiahrt, is stuck in 

traffic somewhere, but we will get this started anyway. Cannot be 

late on St. Patrick’s Day. 

Today we have two panels who will present their prospectus on 

the budgets for the Department of Labor and the Department of 

Education. The first panel will address Labor Department issues, 

including job training and worker protection programs to high priorities for this Subcommittee. 

Our witnesses this morning include Karen Lee, President of the 

National Association of State Workforce Agencies and also the Employment Security Commissioner of Washington State. Ms. Lee represents the State and local agencies responsible for implementing 

many of the job training and employment programs being discussed 

today. 

She is joined by Evelyn Ganzglass, Director of Workforce Development at the Center for Law and Social Policy, who is an expert 

on workforce investment programs and led the Employment and 

Social Services Policy Studies program at the National Governors 

Association, prior to joining CLASP. 

The panel also includes Brian Johnson, Executive Director of the 

Alliance for Worker Freedom, which is a project of the Americans 

for Tax Reform. Mr. Johnson is here at the invitation of Mr. Tiahrt 

on behalf of our minority members. 

Next is Peg Seminario, an expert on workplace safety and health 

issues. Ms. Seminario has led the AFL–CIO’s program on safety 

and health for the past 20 years and served on numerous Federal 

agency and scientific advisory committees. 

Finally, we have Nancy Donaldson, Director of the International 

Labor Organization’s Washington Office. Ms. Donaldson has served 

as an advisor to the ILO since 2005 and has spent the past 25 


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years working to improve labor standards for both domestic and 

international workers. 

I would ask each witness to limit your testimony to about five 

minutes. We will place your statements in the record. And after all 

five of you have made presentations, we will have time for questions from the Subcommittee. 

I am going to forego any additional opening statement because 

we have two panels that we would like to finish this morning. 

Mr. Alexander, did you want to say something before we begin? 

Mr. ALEXANDER. I am glad to be here. 

Mr. OBEY. Well, we are glad you are here too. All right. Did you 

flip a coin or should I? All right, why do you not go ahead? 

Ms. LEE. Thank you, Chairman Obey and members of the Subcommittee. My name is Karen Lee and I am the Commissioner of 

the Washington State Employment Security Department. Today I 

am testifying in my role as President of the National Association 

of State Workforce Agencies, known as NASWA. 

Years ago, after I graduated from West Point, I had the honor 

serving my Country and the military, and today it is my honor to 

serve our Country by helping workers and businesses in my State 

weather the great recession that we are in. And that is what State 

workforce agencies do; we help our Nation’s workers and businesses turn hard times into better times. 

We serve people through programs like the Workforce Investment Act, the Trade Adjustment Act, Wagner-Peyser, Unemployment Insurance, and so on. But the titles of those programs are not 

important; it is the people that we serve. And Americans are turning to us in record numbers. 

In fiscal year 2009, 37 million job seekers sought assistance from 

State workforce agencies. That is a 40 percent increase. Some lost 

jobs they had held for decades, and they need help planning a new 

future. And some are recent military members returning from the 

war who need help translating their military training into civilian 

work. 

Some customers have skill gaps or barriers, such as people of 

color, the disabled, and the poor; and these individuals will continue to struggle unless they get training and career guidance. Still 

others have great skills, but their confidence has been shaken after 

months of not being able to find a job. 

State Workforce staff are part teacher, coach, counselor, and 

friend. We are the human face of government for millions of Americans at a time when people need government to be there for them, 

now more than ever. So on behalf of NASWA I thank this Committee for the Recovery Act funding that you provided. It would 

have been impossible to serve the record number of job seekers who 

came through our doors without additional money. 

Using our stimulus dollars, we have substantially increased enrollment in worker training programs through WIA, adult and dislocated worker programs. We have expanded the capacity to provide unemployment services to the unemployed. The numbers are 

staggering: job search assistance to more than three million claimants in the first six months of the Recovery Act. Getting them back 

to work faster reduces benefit pay-outs, supports business, and improves our economic situation, so it is a smart investment. 


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The Recovery Act also increased funding for Wagner-Peyser employment services programs by 30 percent. And although our customer growth has outpaced the funding increase in many States, 

stimulus funds provided welcome relief. And I must also mention 

the summer youth program, which gave thousands of young adults 

who were disadvantaged their first chance at a paying job. 

As you prepare the 2011 budget, NASWA has four requests. We first recommend a $500,000,000 increase for Wagner-Peyser employment services. Last year, in Washington State, we conducted a 

study on the effectiveness of Wagner-Peyser. It was rigorous and 

peer reviewed. And those results showed that unemployed workers 

who used their job services found work faster than those who did 

not, and they earned more money than those who did not. That is 

good news for workers and our economy. NASWA also requests $500,000,000 for intensive re-employment 

services to put unemployment claimants back to work. The job 

market will not recover by September 30th, and we know we will 

not be able to meet the demand that we expect will be there. 

And, lastly, you probably heard about unemployment benefits 

being delayed because of antiquated computer systems, and that is 

true; many of our systems are over two decades old. NASWA is 

therefore requesting $500,000,000 to help States modernize their 

unemployment insurance computer systems. 

Lastly, NASWA is concerned about the ongoing confusion regarding expenditures versus obligations, and this confusion has been 

caused by out-of-date information from the Department of Labor, 

and it has already cost us $250,000,000 last year, and it was 

money that we could not afford to lose. We would appreciate your 

help in working with you and our cabinet agency so that we can 

resolve this issue on behalf of our job seekers. 

In closing, our workforce system is a lifeline for millions of hardworking Americans who are searching and hoping for a brighter future. We appreciate the confidence that you have shown in us and 

we are working on your behalf. We thank this Committee for your 

appropriations and for all of your support. Thank you. 

[Written statement for the record by Karen Lee follows:] 


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Ms. GANZGLASS. Thank you for the opportunity to testify as well. 

I am Evelyn Ganzglass, and I am Director of Workforce Development at CLASP, the Center for Law and Social Policy. CLASP is 

a nonprofit organization that develops and advocates for policies at 

the Federal, State, and local levels that improve the lives of lowincome people. 

In my written testimony I focus on four points: why it is important to invest in workforce programs at this point in the economic 

recovery; how increased funding for the WIA system under the Recovery Act has laid the groundwork for economic recovery; what we 

know about the return on investment of workforce programs; and 

CLASP’s recommendations for both funding and increasing the effectiveness of workforce programs. 

In my brief five minutes, I will speak to two points: how the WIA 

system has used Recovery Act funds and CLASP’s recommendations regarding the fiscal year 2011 appropriations for DOL. 

The infusion of new money under the Recovery Act has enabled 

the WIA system to expand access to training, increase services to 

low-income adults, and augment one-stop services to meet unprecedented need for retraining and re-employment services during the 

economic recession. 

The WIA system quickly mounted a summer youth employment 

program in 2009 that served more than 300,000 young people. A 

study by the Center for Economic Development and Business Research at Wichita State University found that for every $1.00 of 

wage expenditures in that State, $1.64 was returned to the regional economy. 

In addition to providing much-needed income to these young people, the communities in which the program was operated gave 

them exposure to a wide variety of work environments and connected them to a host of skill-building opportunities. For example, 

in Sonoma County in California, Recovery Act funds were used to 

employ 330 community youth in environmental projects throughout 

the county. In Philadelphia, participants in the summer program 

were required to complete an academic project, for which they 

could receive credit. Philadelphia also piloted a GED to College program. 

There is limited national data on the use of Recovery Act funds 

in WIA beyond the summer program, but indications are that the 

system has helped unemployed workers find new jobs and has 

helped low-income, low-skilled workers find skills and improve 

their long-term job prospects. 

The number of participants in the adult program increased by 10 

percent in the first quarter of program year 2009, compared to the 

last quarter of 2008, just when the Recovery Act funds came online; 

and the number of participants receiving training increased by 13 

percent. Examples of what the system has done: 

In Illinois, Illinois used discretionary Recovery Act WIA funds for 

a competitive grants program to upgrade the skills of incumbent 

workers in key sectors of the economy, such as health care, with 

a priority given to programs that combined basic skills remediation 

and occupational training. The State also issued guidance encouraging the use of needs-related payments, which was part of the Recovery Act. 


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In 2009, New York City more than doubled the number of people 

who received training through individualized training accounts. 

California’s Workforce Investment Boards used Recovery Act 

funds to increase on-the-job training contracts in key industries, 

and provide work experience for people who had exhausted their 

unemployment benefits. They mounted new programs for disadvantaged and at-risk populations, and tripled the amount of support 

of services to those in training. They used new contracting authority provided through the Recovery Act to partner with community 

colleges and State colleges for training in clean and green occupations. 

Regarding the budget, we welcome the Administration’s focus on 

increasing investments in training and improving services for lowincome youth and adults. We support the proposed new investments in innovation, transitional jobs, on-the-job training, and research. But we do not think that the President’s budget goes far 

enough to support the workforce system’s role in our Nation’s recovery or to address the particularly devastating effect the recession has had on the employment prospects of young people and 

low-income workers. 

We call on Congress to sustain the level of Recovery Act investment in workforce programs. We urge you to increase funding for 

youth programs to $3,000,000,000 for expanded summer and yearround programs, and for targeted grants to high-poverty communities to build pathways for youth to opportunities in growing sectors of the economy. 

We believe this level of funding is warranted after years of disinvestment in the workforce system to meet skyrocketing demand 

for services. Failure to invest in America’s workforce will undermine our economic recovery and put us at a disadvantage with 

other nations that invest more strategically in workforce training. 

Thank you for the opportunity to testify. 

[Statement for the record by Evelyn Ganzglass follows:] 


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Mr. JOHNSON. Good morning, Chairman Obey, Mr. Alexander. 

Thank you for being here. I appreciate the opportunity to appear 

before this Subcommittee today to discuss the Department of Labor’s priorities. 

Since the era of the New Deal, the United States has been ransacked with Federal laws and regulations that burden free enterprise and businesses, while promoting the labor agenda. Despite 

the Obama Administration’s claims to be the most transparent 

presidency in history, their actions speak louder than words. It is 

clear this Department of Labor’s priorities are to protect organized 

labor at the expense of worker freedom and increase the regulatory 

burden facing American businesses today. 

The Department of Labor is set to receive $117,000,000,000 with 

‘‘the majority to be used for unemployment insurance benefits and 

Federal workers’’ compensation.’’ USA Today reported Federal employees, on average, make $11,091 more than their private sector 

counterparts. For the first time in history, more than 50 percent 

of all union members work for the government in some level. This 

parallel is not a coincidence. 

The majority of the $117,000,000,000 will extend the unemployment insurance program so that workers in States with high unemployment now qualify for a maximum of 99 weeks of UI benefits. 

That is almost two years. By reducing the need to look for work, 

extended UI benefits cause unemployment workers to take longer 

to find new work. Heritage Foundation macroeconomic modeling 

shows that previous extensions of UI benefits from 26 to 46 weeks 

increased the unemployment rate by 0.22 percentage points. 

Roughly one-third of workers receiving UI benefits find work immediately once their benefits expire. This happens both when unemployment is high and low. Economic research shows that each 13- 

week extension of UI benefits increases the average length of time 

workers receiving benefits stay unemployed by approximately two 

weeks. 

A real stimulus this Committee could provide would be an immediate freeze on any new regulations which cost businesses money 

and workers their jobs. No funds shall be used to create any new 

regulations for the Department of Labor and any other agencies. 

Additional waste and lack of accountability occur within the 

Wage and Hour Division at DOL, which was given $244,000,000, 

an increase of almost $20,000,000 from the previous year. Wage 

and Hour is charged with determining the Davis-Bacon prevailing 

wage rate for federally-funded projects and is grossly inaccurate 

and irresponsibly managed. The Davis-Bacon survey is not a statistically random sample, like the Bureau of Labor Statistics’ unemployment or wage surveys. Rather, the survey results indicate the 

prevailing wage is most often equal to the union wage, meaning 

unionized construction companies can decide the rate of any Federal project. 

Current Wage and Hour Division methods raise public construction costs by $8,900,000,000 per year and inflate wages, on average, 22 percent. Additionally, investigators from the Office of Inspector General found that ‘‘one or more errors existed in 100 percent of wage reports they reviewed.’’ 


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While the only agency dedicated to monitoring union financial reporting fraud and abuse, the Office of Labor Management Standard, convicted 929 union officials and restored $93,000,000 in union 

dues to date, had their budget increased by only $2,000,000, and 

several reporting and transparency forms were retracted. This 

$20,000,000 increase to the Wage and Hour should be used to expand the statistically sound and valid methodology of the Bureau 

of Labor Statistics National Compensation Survey and the Occupational Employment Survey to more accurately reflect market rates. 

Additionally, efforts to rescind worker freedom lie in the $25,000,000 the budget appropriates to investigate independent 

contractors by adding 100 contractor cops, because this Labor Department deems them ‘‘misclassified.’’ Currently, if someone with a 

certain skill, trade, or experience is in demand, this person may 

work for more than one company using their skill as an independent contractor. Since the contractor enjoys the benefits of flexible work, setting their own schedule, and determining when, who, 

and where they work, they are often not given certain benefits and 

many do not require such. Not $21,000,000 or one penny should be 

spent to outlaw a work classification these individuals freely 

choose. 

The budget also completely zeroes out the funding of OSHA’s 

Voluntary Protection Program, VPP, a partnership where private 

companies voluntarily comply with various regulations to avoid inconvenient yearly OSHA audits. Created in 1982 with mass bipartisan support, VPP has grown to 2,284 work sites, covering 921,000 

workers, resulting in illness and injury rates are more than 50 percent below the industry average. In 2007, Federal VPP participants 

saved the Government more than $59,000,000 avoiding injuries, 

and the private sector VPP saved more than $300,000,000. Now, by 

defunding this program, OSHA wants to charge companies to participate, thus providing additional and unnecessary burden. 

Additionally, new OSHA record-keeping rules are a backdoor attempt to implement ergonomics, further costing employers millions 

of dollars in compliance. 

The priorities of this Labor Department seem clear: more government, more regulations, more burdens, and less transparency. 

Thank you. 

[Written statement by Brian Johnson MPA follows:] 


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Ms. SEMINARIO. Thank you, Chairman Obey, Ranking Member 

Tiahrt, Representative Alexander. My name is Peg Seminario. I am 

Director of Safety and Health for the AFL–CIO, and I appreciate 

the opportunity to testify today to present the views of the AFL– 

CIO on funding for the Nation’s safety and health worker protection programs. 

And I would like to thank you, Chairman Obey, for your strong 

continuing support for programs to protect workers from injuries, 

illnesses, and death on the job. 

I am happy to report that after years of neglect and erosion 

under the previous administration, that under the Obama Administration the job safety and health agencies and worker protection 

agencies have returned to their mission of protecting workers and 

ensuring that their basic rights are enforced. 

The President’s budget request last year reflects the Administration’s commitment to strengthening the job safety and health agencies with a proposed increase in funding to return these and the 

other DOL worker protection programs to their fiscal year 2001 operating levels; and the current budget request in 2011 continues 

this commitment, and it focuses on strengthening job safety enforcement and the regulatory programs. 

At OSHA, the budget proposes a modest increase of $14,000,000, 

with 25 additional FTEs. And, again, this proposal that is coming 

forward would undue the erosion since 2001, but it is important to 

point out that, with respect to the OSHA agency, that the erosion 

has been going on for decades, and today the agency is still at 

much lower levels than it was at its high point in fiscal year 1980; 

it has nearly 600 fewer staff onboard today at the agency than it 

did in 1980, and the workforce is 40 percent greater. So the agency 

really has had a great erosion over time, at a time when the kinds 

of hazards, the kinds of problems that workers are facing, that employers are dealing with tremendously. So the rebuilding of the 

agency will take a multi-year commitment to increase funding and 

staffing. 

In the regulatory area, for the eight years of the Bush Administration, we saw a total neglect and inaction, with the agency refusing to set standards. The Obama Administration is now moving forward first to deal with those hazards that were neglected by the 

Bush Administration—standards on silica, beryllium, a standard to 

protect construction workers with respect to cranes and derricks— 

so trying to deal with the unfinished Bush agenda that they refused to take action on; and the budget appropriately calls for an 

additional $4,000,000 on regulation. But we remain concerned that 

that may still be inadequate. Again, this returns OSHA to a level 

of funding that it had in 2001. 

In fiscal year 2009 and fiscal year 2010, the Congress, including 

this Committee, provided OSHA, BLS, and NIOSH funding to address the issue of injury under-reporting, because studies had 

shown that injuries and illnesses were not being recorded on the 

OSHA log, and with reporting missing anywhere from 33 to 67 percent of all injuries. And we would encourage the Committee to continue that funding and OSHA to continue its efforts to provide 

oversight in this area. 


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Another program at OSHA that needs additional resources and 

deserves them is OSHA’s Worker Safety and Health Training Program, which is the only program at OSHA that is directed specifically to workers. It is a small program. For this year, the budget 

would bring the funding to $11,000,000. Again, that is about the 

level it was in 2011, but it is way less than it was when the program was first started in 1977 and 1978, when there were 

$18,000,000. So this is an area that we think needs more attention. 

Turning to the sister agency, the Mine Safety and Health Administration, it too has an ambitious agenda to strengthen protection 

for workers, and the agency has made the reduction of mine fatalities a top priority. It is moving forward with important rules on 

silica and rules to limit exposure to coal dust because, in recent 

years, for the first time in decades, we see an increase in those respiratory diseases in miners. 

In 2006, this Congress strengthened the Mine Safety Act after 

the terrible tragedies at Sago and the other coal mines. As a result, 

penalties have increased, but so has a contrast rate with respect 

to these violations. And there is a huge backlog that needs to be 

addressed, and we would ask the Committee to look at this and 

provide adequate funding to address those needs. 

And, lastly, let me just turn briefly to the Wage and Hour Administration. The AFL–CIO strongly supports the Labor Department’s initiative to enforce Federal laws governing misclassification 

of employees as independent contractors. This involves Wage and 

Hour, OSHA, the Solicitor Officer, as well as the Treasury Department. Currently, we have a vast misclassification of employees; employees not being provided proper wages, the Government not 

being provided proper compensation with respect to unemployment 

and other taxes. So we think this is a very, very important initiative to level the playing field with those employers that indeed are 

meeting their obligations. 

[Written statement by Peg Seminario follows:] 


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Ms. DONALDSON. Good morning. I am Nancy Donaldson, the Director of the Washington Office of the International Labor Organization, ILO, which is a specialized agency of the United Nations. 

Chairman Obey, Ranking Member Tiahrt, and Representative 

Alexander, I would like to wish the top of the morning to you and 

thank you for this invitation to testify. 

The U.S. Government is, and has been for some time, the single 

largest supporter of the ILO’s worker’s rights protections and technical cooperation projects around the world. The ILO has a longstanding and productive partnership with the Department of Labor’s Bureau of International Labor Affairs. With more than 50 

projects actively underway now, the ILAB–ILO collaboration continues to be a large-scale global undertaking. These project combat 

child labor, fight HIV/AIDS in the workplace, end forced labor and 

trafficking, advance workers’ rights and protections, and promote 

better work. 

As this Committee is well aware, the global recession provoked 

U.S. and global jobs crises. In January, the ILO reported an increase of 34 million unemployed workers worldwide, with an estimated total unemployed of 212 million workers in 2009, the highest ever recorded. The global jobs crisis reminds us once again that 

good quality jobs and decent work are essential to the lives of 

women and men everywhere. Decent work is a source of personal 

dignity, family and household stability, and peace in the community. It increases trust in government and business, and the overall 

credibility of institutions. 

Labor is much more than a cost of production. As stated in the 

ILO Constitution, labor is not a commodity. Last June, the ILO 

International Labor Conference of 183 member countries adopted a 

Global Jobs Pact. The Pact’s policy intervention strategies focus on 

reducing the time lag between economic recovery and the recovery 

of good and decent jobs. Last September, the ILO’s Director General, Mr. Juan Somavia, reported to the G–20 leaders that between 

11 and 12 million jobs had been created or saved in G–20 countries 

due to stimulus packages like the American Recovery and Reinvestment Act in the U.S., and other targeted policy interventions. 

The G–20 leaders gave strong support to the ILO Jobs Pact. The 

leaders agreed that to assure that global growth is broadly beneficial, we should implement policies consistent with ILO fundamental principles and rights at work. 

President Obama requested the ILO to develop a 21st century 

training strategy for workers to develop job skills they need to succeed in an evolving global economy with input from the G–20 labor 

and employment ministers. And let me just mention the G–20 are 

the counties with the 20 largest economies in the world, so China, 

Brazil, U.S., and so forth, India. 

One month from now, U.S. Secretary of Labor Solis will host a 

G–20 labor and employment ministers meeting in Washington to 

collaborate on labor and training policies and practices, and develop recommendations. The ILO is working closely with Deputy 

Under Secretary Polaski and the president’s G–20 team to assist 

preparation. 


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These combined efforts have enormous potential to improve labor 

and employment policies, create more jobs in all countries, and lift 

the global economy. 

The ILO’s daily work is the Decent Work Initiative. Today, in 

every region in the world, ILO member States, workers, and employers have crafted and are in the process of implementing decent 

work country programs utilizing ILO technical assistance programs 

supported by USDOL. To highlight a few: 

Combating child labor. This is the largest technical assistance 

program of the ILO. Seventy-five percent of the total U.S. Government contribution to ILO programs has been earmarked to combat 

child labor. The U.S. truly has a lead in supporting this work. 

Since 1992, ILO has assisted over 90 countries in direct action programs. 

Two, the ILO is a partner with the USDOL to advance the capacity of countries to oversee, monitor, and implement core labor 

standards. These projects are designed to ensure sustainable results through labor law reform, building the capacity of labor administrations and inspectorates, strengthening employers and 

workers’ organizations dispute prevention and settlement and advocacy in education. 

Three, Better Work. Building on this approach for implementing 

core labor standards, the Better Work program was created. It is 

a unique and innovative partnership between the ILO and The 

World Bank’s IFC. The USDOL was the initial supporter of this approach through the Better Factories Cambodia program 10 years 

ago. The program is now in Vietnam, Jordan, Lesotho, and Haiti. 

Better Work supports partners to address workplace issues and 

makes the results of factory inspections public. International buyers order from factories that support workers’ rights and protections. This serves the goals of better jobs, more reliable supply 

chains, and helps enterprises to be more competitive. Scaling up to 

new countries and industries, Better Work expects to benefit 1.2 

million workers within two years. 

Fourth, combating forced labor. ILO works in many sectors to 

stop trafficking and forced labor. 

Fifth, HIV/AIDS in the workplace. The ILO has adopted a Code 

of Practice and has programs called SHARE that today is the 

standard for enterprises to manage HIV/AIDS in the workplace. It 

is translated into 60 languages. Twenty-four countries, and more 

than a million workers have been assisted. 

All of these programs have been realized with U.S. Department 

of Labor support and the support of this Congress and this Committee. The President’s fiscal year 2011 budget proposes 

$40,000,000 to combat child labor and an additional $26,500,000 to 

implement technical assistance and monitoring programs to improve worker rights. 

In this time of unprecedented crisis, the ILO welcomes the Labor 

Department’s leadership efforts to make labor markets more stable 

and to promote decent work for more women and men in the U.S. 

and around the world. Thank you. 

[Written statement by Nancy A. Donaldson follows:] 


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Mr. OBEY. Thank you. 

Mr. Tiahrt. 

Mr. TIAHRT. I apologize for being late, Mr. Chairman. It was surprisingly slow. 

Mr. TIAHRT. When we have sunshine delays, I am always curious 

about that. I understand rain delays and accident delays, but sunshine delays always puzzle me. 

Mr. OBEY. We never had that in Wisconsin. I understand it is a 

Kansas affliction. 

Mr. TIAHRT. It comes from riding into the sunset. 

Mr. OBEY. We are both pretty bad. Go ahead. 

Mr. TIAHRT. I apologize for missing the first part of some of these 

testimonies, but I did read through the written testimony. I am curious about the tradeoff between increasing regulations and the 

loss of jobs, particularly union jobs. In south central Kansas we 

build airplanes, and I think it is very important this Country make 

things. We cannot survive as a service economy alone. So, as Mr. 

Johnson was saying, I would advocate a freeze of regulations and 

forcing all of them through a simple formula: the benefit has to be 

great than the cost of implementation. I think that would lower the 

cost of making things. And if we cannot make things, then I just 

think we will be continuing on our jobless recovery. 

One of the things that I have noticed is that our stock market 

has rebounded, but the companies that are doing well are the ones 

that make things overseas; and I am worried about jobs in America. So I am wondering is there a willingness with like the AFLCIO or with Ms. Lee to trade off increased regulations for fewer 

jobs? Or do you think there is a correlation? Do you think that 

more regulations mean more jobs? I am a little curious as to how 

we move forward with this economy when we have approximately 

10 percent of the people laid off, we have another 5 percent that 

have given up looking for jobs right now, and we have aerospace 

workers now working at Lowe’s Lumber Company and Wal-Mart. 

They are under-utilized. 

So I am advocating a freeze and putting all our current regulations through that formula: the benefit has to exceed the cost of implementation. Is that a fair tradeoff, Ms. Lee, or do you think that 

we should—how should we approach this, growth and regulations 

versus getting people back to work, basically? 

Ms. LEE. That is an interesting question, Congressman. I would 

say as an operating agency at the State level, when we are implementing, I would say, rules that impact businesses and the public, 

we work very, very hard to manage the bureaucracy, and we put 

that issue to the test through the rulemaking process that I think 

occurs in most States. One of the things that we try very hard to 

do is balance what we are trying to achieve with the impacts on 

the public or the businesses. 

Mr. TIAHRT. What I have noticed is many times through the enforcement process we have set up this adversarial relationship between regulators and the people who are in the private sector, and 

I think most people understand that the Government does not create wealth; the private sector creates wealth. And as a byproduct 

of creating wealth, we have jobs. So in order to enhance that process, I think we need to change our philosophy. 


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As an example, in south central Kansas we had OSHA target one 

county, Sedgwick County, and literally shut down the homebuilding industry. I went back and met with the homebuilders. 

They said we need to have a conference with OSHA, so I got them 

together in Topeka, Kansas, and they came up with a scenario 

where they would invite OSHA to come to their job sites. They 

would walk through the job site together and make a list of potential violations. Then OSHA gave them six weeks to comply. Everybody went back to work. The workplace safety went up. But they 

advocated for a safe workplace rather than be an adversary, where 

they just come in and the contractor has to immediately reach for 

his checkbook because he knows he is going to get fined. 

So would you be open to a different change in philosophy as far 

as regulatory body is concerned? I think if we have an adversarial 

relationship, we know that that does create strife at the workplace 

and fewer jobs, but an advocacy is what I would like to see. Is that 

something that you think we could philosophically do? 

Ms. LEE. Certainly. Actually, a lot of times businesses will ask 

us to make sure that State agencies are doing their job to ensure 

there is a fair and equitable playing field. So they will come to 

their regulatory agency and say can you make sure that businesses, for example, that do not pay their fair share of taxes pay 

their fair share. So certainly we always try to have a high quality 

relationship with business, because we understand that we are all 

here to support them. 

Ms. SEMINARIO. If I may. You have spoken to the issue of worker’s safety and OSHA. Generally, when OSHA will target an industry, it is because people are being killed. And in the homebuilding 

industry and in construction, unfortunately, we have seen a major 

increase in fatalities, from falls, over 900 in the Country in the last 

couple of years. So the targeting is done in response to there being 

a problem, not because they want to go out and harass a particular 

industry. And I think there does have to be a balance. I mean, absolutely there needs to be a balance. But you cannot really have 

compliance assistance and voluntary compliance if it is not backed 

up strong enforcement. 

And this Administration clearly has a different view than the 

last one that they need stronger enforcement, and we at the AFLCIO would agree with that approach. That is not to say that there 

should not also be the outreach, the compliance assistance to employers, particularly small employers, as well as to workers. So, 

again, it does have to be a balance, but you will not get any kind 

of compliance unless it indeed is backed up by strong enforcement. 

Mr. TIAHRT. I think that is what Mr. Johnson was advocating 

with the Voluntary Protection Program. And what we did in Kansas, if a contractor did not comply after having this opportunity, 

then all these sanctions and penalties and fees were available to 

the agency to enforce the regulations. But what we found out is 

that many of the workers were Hispanic and it was simply a language barrier the ladder cannot be 45 degrees, it has to be 60 degrees. Explaining that when you do not have the language skills 

sometimes is difficult. So the building community actually hired 

somebody from the insurance industry that was a specialist in 

workplace safety, and they went around to all the job sites with an 


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interpreter and took the opportunity to educate their workers. That 

was more productive than all the enforcement they had been doing 

beforehand. 

So I would just like to reinforce what Mr. Johnson said. The Voluntary Protection Program is going to be the most productive thing 

we can do at this point in time to get people back to work in a safe 

work environment. 

Ms. SEMINARIO. The only point I would like to make is just a 

clarification on VPP versus the other compliance assistance programs. The compliance assistance programs for small businesses, 

specifically, are run through OSHA grants to the States. That program is increasing. The Voluntary Protection Program is a program 

that has been directed for decades largely to big employers. If you 

look at who is getting the benefit of it, it is Monsanto, it is GE, 

it is the high performing companies that are really doing a good 

job. 

I mean, you should speak to the Department about this, but I 

think what they are faced with here is having to make choices, because you cannot fund everything. And if you are going to be funding compliance assistance, it should be those programs that are 

targeted to small employers; and that Monsanto, GE, you know, 

who are really doing a good job—and this program, VPP, is about 

the best performing employers—that to look at a different way of 

funding it because they have the ability and the money to take care 

of it and to fund it themselves. 

So it is really a choice: do you put your resources into helping 

the small employers or the big employers. In this case, the Obama 

Administration is deciding they want to help the small employers. 

Mr. TIAHRT. How much more time do I have? 

Mr. OBEY. Two minutes. 

Mr. TIAHRT. Two minutes? Okay. Thank you for being so generous with the time. 

Mr. OBEY. Ten minute rule this morning. 

Mr. TIAHRT. Okay. 

Mr. OBEY. Unless more people show up. 

Mr. TIAHRT. I am concerned that the tradeoff that I see coming 

of increased regulations versus getting people back to work, and 

there is a clear correlation in my mind. So that is my biggest concern. We are going to hire 153,000 people in the Government this 

year at the Federal level. They are going to have to do something. 

My concern is that they are going to be writing more regulations, 

slowing down our economy even further, and we want to get people 

back to work. I mean, I think we can all agree 10 percent unemployment is not acceptable. 

So how do we enhance that process? I think you do it through 

making opportunity and working with big and small companies to 

have a safe place as an advocate for safety rather than an adversary I think would be much more productive. 

Thank you for being generous with the time. I yield back. 

Mr. OBEY. Thank you. 

One of the advantages of being around here as long as I have is 

that you remember some things from back in the stone age. And 

I was here when OSHA was first created. Its main sponsor was 

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gress at that time, Bill Taggart, who was a Republican member of 

the House. We went to college together, served in the legislature 

together, and were out here. Then he unfortunately died at age 40. 

But he was the driving force behind the creation of that agency. 

And when it was created, one of the problems is that the Congress required OSHA to adopt the consensus standards that had 

been developed by some of the biggest companies in this Country 

and, as a result, you had regulations which were understandable 

to a PhD working for one of the large companies in the Country, 

but if you were a small businessman trying to comply, those regulations were often not user-friendly. 

So Silvio Conte, who was then the Ranking Republican on this 

Subcommittee, and I worked together to try to develop a more understandable method of inspection and to provide for a reasonable 

degree of voluntary compliance; and I am all for that. What I am 

not for is emphasizing that to the exclusion of virtually every other 

responsibility in the Labor Department and in OSHA. So I think 

the question, as you say, is simply one of balance, and I hope we 

can find it. 

Let me ask a couple of questions before I turn to Mr. Honda and 

then we move to the next panel. 

We have a tough budget situation. The President has proposed 

what he describes as a domestic discretionary freeze. The Appropriations Committee will meet that, but, in doing so, because there 

are some actions that the Administration’s budget takes that I 

think have been overly stingy, if we want to react to that, we are 

going to have to find some places to cut. Are there any of these 

training programs that you believe should be considered the lowest 

priority or should be considered for reductions? Are there any you 

think are redundant or ineffective? Where would you go? Anybody 

want to volunteer? 

Ms. GANZGLASS. Can I turn that around and talk about what is 

effective? Our approach has been that the workforce system needs 

reform. WIA reauthorization is up this year once again, and it has 

been delayed and delayed and delayed and we think that increased 

funding needs to go together with some changes in the system. 

But I would suggest that some of the more ineffective practices 

in the workforce system are a direct result of under-funding and 

of a system that is stretched so thin so that there is—— 

Mr. OBEY. Example. 

Ms. GANZGLASS. For example, there has been a steady decline in 

the amount of—before the Recovery Act funds came out, steady decline in the number of people who get training. There has been a 

steady decline in the share of people who are low skill, low income 

who have access to training. So the investment has been thinner 

and thinner. There has been, through the WIA, more an emphasis 

on individualized training accounts, which are basically vouchers to 

go buy what is out on the market, so that has also limited the ability of the system to really develop these customized more tailored 

solutions that combine work and education that provide the kinds 

of support that enable low-skilled people to succeed. 

So I guess my answer is that I think there are some ineffective 

practices because the interventions have been so shallow that they 

really have not added enough value to the long-term employability 


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of people. But what I was trying to say through the testimony was, 

with additional money, there has been a tremendous increase in 

training. And that is just the little bit of data I was able to collect. 

I hear anecdotally that there is much more, much more support 

being given and much more investment in the kinds of more tailored, if you will, holistic approaches to training and re-employment than existed before. 

So I do not think there is redundancy in the system; I think that 

all of the numbers that have been used about all of these little 

training programs—and we actually have a project at the moment 

counting all of these—they are little pieces within a larger umbrella, and there really is not redundancy in these programs. So 

that is my answer to that. 

I would say that the dire straits of young people, and especially 

minority young people, really need attention and have long-term 

consequences for this Country. And I know that that does not necessarily go through the appropriations process there have been attempts to deal with summer youth and year-round youth programs, 

and those have failed up until now, at least, but those investments 

I think are particularly important. And for high impact communities that has long-term consequences that cannot just be turned 

around, so it is a really important investment. 

Mr. JOHNSON. $1,500,000,000 is the cost that regulations took 

out of our economy last year. The average American worker will 

have to work 65 days in 2009 to pay for the cost of government regulation, which consumes 17.7 percent of national income. This is up 

from 61 days and 16 percent in 2008. So the trend is not to cut 

and trim, it is actually bloating and expanding. To save money, cut programs. You could save $9,000,000,000 nationwide by fixing the Davis-Bacon Act. I am not advocating for a 

repeal of a 1931 prevailing wage law that is completely outdated; 

I am saying if you are going to implement a prevailing wage, it 

should be used statistically the same across the board. Every other 

agency that is under the Service Contract Act, et cetera, gets their 

wage data from BLS. Wage and Hour is the only one that uses the 

antiquated, outdated, self-reported survey, which is not statistically 

valid. 

That $20,000,000 increase should have been shifted to BLS, 

where everyone gets market wage data from period to expand our 

National Data Compensation Survey. Economists globally will 

agree that they have the most statistically sound and valid methods, not a self-reported survey. 

Another way to save $50,000,000 is to get rid of the State paid 

sick leave fund. There is a $50,000,000 mandate to study this, basically, to see how it implements. Well, if three States already do it— 

California, New Jersey, and Washington—actually, Washington 

passed it but has not implemented it because they realized they 

would have to raise taxes to do so. So you could call California or 

New Jersey, who raised taxes to implement this program, and ask 

them how they are doing it. There is no reason to appropriate 

$50,000,000 to figure out how to do it. 

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pensation pool from something else, which is going to come out of 

wages and benefits. So, overall, wages are going to decrease; and 

we see that under these programs. They just take it right out of 

the compensation pool they already have. 

So $9,000,000,000, $50,000,000, just a few cuts ideas. 

Ms. SEMINARIO. If I may just address the issue of regulation. 

There is the proposition here that somehow regulation costs businesses all this money and has no benefit. I think in the area of 

worker safety it is important to point out that there are real costs 

of not protecting people. We had 5,000 workers killed on the job 

last year; we had millions injured; tens of thousands die from occupational diseases. The estimated cost of just the injuries is 

$150,000,000,000 to the economy, and most of that, much of that 

goes back to employers. 

So I think we have to look at here that there is a point to regulating: not only to protect people, but to protect the economic welfare. And if you go back to the Occupational Safety and Health Act 

and its original statement of purpose, it was to look at the fact that 

we were basically killing workers, workers were being made sick; 

but it was having a terrible toll on the economy. 

So I think we cannot lose sight of the fact that the regulatory 

programs that are in place are for the purpose of protection, but 

also look at the lack of regulation that we have seen in the financial sector in the last number of years and the cost that that has 

had on the economy. So I think we have to take a broader view 

here of what the needs are and what the impacts are overall. 

Ms. LEE. Chairman Obey, if I may. On page 6 of your written 

testimony, NASWA, we have a proposal of how to save 

$840,000,000 in unemployment insurance benefit payments, and 

that is an investment in re-employment services. And we talk 

about that in our testimony. What we know is that as you—even 

in a recession with 10 percent unemployment, there are still areas 

in the Country that go without their needed labor supply, and what 

we do in employment services is we provide transparency to all of 

that. It can be State-to-State. 

And we help workers and we try to match them up at the lowest 

price possible to get them to where they are needed to help jumpstart the economy and help weather this time. That is what happens in your employment service and your re-employment service 

programs and they are proven to save money for the Country, and 

that is part of what is in our proposal. 

Mr. OBEY. My time has expired. I will come back for a couple 

comments afterwards. 

Mr. Honda. 

Mr. HONDA. Thank you, Mr. Chairman. 

I thank the members here for testifying. 

Mr. Chairman, I do not have any questions, just a comment, and 

that is when I was a principal of an elementary school, I ran the 

school based upon certain kinds of standards of safety and standards of educational attainment. The other piece was the classroom 

environment. When we had portables come in, that was a nice 

thing because it was new, it was air-conditioned. But there were 

always complaints that children had headaches and teachers had 


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headaches when they were in, and I was going to say stop complaining. 

But rather than doing that, just called a couple of agencies and 

had them test the air over the weekend, and we found that there 

was not anything wrong, but there was a persistence of illness or 

complaints. We did it again; only this time we turned up the heat, 

tested the air and closed it. We found that formaldehyde was coming off the rugs that were used as part of the chemicals for keeping 

it down. 

That information was critical for me to say you are right, we 

should not be using it until we get rid of that chemical and have 

it come out of the glue. That helped our youngsters’ and the teachers’ health and their ability to teach and learn. 

Fast forward to Katrina, when we are looking at all these trailers that are going in. My concern is that if we are going to provide 

these things, that we ought to make sure that the folks who are 

going to use those trailers will not get sick because of the glue that 

may be used. And I think that that is the kind of standards we 

want to find. 

So I appreciate the kinds of information that does come through 

and helps us to become more thoughtful about the health and safety not only of workers, but of our families and our children wherever we go. The idea of having standards is good, but it is also economical in the sense that you do not lose time, you do not spend 

money on things that you do not have to. 

So I appreciate this kind of discourse. 

Thank you very much, Mr. Chairman. 

Mr. OBEY. Mr. Tiahrt, two or three minutes before we move on 

to the next panel. 

Mr. TIAHRT. Thank you, Mr. Chairman. 

The cost of regulations is something that I think we have to deal 

with in this economy in order to try to get people back to work, and 

nobody advocates a complete abolition or abolishment of regulations. I think that there is a need for work safety. I think there 

is an incentive for employers, especially small businesses. 

There is a roofing contractor that was talking to me about OSHA 

and using harnesses on roofs. Before this education program went 

around, they did not realize they had to use these harnesses, and 

one of his brother-in-laws who was working for him fell off a roof 

and he had to explain at the next family reunion why his brotherin-law got injured at the workplace. 

Many of these small employers employ their friends, their family. 

They do not want people to get hurt. That is why I strongly advocate this education program, because these regulations are hard to 

understand. As the Chairman pointed out, at first they are worse; 

now they are better, but they are still hard to understand, and 

small companies do not have the resources to dedicate somebody to 

just interpret these for them or keep track of them. 

So I think whether it is at the small business level or at a larger 

level, advocating for a safe work environment and a clean environment and a fair work environment is much more productive in the 

long-run, and I would like to see us work together to change the 

philosophy from an adversary to an advocate for these general 

workplaces. 


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So thank you, Mr. Chairman. 

Mr. OBEY. Well, as long as we are philosophizing instead of asking questions, which all three of us seem to be doing, let me tell 

you a story that I think illustrates why it is necessary to sometimes have some pretty tough regulation. 

A number of years ago, in Superior, Wisconsin, we had a lot of 

grain elevator workers who were having a hell of a time simply 

breathing on the job, and I know about that because I am allergic 

to grain dust; I just close up like I am having an asthmatic attack. 

So I was asked by those workers if I could get some people in there 

to examine what was going on in those elevators. So I got Dr. Irving Selikoff to come in. He was the great scientist who made the 

major discoveries about asbestos and mesothelioma. So we got 

Selikoff to go up there and deal with those workers’ problems. 

The manager of one of the grain elevators was mad as hell at me, 

and he said to me there is no problem out there. He said, it is good, 

healthy conditions. He said, none of these people really have a 

problem, they are just trying to hassle us. So I simply said to him, 

I tell you what. Why do you not go out there and work out there 

for three days, and then see if you have any problems. 

The point of the story is simply that when we talk about a costbenefit ratio, cost to whom, benefit for whom? The costs and the 

benefits often do not accrue to the same party. So it seems to me 

that we have to be very careful. If we are going to use any device 

like that, we have to be very careful so that we measure the 

human impact. 

As far as regulations are concerned, the assumption is often 

made by some, I guess, that regulations routinely cost the Country. 

I would say it costs the Country greatly when we did not have sufficient regulation of the financial sector of our economy. We would 

not have been going through this recession if we had had better 

regulation of the big banks in this Country, if we had had better 

regulation of credit default swaps and other derivative hair-brain 

schemes like that. 

So I am one who confesses to be very suspicious about a wholesale attack on regulation. That does not mean that some agencies 

do not drive me crazy by their nitpicking. OSHA often has, and will 

continue to do so, I assume. But I wish we could strike a balance 

so that we do not have this constant yinging and yanging. 

When the Clinton Administration was in, we had good support 

for these programs. The Bush Administration comes in, we wind up 

going to the opposite ends. I wish we could find a way to meet 

somewhere in the middle and have a consistent policy over time. 

Even if it is a little tougher than business wants, even if it is a 

little weaker than labor wants, at least people would know what 

the rules of the game would be over a long haul; and that, I think, 

would be better for everybody. 

Just one basic question about training. People will always say, 

look, we are in a recession. We do not have enough jobs to go 

around. Why are you training people for jobs that do not exist? 

Why are you putting so much money in training? Why do you not 

wait until the economy is recovering? That is what I get from people a lot. 

What is your response to that? 


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Ms. LEE. Chairman Obey and members of the Committee, when 

the economy starts to recover, we think that business should be 

able to have immediately the skilled workers that they need. So in 

order to have that, what we have to do is to be able to interact with 

workers who are unemployed, be honest with them about what 

their skills are, what their ability to compete in the labor market— 

which is competitive—and up-skill them if necessary, re-skill them 

if necessary, so that when businesses are taking off and are coming 

out of the recession, that at very low fees we can find them the 

workers that they need. 

And this happens cyclically. And, at the same time, during a recession, when many businesses start, they still have difficulty finding certain skill sets in certain locations; and what the workforce 

system has to be able to do is to make that match occur. And as 

you know, many of your constituents, American citizens, they are 

not realistic when it comes to their marketability in the job market, 

and being unemployed is a very, very difficult time for them. 

So without our public workforce system and all the parties working together, you will have many Americans that honestly cannot 

assess their skills and then wonder why can I not get a job? Why 

can I not become re-employed? And then that is very bad for the 

Country. 

Ms. GANZGLASS. Just to add to that. I would argue this is a really good time to invest in training. The opportunity cost of training, 

meaning the loss of foregone wages, the fact that people are on unemployment insurance, so there is income support that is coming 

through that allows them to take part in longer-term training. We 

know that people who have families, who go to school at night, who 

work full-time, who works split shifts, it is very difficult to complete education. So, actually, periods when they are working less 

than full-time, when they are unemployed and getting some income 

support is a really good time to up-scale the workforce. 

And people who are skilled in one field who have lost their jobs 

in manufacturing, in other fields, they are not going back to those 

same jobs. The jobs that are being created now and will be created 

in the recovery are all going to change dramatically and require 

different and enhanced skills. So people need retraining, and you 

cannot just swap people from one field to another. They are not 

going back to the exact jobs that they have had. 

One last point. In the written testimony I include data from a 

number of training programs that are really tied to economic development in California and Kentucky. Those have had really strong 

evaluations and have shown that actually the training has a larger 

impact on job creation, on earnings, on employment than other investments or tax credits in job creation. So when you ask about 

where to cut, tax credits for job creation, in fact, have less return 

than a good solid investment in improving the productivity of workers who are there and helping companies upgrade what they are 

doing. 

Mr. OBEY. Is that it? Do you want to say something? 

Ms. DONALDSON. Just a word from the global side on both standards and training. At the ILO we have—employers are our partners, along with worker associations, and what we encourage is a 

dialogue, which both Mr. Tiahrt and Mr. Obey have talked about; 


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and through that dialogue we have learned that they can come to 

agreements, and that is what the standards are that have happened over the last 90 years. 

I would like to say that the Better Work program that I mentioned is supported by the industry; they have committed money, 

hundreds of thousands of dollars. And they believe in standards, 

they believe in getting rule of law. There are places in the world 

where there are not standards. There are places in the world where 

you can find what you are looking for, and they are not pretty for 

employers or workers. 

Mr. OBEY. Would you do me one favor? Last question from me, 

then I will ask Mr. Cole if he has any. 

I think a lot of people really are not very familiar with how the 

ILO works and, because of that I think they wonder whether they 

have any significant impact. Let me ask you how does the ILO 

work? Let me back up. Yes, I am interested in not seeing child 

labor around the world. Yes, I want foreign workers treated fairly. 

But even more than that, I am interested in protecting American 

workers from unfair pressures that lower wages. 

How does the ILO work to effectively enhance countries’ abilities 

to track the problem and to do something about it when they find 

a problem? What is the mechanism? What is the way that they go 

about, in essence, protecting American wages in a legitimate way? 

Ms. DONALDSON. Well, let me just say I am an American, so 

speaking from that perspective as an ILO official, as well, the 

United States has free trade agreements with our trading partners 

around the world, and we have systems of preferences, as you 

know, with 140 countries that are less developed; and those trade 

relationships in essentially a free trade world require that our 

trading partners meet core labor standards. And what does that 

mean? 

Mr. OBEY. And how do you go about making sure that they do? 

Ms. DONALDSON. Yes. So the way that we work, the ILO, we 

work with our partner countries, partner employers, and partner 

workers, and we bring technical assistance programs to help countries meet these goals that they have agreed to meet. So it raises 

the living standards where there are better jobs there, and it does 

not compete by drawing our good jobs out of the United States. And 

we think in a world where there are better jobs and better work 

everywhere, including in the U.S., means there are better consumers and there are better trading partners. 

So we want to help with standards, with our partners to make 

economies less dependent on sweatshops and slave labor and products that are produced and put into the system, not violating the 

laws of the United States and others. At the same time, we want 

to hold other countries accountable. 

So I would just say the ILO, which has been in existence since 

the end of World War I and was created by the Versailles Treaty 

to promote peace—because labor strife and economic instability is 

a result of a lack of working together—they have passed standards 

year after year that the employers discuss, as well as the employees, and then there is a transparent reporting system that is 

participatory. 


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Complaints can be filed, experts look at the issues. We change 

standards. We try to adjust with the world of work as it evolves. 

It is a very dynamic process. It is a parliamentary rule, in a way, 

that the countries participate in. So it is slow sometimes, as happens here as well, but it is a very open dialogue because peace, stability, strong economies, productivity and jobs for people as livelihoods is at the core of this. 

I hope that addresses the question in some way. 

Mr. OBEY. Thank you. 

Mr. Cole. 

Mr. COLE. Thank you, Mr. Chairman. I just want to quickly 

apologize to the panel, apologize to you and Mr. Tiahrt for coming 

late, but I have been in Interior, so I have been doing other work 

and look forward to participating a little bit later in this session. 

Thank you. 

Mr. OBEY. All right. 

Well, thank you all very much. I appreciate your participation 

today. 

WEDNESDAY, MARCH 17, 2010.

TESTIMONY OF INTERESTED INDIVIDUALS AND ORGANIZATIONS LABOR AND EDUCATION PRIORITIES/ESEA 

REAUTHORIZATION 

WITNESSES 

GENE WILHOIT, EXECUTIVE DIRECTOR, COUNCIL OF CHIEF STATE 

SCHOOL OFFICERS 

DANIEL DOMENECH, EXECUTIVE DIRECTOR, AMERICAN ASSOCIATION 

OF SCHOOL ADMINISTRATORS 

GREG RICHMOND, PRESIDENT, NATIONAL ASSOCIATION OF CHARTER 

SCHOOL AUTHORIZERS 

RANDI WEINGARTEN, PRESIDENT, AMERICAN FEDERATION OF 

TEACHERS 

DENNIS VAN ROEKEL, PRESIDENT, NATIONAL EDUCATION ASSOCIATION 

OPENING STATEMENT BY CHAIRMAN OBEY

Mr. OBEY. Is that a vote? It will take probably 20, 25 minutes, 

so I would like to get started with panelists’ comments. I apologize 

for the interruption that will occur, but we cannot do much about 

the House setting votes when they are inconvenient for committees. 

Sorry to do this to you. I know it is going to be discombobulated, 

but that is the Congress. 

We will now turn to our second panel this morning, which will 

focus on Federal education policy and related funding issues. 

We are pleased to have with us today a panel of experts who represent the professionals on the ground with our kids, working day 

in and day out to educate the Nation’s students. You are here on 

behalf of teachers and leaders at both the State and local levels. 

We are eager to hear your perspectives on how decisions made in 

Washington translate into the classroom across America. 

Our witnesses are Dr. Daniel Domenech, Executive Director of 

the American Association of School Administrators. Dr. Domenech 


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has more than 36 years of experience in public education, 27 of 

those as a school superintendent. 

We also have Ms. Randi Weingarten, President of the American 

Federation of Teachers and a former history teacher. 

At the invitation of the Minority, Mr. Greg Richmond, President 

and Chief Executive Officer of the National Association of Charter 

School Authorizers. 

Mr. Dennis Van Roekel, President of the National Education Association and a former math teacher. 

And, finally, we have Mr. Gene Wilhoit, Executive Director of the 

Council of Chief State School Officers from 1994 to 2006. He led 

State education agencies in Arkansas and Kentucky. 

I would ask our witnesses to limit their remarks to five minutes, 

then we will proceed to a round of questioning when we get back 

from the floor interruption. 

Mr. Tiahrt, any comments? Thank you. 

You want to begin? 

Mr. DOMENECH. Certainly. Well, Mr. Obey, Mr. Tiahrt, thank 

you so much for inviting me here this morning. It is a pleasure to 

be here this morning. Thank you for the invitation. I am Dan 

Domenech and I am the Executive Director of the American Association of School Administrators, and, as Chairman Obey indicated 

earlier, a superintendent of schools for 27 years. My last tour was 

a superintendent of schools here in Fairfax County, Virginia, right 

across the way. 

We are indeed grateful for the support that we have received 

from Congress, and certainly from the members of this Committee. 

The recovery funds have gone a long way in our Nation’s schools 

to preventing what would undoubtedly have been a great disaster 

in our public school systems. Jobs were indeed saved; programs 

were indeed saved that would otherwise have been cut. 

We are also very appreciative of the work that you are doing relative to the Jobs for Main Street and specifically the 

$23,000,000,000 that would be advocated for the State fiscal stabilization funding, which will certainly help in the current economic environment that faces our schools. 

We pretty much see every day, as you pick up a newspaper, that 

every school district in the Country is going through the process of 

eliminating positions which might result in increases in class size, 

eliminating programs, eliminating summer programs, after-school 

programs. You read about a school system like Kansas City, where 

they are closing half of their schools; Detroit also closing a great 

number of schools. So we see that there is a significant economic 

issue facing our schools and that they need help. And certainly the 

Jobs for Main Street and the $23,000,000,000 that the House has 

already acted upon would be a tremendous, tremendous help. 

We also urge you, as you move forward not only with the Jobs 

for Main Street, but also for the budgetary allocations, that you 

look at, in essence, what happened this year with the stabilization 

dollars to a great extent, and that is the fact that in many, many 

cases the dollars were sort of hijacked at the State level and were 

used to supplant what would otherwise have been State support for 

education, and even local support of education. So that, unfortunately, in spite of this great record year for education in terms of 


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Federal support, most of our school districts around the Country 

wound up with a total of less dollars than they would otherwise 

have had had the State and local support remained at the same 

levels. 

And, indeed, when we ask our members—and we survey them on 

a regular basis, we find out that 88 percent of them have reported 

to us that indeed that was the case, that their local and State allocations wound up being less than it was supposed to have been, so 

that in spite of the increase of Federal dollars, in many cases almost doubled, they still have huge budget issues. 

We are also seeing that 83 percent of our members are reporting 

that as they are putting their budgets together for this coming 

school year, that they are looking at reductions again in workforce 

and reductions in staff. So this is going to be a huge problem. 

I want to now focus on the budget that the President has put 

forth and that you are now considering for the 2011 year. 

We are very much concerned with what we see as a shift from 

formula funding to competitive funding, and we frankly are very 

much against that. ESEA historically we consider to be the kind 

of program that was put in place to level the playing field. Recognition of the fact that we have children of poverty in our schools and 

recognition of the fact that there is substantial evidence that supports the fact that children of poverty are our underachievers. They 

are the ones that are at the bottom end of the achievement gap. 

They are the ones that are in all of our failing schools; and that 

ESEA dollars have traditionally gone to help these youngsters. 

Whereas we understand the strategy behind competitive grants, 

we think of what Secretary Duncan has said in terms of education 

is a civil right for our children, and we believe that a child’s civil 

rights should not be subject to competition and that we should not 

be doing things that will defer dollars that are very much needed 

by these children to just those few districts who happen to have 

adults that are able to write the kinds of grants that will win them 

the competition. 

So we are not in support of that and we specifically point to our 

small and rural school districts across America which are the majority of school districts in America, and the fact that these districts do not have the capacity, do not have the time and often the 

skills to write the type of grants that would provide them with the 

kinds of monies that we are talking about. 

We are also looking at Title I and concerned about the fact that 

even though the President’s proposal calls for an increase, total increase, and most of that increase is going to these competitive 

grants. So we are concerned that, in essence, Title I becomes level 

funded at a time when we see that there are great economic needs 

in our schools. 

So there needs to be, if there are going to be increases, increases 

in the Title I allocation, that it is not level funded, because we see, 

as we have looked at the blueprint that was recently released by 

the Administration, that there are things in there—and I will point 

specifically to the requirements for the development of new assessments, the collection of data, the analysis of that data, the reporting of that data—that basically amount to an unfunded mandate, 


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because there is nothing that would, in essence, finance the collection and the use of that data in our local school districts. 

So knowing that, in all probability, the passage of ESEA will result in some unfunded mandates, there is a need, then, for greater 

formula funding in Title I. 

And same thing with IDEA. Our organization has long been advocating the need for IDEA to be funded at the level that it was 

promised, and that is 40 percent. Currently, the budget that is 

being proposed is funding IDEA at 17 percent and this is a huge 

economic issue for school districts. As you know, we are required 

to provide for the needs of our special ed, and that is the only area 

where a district has absolutely no flexibility. We have to provide 

for the needs of these children, irrespective of cost, irrespective of 

the budgetary problems that a school district may be having. That 

is where it has to go. 

So, at times like this, what happens is that we are robbing Peter 

to pay Paul. We are taking money away from the general education 

program to fund the needs of our special ed students; and, thus, 

why funding IDEA at the promised level is significant. 

Finally, I want to point to the Rural Education Achievement Program, REAP, which is something that our organization also is very 

much supportive of, and this is because this program is focused on 

our rural schools in America, recognizing the needs that they have. 

And, again, we are concerned that the budget talks about a setaside of REAP dollars for the Secretary to use for competitive 

grants, and here again we propose the same argument. 

So thank you, Mr. Obey, for this time, and rest assured that all 

of us in our schools will do, irrespective of what happens, the very 

best that we can on behalf of our children. 

[Written statement by Dr. Dan Domenech follows:] 


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Mr. RICHMOND. Good morning, Chairman Obey, Ranking Member Tiahrt, and members of the Subcommittee. Thank you for inviting me to speak with you today. 

The National Association of Charter School Authorizers, or 

NACSA, is a membership organization not of charter schools, but 

of the agencies that oversee charter schools. Our members are 

school districts, State education departments, universities, and others; and we work with our member agencies to grow the number 

of high-quality charter schools across the Nation by setting professional standards and providing technical assistance directly to authorizers. 

Allow me to point your attention to a picture that appeared earlier this month in the Chicago Tribune under the headline Every 

Urban Prep Charter School Senior is College-Bound. One hundred 

percent of the first senior class at this all-male, all-African American charter school has been accepted into a four-year university. 

Take a moment to look at the joy in the faces of those boys and 

imagine the pride of their mothers, fathers, and grandparents. 

Tim King, the founder of this charter school that opened three 

and a half years ago, says, ‘‘There were those who said you can’t 

defy the data. Black boys are killed. Black boys drop out of high 

school. Black boys go to jail, they don’t go to college. They were 

wrong.’’ 

One hundred percent of graduates admitted to college would be 

a terrific achievement for any school in America, but in the innercity of Chicago, this achievement is truly remarkable. But it should 

not be remarkable; it should be the norm. All children—white, 

black, and brown—in every community in America should be able 

to attend a school that prepares them to go to college and to succeed in life. 

This Committee has the ability to make this type of opportunity 

available to millions of more students by acting boldly in support 

of Federal efforts to expand educational opportunities and by demanding results. To that end, I urge you to continue to support the 

start-up of new charter schools and to include provisions that promote quality as you do so. 

This boldness was evident in fiscal year 2010, when the Committee appropriated $256,000,000 to support the start-up of over 

1300 new charter schools. The 2010 appropriations bill also included new accountability measures, supported by my association, 

to ensure that new charter schools are held accountable. And I 

would like to thank you, Chairman Obey, and Congressman Tiahrt 

for your leadership which ensured that these new accountability 

measures were included in the final bill. 

In the Administration’s proposed reauthorization of ESEA, we 

support the proposal to expand the range and quality of educational choices available to students by increasing the number of 

high-performing charter schools. Yet, we also know that public 

oversight of charter schools is highly variable across the Country, 

leading to excellent charter schools in some communities and unacceptably weak schools in others. 

Any Federal effort to increase the number of charter schools 

should be accompanied by an equal effort to ensure quality overVerDate Mar 15 2010 09:09 Nov 16, 2010 Jkt 058234 PO 00000 Frm 00183 Fmt 6601 Sfmt 6602 E:\HR\OC\A234P2.XXX A234P2

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sight that maintains high standards, preserves school level autonomy, and safeguards student and public interests. 

To that end, we recommend that Congress explicitly reserve at 

least $5,000,000 in fiscal year 2011 for the purpose of improving 

oversight of charter schools, which will ensure that Federal funds 

are supporting only quality schools. Additionally, we would recommend that language in last year’s bill outlining three quality 

control standards be repeated again this year. 

My members, the agencies that oversee charter schools, recognize 

that there is nothing automatic about being a charter school. For 

every urban prep success story, there may be another school with 

weak academic results or poor financial management. These poorly 

performing charter schools need to be held accountable. Yet, all too 

often oversight of these schools is weak and poorly performing 

charter schools are allowed to stay open. 

Just last week, for example, the FAME Charter School in Fremont, California, had its charter renewed for five years by the Alameda County Board of Education, despite a State audit that identified dozens of irregularities, including an unusually high salary of 

over $336,663 for the school’s principal, for whom the school also 

bought a $75,000 Mercedes. 

These types of abuses are a disservice to children and taxpayers, 

and they tarnish the achievements of the thousands of good charter 

schools, like Urban Prep, that play by the rules and provide quality 

educational opportunities for hundreds of thousands of children. 

Authorizers are your partners in assuring charter schools provide 

more high-quality educational opportunities for children, while 

playing by the rules and serving the public interest. Authorizers 

who follow professional standards set by my organization are more 

likely to thoroughly evaluate proposals for new schools, approving 

good proposals and denying weak proposals. They are also more 

likely to provide proper oversight that respects the autonomy of 

charter schools while holding them accountable for results. 

Yet, for many years the role of authorizers in the charter school 

sector has not been understood, nor supported by policy makers. 

Over the past 15 years, the Federal Government has allocated 

$2,000,000,000 to support the creation of new charter schools. During that same time, less than $2,000,000, or only one-tenth of one 

percent, has been invested to ensure that the schools are held to 

high standards and properly monitored by a competent authorizing 

agency. 

Last year, you began to remedy this lack of Federal support for 

quality oversight thanks to the leadership of this Committee that 

I mentioned earlier. In fiscal year 2011, I urge you to continue that 

leadership by allocating $5,000,000 directly for quality authorizing 

so that many more children have that opportunity, like the boys at 

Urban Prep Academy, to attend a great school that prepares them 

to go to college and succeed in life. 

Thank you. 

[Written statement by Greg Richmond follows:] 


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Mr. OBEY. Thank you. 

I think we 

Mr. OBEY. Okay, this job would be great if we did not have to 

interrupt it to go vote. 

Mr. Wilhoit, why do you not go next? 

Mr. WILHOIT. Chairman Obey and Ranking Member Tiahrt, it is 

my pleasure to be a member on this panel this morning, and I 

thank you on behalf of the Chief State School Officers across the 

Country who are the State-to-public officials representing elementary and secondary education in the States and D.C. Department 

of Defense and the five extra State jurisdictions. 

My remarks this morning are focused on what I think is an 

emerging potential that exists between the Federal Government 

and the States to advance education in this Country, and also to 

address what we think are some targeted areas where the Federal 

Government could enhance education development across the 

Country. 

First, though, I want to echo Dan Domenech’s respect and admiration for and thanks for the Recovery Act funds. It has shored up 

disastrous situations in States. Teachers are now teaching that 

would not have been teaching; programs are underway that are essential for children that would not have been. So we appreciate 

that help. Again, we are supportive of the House action to continue 

some funding under this next fiscal year, if possible, the 

$23,000,000,000 appropriation that has gone through the House. 

Your commitment to Title I and to IDEA, as well as some of the 

reform initiatives, sort of set a context for my comments. You were 

able to shore up—the programs have stabilized education in our 

history. 

But you also put some resources in some new programs that 

have shown some real promise, things like the Longitudinal Data 

Systems that build State capacity for transparency and reporting; 

the issues around Race to the Top, where we have some innovation 

occurring in the States; the Teacher Incentive Fund. Those are 

areas where we are beginning to see some real excitement and energy around them. So you have stabilized and continued some 

State funding, but you have spurred some innovation out there 

that is beginning to take place. 

Our budgets are still tight. Our projections are for increased difficulties in the next fiscal year, so we need this continued support. 

I would just say that as we look forward, though, we get through 

this crisis and we move ahead, we really do believe that American 

education is experiencing some really significant reflection and 

transformation. I hope you can sense that. I hope you can have witness to some of the actions that are occurring in the States. First, 

States are stepping forward and ratcheting up their standards and 

assessment policies. We are beginning now to put data systems in 

place that are much more coherent and thoughtful and robust than 

we had in the past so that teachers in the classroom, administrators can make better decisions, and that we at the State level can 

inform policy. 

We are talking about new forms of individualizing and supporting education that we have not talked about in the past and 

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ple of that is the National Governors Association and our association combining on an effort for developing common core State 

standards which are, for the first time, States are coming together 

across the Country in agreement about what students should know 

and be able to do. I think the Race to the Top, we had 41 States. 

And knowing that this can be highly competitive, yet interested in 

stepping back, reflecting on who they are and what they have done 

and what they might do in the future; developing road maps for innovation. 

So this idea of hopefully, in the future, of ESEA policy and funding that would support both innovation and continuation of the 

good models that we have had is something that we are really interested in supporting. 

We think that, as we move forward, there are some critical 

needs. We need to change. We need to improve in public education. 

We are not getting done what our public expects of us. We are not 

delivering as we should. We all know that on this panel. There is 

a commitment, but it will take a concerted effort around better 

technical assistance to our districts and capacity-building for those 

districts; higher quality professional support for our teachers; better information systems and research around what we are doing so 

that we can make adjustments as we move ahead; and really, most 

importantly, more aggressive interventions with these lowest performing schools that we have continuing in many of our districts. 

So we are really pleased with some of the recent efforts around 

support for these, particularly the Longitudinal Data Systems, the 

School Improvement Grants, are good examples of the kinds of policies that are helping the States move aggressively forward. 

We think a greater investment is needed, and I just mentioned 

three of them: one, in the area of student assessments. We appreciate the $400,000,000 program you have for assisting States to develop assessments. We know those assessments must improve in 

the future; they have to be better indicators of student progress. 

We have to expand our work beyond the summit of assessments. 

We have to move beyond the multiple choice kinds of decisions that 

we are making. A good partnership between States and the Federal 

Government there could be very helpful. 

We appreciate the $350,000,000 Race to the Top fund that would 

get us started with innovation, but we need greater support as we 

move ahead. 

Secondly, the School Improvement Fund would focus a lot of attention on these lowest performing schools and help States and 

Federal Government move together. 

And then, third, we request that you not step aside from ESEA 

and IDEA. These are critical programs for us. At the same time, 

we think these innovative programs need to be complimenting 

those. 

Finally, I would just say that we are supportive of the Department’s proposal for consolidation into these 11 strands programs. 

Moving from sixty-some programs to 11 makes sense. We are not 

losing the integrity of those. We are not backing away from accountability. We think that States could better allocate our Federal 

resources. We could reduce some major repetitive actions in the 

States, and we would be held more accountable. 


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We think a part of that means that you all need to be very clear 

as we move toward these kinds of consolidation programs that you 

state the purposes very clearly. We are ready to lead on those. We 

are ready to be held accountable. 

Thank you. 

Mr. OBEY. Thank you. 

[Written Statement by Gene Wilhoit follows:] 


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Mr. OBEY. Ms. Weingarten. 

Ms. WEINGARTEN. Thank you, Chairman Obey. Thank you, Ranking Member Tiahrt. Thank you, former member of the AFT, Mr. 

Honda. I want to thank profoundly Chairman Obey for both your 

leadership on moving the Recovery Act last year and your commitment to move the jobs bill this year. 

My colleagues have both talked about it, but ultimately, as a result of ARRA, more than 325,000 teachers, professors, and other 

education staff who were in danger of being laid off are educating 

our students in our schools nationwide. ARRA funding has enabled 

schools to continue providing education opportunity and stability to 

children who are in the midst of this economic turbulence that is 

still swirling around them and, in addition, thousands of essential 

State and local public employees whose jobs were also at risk are 

still delivering critical services in their communities. And I do not 

think that there has been enough thanks about the stability that 

you and the President provided, the Congress and the President 

provided in the worst of all times. 

We also want to thank you for really pushing on the Jobs Act, 

because now, with the Recovery Act winding down, States are facing an additional budget gap of up to $180,000,000,000 next year; 

and unlike—I think I may disagree respectfully with my colleague 

from the Chiefs, because what we are seeing is massive State budget cuts could threaten and undermine all the good work that the 

Recovery Act has done to strengthen and improve our public 

schools and to save jobs. Let me give you a couple of examples that 

have happened in the last few days. 

California. There are over 23,000 pink slips that were mailed to 

educators statewide on Monday, including nearly 2300 teachers in 

LA and about 900 teachers in San Francisco. 

New York State is considering eliminating a wide range of Regents examinations, which is New York’s traditional measure of 

high school student achievement. So at the same time as we are 

trying to raise standards, New York is going to pull out those 

world-class standards that it has because of monetary issues. 

Our locals are reporting that districts are attempting to reduce 

the number of school personnel, including paraprofessionals working with students with disabilities, in order to avoid paying for the 

services that those students need. So, for example, a child with 

Downs Syndrome or another disability will not stop needing assistance from a para or from a trained special educator. 

You know about the hundreds of districts that are now reporting 

contemplating four-day work weeks. You know these kinds of stories are coming in all across the Nation. 

We need the help. Forget about us for a second. The kids, our 

kids need the help. They do not get to be five years old twice. They 

need the help from their educators, and the crunch time is now. 

So I again thank you profoundly for trying to push on the jobs 

bill, and we are making the same case as we are today in the Senate. 

In terms—— 

Mr. OBEY. Where? [Laughter.] 

Ms. WEINGARTEN. You know, that other house. 

Mr. OBEY. Oh, yes. Oh, yes. 


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Ms. WEINGARTEN. As a former history teacher. [Laughter.] 

Ms. WEINGARTEN. But similar to the funding provided by the Recovery Act, there are many things to applaud in President Obama’s 

proposed budget, including the increased funding for childcare assistance for Head Start and the maximum Pell Grant. But just as 

my colleagues have said, we are concerned about some of the policy 

implications attached to the budget proposal, and let me just talk 

about two very quickly. 

Number one—and Dan Domenech said this already—Title I 

needs to be a formula-driven program. We believe that Title I funding should not be based on the outcomes of political fights at the 

State level; it should be based simply on what is needed to ensure 

that students are well prepared for college, work, and life. And, as 

a result, it should also not be based upon how well a district can 

write a grant. We need it to be formula-driven. Again, not us, but 

our kids. 

And let me just end with a few points about SIG, which is what 

we are very, very concerned about. Ultimately, it is very good news 

that the budget proposal proposes a significant increase in funding 

for the School Improvement Grants for our lowest performing 

schools. But, at the same time, we are concerned that it has focused SIG use only a rigid, narrow list of unproven options. 

The bottom line, as Gene Wilhoit has said, we all need to change. 

Our schools need to change. But no single factor causes a school 

to struggle. Rather, it is a combination of factors. And, bottom line 

our struggling schools need a line curriculum; standards and assessments; workable strategies for teacher recruitment, induction 

retention and professional development; differentiated instruction; 

extended learning and enrichment time; family and community engagement; and community schools in which the services that children and their families need are provided in a school building. 

I end on that point because I have watched and I have engaged 

in school turnaround. But it is not simple stuff. It takes proven 

programs and money, and people working together to do it. We are 

willing to do it. We need the help to get that done. Thank you. 

Mr. OBEY. Thank you. 

[Written statement by Randi Weingarten follows:] 


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Mr. VAN ROEKEL. Thank you, Chairman Obey, Ranking Member 

Tiahrt, and members of the Committee. I am Dennis Van Roekel, 

President of the National Education Association and 23-year high 

school math teacher with the honor of representing some 3.2 million people who spend their professional life each day in public 

schools across America, from pre-K to graduate. 

Fulfilling the promise and the purpose of public education requires a solid foundation of resources, and, in that respect, the 

President’s budget is a mixed bag. While it correctly reflects an understanding that education fuels our national success and calls for 

an overall funding increase, those increases will not reach all students, districts, and States. 

Historically, thanks to the leadership of this Committee, funding 

increases have always gone to formula-based programs, so that all 

students and staff and States benefit. Now more than ever, from 

both an educational and a jobs perspective, this needs to continue. 

And that is why, as my colleagues on the panel have mentioned, 

the trend toward competitive grants is very troublesome. 

A dramatic shift away from formula grants can have serious consequences in this economy. Providing certainty to States and local 

school districts is a must in these times of incredibly difficult fiscal 

environment. The funding levels proposed for core programs like 

Title I and IDEA are less than what is necessary. Poverty is still 

very much an issue in this Country, and we have schools that lack 

the resources, committed and effective leadership, and enough 

great teachers and education support professionals to deliver what 

every student needs. Federal Government must be engaged in 

these issues starting by fully funding Title I and IDEA. 

I also want to take an opportunity to address the Administration’s blueprint for ESEA reauthorization. We know that Congress 

is eager to right the wrongs of No Child Left Behind, and no one 

could be more eager than America’s educators. For the last 10 

years, each and every day their professional lives have been impacted by that law. But they cannot support the blueprint in its 

current form. 

The blueprint calls for prescriptions before the actual problems 

are diagnosed, even though struggling schools need a wide range 

of targeted actions to ensure that every student succeeds. The blueprint leaves out students’ first teacher, their parents. In fact, the 

President’s budget would eliminate funding for the Parent Information Resource Center, the only Federal program dedicated to increasing family engagement. Without this funding stream, parent 

education and outreach programs in low-income and Title I communities would be lost. 

The blueprint also continues the narrow focus on tests, these 

narrow do-or-die high-stakes tests. We know the results of these 

current tests: it is narrow the curriculum. We have seen elimination of programs that should be there, and we have seen the 

kind of educational practice that we know is wrong for students. 

They ignore those who are already proficient; they ignore those 

that are a long ways away, and tend to focus on the golden band, 

as one principal called it, of those just below proficiency. 

It also fails to address the current rules that undermine local decisionmaking around school improvement models. As we look at the 


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lowest performing schools, 50 percent are in urban, 20 percent suburban, and 30 percent in rural. And when you look at the four 

models, the first three do not apply to a rural area at all. I grew 

up in one of those small towns of 1700. You could not close my high 

school and go to another one; it was the only one that was there. 

And we need to have models that work for all. And to think that 

the current system only allows one alternative for 30 percent of 

those impacted just does not seem right. 

Finally, the blueprint makes a faulty connection between tests 

and teacher evaluation and compensation. On the one hand, we say 

we do not want to micro-manage; we want more flexibility. Tight 

on goals, loose on means. And yet it mandates more to than 15,000 

school districts how to evaluate and pay their employees. I cannot 

imagine Federal funds going to a State or to a mayor with strings 

attached that say and this is how you will pay your employees in 

order to get the resources. 

We are sharing this movement broadly with our members to ensure that this reauthorization reflects their voices, and we look forward to engaging with Congress as we continue to do this. 

Finally, I mentioned the need for additional investment education jobs. The American Recovery and Reinvestment Act, as 

Randi mentioned, created more than 300,000 education jobs that 

would have been gone. But more needs to be done. Incredible layoffs and program cuts are facing across the Country. North Carolina, 6,000; Randi mentioned California, more than 20,000; Indiana 

up to 5,000. And I think what is most important is when all of 

those tens of thousands of adults leave, there is not one less child 

who needs a healthy breakfast or lunch, who needs a clean and 

healthy environment, or needs a caring adult. 

And I would just add my thanks to the tremendous work of the 

House in passing the Jobs for Main Street Act, especially to you, 

Chairman Obey, for your work. 

So the road to our economic stability and prosperity as a Nation 

runs through America’s public schools, and every student deserves 

the best we can offer, and I hope we deliver right now. Thank you 

very much. 

[Written statement by Dennis Van Roekel follows:] 


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Mr. OBEY. Thank you. 

Mr. Tiahrt. 

Mr. TIAHRT. Thank you, Mr. Chairman. 

Thank you all for coming to the panel. 

Mr. Richmond, I want to thank you for not only talking about the 

success of charter schools, but the realism that some charter 

schools have troubles as well; and I appreciate that, that you 

brought up both sides of it. 

There has been research that looks at the performance of charter 

schools compared to those who attend what is called traditional 

public schools. Are there any of those lessons those traditional public schools can learn from the charter school industry and the success they have had, keeping in mind that there has been both success and lessons learned in failure? 

Mr. RICHMOND. Absolutely. I think from the research studies 

themselves, but then also just from our practices in the field for the 

past almost 20 years the charter schools have existed. We are seeing a set of things that are true in charter schools and, frankly, I 

think they are true for any school, about school quality, the kinds 

of things that are happening at the Urban Prep school that I mentioned, and it begins with high expectations. 

And that cannot just be a slogan, that we have high expectations; 

it is actually very hard work every day to communicate among all 

the faculty, all the staff, all the adults, all the children that we actually do expect you to succeed and go on to college. 

But then you have to follow that with flexibility at the school 

level, flexibility that allows those educators in the building to understand what their students need and to deliver an educational 

program that meets their need; flexibility around time, around curriculum, around budgeting. So that flexibility at the school level for 

the educators is important. 

But then it has to be followed, then, by a measure of success. Not 

every school is going to be successful, and that is where the measures of school quality, standards. If you want to boil it down to a 

few phrases, standards and meaningful assessments. But we need 

to have measures of school quality that let us know which schools 

are doing well. Let us know as policy makers, but then also let the 

folks in the schools know if the things they are doing are working. 

Those are activities—high expectations, school level flexibility, 

quality standards and assessments—that you heard talked about 

at this table, you heard talked about in the blueprint for ESEA, 

and many of those ideas are ideas that really percolated, in many 

cases, from charter schools, where charters have been the research 

and development function that many folks wanted them to be when 

the idea first came about in the 1990s. So we are seeing those kind 

of ideas get tested, tried out, and learn and pick the ones that are 

working. 

Mr. TIAHRT. How do you, as authorizers, hold schools accountable 

like charter schools? How do you hold them accountable? We have 

talked about No Child Left Behind, and that was an attempt at accountability that I think has been very burdensome through the 

regulations involved. How do you guys do it? 

Mr. RICHMOND. Well, you have to begin with multiple measures 

of quality. So not just an achievement or a status score, but also 


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look at gains. So that is an improvement in this blueprint, that we 

are looking at gains now over time. And for authorizers, we recommend that authorizers also look at a relative comparison: How 

good is the charter school relative to the other schools the kids 

would go to? 

So if you have those three types of multiple measures, then that 

starts to inform that authorizing agency about whether that school 

should be renewed. 

Then, frankly, though, you have to be willing to act if a school 

is a low quality. And I mentioned the school in California that has 

both academic and financial problems, where that authorizer was 

not willing to shut down a failing school. And that is a very difficult thing to do; it is not easy. Easy to say; very hard to do. But 

in order to be successful at this, we have to have the will to do it, 

and it begins with quality measures of school quality. 

Mr. TIAHRT. One of the things that concerns me now—all of you 

want the kids to get educated and, listening to your testimony, I 

think everybody mentioned the burdensome regulations that are 

involved with the process today. If you look at wasted effort, I 

think we can make a case that some of this regulation is wasted 

effort; that we have better ways of measuring progress, better ways 

of administering to see that schools are effectively run. 

And at a time when we have overspent by more than 

$1,500,000,000,000 last year—this year we are already 

$655,000,000,000 behind; we have had to borrow that much 

money—these five-year-old kids that Ms. Weingarten mentioned, 

how much are we willing to burden them with future debt in order 

to carry this out? Should we not be doing this in a most effective 

means necessary? We want them to be educated. How do we overcome the burdensome regulations that you all have spoken about? 

How do we make it more streamlined? 

Mr. Domenech. 

Mr. DOMENECH. Well, to your point, sir, about what lessons have 

been learned from the successful charter schools, it is exactly that, 

the flexibility to waive some of the rules and regulations that tend 

to stand in the way of progress. We see charter schools as a viable 

option, but we wonder why that flexibility cannot be applied to all 

of our public schools so that we have the opportunity to be freed. 

Mr. TIAHRT. That is my point. How do we—is not that what we 

should be pursuing? You guys are educators. 

I am sorry, I am running over here a little bit, Mr. Chairman, 

but—— 

Ms. WEINGARTEN. Part of the reason that we are concerned about 

conditioning things like professional development, which we know 

teachers really need, or class size reduction, which we know that 

kids actually need, to things like teacher evaluations that have not 

been created yet in a meaningful way, is that all of it looks like 

the Federal Government is doing a lot more management of schools 

as opposed to creating a lot more flexibility. 

There are times when oversight is important, meaning if we 

could actually get funds for early childhood education into schools 

in a real way, then we would actually save a lot more money later 

on down the line. If kids have early childhood programs, what we 


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have seen by research is that every $1.00 spent there saves $7.00, 

$8.00, $9.00 later on in life. 

So—— 

Mr. TIAHRT. Sorry to interrupt you. I think the concern I have 

now is that we do not have the funding today. Those are good 

plans. How do we streamline it today so that we can save enough 

money to make sure our kids are educated? 

Ms. WEINGARTEN. When you actually listen to the voice of teachers in schools and you actually have—one of the things that costs 

no money whatsoever, sir, is when you create a real collaborative 

learning environment where the voices of those who actually are on 

the front lines are listened to, we have seen tremendous school success; and what we see is that they will tell you, if they are empowered to do so, where there is waste. 

Mr. WILHOIT. Just three areas of suggestions. First, be cautious 

in starting new programs and layering them on top of existing programs. It seems like the solution thus far has been let us hold on 

to everything we have and let us add more on top of it; and a lot 

of it does not make sense, it is not coherent. 

Mr. OBEY. Sounds like our existing health care system. 

Mr. WILHOIT. A few parallels here. 

In order to do that, you have to know where you are going, you 

have to know what to hold people account for, you have to do research and development around that. 

The second idea, there is not a whole lot of Federal research 

going into this dynamic learning environment that is out there. We 

need a lot of those resources, IES resources, targeted to finding 

best solutions, gleaning from the work that is going on in classrooms and in school districts, and feeding that back to the Nation. 

We do not have that kind of feedback loop that is enriching. We 

are not learning from the struggles and gaining from the best models. 

The third area is the one I mentioned. You could streamline a 

lot of the Federal programs by putting them into some consolidated 

programs. You would not have to eliminate the general purpose of 

those, but look at the duplication of effort, and the small programs, 

many of them, end up being a very small amount of money and 

having limited impact. So, again, I would encourage you to look at 

those. 

Mr. TIAHRT. Thank you, Mr. Chairman. 

Mr. OBEY. Mr. Honda. 

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

I appreciate the information shared and its impact on budgets 

and everything else like that, and I appreciate the thoughtfulness 

of us moving away from No Child Left Behind and to the Race to 

the Top, and I assume that race to the top means that there are 

no losers. As school teachers, we always say there are no losers, it 

is just when you cross that line. So hopefully that is the mind-set 

that we have when we do this. 

I had some questions about charters and stuff like that, but I 

think I am going to go off on a different tangent, if I may. It may 

not even be relevant to budget, but bear with me. 

A few years ago we, in this Country, went off on a path to equalize education in terms of looking at segregated schools, and we 


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went through the efforts to determine which schools are segregated 

and then deemed them segregated schools; and it is an untenable 

situation to have. And now it seems like after we have gone 

through them all, in the interim we had IDEA; before that we had 

ESEA; and prior to that we had this battle of trying to equalize the 

ADA in different States. Big battles. And this is all, I think, in the 

name of equity for the children. 

What have we learned up to now in terms of addressing equity 

for the children and what should we be standing back on in order 

to look at how to approach the basic question, the needs of the 

child? I would be really interested in what the thoughts are of our 

stakeholders, knowing that students come to school with only one 

currency, and that is time. You mentioned that. But we cannot 

take time and bank it, then withdraw it later, when it is convenient. 

So if desegregation was an effort on the civil rights of youngsters, 

is there a case to be made by stakeholders on behalf of children on 

their civil rights to access to equity, whether it is a local or Federal 

level? Is there a way to reshape the paradigm of public education 

and States’ rights or States’ responsibility and the Federal Government’s responsibility. 

The Constitution was written at a time when the Federal Government just began to shape itself, so they said education was a 

State issue. I just wonder what thoughts may have come to your 

mind based upon just what I have sort of laid out. 

Mr. VAN ROEKEL. Mr. Chairman, may I respond? 

Mr. OBEY. Sure. 

Mr. VAN ROEKEL. Mr. Honda, I think you raise a very critical 

point, and I think where we often get into debates and discussions 

about activities and programs, and I think there is a point that you 

are making that we have to come back and ask ourselves what is 

the purpose of public education in America for the 21st century. 

I picture a circle and, for convenience, just make it into four 

quadrants. I think one of those quadrants is about academic 

achievement, and it ought to be a rich curriculum, with math and 

science and history and so on. But then another one is the equity 

of an equal opportunity. That has to be a purpose of public education in America, to provide that opportunity to every single person, student, in America. I think another quadrant has to do with 

our responsibility as citizens and civics, and that should be part of 

the purpose of this educational system. And the fourth one I would 

say would be about the whole child; that I hope we are not just preparing someone to work. I think there is more to the purpose of 

education, so that, as an adult, they are a citizen, an engaged citizen, but they also know how to balance work, family, faith, community. 

And if we get to a consensus and agreement on the purpose of 

what it is we need as a Nation for public education, I think then 

the answers become clear about what we need to do. And if equity 

means that every student has a shot, then we ought to say is that 

currently available in our State. And if the answer is no, what do 

we do to make it so. I think it is a question of purpose and common 

purpose, and working together to make it a reality. 

Mr. HONDA. So the answer to the question is? 


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Mr. VAN ROEKEL. The answer, I believe, is that we have to begin 

that discussion and say what do we, as policymakers, as parents, 

as community members, want from our public schools; and build on 

that. If you do not start with that question, I think it is hard to 

know which program or which activity is the right one now. 

Mr. OBEY. Did you want to say something? 

Ms. WEINGARTEN. I would just say a short answer is what both 

Dan Domenech and I and I think Gene said as well, which is Title 

I needs—if we are looking at equity, Title I needs to be more 

robustly funded in a formula way to the kids who need it the most 

to ensure that they have a level playing field. And that is part of 

the reason that we are concerned about the competitive grants. 

Mr. HONDA. Mr. Chairman, do I still have time? 

Mr. OBEY. No, you are done. 

Mr. HONDA. Oh, okay. 

[Laughter.] 

Mr. COLE. Well, I will yield the gentleman a minute if he wanted 

to respond. 

Mr. HONDA. Thank you, Mr. Cole. 

So it sounds like there is a need for a national dialogue on the 

issue of equity and asking that question of ourselves, is there equity. Would the policy be differently shaped if we moved from talking about equal opportunities for all children and say each child 

has a right to the pursuit of happiness and, in order to achieve equity, would there be a policy difference when you say each child 

rather than all children? 

Mr. WILHOIT. Absolutely. Each individual has a right to a high 

quality education, and my sense is that, in all respect, we know we 

do not have that right now. So the real issue for me is how do we 

wrestle with this as a society and how do we make a commitment 

to do something about it. And it is going to require an outstanding 

teacher in front of every child, each child in this Country; it is 

going to require resources to take that child to a level of education 

that we are expecting them; it takes, as Dennis was saying, a clear 

sense of what that goal is for each of those children; and holding 

ourselves, as adults, accountable for that. And all of those areas 

need dramatic improvement. 

Mr. HONDA. Thank you, Mr. Chairman. 

Thank you. 

Mr. COLE. Thank you, Mr. Chairman. 

I have a couple questions for you, Mr. Richmond, and then just 

some broader questions I want to put to different members of the 

panel. 

In a lot of places, local schools are effectively the authorizing 

agents for charter schools. Other places in States, there is a variety 

of different people that get to authorize whether or not there is 

going to be a charter school. Is that a good system, bad system? 

Should we have more uniformity? 

Mr. RICHMOND. There are some real weaknesses in how authorizing is structured around the Country, to be honest. So, number 

one, my organization always believes that it is desirable to allow 

a local school district to authorize charter schools. We think that 

that is always an appropriate role for a local school district and a 

local school board. 


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But we also have to be honest that many of those organizations 

do not necessarily have the interest or the capacity to delve into 

that work. In those situations, then, it is important and it is helpful to have another entity. Oftentimes that is a State level entity, 

the State Department of Education or a university or a State level 

board focused just on chartering. So that that level entity can develop the expertise, is interested in doing the work, and can put 

in place the right practices and the right policies that lead to quality. So we believe that mix is what you want to achieve, and that 

mix is actually in place in some States, but not in others. 

Mr. COLE. Give me an example, because that kind of mix, frankly, somebody has to make the final call. 

Mr. RICHMOND. Sure. 

Mr. COLE. So where should the final authority rest? 

Mr. RICHMOND. An example, Colorado has this system in place 

right now, and other States. You can go to your local school district. If you are someone who wants to start a charter school, you 

can go to your local district and they can act on you and approve 

you to exist. Or you can go to the State charter level board and 

apply to them. 

So we think having both of those avenues is desirable. But we 

want to make sure, at both levels, that there are some quality practices in place so good schools are being approved and good schools 

are staying open. 

Mr. COLE. This question probably more appropriately goes to Ms. 

Weingarten and Mr. Van Roekel. 

We have had a lot of discussion, we are going to have a lot of 

discussion about No Child Left Behind, what good, bad. I very seldom hear anything good. But just from your experience, over the 

time that that program has been implemented, have test scores 

gone up, down, stayed the same? And, more importantly, from my 

perspective, has some of the differential between some of the subgroups, particularly disadvantaged groups and the main population, if you will, narrowed? What kind of progress have we made? 

Ms. WEINGARTEN. So it very much depends, Congressman, 

whether you are looking at things like the NAPE schools or whether you are looking at individual assessments that States give. I 

think that there is a uniform agreement that the individual assessments by States have been varied and have actually been a situation where States may be looking good, but it is a question about 

whether there has been proficiency for children. 

In terms of NAPE, things have gone up incrementally, but not 

the gallops that I think everybody on this panel would want; and 

I think that is part of the reason why we are very pleased to be 

working with—we, the AFT—with the Chiefs and with the NGA on 

the common standards. And I think Gene will talk about how we 

have done that with them, because we know we need higher standards so that those standards are aligned to what kids should know 

and be prepared for to succeed in life, college, and work. 

In terms of the achievement gap issue, which is a very serious 

issue, in some places it has narrowed; in some places it has not, 

dependent on different States. I think what No Child Left Behind 

did was, most importantly, it created transparency and it created 


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a notion of accountability and holding all of us, all of our feet to 

the fire; and I think that is a good thing. 

Mr. COLE. Are you comfortable, in the President’s proposals, that 

those principles remain? 

Ms. WEINGARTEN. The difficulty is those—what No Child didn’t 

do for us was that because the accountability system was very rigid 

and stagnant, the issue that—just to cut to the chase—the issue 

that we all have is how to build capacity and how to grow capacity 

so that every child, each child, every child has an opportunity to 

learn. 

What will happen now under the President’s blueprint is that all 

the rules will change again, and there will be a lot of pieces that 

are moving, some of which will be higher; some of which will be 

waiting to see what the new assessments are; some of which start 

immediately, like much more rigid and inflexible accountability in 

terms of teachers. 

So the real question, in my judgment, my judgment alone, is how 

do we get to that place of ensuring that every child has the chance 

to learn. So a lot of the pieces in the blueprint are very valid, have 

lots of—are very important to do, but how are we going to create 

the coherence that we need of a maligned system in a State or in 

a district that really ensures not just individual children learn, but 

every child does. 

Mr. VAN ROEKEL. Let me add just something very briefly. Randi 

hit it on the head. There is such a contradiction because you are 

measuring different things between State systems that their highest achieving and on the national system failed to make adequate 

yearly progress. 

From an educator’s point of view, I think what is really critical 

is the work that the Chief State School Officers are doing with the 

48 States and common core standards. They need to be clearer, less 

of them, well written. That is the first step. From the education 

point of view, I have to know what it is you want students to know 

and be able to do. 

To me, the second step is then, at the local and State level, they 

have to have a curriculum that matches those standards. If you 

give me a curriculum that is totally different, my choice is either 

to teach the students something that you did not want, because it 

is not on the standards, or to develop all of my own materials to 

be able to have a curriculum that addresses the standards. 

And the third step, then, is to have an assessment system that 

actually measures whether or not a student is learning what you 

asked them to know and be able to do in the standards. And you 

cannot reverse the order of those. You cannot start with the tests 

and then develop standards or curricula; and I think sometimes we 

do that. There are so many tests. Like we are starting this new 

blueprint and they want to retain the old testing system. Does not 

make sense. 

We need to know what those standards are, then develop a curriculum, and then have assessments that actually measure real 

solid student learning and whether they are progressing. And if we 

do not do it in the right order, or if we try and skip one of those 

steps, we will fail. 

Mr. COLE. Thank you, Mr. Chairman. 


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Mr. OBEY. Thank you. 

Let me go for a moment to the recovery package. Despite assertions to the contrary by virtually every governor, every local school 

district, the Executive Branch of government, despite all of that, 

you have people who continue to insist that because unemployment 

has not moved down and because we still have some job losses each 

month, that the recovery package has not created a single job. 

You have indicated that about 325,000 teachers are working 

today who would not be working had the recovery package not 

passed. What do you base that on? 

Ms. WEINGARTEN. We base it on a number of sources, but we 

have attempted to align our data with the data from the Federal 

Government. What we have seen is—remember, normally in February, March, April of each year, that is when school districts know 

what their budgets or try to predict what their budgets are supposed to be for the next year. So what we were getting from last 

February, March, and April was what the predictions would be 

after the Recovery Act. 

So we were able to start counting what the cuts to instructional 

programs would be and equate that in terms of full-time equivalents, and that is how we started counting. And the counting that 

we have done, we have done, as I said, in conjunction with the Department of Education and in conjunction with the Vice President’s 

Middle Class Task Force. 

Mr. OBEY. Well, some people will say, well, that is just teachers, 

that is just public jobs; you are not really doing anything for the 

average taxpayer. What is the benefit to the average taxpayer if 

those 325,000 teachers are still working? 

Ms. WEINGARTEN. Mr. Chairman, I—and maybe this is simply 

anecdotal and, therefore, maybe it does not count for anything, but 

I grew up in New York State, and I witnessed in New York City, 

when this type of action was not done and when, in September of 

1975 15,000 school teachers were cut from the City of New York 

education system because of very bad budget situation, that school 

system did not recover for children for the next 10, 20 years. They 

essentially invited 10,000 people to come back, of which 3,000 did. 

But the devastation to that city is of public record. Whether it 

was people who fled the city to the suburbs, whether it was the 

change in the city that was a once proud city to one that felt like 

it was on its last legs, whether it was the devastation to kids, you 

saw that devastation clearly and convincingly in New York City in 

the 1970s. 

Mr. OBEY. Yes. 

Mr. DOMENECH. Our most recent survey indicates that our superintendents state that, on the average, districts in America saved 

about 10 positions per district. And, in addition to that, as you 

know, school systems generally tend to be the largest employer in 

their communities. I was a superintendent of schools here in Fairfax County, where I had 27,000 employees. Not only was I the largest employer for Fairfax, but for the State of Virginia. 

So what happens to our employees and our ability to hold on our 

employees has a significant impact on the local economy. 

Mr. OBEY. You mentioned that you have some concerns now that 

the Recovery act is scheduled to wind down. It is supposed to wind 


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down. The whole idea of the Recovery Act is that it is not supposed 

to be permanent spending; it is supposed to be temporary bridge 

spending that gets us from point A to point B. 

We are going to have a huge deficit this year because revenues 

as a percentage of our total national income have dropped to 14.5 

percent. We have never had a balanced budget when revenues have 

dropped below 19.6 percent. 

So it is supposed to be temporary, but it is not supposed to be 

immediate, which is why we tried to pass the supplemental jobs 

bill in December, the $27,000,000,000 that you have been talking 

about. 

Tell me what kind of problems you expect school districts to experience if the Congress does not pass something like that 

$27,000,000,000 package that the House passed earlier, or late last 

year. 

Mr. DOMENECH. Well, it is exactly what we see happening right 

now in terms of the cuts that are being projected in school systems 

around the Country that will take place and will have significant 

impact on school systems and community if the $23,000,000,000 

that we are so grateful for that the House has passed does not become a reality, because, as you know, school systems lag behind the 

general economy. We are going to have to wait for local real estate 

values to begin to increase, before assessment values begin to increase, because that is 80 percent of the revenue that most districts 

in America get; it is that local effort that is so important for us. 

So we really are looking really to be bridged to that point where 

we can begin to see a turnaround in local economies in terms of 

that real estate tax that will begin generating the revenues that 

will make districts whole. In the meantime, the concern is that we 

are going to begin doing irreparable damage to programs and services at the district level that have taken years to put in place. That 

if they go away, it will take years again to get back into, and it 

is going to affect this issue of equity, because the kids that are 

going to be hurt the most are the poor children of America. 

Mr. OBEY. Well, I think that the Recovery Act is not being given 

sufficient credit for jobs that have been retained, just as Mr. Cole 

pointed out yesterday that the action of President Bush in stabilizing the financial sector with that very unpopular, but nonetheless needed, Wall Street rescue package. Nobody here that I know 

of liked that Wall Street rescue package. We certainly did not like 

the people who caused the problem to be created in the first place. 

But when you have an epidemic, you do not just take care of people 

you like; you have to take care of everybody or the society still gets 

pretty doggone sick. And that is what I think President Bush was 

trying to do on that piece, and that is what we were trying to do 

with the stimulus package. 

Let me turn to the President’s budget. I voted for No Child Left 

Behind for two principle reasons. First of all, it was George Bush’s 

first major effort out of the box and I am old school, I guess, but 

I have assumed that we ought to try to give every president some 

help at the beginning of his term; and so that is what I did. 

Secondly, because I felt that we needed to have pressure for reform, pressure for accountability and evaluation, even though a lot 


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of us complained at the time about the rigidity and the specificity 

of that package. 

So I believe in the principle of trying to prod districts to higher 

levels of performance. But I think it has some perverse results. 

Mr. Van Roekel, you said you were a math teacher, so I am probably asking the wrong guy. [Laughter.] 

Mr. OBEY. But one of my frustrations with No Child is that it 

has such attention to math and reading, and it leaves history and 

civics behind. I think that is a danger to the Country, because with 

the collapse of the journalism industry, with the collapse of newspapers, the public is getting less and less material that educates 

them on a daily basis about how our system works and what the 

realities are in our society and yet we are also, I think, shortchanging history on the social sciences, and I think we are running 

a danger of creating an entire generation of societal illiterates in 

that sense. 

So I know you are a math teacher, I do not mean to knock mathematics, although it did scare the devil out of me when I was in 

school. 

Mr. VAN ROEKEL. As a math teacher, I agree with you 100 percent. I think it is an overemphasis, and all of those other subjects 

are absolutely critical, especially as we look at the skills and 

knowledge that are needed for the 21st century. And even as a 

math teacher, I can say that the overemphasis on the standardized 

tests did such harm to the teaching of mathematics. 

I visited a middle school and I saw a teacher with a very thick 

three-ring binder, and it was filled with worksheets that were all 

multiple choice; and she said that was what they had adopted as 

the math curriculum for sixth, seventh, and eighth graders. And it 

was all done in worksheets that were multiple choice because that 

would prepare students best for the test. I said, how in the world 

do you teach geometric concepts, direct or indirect proof, or coordinate geometry? How do you do that and only ask multiple choice 

questions? She said, well, we are focusing on that test. 

So it is not just the narrowing in the subject matter, but it is the 

narrowing of how you assess student learning and success. So that 

is one of the things that we really must change; that there ought 

to be multiple measures. And that does not mean three or four 

tests instead of one; it means multiple ways of measuring. When 

you are thinking about a student who is learning to write, to show 

demonstrations or examples of their work in first part of the year 

and the last part of the year, you will see dramatic differences. You 

cannot show that on a multiple choice test. 

So it is really critical that we identify the different ways of measuring student learning in a variety of ways. One of the reasons I 

believe NAPE scores have stalled is because when you look at all 

of the things they measure, we are not doing those things anymore; 

we are narrowing that curriculum. 

So as important as I know mathematics is,—I told that to my 

students all the time—knowing English grammar and doing well in 

mathematics just sets you up. No matter which test they give you, 

you are going to score well and open up possibilities. But as much 

as I believe that, I also know—and for my own children and my 

grandchildren, I want them to have that broad, broad expanse of 


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curriculum, because you do not know where the student’s passion 

lies. 

I am amazed at five-year-olds who have this incredible interest 

in space. Where did they get that? Why does this one have that 

and another one is so into music or athletics or whatever the subject may be? We need to find those passions and give them a broad, 

good, solid education, but also allow them to go their way of where 

their passion will be for the rest of their lives. 

Mr. OBEY. Well, there is such a need for public education or education about public affairs. I remember being in a classroom a few 

months ago with a State assemblyman and, I swear to God, half 

these kids could not have told the difference between a State assemblyman and a third baseman for the Chicago cubs. I mean, I 

was amazed at how little they understood about the basics. Admittedly, the Cubs are irrelevant most of the time. [Laughter.] 

Mr. OBEY. Go ahead. 

Mr. WILHOIT. Just to look at this from a lense at a State level, 

I applaud the Congress and the Administration for drawing attention to public education; we do need dramatic improvements. So 

the focus on each child, every child is really important and so the 

system has, at this point, paid more attention to all children. 

But I think NCLB was a good example of a wrong-headed kind 

of design, and by that I mean it was very prescriptive about how 

one would act at a State level, the kinds of procedures you would 

set up, the rules and regulations, and how it would be implemented 

at the local level. It was very, very loose on the outcomes expectations. And I think a good Federal law is very clear about those expectations, the accountability structure to be put in place, and leaving latitude for implementation and a bit of diversity and innovation as we move forward. 

I think, really, one of the—and there were limited opportunities 

for latitude in the law, and States took advantage of every one of 

those limited latitude opportunities. So we got into multiple disputes about calculation formula procedures rather than the really 

important issues about student learning. 

I think it really did hamper and limit the innovative States. So 

what I saw at a point when we began to ratchet up expectations 

for all States at a minimum level of performance, what happened 

in that process was a pulling down of those States that were leading reform in the Country, and I have seen a lack of that in the 

last few years. I will give you a couple of examples. 

As a commissioner, we had in our State a requirement that students would be exposed to the broad curriculum, including the arts, 

as a regular requirement of the program. When we went to NCOB, 

we were forced to give those up in our assessment system. They did 

not count. In our sense, if we had been able to hold on to that, we 

would have had a lot of development in the arts in terms of program opportunity across all the genre of arts, and we would have 

required that kind of development. It has lost its attention. 

Secondly, we were asked to turn the test around within just a 

month’s time frame, and it led us to the point of giving up really 

robust kind of assessment items that Dennis was talking about. We 

could not do portfolios any longer because we could not turn them 

around. We could not do the kinds of open response kinds of quesVerDate Mar 15 2010 09:09 Nov 16, 2010 Jkt 058234 PO 00000 Frm 00224 Fmt 6601 Sfmt 6602 E:\HR\OC\A234P2.XXX A234P2

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tions. We could not engage our questions in the process of making 

judgment against those because we had to give something, get it 

back in return for accountability purposes. 

So what we saw was a sort of ratcheting down of some of the innovative ideas that were coming forward. I hope in the next round, 

as we look at the blueprint, we look at how it plays out in ESEA 

reauthorization, that we hold on to the ideas about high accountability, clear structure, but allowing some latitude at the local and 

State level for implementation policy. 

Mr. OBEY. Just two last questions. First of all, to all of you who 

are supportive of the recovery package and who are trying to make 

the Congress understand what will happen if we do not provide additional help to school districts, I would just ask one favor. With 

all due respect to my friend, Mr. Honda, please do not use California as an example. [Laughter.] 

Mr. OBEY. Because, again, with all due respect, I know of no 

State that is more irresponsible in terms of its political structure. 

They require a two-thirds vote in order to get permission to leave 

the room, and they have amended their constitution 500 times. 

Every time they have a proposition, it is a great idea that spends 

money; they put money behind that proposition, it passes, but the 

propositions always neglect the question of how you are going to 

pay for it. So that squeezes out everything else in the base budget. 

So I think we need to be armed with more relevant statistics 

than the problems that are—I view many of California’s problems 

as being of their own making, so I would—I am not unsympathetic 

to people who live there, but they have to do something about their 

own political structure and fix that first. 

And then with respect to reform, I like to sail, but I would not, 

while the sailboat was sinking, be focused on putting another coat 

of varnish on the deck. And, to me, at a time when all school districts are in big trouble because of the economic situation in the 

Country, I think that to be focused as much as we are on the reform aspects of the Administration’s budget is a mistake. 

I might support what they are doing two years from now, when 

so many school districts are not drowning, but I was greatly disappointed to see that they tried to cut Title I last year in order to 

finance the reforms. This Committee stopped that, and I would 

hope that we would pay more attention to just keeping local school 

districts’ and local taxpayers’ head above water until the economy 

more fully recovers. 

Mr. Tiahrt, any last thoughts? 

Mr. TIAHRT. Yes, I have one request from Mr. Wilhoit. 

You talked about a consolidation process from 60–plus programs 

to 11. I went through your testimony; I really could not find much 

detail about that. Could you provide us with the detail? And you 

talked about removing some of the layers and not just compressing 

them to 11 programs from 62, so I would find that interesting. 

Mr. WILHOIT. I would be pleased to that. 

Mr. TIAHRT. Thank you. 

Mr. OBEY. Mr. Honda, any last comments? 

Mr. HONDA. Yes. Thank you very much. Just a real quick comment about the role of the Federal Government and the role of 

States in terms of education as defined back in 1787. This is 2010, 


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going on 2011. It seems like we should probably step back again 

and redefine what our role is again, because since we are well developed now as a Nation, funding barriers to equity seems should 

be a shared thing if we believe in equity and civil rights for each 

person. And that may take a massive national effort for us to sit 

down and starting to talk very seriously about this; otherwise, we 

should end up suing ourselves. 

But I know that this Country can do it. When we identify a national crisis, we sometimes forget about the costs; just move ahead 

and solve the problem. I do not think we can do it this way with 

education; we have to be thoughtful and very, very analytical and 

looking at what it is and what we need to do, and then recognize 

those barriers. 

And I would end with this, that somewhere along the line our 

schools will have to challenging local government in how our 

schools are created and how communities are created, because 

what we learned from deseg was that schools reflect the neighborhoods they come from. If we know that, there is one major area 

major area that we should be looking at. 

Thank you, Mr. Chairman. 

Mr. OBEY. Mr. Cole. 

Mr. COLE. Thank you, Mr. Chairman. I always find this the most 

frustrating. I say this as a former educator. I used to say, when I 

was a college prof and you deal with higher education, that the bad 

thing about smart people is they make everything complicated; otherwise, what good is it to be smart. [Laughter.] 

Mr. COLE. And there is a lot of that that goes on. So I want to 

throw out one clay pigeon here, because I am very bothered by— 

I was at Aspen Institute, one of our seminars last year that really 

concerned me. They were looking at high school graduation rates 

and student performance historically, insofar as you can even judge 

that; and we were about where we have always been, which at one 

point was the best of the world. If you are my age, you really are 

a member of the best educated cohort in the world. If you are my 

son’s age, in his twenties, he is about eighth or ninth. 

So it was not so much that we had changed. Frankly, the argument would be, in terms of outcomes, we really had not changed 

very much at all. We were not worse than we had been; we were 

about where we were. Other people had moved pretty dramatically 

ahead of us. 

And one of the reasons, and certainly not the only one—I am 

quite familiar with all the complexities. You have to have parents 

that care. Not every kid gets to start at the same place, from the 

same neighborhood, from the same funding base, et cetera. But one 

of the common themes in the groups and other countries that seem 

to be outperforming us was simply time on task. You know, they 

actually were in school longer every day, and they were in school 

more every year. 

How much could we do just by looking at that problem? Because 

I think it is very hard for us to do lots of small things, but providing money that extended the school year—and I am not saying 

do this for free—and put students in school longer, I would just be 

interested in knowing your opinion as to how helpful that would 

be, or is that another one of these sort of one idea panaceas? 


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Mr. DOMENECH. Time on task is one of the secret ingredients behind education. I think it is common sense. The more that a child 

has the ability to be exposed to good learning and instruction, the 

more that the children will learn. That is why many of us have 

moved to year-round schooling. That is why many of us have 

moved to expand the school day. 

The problem is that it is expensive. It is expensive to do. It is 

one of those resources. And, unfortunately, what we see happening 

in this economy is a move in the other direction. The number of 

districts now that are going to four days of school, as opposed to 

five days of school, the number of districts that are cutting back 

on the length of the school day or eliminating summer school, 

eliminating after-school programs. 

Mr. COLE. Let me just add, and I would like you to respond to 

this real quickly because I am abusing my time here. 

Remember, too, the other thing I would add, I mean, resourcewise, we can always do more. Okay? I accept that. We do more 

than anybody else in the world on a per kid basis, pretty much. So 

there has to be some efficiencies in here as well with additional 

money. We clearly are not running this system as efficiently as 

other people if you just look at dollars behind kids, behind teachers, behind administrative structures. 

Ms. WEINGARTEN. So we are in favor of more time on task. We 

have to figure out, as everyone on the panel said, we have to make 

sure that we are not just doing more of the same. The engagement 

for children is very important in terms of how we engage kids in 

a robust, broad curriculum, so that we take them where they are, 

not where we want them to be. 

But the other thing that is interesting about the international 

comparisons, particularly the two countries that do very, very well 

compared to us, Japan and Finland, is that Japan actually has less 

time in instructional endeavors of teachers and children. But what 

they have, both in Japan and Finland, is more time that teachers 

work with each other to differentiate instruction. So that teachers 

are spending more time in school with each other, but they are 

polishing the stone, they are making sure that they are instructing 

in a much deeper way. 

So there is much more R&D in these countries that we compete 

with that have outflanked us than we have here. 

Mr. VAN ROEKEL. I will quickly echo that. We have learned in 

the charter sector that more time on the same model will simply 

give you more of the same, and that more time has to be accompanied by giving more flexibility to the educators in the school to 

use that time better, to provide a richer curriculum, to set higher 

expectations. You have to do both. 

Mr. COLE. Thank you, Mr. Chairman. 

Mr. OBEY. I guess I would simply say that in my district I have 

been a strong supporter of after-school programs for a variety of 

reasons, but one because it does help to provide some additional 

enriching experiences for kids. It does give them more time and 

some of them do a better job than others. But I have been impressed by how much more of an academic focus those programs 

have now versus what they had before when they started out as 


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field trip heavens, you know, five or six years ago, and they have 

become much more rigorous. 

The other point I would simply make, going back to the reform— 

and I mentioned this yesterday—we are not just talking about 

problems at K through 12; we are also talking about what happens 

to kids when they graduate from high school. And the most appalling statistic I know is this one: among students who scored in the 

top quarter on eighth grade math tests, a child of a wealthy family 

graduated from college 74 percent of the time; while the child who 

came from a poor family graduated only 29 percent of the time, 

even though they had demonstrated the same ability. That is an 

appalling result for all the money that we are spending. 

Thank you very much. I appreciate it. 


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THURSDAY, MARCH 25, 2010. 

FY2011 BUDGET OVERVIEW: JOBS, TRAINING, AND 

EDUCATION 

WITNESSES 

JANE OATES, ASSISTANT SECRETARY FOR EMPLOYMENT AND TRAINING, U.S. DEPARTMENT OF LABOR 

RAYMOND JEFFERSON, ASSISTANT SECRETARY FOR VETERANS’ EMPLOYMENT AND TRAINING SERVICES, U.S. DEPARTMENT OF LABOR 

MARTHA KANTER, UNDER SECRETARY, U.S. DEPARTMENT OF EDUCATION 

ALEXA POSNY, ASSISTANT SECRETARY FOR SPECIAL EDUCATION AND 

REHABILITATION SERVICES, U.S. DEPARTMENT OF EDUCATION 

OPENING STATEMENT

Mr. OBEY. Well, good morning, everybody. 

Today, this subcommittee will focus on challenges in this difficult 

job market, especially the challenge of training and educating our 

workforce for a high-skilled career path in the new economy. 

This really is a rescheduled hearing. We got discombobulated 

and had to cancel. And I hope that we don’t get hit with too many 

roll-calls that will screw up the hearing this morning, but that is 

the normal condition up here this time of year. 

According to the Bureau of Labor Statistics, the most substantial 

job growth over the next decade will be in careers that require associate degrees or a vocational certification, including health care, 

high-tech manufacturing, and clean energy. In my home State of 

Wisconsin, half of all job growth in the next decade is expected to 

involve jobs that require more than a high school education but 

less than a bachelor’s degree. 

The Labor Department’s job training programs have an important role to play in helping workers to get the training and skills 

they need to get those jobs as they become available. We need to 

be making sure that any business looking to expand has as little 

trouble as possible in locating highly qualified workers right here 

in the United States to meet its needs. 

That is one reason we included approximately $4,000,000,000 in 

the Recovery Act for job training, effectively doubling the resources 

available to local workforce agencies. This investment has enabled 

a record number of unemployed and disadvantaged workers to 

enter job training programs so that, as our economy continues to 

recover, more American workers have the necessary skills to drive 

sustainable economic growth while sharing fairly in the benefits. 

That means that job training is a key tool for addressing the 

longer-term stagnation of wages and living standards that have 

plagued the middle class. 


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As I have mentioned frequently, and I am sure Members of the 

subcommittee may be getting sick of hearing me say it, but as I 

have said in the past, the earnings disparity between the wealthiest workers and the middle class has been growing for three decades. Since 1979, real median income has grown by less than onehalf of 1 percent. More recently, between the late 1990s and mid 

2000s, incomes from the top fifth of families grew by over 9 percent, incomes from the middle fifth of families grew by a little over 

1 percent, and incomes for the bottom fifth declined by over 2 percent. 

One tool for addressing these disparities is better job training. It 

is not the entire solution, by any means, but it can be part of the 

solution. Study after study has shown a direct link between job 

training and increased long-term earnings, boosting living standards for middle-class American families. That is also true about 

education. 

One of the most important links between our education and job 

training is our network of community colleges. More than a third 

of individuals receiving job training through the Workforce Investment Act are served by community colleges. And studies have repeatedly shown that those individuals with a year or 2 of post-secondary education earn higher wages than their counterparts with 

only a high school education. 

Which leads me to Pell Grants. As college tuition continues to 

rise, Pell Grants are a necessary lifeline for modest-income students to continue their education. Nearly 80 percent of high-income 

students attend college immediately after high school, compared 

with a little over 50 percent of low-income students. That is not a 

level playing field. It is not fair to the individuals; it is not healthy 

for the country. Pell Grants are pivotal to closing the college opportunity gap for low- and middle-income students. 

In fact, when I became chairman, the maximum Pell Grant 

award had been frozen since 2003. Both parties have congratulated 

themselves repeatedly on how much we have done for Pell Grants 

through the years, but the fact is that when the Pell Grants first 

started back in the 1970s, they paid for over 70 percent of the cost 

of a 4-year college education; today they pay for less than 40 percent. So before either party gets all too excited about the wondrous 

job that we have done on Pell Grants, they need to understand that 

there is a long way to go before we match our performance with 

rhetoric on that front. 

I know that today’s witnesses are actively engaged in addressing 

some of these issues, and I look forward to hearing the testimony 

this morning. This morning’s panel includes senior officials of the 

Labor and Education Departments who have responsibility for jobrelated training and education. 

From the Labor Department, we have Jane Oates, who is the Assistant Secretary for the Employment and Training Administration, and Ray Jefferson, Assistant Secretary for Veterans’ Employment and Training Services. From the Education Department, our 

first witness will be Martha Kanter, who is the Under Secretary 

and who has responsibility for career and adult education and 

higher education. Also, we have Alexa Posny, who is the Assistant 

Secretary for Special Education and Rehabilitation. 


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I will ask our witnesses to summarize their remarks in 5 or 10 

minutes, and we will place the entire written statement of all of 

you in the record. 

But, first, I would yield to Mr. Tiahrt for whatever comments he 

might have. 

Mr. TIAHRT. Thank you, Mr. Chairman. 

And welcome, panel. And a special welcome to Alexa, who is a 

fellow Kansan. 

Ms. POSNY. That is correct. 

Mr. TIAHRT. Good to see you again. 

Mr. OBEY. Now, wait a minute. I thought she was originally from 

Wisconsin. 

Ms. POSNY. I am. 

Mr. TIAHRT. Mr. Chairman, if you drive down I–70, we claim you. 

Well, thank you, Mr. Chairman. I want to thank our witnesses, 

as well. 

And with unemployment hovering around 10 percent and the 

prospects of a jobless economic recovery on the horizon, I think 

there is a cause for some concern. I am reminded about an episode 

of the ‘‘West Wing’’ television series where Alan Alda’s character is 

being asked in a debate how many jobs he would create as President. ‘‘None,’’ he replied. ‘‘Entrepreneurs create jobs. Businesses 

create jobs. The President’s job is to get out of the way.’’ 

The government does not create wealth. And, in the long term, 

the government does not create jobs. What really creates jobs is the 

creation of wealth. And as a byproduct of the creation of wealth, 

jobs result in that process. What government can do is create opportunity, and it does by fostering an atmosphere that is conductive to the private-sector innovation. Specifically, government can 

get out the way, and by that I mean by lower taxes, reducing burdensome regulations, rewarding entrepreneurial behaviorship, and 

becoming energy-independent. 

I would argue that a jobless recovery is what we are seeing right 

now, and it is a product of what we have seen over the last 2 years. 

While I agree with the chairman’s comment before the Secretary of 

Labor that job loss has slowed—and that is good news—the nearly 

$800,000,000,000 spending spree we call the American Recovery 

and Reinvestment Act not only missed its intended mark to create 

jobs, it has piled another $300,000,000,000 in interest payments on 

to the American taxpayer. 

The reality is that much of the bill was not stimulus, and whatever part can be argued was stimulus has largely run its course. 

However, all that money now has to be paid back, which will create 

more of a drag on the recovery of jobs than it has in the stimulus 

in the first place. 

For my part, I would say that if we are serious about putting 

adults back to work—and I think everybody in this room is serious 

about that—we need to stop throwing good money after bad by 

growing government programs that are unlikely to have the impact 

and start focusing our efforts on creating an environment that will 

create opportunity and spur private-sector growth. 

Thank you, Mr. Chairman. 

Mr. OBEY. Thank you. 


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Why don’t we begin with you and just run the table and see what 

happens? 

EMPLOYMENT AND TRAINING ADMINISTRATION

Ms. OATES. Thank you, Mr. Chairman, for this opportunity. And, 

Mr. Tiahrt, as the ranking member, thank you for this opportunity 

to come before you to testify on our fiscal 2011 budget at the Employment and Training Administration. 

As the ranking member said, we are in challenging economic 

times, and job creation is critical to our recovery. And we think, at 

ETA, that having the best-prepared skilled workforce is something 

that we can do to impact the acceleration of the recovery. The overall fiscal year 2011 budget for ETA is $12,800,000,000, of which $10,900,000,000 supports discretionary programs and 

$1,900,000,000 is for mandatory programs. 

The 2011 budget request is guided by Secretary Solis’s vision of 

‘‘Good Jobs for Everyone’’. To make this vision a reality, individuals 

must have the skills and education necessary to compete for the 

good jobs of today and of the future to help them stay in the middle 

class or enter the middle class. 

Therefore, the request and its proposed initiatives will support 

transformational efforts to improve the effectiveness of the public 

workforce system. It will build upon both the $4,700,000,000 investment in the Recovery Act, Congressman Obey, that you mentioned and the appropriations that you provide to us every year, including fiscal year 2010. It will focus on helping job seekers gain 

portable, industry-recognized credentials and degrees and to leverage partnerships to align education and training programs at the 

Federal, State, and local levels. 

And I might say to this Committee that, in this administration, 

we are actively doing that alignment at the Federal level. It is one 

of the things that we are most proud of. And we really are thankful 

that you allowed us to testify together. We wish that our other 

friends were here from HHS, as well. We mean partnership. 

PARTNERSHIPS

The Department of Labor is working collaboratively with our 

Federal agencies. You see Education here. We have done wonderful 

work with them, coming together on the Workforce Investment Act; 

coming together to align the kinds of strategies that help adult 

learners—adult learners who are older workers, adult learners who 

are dislocated in their 30s, and adult learners who face other barriers. 

And we are specifically looking to target those populations that 

have been persistently at the bottom of the rung. They have persistently been unemployed, recession or good times. And we need 

to find the strategies that work for them. 

Not only have we worked with Education—and we are going to 

do more of that—we have also worked in partnership with our 

friends at HHS. You may have seen the guidelines that we have 

put out allowing TANF subsidy money to be used for summer 

youth and for our system, the public workforce system, to make 

sure they don’t have to create redundant programs for either recruitment or placement as well as resume-building and the soft 


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skills. Those TANF recipients who are going to use the subsidy 

money should be able to come in seamlessly and use our one-stops 

so that they can get the help that they need to find the good jobs 

and maybe be retained in those jobs after the subsidy is over. 

And we have worked with Ag, USDA, an unlikely partner, to 

make sure that every unemployed person knows if they are available for food stamps, for the SNAP program. We think that many 

people in this recession have not been accustomed to using Federal 

programs. We want to make sure that no unemployed worker and 

their family go without food when the food stamp program is there. 

We are also very excited about the work that we have begun 

with Commerce and SBA. Because, as all of you realize, we don’t 

create jobs either, and if we are working through our one-stops 

with the Small Business Administration, through Import-Export 

Bank, and through our friends at Commerce, our one-stops can provide small- and medium-sized businesses access to government 

services that they may not have had before. 

RECOVERY ACT INVESTMENTS

Our 2011 request will help the ETA programs build on our partnerships and our Recovery Act investments and also help us address some training needs that have become apparent over the last 

year. Secretary Solis has gone over a lot of those investments with 

you, so I won’t bore you with that in my oral testimony, but I am 

happy to take questions on that. 

I do want to talk a little bit about our recovery money. The $720,000,000 that we put out through competitive grants created 

an unusual response. I am sure the Secretary reported to you that 

we had thousands of applications in the five programs that we ran, 

incredibly high-quality applicants, and were only able to fund a 

fraction of applicants. 

PATHWAYS OUT OF POVERTY

One of the things that I am most proud of is that, in our Pathways Out of Poverty grants, we were able to target PUMAs (Public 

Use Microdata Areas) you know, a word that didn’t mean anything 

to me before. When someone first brought it up to me, I thought 

they were talking about the African cat, and that was not what 

they were talking about. Instead, it is a census track that targets 

poverty levels. Fifteen percent or more of the population in that 

PUMA are at the poverty level. That is something that helps us get 

to those disadvantaged workers, who have been lost in our grants 

sometimes in the past. 

We will continue to work with you to figure out innovative ways 

that we can do better at reaching the people that we haven’t been 

able to reach. We think that partnerships, not only the ones at the 

Federal level but our close partnerships with Governors, with local 

elected officials, with our good friends at all of the associations, to 

figure out how do we get them the technical assistance that we 

need. We need help in figuring out, not just doing more of the 

same, but doing better, more efficiently, and more effectively. 

And, with that, I will turn it back to you, Mr. Chairman, and 

wait for your questions. Thank you. 

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Mr. OBEY. Thank you. 

Mr. Jefferson. 

VETS

Mr. JEFFERSON. Thank you, Mr. Chairman, Ranking Member 

Tiahrt, distinguished members of this subcommittee. 

About 2 weeks ago, I had the privilege of meeting some of our 

Nation’s World War II survivors at an Honor Flight landing at National Airport. I shook the hand of a Pearl Harbor survivor. It was 

an inspiring example of the privilege we have at VETS to serve 

this inspiring community and the importance of providing them 

with the very best possible programs and services. And I am honored to be here testifying before you today with my colleagues at 

Labor and other government agencies. 

VETS proudly serves the veterans and transitioning service 

members by preparing and assisting them to obtain meaningful careers, to maximize their employment opportunities, and to protect 

their employment rights. And we do that in partnership—in partnership with Congress, by working very closely with the Department of Veterans Affairs, Department of Defense, Housing and 

Urban Development, HHS, other government agencies, our veterans service organizations, the nonprofits, and the private sector. 

Our programs are an integral part of Secretary Solis’s vision of 

‘‘Good Jobs for Everyone’’ and of keeping veterans and their families in the middle class. For fiscal year 2011, the Department is requesting our budget of $262,494,000 for VETS. That is an increase 

of 2.4 percent above the fiscal year 2010 budget. 

Three words symbolize the approach that we are taking to our 

programs: excellence, innovation, and transformation. I would like 

to share six examples of how we are doing that at VETS. 

UNEMPLOYED VETERANS

First, to help our Nation’s unemployed veterans, we fund 2,000 

employment representatives around America. These employment 

representatives work with our unemployed veterans to prepare 

them to find meaningful careers and provide them with training 

and services. However, we are not satisfied with how this program 

currently works, and we are presently innovating it. Three examples of that innovation are as follows: 

Number one, we are refocusing our Disabled Veteran Outreach 

Program specialists on serving the disabled veterans. This population is one of the hardest to employ, and we are going to focus 

them specifically on that community. 

Number two, our local veterans employment representatives are 

going to be doing more employer outreach. And a key part of that 

is a new employer outreach and engagement initiative that we are 

launching. We are working with the largest private-sector associations to open up the doors to their members so our State directors 

and our local veterans employment representatives have access to 

those CEOs and senior executives and can communicate directly to 

them the value of hiring a veteran. 

And, finally, through our partnership with Jane Oates, we are 

ensuring that veterans have priority of service in all Department 

of Labor programs, number one. 


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TRANSITION ASSISTANCE

Number two, we are working to help and better serve our Nation’s transitioning service members. We have a 3-day employment 

workshop called TAP, Transition Assistance Program. I am really 

focusing on that becoming an acceleration program. 

Right now, it is 240 slides over a 3-day period. You can imagine 

how exciting that is. For the first time in 17 years, we are transforming that program. We are making it more economically relevant, immediately useful, and engaging for the service members 

who go through it. 

We have reached out to leadership experts, from Harvard to the 

private sector, to bring in transition best practices, such as stress 

resiliency training; mental health stress-reduction techniques; templates; career and life and work planning; how to develop one’s network and how to actively succeed once you are in a career; how to 

transition to a civilian environment. 

So, transforming that TAP program is a second example of what 

we do. We serve roughly 142,000 of the 165,000 transitioning service members through that program right now. And because of the 

importance of that program, in our fiscal year 2011 budget we have 

a separate budget activity for that. 

We have also requested an increase of $1,000,000 to emphasize 

spouses. Spouses have access to this program. Right now, the vast 

majority do not know that. We want to make sure they are aware 

that they have access to this program to increase military spousal 

employment and also to provide the training in languages other 

than English. 

Number three, helping our Nation’s homeless veterans. We have 

the Homeless Veterans’ Reintegration Program. It is the only federally funded program that provides employment services for homeless veterans. 

Right now, this year, we are serving about 21,000 people. One of 

our metrics, the entered employment rate, we are at 67 percent. 

We provide 6 months of ongoing support once they find a job. Our 

retention rate is roughly 80 percent. 

But we are still not satisfied with that. We are going to take 

$5,000,000 of the 2011 requested increase and we are going to use 

it to identify the best practices to better serve homeless women veterans. It is a totally different model of what is required to serve 

this population. We are going to identify the best practices this 

year, do funding of about 25 grantees, and embed and disseminate 

those best practices next year. 

Number four, to help our Nation’s incarcerated veterans, we are going to take $4,000,000 of our requested increase for 2011 and 

serve about 1,500 incarcerated veterans through 12 sites. This is 

one of the hardest populations to serve. As you know, there is a 

tremendous risk of them becoming homeless and also returning to 

jail. We want to prevent that. And we are working very closely 

with the Department of Veterans Affairs on that initiative. 

Finally, for all of our Nation’s veterans, we want to continue preparing them for what is called traditional industries and traditional careers, but we want to also prepare them for industries of 

the future and green jobs. So we, through our Veterans’ Workforce 


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Investment Program, have requested an increase of $2,000,000 to 

that, and we expect to serve 4,600 veterans with our fiscal year 

2011 budget. 

We are honored to be here. We are very excited about what we 

are doing at VETS. And We have a long ways to go, but we feel 

we are making significant progress. 

And I look forward to your questions. 

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Mr. OBEY. Thank you. 

Ms. Kanter. 

OPENING STATEMENT OF MARTHA KANTER

Ms. KANTER. Thank you, Chairman Obey and Ranking Member 

Tiahrt. I am delighted to be here. 

Let me talk about several elements of the President’s proposed 

fiscal year 2011 budget that will leverage the educational resources 

that we have through the States and our local communities to 

move America toward social and economic prosperity. 

PRESIDENT OBAMA’S GOAL FOR 2020

Investing in education is more important than ever. When I step 

back and recall what President Obama said in April, his goal is 

that by 2020 we will have the best educated, most competitive 

workforce in the world. 

When I look at all of the things we are doing, whether it is Pell 

Grants, Public Service Loan Forgiveness, the programs in the Reconciliation Act, the programs for historically black colleges and universities and other minority-serving institutions, and the program 

for community colleges hopefully through the TAA—Trade Adjustment Assistance—when taken together, will contribute toward 

reaching the President’s 2020 goal. 

HIGHER EDUCATION AND THE WORKFORCE

We are expecting somewhere between 10 million and 13 million 

more undergraduates to enroll in higher education. We need them 

to be well-trained. We need to give them opportunities to obtain 

the jobs that are going to be available. We are working very closely 

with the Department of Labor. Since I came in July, Jane Oates 

and I have had many meetings. We are really trying to think this 

through carefully. 

SPECIAL POPULATIONS AND THE WORKFORCE

Alexa Posny, on my other side, is very attentive to special populations, especially people with disabilities, veterans, especially disabled veterans, and homeless veterans. We are discussing how we 

can map Education and Department of Labor resources to serve 

those most needy populations in our country. 

ELEMENTARY AND SECONDARY EDUCATION

The backdrop of higher education obviously rests in early learning and K–12. We have 27 percent of students not graduating from 

high school. Across the urban parts and some of the rural parts of 

America, the rates are much higher. We look at those students who 

could and should graduate. We want to put in place all of the work 

that Secretary Duncan told you about last week and let that serve 

as the foundation. 

When you have kids who are not ready for kindergarten, 25 percent of children, especially those from the poorest families, who 

aren’t ready for kindergarten, the result is the 4th-grade reading 

scores that were released from NAEP this week. I think you, 

Chairman Obey, showed the chart last week that shows what hapVerDate Mar 15 2010 09:09 Nov 16, 2010 Jkt 058234 PO 00000 Frm 00256 Fmt 6601 Sfmt 6602 E:\HR\OC\A234P2.XXX A234P2

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pens with the disparity between wealthy and poor, the opportunities for young people and how they do and don’t have access. 

PELL GRANTS

The Pell Grant is central to this. It gives families of young children the hope that there will be a college slot ready for them. I 

know at Foothill-De Anza Community College District, where I was 

chancellor for many years and president, we had a program called 

KinderCaminata that distributed diplomas to graduating kindergarten children. We did this to educate the parents, many of whom 

didn’t speak the language as I am speaking it, many of whom are 

from poor families, many of whom are from under-represented 

groups in K–12 as well as in higher education—and those groups 

are becoming the majority of our country. 

It is very important for us to have a vision, which is the President’s goal and your efforts, to save jobs through ARRA—the American Recovery and Reinvestment Act. We are grateful for that, but 

to have Pell Grants as a centerpiece of opportunity for American 

families is critical to our success. This also drives much of the partnership between the Department of Labor and Education so that 

we can have opportunities for both education and training for 

Americans who need it so much. 

We know that there is a shortfall in the Pell Grants program. We 

are working very closely with OMB—the Office of Management and 

Budget—through our budget office to find solutions and work with 

Congress to meet that shortfall. Students, as you have seen, are 

knocking down our doors. I met with over 500 students this week 

on the National Mall, who may be coming here to tell you their stories. 

It was all about Pell. I asked them, do you know about the Public 

Service Loan Forgiveness? I said, those are some new provisions in 

the Reconciliation Act that are going to keep college more affordable. If you want to become a police officer in a community college 

or you want to get workforce training through a one-stop shop and 

become an energy management technician, all of those resources 

are going to be available. And we want to get you into not only the 

private sector but into public-sector opportunities. 

COLLEGE ACCESS GRANTS

We are excited that the Reconciliation Act is hopefully going to 

double funding for college access grants. This will allow outreach 

to those families I talked about, to let students know that college 

will be there for them, as well as workforce training opportunities 

that are tied to the work being done in internships and apprenticeships. 

CAREER AND TECHNICAL EDUCATION TRAINING

We have a number of new programs that have been in place with 

unions and other organizations. For example, at the University of 

Texas at Brownsville, Texas Southmost College has a partnership 

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ship, move on to journeyman, all the while getting their 2-year and 

4-year degrees. It is this kind of innovative partnership that we are 

hoping to leverage with the Department of Labor if funds become 

available in the Reconciliation Act. 

REAUTHORIZATION OF THE WORKFORCE INVESTMENT ACT

When I step back and look at the big picture, we have more than 

90 million adults with low skills and who have not had access to 

college. We are just at the beginning with our workforce career and 

technical education training. We are serving about 2.4 million 

adults. So we have, as you said, Chairman Obey, a long way to go 

with all of this, but we have to reach more Americans. And that 

is why we are doing so much work to reform Title II of the Workforce Investment Act, to figure out how we can assess and provide 

eligibility to individuals who didn’t have the opportunity. 

We are very much committed, with these funds, to advance career ladders for people, so that education and training are both the 

opportunity and the expectation. Education, training and workforce 

planning should be a coordinated system. People need jobs to live, 

and they need education to get the jobs and further advance. This 

is a very critical philosophy. We should not be preparing students 

for careers or for education; we should be preparing them for life. 

Students need both education in a lifelong context and training at 

different times in their lives so they can move up the ladder. 

You can train someone for 40 hours a week to be a solar-panel 

installer, but maybe that person could be an energy management 

technician. Maybe that person might want to have an opportunity 

to get a baccalaureate degree and go into climate science. We 

should leave those opportunities open for people to make the 

choices they need and have ‘‘family-sustaining wages’’ to move forward as the economy recovers. 

COLLEGE- AND CAREER-READY STANDARDS PROGRAM

The Administration has requested $14.5 billion, as you heard 

from Secretary Duncan, for the College- and Career-Ready Standards Program. We want students ready for college and career when 

they graduate from high school. This is a generational agenda. The 

States have come forward to say, we need to raise our standards, 

but we need to also look at a growth model so that we know students have the skills they need to be ready for college. 

We don’t want to divorce higher education from K–12. In fact, we 

want to have stronger connections there. We also want to look at 

early learning as a part of that connection, so that, for example, 

the community colleges and 4-year schools will train the child care 

providers, provide baccalaureate degrees for entry-level programs 

and Head Start programs. We should look at this as a continuum, 

which I think will be very important to our success. 

We have been working, as Jane said, with the Department of 

Labor, but we have also been working with the Department of Energy, the Department of Health and Human Services, and the Regional Innovation Clusters effort that you have supported to have 

the education components really embedded in these career opportunities for people. 


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I look forward to answering all your questions and I appreciate 

your having me to this committee. 

[Prepared statement of Under Secretary Kanter follows:] 


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Mr. OBEY. Thank you. 

Ms. Posny. 

OPENING STATEMENT OF ALEXA POSNY

Ms. POSNY. Thank you very much. 

Chairman Obey and Ranking Member Tiahrt, I just want to clarify for the record, I was born and raised and lived in Wisconsin for 

33 years and have had the great opportunity to be in Kansas for 

the last 22. So, know that I split my—— 

Mr. OBEY. It sounds like Wrong Way Corrigan to me. 

Ms. POSNY. Badgers and Jayhawks and everything else, they are 

equal, believe me. 

Mr. TIAHRT. She likes warm weather. 

Ms. POSNY. Thank you very much for this opportunity to talk 

with you on behalf of the 2011 budget. 

Ensuring that people with disabilities have access to a high-quality education and then the career and vocational development services they need for participation in our economy are top priorities, 

not only for us in our Administration but I know it is for all of you, 

as well. 

AMERICAN RECOVERY AND REINVESTMENT ACT

Our 2011 request will build on the work that has been currently 

supported by the American Recovery and Reinvestment Act— 

ARRA. Under the ARRA funds, States and LEAs have received an 

unprecedented amount, $12.2 billion, for special education programs under IDEA—the Individuals for Disabilities Education 

Act—and an additional $680 million for vocational rehabilitation 

and independent-living services. 

In terms of how some of those dollars were spent, for IDEA, 

States used the funds to pay for the salaries of over 50,000 personnel. For vocational rehabilitation—VR, the funds were used to 

serve almost 39,000 consumers and assisted 1,800 of them achieve 

competitive employment. And approximately 27,000 of our consumers have been removed from our waiting lists. 

In Wisconsin, some of the VR funds were used to offset 50 percent of individuals with disabilities in terms of their salaries and 

benefits for their first 90 days of employment while the employees 

were getting up to speed. 

In Kansas, Wichita has a great example of how the funds were 

used, and it is now being replicated in several other districts. The 

Wichita public school district provided students with disabilities 

work experience in real jobs for real pay, and the VR counselors 

were assigned full-time to each high school. 

SPECIAL EDUCATION GRANTS TO STATES

We know that a strong educational foundation, as Martha said, 

for youth with disabilities leads to better career and employment 

opportunities. It is absolutely a must. So, therefore, our 2011 budget request contains $11.8 billion for special education grants to 

States. This is an increase of $250 million serving, over 6 million 

students across the United States ages 3 through 21. This level of 

funding maintains the excess cost of special education at approxiVerDate Mar 15 2010 09:09 Nov 16, 2010 Jkt 058234 PO 00000 Frm 00265 Fmt 6601 Sfmt 6602 E:\HR\OC\A234P2.XXX A234P2

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mately 17 percent or the national average per pupil expenditure, 

and provides an estimated average of $1,750 per student. 

VOCATIONAL REHABILITATION STATE GRANTS PROGRAM

We are also requesting $3.6 billion to support rehabilitation and 

independent-living services. 

The State-Federal program of vocational rehabilitation, a Workforce Investment Act partner program, is the flagship program for 

providing job training and employment to individuals with disabilities. The VR program is a ‘‘go-to’’ agency within a local workforce 

system to which clients with special disability-related needs are referred to from other partner programs. 

What has been achieved so far? Over 2 million individuals with 

disabilities have achieved employment through the VR program 

over the last 10 years. This is almost 200,000 individuals who are 

gainfully employed each year. And the VR State Grants Program 

currently serves approximately 1 million customers each year. 

We know that we have to raise our expectations for our customers and counselors alike and focus our resources on helping individuals with disabilities attain high-quality employment and careers that will lead to self-sufficiency, not just to jobs, but so that 

they can sustain themselves. 

We are committed to working with our Workforce Investment Act 

partners to ensure that individuals who do not need the comprehensiveness of the VR program still have access to appropriate 

services through our WIA one-stop partners. 

We also know that a major emphasis on our level, in terms of 

K–12, should focus on transition planning for students with disabilities as they move towards postsecondary education, training, and 

employment. VR agencies play a major role in this endeavor, as 

nearly 22 percent of our transition-age youth received postsecondary education as a service under the VR program in 2008 and 

over 65,000 achieved employment outcomes. 

NATIONAL ACTIVITIES AND THE WORKFORCE INNOVATION FUND

I am really excited, as has been referred to, about a request for 

$30 million to support a Workforce Innovation Fund. Combined 

with $30 million requested under the Adult Education National 

Leadership Activities to support a partnership with our colleagues 

at the Department of Labor, this project will serve to support and 

validate effective strategies for improving service delivery and outcomes for individuals served under WIA. 

SUPPORTED EMPLOYMENT FOR YOUTH WITH SIGNIFICANT DISABILITIES

Additionally, we have asked for $25 million for discretionary 

grants that would be awarded on a competitive basis. This would 

expand supported employment opportunities that allow us to extend the support that some of our people with the most significant 

disabilities require in order to stay on the job and be retained in 

employment. 


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CONCLUSION

In closing, I just want to thank you for continuing to support the 

critical services and programs that have enabled millions of children and adults with disabilities to not only learn but also to be 

gainfully employed. Our culture and economy are stronger when 

the diverse talents of people with disabilities are developed through 

education and training and used in the workforce. 

Thank you very much. 

[Prepared statement of Assistant Secretary Posny follows:] 


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Mr. OBEY. Thank you. 

Mr. Tiahrt. 

Mr. TIAHRT. Thank you, Mr. Chairman. 

I can tell you are very passionate about your work, and I appreciate that very much. 

CARRYOVER

In my opening remarks, I said that the government doesn’t create wealth but it can create opportunity. And I have to say that 

the programs on employment and training at the Department of 

Labor provide many Americans with opportunity. But, as appropriators, we have to make sure we follow the money and are accountable for this budget. 

The fiscal year 2009 carryover was about $1,400,000,000. Now, 

some of that, $500,000,000, was stimulus money. The fiscal year 

2010 carryover was about $544,000,000, as an estimate. And the 

estimate on fiscal year 2011 carryover is about $574,000,000. 

So, if we look at the fiscal year 2010 budget, the current budget 

year, because of the carryover, $5,400,000,000 is available for fiscal 

year 2010. And you expect the end of the year to be $4,200,000,000. 

That is a $1,200,000,000 difference. And I think we are still spending 2007 money and some 2008 money, fiscal years, and we are 

running a 3-year revolving balance of about $1,000,000,000. 

Can you explain, Ms. Oates, how come such a large balance carryover is required? 

Ms. OATES. Congressman, I will try. 

First of all, the Workforce Investment Act, which governs these 

appropriations, is a complicated Act. Local areas are given 2 years 

to expend their appropriated yearly money, and then the third year 

it is recaptured by the State and can be redistributed or used for 

statewide activities. 

So the expectation in the underlying authorization is not to 

spend out every year. It is to do longer-term planning. That may 

be revisited when the Act is reauthorized. And I share no good or 

bad with that. 

I do want to explain one thing about where locals are going, not 

only in your State, in Kansas, but nationwide. They are moving toward longer-term training. And that creates a battle that has been 

going on since the day after this bill was passed in 1998, the battle 

of obligated versus expended. 

OBLIGATED VERSUS EXPENDED

Let me give a very simple example. If I send Ray through training—which he doesn’t need, by the way—but if I send him to training and that training is three semesters to get an industry-recognized credential or degree, when I put him into that training the 

first day, I have to obligate the money for the three semesters of 

that training. 

Now, our local areas, we are always working with them to say, 

you know, make sure that they are making satisfactory progress, 

make sure they haven’t dropped out. And I think they do a reasonably good job of that. But that longer-term training obligation is exacerbating the problem that you are referring to of these pots of 


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money looking like they are unspent. They are not unobligated; 

they are truly obligated. 

There are two pots, at the Governors level, that have been the 

traditional slowest of the spend-downs, and that is the Governors’ 

15 percent reserve and the rapid response money. The rapid response money is there for emergencies: large-scale dislocations or, 

heaven forbid, Katrina-like disasters. So a Governor has a pot of 

money to send people out to provide information so that they can 

put forward the most appropriate response to dislocation. 

The 15 percent money, having gotten to know many Governors, 

I mean, they really are trying to use that strategically to look at 

economic development opportunities in their State, and that takes 

longer to do. This is not an excuse; I am trying to provide an explanation. 

And, again, if this committee feels strongly that the 3-year 

spending provision, whose guidelines are included in the Workforce 

Investment Act, we can work with you and with authorizers to address your concern about giving a governor that third year and giving locals 2 years to spend their annual appropriation. 

Mr. TIAHRT. I think some of these funds are still unobligated, so 

I am a little concerned about some of that carryover. 

GREEN JOBS ACT

I have limited time here, so I want to move on to the Green Jobs 

Act. To compress the question, basically the Green Jobs Act only 

applies to entities that coordinate with labor organizations, which 

covers about 12 percent of the working population. 

What about the other 88 percent? Shouldn’t we change the application so that it is not just labor organizations but the rest of the 

private sector also has access to the Green Jobs Act funding? Do 

you follow my question? 

Ms. OATES. I am not quite sure. Are you talking about our competitive grants that we put out under Green Jobs or the underlying 

statute, the Green Jobs Act? 

Mr. TIAHRT. The Workforce Investment Act was amended by the 

Green Jobs Act. But in there, it sort of cordoned off the funds to 

just be used with entities that coordinate with labor organizations. 

That population is about 12 percent of the working population. 

There is 88 percent of the working population out there that is not 

qualifying for these funds. 

Would it take a legislation action to open it up for the other 88 

percent, or can you do that through your abilities? 

Ms. OATES. You know, I would have to get back to you on whether there needed to be legislative action. But the term we use, Congressman, is ‘‘labor-management partnerships.’’ 

I make no secret that I am a friend of organized labor. I was an 

AFT member as a teacher. So, you know, I joined a teachers union, 

you know, in Philadelphia and in Boston when I was there. 

But our purpose is to get labor-management partnerships. Because we think, when labor and management work together, they 

can make sure that the workers continue to get the skills that they 

need and that management can get the loyalty that they need from 

their workforce. 


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So, in all of my comments and implementation, we have many 

labor-management partnerships that we have funded through our 

Recovery Act grants that don’t actively engage with a member organized labor, a union. 

So I would be very reluctant and try to change your mind about 

that term, ‘‘labor-management partnership.’’ You know, I wouldn’t 

disagree that, if you are in a right-to-work State, that you want to 

move away from organized labor. 

But I will get back to you, if I may, through the Chair, on whether you need legislative correction. 

Mr. TIAHRT. To make myself clear, I am not trying to move away 

from organized labor. I am saying that it should be open to all 

labor. And I think that is what you told me. 

Ms. OATES. Yes, and labor-management partnerships. 

Mr. TIAHRT. The ‘‘labor’’ part doesn’t necessarily mean organized 

labor? 

Ms. OATES. In the term ‘‘labor-management partnership,’’ no, sir, 

it does not. 

Mr. TIAHRT. All right. 

Thank you, Mr. Chairman. 

Ms. OATES. But I will get back to you through the Chair the— 

because I am not familiar with that language in the Green Jobs 

Act, and I will certainly get back to you on it. 

[The information follows:] 

Yes. The Green Jobs Act, in amending the Workforce Investment Act (WIA), indicates specific activities where certain entities should be engaged as a partner in the 

grant application, including labor-management organizations. In order to be eligible 

to receive a grant where a labor-management partnership is required, an entity 

must be a nonprofit partnership that includes the participation of industry and 

labor organizations, including joint labor-management training programs. The Employment and Training Administration does not have the authority to waive eligibility requirements under WIA. 

Mr. TIAHRT. I appreciate it. 

Mr. OBEY. Ms. Lee. 

HUGE DISPARITIES IN COMMUNITIES OF COLOR

Ms. LEE. Let me ask you, Secretary Oates, a couple of things in 

terms of your testimony. And you mentioned—and I think this is 

what needs to happen, is a statement of fact. ‘‘American Indians 

and Alaska Natives make up the most impoverished group in the 

Nation, with unacceptably high unemployment rates on or near 

rural or isolated reservations.’’ And then you go on to talk about 

the budget request, $55,000,000 for Indian and Native American 

programs. You should do this, this makes sense, and I really want 

to commend you for that. 

I am looking through your testimony and can’t find any statement of fact as it relates to the African-American unemployment 

rates and the Latino unemployment rates. 

And let me just call to your attention the Joint Economic Committee’s report, chaired by Congresswoman Carolyn Maloney. She 

lays out what the facts are in the African American community, 

and her comment is, ‘‘By better understanding the unemployment 

challenges facing specific communities, Congress can design and 

enact innovative policies that effectively address these challenges 

and help people get back to work.’’ 


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What concerns me is, for some reason, you guys just don’t want 

to acknowledge these huge disparities in communities of color. And 

we are not talking about developing race-based solutions, but we 

are talking about acknowledging a fact that communities of color 

have long-term chronic unemployment. And, until you acknowledge 

that, it is going to be hard to develop specific solutions, which, of 

course, will make our country stronger and put people back to 

work. So I want to know why that is always left out. 

SUMMER YOUTH JOBS PROGRAM

Secondly, in terms of the summer youth jobs program, thanks to 

Chairman Obey, yesterday we passed $600,000,000 for our summer 

youth jobs program, 300,000 to 400,000 jobs. Young people, unfortunately, as it relates to the recession, have to help their families 

now pay the rent and buy food because their parents are unemployed. 

But this is an emergency. And we have to jump through a lot of 

hoops to just put people back to work because we haven’t declared 

an emergency and we haven’t seen the unemployment in our country as an emergency. And if you look at this report—and, Mr. 

Chairman, I am going to ask you if I can put this report into the 

record, if possible. Could I ask for unanimous consent to insert this 

into the record? 

Mr. OBEY. Without objection. 

Ms. LEE. Thank you very much. 

[The information follows:] 


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Ms. LEE. If you look at this and if you look at what has taken 

place in the Latino community—The Urban League just presented 

its State of Black America and Hispanic America—an emergency 

exists. 

EMERGENCY STATE OF MINORITY UNEMPLOYMENT

And so, you know, somehow we have to see this as an emergency. 

I don’t know if it is the White House, if it is your agency, if it is 

us. How do we get the country to designate and declare a state of 

emergency as it relates to the job crisis? 

Ms. OATES. Well, Congresswoman, I couldn’t agree with you 

more. The reason that I, in my testimony, in my written testimony, 

highlighted the Native American unemployment was because I was 

justifying our request for more money in that. 

Ms. LEE. And you should. And, I mean, that is the right thing 

to do. 

Ms. OATES. Yes. I think the situation right now with minority 

unemployment, particularly young people of color, is just immoral. 

We have to do something about it. My reference to the PUMAs was 

one of the ways we try to direct those grants specifically to those 

areas of poverty. 

And, in everything that we do, we are going to try to bring more 

attention into those communities that have been persistently poor, 

good times and bad. The recession has only made their condition 

worse, but they were double-digit unemployed before. 

Ms. LEE. Well, why don’t we say that? 

Ms. OATES. Unfortunately, I didn’t say it in this testimony. I assure you that I say it wherever I am. I was with Job Corps all 

week, where we basically have young people, 16 to 24, the majority 

are from these poor communities, many of them minority. And they 

are looking to get the skills they need at a residential Job Corps 

facility because they couldn’t get them if they stayed where they 

were in their community. 

I commit to you that I will say it more often and louder, but it 

is certainly something that you can see directed in our programming at the Department of Labor. And I publicly apologize if you 

don’t think we—Secretary Solis says it loudly and often. But if you 

don’t think we are saying it enough, I will commit to you that we 

will say it more often and continue to point out to you and the staff 

of this committee ways that we think we are targeting to help respond to that immoral situation. 

Ms. LEE. Thank you. 

And what about the emergency state that we are in, in terms of 

the crisis of unemployment throughout the country? 

Ms. OATES. In fact, we think that there is a critical need to make 

sure that employers are presented with those folks who have not 

had the opportunities that other folks have had. And we need to 

work with those employers to create jobs and publicly list those 

jobs—— 

COMPREHENSIVE JOBS PACKAGE

Ms. LEE. No, I understand that. But I am just talking about us 

here trying to pass a comprehensive jobs package. We can’t seem 

to do it. We spent $50,000,000,000 to rebuild Iraq, but we can’t get 


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$1,000,000,000 for summer youth jobs. And I am just saying, unless we declare it an emergency, we can’t do it. 

Ms. OATES. Well, I was remiss in not thanking this committee for 

all the work on summer jobs. I got to see a lot of those kids last 

summer. That $600,000,000, even though it is not the amount that 

any of us wanted, is a huge downpayment. And it is going to make 

sure that people can start talking with employers about those jobs. 

It is an emergency, Congresswoman. It is an emergency when I 

go out, when you go back to your districts, I am sure, when I see 

those people that are saying, ‘‘What am I going to do? I can’t find 

a job.’’ And it is particularly disheartening when you hear people 

on national television saying, if they wanted to work, they could. 

I can tell you, in the communities that I have visited, there are 

hardworking people looking for a job every day. Thanks to the UI 

benefits that you provided, they are making probably less than onethird of what they took home before, but at least it is keeping a 

roof over their head and food on their table. 

It is a crisis. I don’t know why we are afraid to call it that. And 

we should do something about it. 

Mr. OBEY. Mr. Rehberg. 

H–2A

Mr. REHBERG. Thank you, Mr. Chairman. 

You win the lottery today. 

Ms. OATES. Uh-oh. 

Mr. REHBERG. All the questions are yours. 

Ms. OATES. I did have a bet on this before, and I was totally 

wrong. I am going to have to buy everybody lunch. 

Mr. REHBERG. Where are we going? 

H–2A, you have a new regulation in place that took effect on 

March 13th. And I am not going to get into the politics of hourly 

rates and all. You know, that is for another day. But the difficulty 

is my farmers in Montana—as you know, it is a very specific group 

of people that need H–2A. Not all small businesses qualify nor 

need it. You usually associate it with sometimes herding, sometimes fruits and vegetables and such. So it is a unique arena. 

In the development of the regulation, it seems as if you have to 

do, by law, a flexibility study, according to the SBA. And rather 

than look at the impact it was going to have on the H–2A visa applicants, a unique group of farmers, you made the determination 

that the H–2A applicants would be compared against all small 

businesses. And you came up with the determination a flexibility 

study was not necessary because it only affected 2 percent of all 

small businesses in the country. The problem is, it affects 98 percent of the H–2A applicants. 

Why the change in philosophy? What rationale is there? And, as 

you know, you are going to end up in court over the thing. Why 

even put yourself through the pain and suffering of changing a determination when, clearly, it affects 98 percent? 

And for my poor farmers in Montana, they didn’t see this coming. 

This is their third hourly wage increase in 3 years. And they are 

coming in and applying and being told once again—in one particular case, it is a $1.57-an-hour increase. They don’t have the 


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ability to pass the cost along. They have had to make business determinations, decisions, going up to this point. 

So could you explain to me why the change in philosophy? 

Ms. OATES. Mr. Rehberg, as you mentioned, we are in litigation 

against this, so I am really restricted in what I can say. 

But let me say this: There are some things in this change that 

are positive changes. Before, under the old rule in Montana, one 

county versus another had to pay different rates. At least now we 

have gone to statewide rates. 

And in respect and trying to understand the needs of the 

businesspeople who are going through this change, actually, as we 

are speaking, there is a webinar going on for businesspeople that 

takes them line by line through the application to make sure they 

understand the application process and to give them some of the 

other instances on this. 

That webinar, by the way, the reason we used a webinar—because your response to me would be to say your farmers are awake, 

but they are milking the cows or doing whatever—— 

Mr. REHBERG. Well, first of all, my response would have been, 

could you have warned them ahead of time, all the H–2A applicants from the past, warned them this change was coming? And I 

have looked at the comments, and virtually 100 percent of the comments were in opposition to what you are doing—what you did, the 

way you interpreted the flexibility study. 

And, again, you know, I am not going to argue the politics of increasing salaries, but it is the way you are skirting the SBA and 

its impact on the small businesses as a result of the change in the 

regulation. 

Ms. OATES. I would be happy to revisit with you after the litigation is finished when I could give you a clearer idea of what we 

went through. But, as you can imagine, all of that is—— 

Mr. REHBERG. Is it happening in other areas? Am I going to start 

hearing from other entities, small businesses within my State, that 

you have changed the way you look at impacts, whether they have 

the ability to implement the rule or whether it is going to make 

them less competitive? Because those are really the two standards 

on the flexibility study. 

Ms. OATES. The bureaucratic answer would be to tell you that, 

every step of the way, when we do a process change, it is in the 

Federal Register. The reason I say ‘‘bureaucratic’’ is, people in my 

home State of Pennsylvania didn’t read the Federal Register daily. 

So, therefore, what I would say to you is what we can make 

available to this committee is notifying, through the Chair, notifying you when any changes are happening. I don’t see any changes 

on our horizon that would impact that, but I am not a small-business owner. 

But I would be happy to make sure that the committee staff is 

aware of any changes that are coming up so that you could highlight for your constituents. It is not our intent to do anything behind closed doors. 

Mr. REHBERG. Could I just suggest, you know, I would communicate, but you already know who the past applicants are, especially in something as specific as H–2A. It would make sense, bureaucratically and from an executive branch perspective, to make 


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contact with them, to tell them that, ‘‘The regulation will be implemented on March 15th. We know you have already made your 

planting decisions, you have already made your hiring decisions 

based upon your calving and such. And this is coming down the 

pike, and this is what you are going to foresee.’’ You can do that 

as a courtesy, I would think. 

Ms. OATES. We do that now, sir, but obviously we don’t do it well 

enough because your constituents weren’t aware of that. We always 

have room to improve, so I take your suggestions, and we will 

make sure that we make those improvements in the future. 

Mr. REHBERG. Thank you. 

Ms. OATES. Thank you. 

Mr. OBEY. Ms. McCollum. 

Ms. MCCOLLUM. Thank you, Mr. Chair. 

WOMEN VETERANS

First, I want to make a comment on the veterans program that 

I heard. It is fabulous. Women veterans have long been—I am 

going to just say ‘‘neglected,’’ because the numbers weren’t there 

and they didn’t seek out for help because they didn’t feel welcome. 

And we had a hard time getting many of our male veterans to feel 

welcomed home, to ask for assistance and things. So I am very 

pleased you are doing that. 

I represent Minnesota. We have done some work with our homeless veterans that we are very excited about, but there was an inclusion of women veterans in the process. 

Also, Mr. Chair, we heard the testimony talking about reaching 

out to those veterans coming out of detention. But we are working 

with some innovative programs to keep them from going into detention in the first place in the special courts. 

And, at some point—and you would probably be the person to understand that or know the counterpart—but I think we need to put 

this all together and look at it as a package. So if someone could 

maybe contact my office so that I understand better how the special courts, the homeless interventions that you are doing, as well 

as the early interventions as the gentlemen and -women are coming out the system, how we bring everybody back home. 

VETERANS COURTS

Mr. JEFFERSON. I would be very glad to do that. 

And we are working very closely with the Department of Veterans Affairs right now in this partnership. So they have the veterans courts—as you know, the first one is in Buffalo, New York— 

to look at how we can give people different opportunities. Then 

with the incarcerated veterans program, improving the content so 

we get even better results from that going forward. 

So we would be honored and excited to come by and explain that. 

Ms. MCCOLLUM. Thank you. 

I think one of the things that we found out sometimes in our 

drug courts or alcohol courts, that we had a lot of veterans in them. 

And so it might even be taking some of those courts that are already in existence and helping the judges with specialized training 

in that. 


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EMERGENCY GRANTS

I would like to focus on emergency grants. And I think Mr. 

Tiahrt kind of talked about how we have pots of money that sometimes are set aside until they are spent, but they are fully accounted for. They are encumbered. 

I held a hearing in St. Paul on workforce and labor programs 

that was funded by this subcommittee. And issues with the National Emergency Grant requirements came up time and time 

again during the hearing. 

Minnesota Local Workforce Systems has made an efficient and 

effective use of Workforce Investment Act formula and Recovery 

Act funding, serving three times the number of people that they 

did in the previous year. They are now seeking additional funding 

through the special National Emergency Grants that have been 

made available to them by the Department of Labor that serve dislocated workers. 

Here is the policy problem. Currently, the policy in place is making it difficult to access this grant funding. Regulations currently 

in place require 95 percent of the funds to be disbursed before the 

applicant requests more funding. 

So, without taking into account obligations or these encumbrances, is the Department of Labor willing to consider some of 

these policies to ensure that funding provided by Congress is accessible to the severely dislocated workers in Minnesota who are currently on a waiting list to access these training programs? 

In other words, we can’t add any more on because those that are 

on haven’t spent all their educational dollars. But the money is set 

aside, so at the end there is a diploma. So we have intention here 

of wanting to do the right thing by setting aside the funding to 

make sure that the diploma, the certificate is achieved at the end, 

but there is grant money out there for other people who would be 

eligible, but they can’t access it because the money hasn’t been 

fully disbursed for the others. 

So I think, Mr. Tiahrt, you and I could maybe work together on 

this to find out an accounting mechanism with great transparency, 

great accountability in it, but something that doesn’t hurt individuals from applying for grants, when we are just trying to do the 

right thing to make sure the dollars are there for the educational 

services. 

Is this something you are working on? 

Ms. OATES. Absolutely. 

I would say that the requirements—as of 3 weeks ago, when this 

came to my attention, Congresswoman, when we put forward these 

requirements that we were posting, there would have only been 

three States who would be eligible to apply for the money. That, 

to me, is not being fiscally responsible; that is being silly. 

So we are in the process of looking at a new set of frameworks 

where you can apply for National Emergency Grants without looking at your 2008 spend-down, your 2009 spend-down, your Recovery Act spend-down at these high levels, and to look at cases more 

on an individual base. 

I mean, the nature of National Emergency Grants is not to supplement the dislocated worker formula; it is to respond to incredVerDate Mar 15 2010 09:09 Nov 16, 2010 Jkt 058234 PO 00000 Frm 00297 Fmt 6601 Sfmt 6602 E:\HR\OC\A234P2.XXX A234P2

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ible need. So, while we just don’t give States more money because 

they say they are out of formula money, we do look at incredible 

need. Having a waiting list and employers ready when those people 

have the skills and credentials necessary is an emergency. So we 

want to make sure that we are responsive to that. 

I am happy to share where we are right now on those numbers 

and figuring out the kinds of numbers. But it really is moving to 

looking at a case-by-case basis. 

[The information follows:] 

The purpose of National Emergency Grants (NEGs) is not to supplement the Dislocated Worker (DW) formula program, but to respond to incredible need. The 95 

percent disbursement of funds requirement only applies to one of the several types 

of NEGs known as Formula Funds Replenishment, an American Recovery and Reinvestment Act (ARRA)-funded NEG that is designed to provide local areas in dire 

straits with a bridge until their next allocation of DW formula funds becomes available. Eligibility for other types of NEGs call for a state to have spent 70 percent 

of its Program Year (PY) 2008 DW formula funds and 50 percent of its ARRA DW 

formula funds. The purpose of these thresholds is to ensure that states are expending their DW formula resources quickly and efficiently before requesting additional 

resources, and to ensure that excessive amounts of carry-over do not occur. 

Minnesota has been successful in securing additional resources through NEGs, as 

evidenced by the state having been awarded three other NEGs for up to $6,875,701. 

Minnesota has also submitted an additional NEG application for $2,635,901 which 

is currently moving through the approval process. In total, Minnesota will have 

been awarded nearly 50 percent of the amount of funding received through the PY 

2009 DW formula process in NEG awards alone, before considering the Formula 

Funds Replenishment NEG. The Department has also been working with Minnesota 

to examine its obligations and commitments and is in the process of developing a 

methodology to project when the 95 percent threshold will be met. If projections 

show that the threshold would be met within this quarter, Minnesota will be considered as having met the 95 percent threshold and thus eligible for a Formula Funds 

Replenishment NEG. 

States all across the country continue to experience incredible need. On April 12, 

2010, the Department announced the availability of up to $90 million in funding for 

On-the-Job Training (OJT) NEGs in recognition of the widespread scope of recession-related layoffs across the country. The Secretary of Labor has recognized the 

impact of the recession on the national workforce as a significant dislocation event 

for purposes of this one-time ARRA targeted NEG assistance. Due to the unique nature of this assistance, there is no formula funds usage requirements associated 

with applying for OJT NEGs. 

Ms. MCCOLLUM. But I agree with Congressman Tiahrt; if there 

is funding out there that is not going to be spent, that needs to be 

accounted for, this committee needs to know about it, so that we 

can be more effective. 

Thank you, Mr. Chairman. 

Mr. OBEY. Mr. Cole. 

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

Secretary Oates, you probably need a break, so I am going to 

give you one. 

Ms. OATES. Thank you. 

Mr. COLE. And you have been the political pinata. It is somebody 

else’s turn. 

If I may, Secretary Kanter, I wanted to focus on three areas 

where the administration has chosen, basically, to sort of flat-line 

the funding, and I wanted to get the reason why, because I think 

these are important programs. 


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FEDERAL TRIO PROGRAMS

Mr. COLE. The first one is TRIO. And my concern here is, we are 

very appropriately expanding Pell Grant money, and we are trying 

to make financial access better, but a lot of the students that are 

served by TRIO, frankly, need the support and need additional 

preparation, additional support. So just giving somebody a check 

isn’t going to be enough, in these cases. 

And, particularly, we lost, I think, about 40,000 TRIO students 

last year due to absence of funding. We know that this is a population that we have never, under anybody, come close to serving. 

So why the decision to flat-line TRIO? 

Ms. KANTER. Frankly, we were working on the assumption that 

there may be College Access and Completion funding available 

through the American Graduation Initiative. We were expecting 

that grantees in the TRIO and GEAR UP programs, either in collaboration with one another or as a partnership program with different colleges and universities, would be able to apply for those 

funds on a competitive basis. We are very interested in using the 

evidence of what has been working so well with GEAR UP and 

TRIO. 

But that is why—we can’t ask for everything—we flat-lined that budget. It is $910 million for Federal TRIO programs and $323 million for GEAR UP. We thought funding from the SAFRA Act would 

meet that need and make it a little more competitive so that others 

could accomplish some innovative kinds of things that they couldn’t 

do in the current program. They would be able to put some of the 

best practices and lessons learned into place to do more. 

Those programs are reaching out to the underserved students I 

talked about. Some TRIO projects spend as much as $7,000 per 

student. I came from a college district where we received $5,000– 

$5,500 per student. So the TRIO investment more than doubled 

what the cost per student would be, in California at least, for a 2- 

year college student. And we were very excited that those competitive grant funds would enhance the programs that we were able to 

support for these years. 

Mr. COLE. And you touched on this partly in your answer, because I have, again, exactly the same concern for GEAR UP. I 

mean, when I used to be a college educator many years ago, I saw 

a lot of kids just show up and they were just not ready. And it is 

because they didn’t know how to get ready, in many cases. And, 

frankly, in many cases, their families didn’t know how to get them 

ready. Nobody had gone to college, nobody knew much about it. 

And the competitive grant approach is good, but it doesn’t give 

you certainty. And, you know, funding these programs at a higher 

level is something that I hope we look at, Mr. Chairman, if it is 

possible. 

CAREER AND TECHNICAL EDUCATION

Last area, and I know our time here is very, very limited, but 

I wanted to ask you basically the same sort of question with respect to Carl Perkins money. Again, in our State, the emphasis on 

technical education is very high. We have a career tech system 

that—probably there is not one or two like it in the country. This 


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is a really important part of doing exactly what I know all of you 

want to do, which is give those students that aren’t necessarily 

going to 4-year institutions training opportunity, give workers that 

are temporarily displaced an opportunity to again come back, pick 

up an additional skill, move back in the workforce. 

So what is the thinking there? Because, again, the funding, if I 

am correct, is basically sort of flat-lined. 

Ms. KANTER. Right. It is flat-lined. But we really want to deliver 

and expand career and technical training to give high schools, community colleges, and universities more chance to align what works. 

We see college and career readiness as a dual condition for success 

in education. And we have to work on ways that that curriculum 

can be tightened up. 

The Perkins Act funds will let us do that. We didn’t ask for an 

increase for the Perkins Act, but we think it is really essential in 

order to move forward. And we have the career pathways and programs of studies research out of the Perkins Act that we are using 

as a backdrop to how we are thinking about the Workforce Investment Act reauthorization. And we know Perkins Act Reauthorization is down the line. So we want to bring all of this together. 

And, certainly, a lot of the Perkins Act lessons learned tell us 

that we have to upgrade our programs, for example, for green jobs. 

Or I can tell you about automotive technology if you want to hear 

about that moving to alternative fuels and hybrid vehicles. It is a 

high-cost program. I had to put in lifts in my school. We were hoping the SAFRA Act would have construction or facilities funding 

available to upgrade these programs. We had a high-speed link into 

Chrysler so the students could really learn the numerical controls 

and the automotive technologies needed to be an auto mechanic 

and then move up, hopefully, over time, as I said, through the career ladders. 

But the Perkins Act allows us to look at that curriculum. In my 

experience, we had a great partnership with the regional occupational program, where they had the high school graduates and we 

streamlined the curriculum and were talking about accelerating 

those programs. 

So we see Perkins programs as critical. We want to build off of 

that. We can’t do everything. You know, we chose to really focus 

on the Workforce Investment Act because that is up for reauthorization now. 

And we are also hoping, in the College Access and Completion 

Fund, to be able to look at occupational training. We have been 

working with the Department of Labor for the last 8 months, so we 

can actually bring this together and hopefully not only upgrade 

those programs and give the faculty more training but also look at 

new methods of acceleration so students could go through more 

quickly. For example, students could go through the summer, do 

the year-round kind of training that really drills down on the curriculum, so we could get more students trained for the jobs. 

Mr. COLE. If I could just make a point in conclusion, this is an 

area—and, again, the President has been very generous in the 

budget here. It is one of the few areas that, in any of our committees, we have seen a major expansion in funding. And I hope we 

look very carefully at some of our existing programs, like TRIO, 


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like GEAR UP, like Carl Perkins, that have done very well and, 

frankly, I think, fit the objectives of what the administration wants 

to do, and think twice about some of the newer things, whether or 

not we can afford them. Because we have some proven products 

here that I think we have consistently underfunded. 

So, anyway, thank you, Mr. Chairman. 

Mr. OBEY. Mr. Ryan. 

EARLY COLLEGE AND PELL GRANTS

Mr. RYAN. Thank you, Mr. Chairman. 

I want to first thank Assistant Secretary Oates for coming to 

Ohio and being a great presence there for some of the issues that 

we had to deal with. And, also, congratulations. I know you worked 

for Senator Kennedy for a long time, and this was a historic week 

for his legacy and those of you who worked for him for such a long 

time. 

I want to say thank you, also, to Mr. Jefferson. Thank you for 

all that you do. We had a great meeting a few months back, and 

I look forward to working with you, as well. 

I have a question, you know, kind of based on what Mr. Cole was 

saying to Secretary Kanter regarding—he was talking about TRIO 

and some of the—Upward Bound and all the great programs. And 

they are terrific programs. 

One of the issues we have in my district, and I think across the 

country, is the issue of early college. And we have an early college 

program in Youngstown that has now been basically zeroed out by 

Youngstown State University because of budget cuts. This is an 

award-winning program across the State for the city of Youngstown, when the rest of the school district is collapsing. 

Long story short, I think we can find a compromise position here. 

These kids who want to go to college, early college, do not qualify 

for the Pell Grant. And I mentioned this to the Secretary of Education when he was here last week, because I think it meets all of 

the goals that he has set out for the Department of Education, I 

think what the President is saying. These kids want to go to college, they are going to college, but yet they don’t qualify for the 

Pell Grant. And I think we should work very hard at figuring out 

how we allow these young kids to qualify for the Pell Grant. 

From our vantage point, you know, watching the dollars here, I 

would much rather pay for them to go to college when they are 17 

and 18 than pay for them to go to college when they are 21 and 

22, just because of inflation, so we can get this money in on the 

front end and create the kind of pipeline that you are talking about 

in getting these kids in. 

It is a transformational program, and I think it does a lot of 

things similar to what TRIO does. They want to go, and here we 

have programs getting cut. And I think we can increase that pipeline. 

So, if you could just comment on that. 

Ms. KANTER. I can tell you, we need to explore all the ramifications about opening the doors wider for Pell Grants. We are very 

interested in working with the Congress to look at what options we 

might have. I understand from the research that I did that we 


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looked at this a couple of times in the past, and we had some challenges that we need to really delve into and explore. 

So I don’t have an answer for you—— 

Mr. RYAN. Do you remember what those were? I mean, obviously, 

there would be some—— 

Ms. KANTER. I don’t really have the specifics on that, but I would 

be happy to come over to your office and walk through what happened in the past, give you a report on what we found, what we 

learned, and look at what some options might be to look at this. 

Mr. RYAN. Okay. Yeah, I mean, I think if we look at the big picture here, these are kids who otherwise, you know, may never end 

up in college, but they walk on—and Youngstown State is, I think, 

the prime example, Midwestern university in an industrial town. 

But when you walk on the campus, you don’t think, ‘‘I am in 

Youngstown, Ohio.’’ You think you are on a college campus. And 

these kids’ eyes light up, and they end up meeting the kind of level 

of expectation that the school has for them and our community has 

for them. So I would look forward to working with you on that. 

Also, I wanted to mention one other thing that I mentioned to 

the Secretary and have been talking about here for a couple of 

years. I think I even mentioned it to Secretary Oates a year or so 

ago: the movement in education toward social and emotional learning. And I see your background is in clinical psychology a little bit. 

Ms. KANTER. I am ready for this hearing. It comes in handy. 

Mr. RYAN. Congress needs it, believe me. 

Ms. KANTER. I need it. 

Mr. RYAN. I may ask for an additional 5 minutes, just for some 

personal therapy. 

Ms. KANTER. I will come over to your office. 

Mr. RYAN. Okay, very good. I have a couch there and everything. 

We will be good to go. 

The move toward social and emotional learning, I mentioned it 

to Mr. Duncan. I think the evidence backing this up, the brain 

science backing it up, recognizing that the emotional situations 

that these kids have to deal with are directly prohibiting their ability to learn. And we know it now from brain science. It is not because we want to, you know, be sensitive. I mean, yes, we do, but, 

at the same time, the brain science is backing this up now. 

And the beneficiaries of this are teachers, as well, who learn how 

to self-regulate and make sure that they are coming into the classroom with a positive attitude and creating an environment to learn. 

And I want to continue, through this committee, to push for more 

investments into social and emotional learning. I know there are 

effective teachers and leader grants, Teacher and Leader Innovation Fund, those kind of things. But I would like to work with you 

to help us design programs and create little pots of money where 

we can continue to push social and emotional learning. 

The evidence is there: 11 to 17 percentile point increase in test 

scores; closes the achievement gap; increases the positive mood of 

the school; decreases the negative aspects of what is going on in 

the school; builds a community in the school. So, there is no question there. 


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The red light is on, and my chairman is staring at me. But I 

want to work with you on this and continue to work with the Secretary on this, as well. 

Thank you. 

Mr. OBEY. Mr. Alexander. 

Mr. ALEXANDER. Thank you, Mr. Chairman. 

Secretary OATES, Mr. Rehberg said you won the lottery, so let’s 

celebrate by another question. 

H–2B

He brought up a point about the A program, H–2A. Would those 

same concerns drift over into the B program? 

And I don’t really understand why we have to have two. You 

have the As that harvest the food, but As can’t process the food; 

it has to be B. Is that correct? 

Ms. OATES. B is non-agricultural, yes, sir. 

Mr. ALEXANDER. Okay. Some of those same concerns that he 

brought up would apply to the H–2B program also. 

Ms. OATES. The H–2B regulation is—the regulatory changes are 

just beginning. So it is open. You know, we are just getting things 

out there. Yes, some of the same issues will come up, in terms of 

worker protection and worker housing. But, in our budget proposal, 

as you will recognize, we also ask to impose a fee on this. Because 

your neighbor, the Governor from Mississippi, I think I was 3 days 

on the job, brought up to me—took me out to the port and said, 

‘‘Look at that.’’ It was an oil rig. He said, ‘‘How many workers, do 

you think, out there are from Mississippi?’’ I said, ‘‘I don’t know.’’ 

He said, ‘‘None. They are all from Eastern Europe on visas.’’ And 

they were welders. 

So he really woke me up to the fact that we need to beef up programs that have been atrophied, used to be funded under Carl Perkins, used to be funded under the old way community colleges 

worked when they were technical colleges. Now, he told me that he 

couldn’t get people from Mississippi—and I am sure, you are so 

close there in the Gulf port. 

So the idea of our using those fees to beef up apprenticeship programs so that we have American workers that do those kinds of 

jobs rather than having to be dependent on foreign labor. 

But, again, we will be much more clear with committee staff as 

the H–2B process begins, so that you are aware. We will take Congressman Rehberg’s comments and make sure that we are getting 

out to people in a deeper way than we did before. But that process 

is beginning now. And we are going to probably suggest changes 

to the H–2B ranks, as well as we did to H–2A. 

Mr. ALEXANDER. Okay. Well, so I can better understand, if you 

harvest the food or fruits or vegetables, that is A. 

Ms. OATES. A. That is agriculture. 

Mr. ALEXANDER. But once it goes to canning, that is not A anymore, that is not agriculture anymore. 

Ms. OATES. That is correct. 

Mr. ALEXANDER. Thank you. 


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PUBLIC SERVICE LOAN FORGIVENESS PROGRAM

Ms. KANTER, we know that government only exists because of the 

taxpayers. So you were talking about Pell Grant a little bit ago. We 

understand the need there and the expansion of it. 

But I was concerned about something you said, encouraging participants to sign something saying that, if you are going to school 

at the expense of the government, if you will sign saying, ‘‘I will 

work for the government,’’ then your loan will be forgiven. Is that 

correct? 

Ms. KANTER. This is the Public Service Loan Forgiveness Program. 

Mr. ALEXANDER. Okay. 

Ms. KANTER. That was passed last year, and that is what I was 

talking about. If you get a loan, you would pay it back. If you go 

into public service, to be a teacher, a policeman, a government 

worker, or a community college staff member, you would pay back 

the loan at 10 percent of adjusted gross income when you get that 

job. As you are working forward, you pay it back within 10 years. 

Mr. ALEXANDER. Well, I understood you to say that it would be 

forgiven. I don’t know, maybe I misunderstood. 

Ms. KANTER. After 10 years of employment, your loan debt is forgiven. 

Mr. ALEXANDER. Okay. Well, I just find it odd that, at a time 

when a great percentage of the public out there is already mad because they see every day where government employment is rising 

and private sector is falling, that we would encourage young men 

and women that are participating in the Pell Grant program at the 

expense of the taxpayers, would be told that if you will go to work 

now for the government, we will forgive some of your loan. It just 

seems like that is kind of poking the public in the eye with a sharp 

stick. 

Ms. KANTER. Maybe I need to differentiate between Pells Grants 

and loans. The Public Service Loan Forgiveness is not a payback 

on the Pell, it is when you need a loan. If you had a tuition to pay, 

for example, under the Stafford loan program, you will pay that 

back over 10 years. We will have a huge number of replacement 

jobs in government, because many of us are over 60, unfortunately, 

and we will have to replace those staff. 

I did a lot of work with emergency physicians in the county hospital. They could not get people to come into those jobs. The Public 

Service Loan Forgiveness will allow those individuals to take those 

loans. If they qualify for Pell, they will get the Pell Grant. However, if they take the loans, then they will pay those loans; but 

after 10 years, the remaining loan debt will be forgiven. And we 

will have had benefit of 10 years of a county doctor in a county hospital with a long waiting list for service. So that is the example. 

Mr. ALEXANDER. Thank you, Mr. Chair. 

Mr. OBEY. Ms. Roybal-Allard. 

ELIMINATION OF THE CAREER PATHWAYS INNOVATION FUND

Ms. ROYBAL-ALLARD. Ms. Oates, in September of 2009, the Bureau of Labor Statistics commissioner, Keith Hall, announced that 

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cession began. The commissioner also projected that this growth 

will continue, and in the next decade we will need to fill an additional 3 million jobs in the health care field just to meet the Nation’s demand. 

And he stated that registered nurses will account for hundreds 

of thousands of these health care positions, adding to an already 

very serious nursing shortage, projected to grow to 260,000 registered nurses by 2025. 

In light of this critical and growing demand for nurses, I was 

surprised that the Career Pathways Innovation Fund, which is a 

competitive grant program intended to prepare workers for careers 

in high-demand industries, has been eliminated from the fiscal 

year 2011 budget. 

How does the Department plan to address shortages such as the 

nursing shortage if it eliminates training programs that prepare 

Americans to fill these critical health care positions? 

Ms. OATES. Congresswoman, you have heard my friend, Martha 

Kanter, talk about this before. In preparing our budget request, we 

were hoping that the American Graduation Initiative would happen and we would have dollars to deal with the Career Pathways 

issues through AGI, and that didn’t happen. 

Ms. ROYBAL-ALLARD. And that didn’t happen. 

Ms. OATES. Right. But we do—just so you know, we agree with 

you. This is the most resilient sector in the recession. It is important for us to keep focused on allied health and, in particular the 

area of nursing, work closely with our friends at HRSA so that we 

are working in concert, not in duplication. 

So we will use H–1B funds to continue the health care initiative 

because it does match the needs for H–1B visa fee funds. So that 

was our backup plan. 

We will also continue to, if indeed we are able to maintain the 

$2,000,000,000 that is to be used for community college program 

expansion, I think both Under Secretary Kanter and I would agree, 

along with our friend Mary Wakefield, that we need to do something to address the nursing faculty shortage. We can’t get nurses 

who can make more working three 12-hour shifts to come in and 

be a career person in a higher-ed facility. And we need more faculty. We also want to work with our colleges that are preparing 

nurses to make sure that—you don’t need a nursing faculty to 

teach biology. The regular biology, A&S department can teach biology. You don’t need separate staff. 

Where we do need nurses and nursing faculty particularly are in 

those areas where they are so specifically nursing-centric and in 

the clinical supervision. And there are really promising models 

across the country, where hospitals and health care providers have 

partnered with the colleges to provide the clinical supervision with 

their own paid staff, not the college’s paid staff. 

We think that the new investment over 4 years in building the 

capacity of community colleges will help us invest in those kind of 

innovative processes, as well as helping to look at other ways to address the nursing shortages. 

We know that there are other areas coming up, like health IT, 

that there is going to be little help through competitive grants 

through HHS. But nurses are really—especially the RNs, the 2- 


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year-degree nurses, they are our responsibility, so we are not going 

to ever walk away from that, as are the other entry-level allied 

health careers, you know, like the med techs, like all the assistants, the CNAs, and like the pharmacy techs. I mean, the local 

pharmacy, CVS and such, have such great need, and those are 

great entry-level jobs for folks who could then continue on to be 

nurses. 

So we are going to be working on all of that simultaneously, believe it or not. 

JOB CORPS

Ms. ROYBAL-ALLARD. Okay. Because I run out of time, very 

quickly I want to talk a little about Job Corps. And I will go 

straight to the question. I think we know what a great program 

that is and how it fills a tremendous need, but it is facing a 

$40,000,000 shortfall. And my question is, how do you plan to address the shortfall to avoid staff layoffs, staff attrition, and disruption in student services? 

And, also, Job Corps asked me to raise another issue, and that 

is, because our young people are facing record unemployment, the 

demand for Job Corps far exceeds capacity. Yet our Job Corps 

classrooms sit empty every evening. And Job Corps estimates that, 

with a modest investment of $15,000,000, they could train 965 additional nonresidential students in their existing facility each 

evening. And not only would additional youth be served, but additional jobs would be created to teach and train these students. 

And the second question would be, would the Department of 

Labor consider maximizing the use of Job Corps facilities and expanding the program capacity by creating evening classes? 

Ms. OATES. This is the first time I have heard that suggestion, 

Congresswoman. I think it is a great suggestion. I mean, we know 

that we are always pushing our community colleges to do weekends 

and evenings to fully utilize. So, I mean, I will come back to you 

on that. I think it is a great suggestion. 

Ms. ROYBAL-ALLARD. Okay. We will follow up. We will follow up. 

Ms. OATES. But on the money piece, we do recognize that the Recovery Act gave us a unique one-time opportunity to go down our 

list, in terms of repairs and renovations. So we are hopeful that we 

can fill this shortfall, number one, through efficiencies. We do think 

that there are some—I have only been responsible for Job Corps 

and ETA for 24 days. So I am learning about Job Corps as we 

speak. But I think there are some efficiencies we can put into 

place. 

And if we do run short, we can reprogram a little bit with our 

construction funds, because the recovery money did let us do so 

much of the construction that was on the wait list. 

[The information follows:] 

Job Corps is not planning staff layoffs, nor will services to students be impacted. 

In order to maintain base operations and pursue initiatives such as increasing instructor pay, opening the Ottumwa, Iowa center in FY 2011, and expanding the Licensed Practical Nurse training program, Job Corps is pursuing a reform agenda 

that we believe will create savings through operational efficiencies. These reforms 

could include energy conservation practices to reduce utility and fuel costs, maximizing center slot capacity, and taking advantage of economies of scale for targeted 

on-center services. 


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As a responsible contingency, the Department has requested authority to transfer 

funds from Construction to Operations in case these operational reforms do not result in savings as quickly as expected. This will have a negligible impact on the 

Construction budget for the FY 2011, as the majority of shovel-ready projects have 

been funded through the Recovery Act. 

Ms. ROYBAL-ALLARD. Okay, thank you. We will get back to you 

on the evening classes. 

Ms. OATES. Yes, thank you. That is a great idea. 

[The information follows:] 

The Department is open to this suggestion, understanding that evening classes 

can complement daytime training for current Job Corps students and open up opportunities for new students to participate in the program. Currently, Job Corps 

centers take advantage of after-hours instruction in a variety of ways, including life 

skills classes on personal finance and independent living, extended computer lab 

hours and English Language Learner (ELL) classes, and recreational activities such 

as yoga classes and intramural sports. 

The suggestion of evening classes, however, assumes a more structured delivery 

of academic and career technical training similar to daytime instruction. This would 

provide additional students, including local non-residential students, with the prospect of attaining their GED or High School Diploma, and/or achieving a certification 

in a high-growth industry. Further, current students could supplement their daytime training by taking additional academic classes or enrolling in a complementary 

career training class. 

Job Corps has already begun to collect information on the availability of facilities 

and current evening offerings at its centers. The program will then need to determine the feasibility of offering academic and career technical training at its sites, 

and any net costs associated with doing so. This will include an analysis of highgrowth, high-demand trades that should be offered at each site, the demand for such 

services, and the costs and benefits of such an approach. 

Mr. OBEY. One of the things that becomes apparent to me, as I 

sit through these hearings, is how many things we are trying to do 

and how few resources we have to do them. 

We were talking earlier about Pell Grants, the percentage of college costs that had been paid for by Pell Grants in the 1970s 

versus today. We have a much smaller percentage of college costs 

being met by Pell Grants. Title I, we have a very small percentage 

of eligible kids actually being sufficiently served by that program. 

Mr. Cole mentioned TRIO and GEAR UP. You can run down the 

committee and everybody will have their favorite example. 

Then you get to job training. I think Congress has a split level, 

when it comes to job training. You have a lot of people who they 

think that these programs aren’t worth a hill of beans, and you 

have others who think that we are falling far short in meeting the 

need. 

You were talking about nurse training. One of the few bright 

spots in the national economy in terms of job growth, even through 

this recession, has been the health care sector, which actually grew 

by about 600,000 jobs between December of 2007 and December of 

2009. That is an average of about 25,000 jobs per month—a whole 

lot better than the rest of the economy was performing. 

The Department of HHS estimates that by 2020 we are going to 

need 2.8 million nurses, 1 million more than the projected supply. 

In the much maligned Recovery Act, we included $250,000,000 to 

fund job training for careers in high-growth industries, with an emphasis on the health care sector. 

Now, I understand that DOL received an overwhelming response 

of more than 800 applications for those grants. The Department 

was only able to fund 55; is that correct? 


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Ms. OATES. That is correct. 

Mr. OBEY. What does that tell us about the sufficiency of this effort, especially given the fact that we have just passed the health 

care proposal, which is going to add some 30 million people to the 

lines of people who want to get in and see doctors and nurses and 

other health professionals? What are we going to have to do to really meet the need in that area? And what does that tell us in terms 

of additional resources we need to apply to it? 

Ms. OATES. Well, I think if you had community colleges sitting 

before you, they would say that they are constrained and they have 

to build their capacity. And part of that is what I was referring to 

when I was responding to the congresswoman’s question. I mean, 

I think it has to be a multi-pronged response. We have to get them 

to think differently, in some cases, and we have to use our privatesector partners. 

But, Congressman, I would be remiss if I didn’t tell you, we need 

more money to help these community colleges get the capacity to 

attract the faculty. You know, as I go around—and I am sure you 

have been to a million of these training facilities—but when you go 

around and you think how you train young students, not-so-young 

students for these jobs, the computer stuff is great. You know, you 

have SimBaby, who can teach you how to hold a baby correctly so 

you don’t endanger a newborn infant the first time you think about 

holding that newborn baby. But they cost, like, $150,000. For a 

community college, they are thinking, do I buy SimBaby or do I get 

a faculty member? 

So we need to continue to help them. And, you know, some of the 

things that Congressman Cole said about Perkins directly impact 

these training programs, because Perkins is the only way these 

community colleges have really been able to have a Federal source 

to get the equipment they need, whether it is in allied health and 

nursing or whether it is in advanced manufacturing. 

So, at some point, while I do try to be fiscally responsible and 

talk about efficiencies and removing redundancies, at the end of 

the day I have to agree that there are certain times when I am 

going to have to come to you and say, ‘‘We need more money.’’ We 

thought we were going to be able to use AGI. It went away. We 

are going to use any money that we are given collaboratively and 

in the best vein. But we certainly may need more money to create 

the skilled workforce to fill these health care jobs over the next 3 

to 5 years. 

Mr. OBEY. So much is impacted by intangibles. You know, I hear 

an awful lot about how the economy needs to have an added dose 

of consumer confidence before it begins to grow. But I also see another huge gap in confidence, and that is the confidence demonstrated by a lot of people in the workforce who are out of work 

and have become very unsure of themselves. 

I was at a community college branch campus in a town called 

Antigo in my district a couple of months ago. And I was struck by 

the fact that there were a number of people in their training program from the same employer in my hometown. And that employer 

had for years been regarded as one of the best employment opportunities for anybody in the area. And then they laid off over 200 

people, and they laid off some more. 


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And you could just see, not just the resentment, but the lack of 

confidence on the part of a lot of those people. They were in that 

program, but their confidence had been shattered because they 

thought they had the world by the you-know-what, and then, all of 

a sudden, everything fell out from under them. 

And I guess my question is, there are going to be those who still 

have enough built-in confidence to actually make it through, but 

there are a lot of others who are going to be so afflicted with selfdoubt that, even if they get training, they don’t have real confidence in their ability to actually put it to use. 

ONE-STOP CENTERS

What tools do we have available with these programs in order to 

deal with that problem? 

Ms. OATES. In one respect, we have been trying to give professional development opportunities to our frontline workers at the 

one-stop. Because, clearly, many of the clients coming to one-stop 

centers today are people who never thought they were going to be 

unemployed. They were the kind of folks who left high school with 

or without a diploma, went with the same employer, maybe the employer that you are talking about in your area, and stayed with 

them for a lifetime, were a loyal employee and never thought—layoffs were something for lazy people, that wasn’t going to happen to 

them, they are hardworking. And they don’t understand that the 

economy has dealt them a KO. I mean, they are really in trouble. 

So the professional development that we have been trying to give 

to one-stop operators is understanding and trying to listen to the 

point where you help build—you listen to what their concerns are 

and build their self-esteem. 

From the Federal level, what we are trying to do is create some 

electronic tools. So we did an electronic tool challenge of job 

aggregators, because these folks haven’t looked for a job in a long 

time. So we put up over 300 different things for free on our Web 

site and told—65,000 people did it—come in and tell me what you 

liked about it and what you didn’t. And for some of them, it was 

not using Monster.com with a million jobs; it was going to look for 

jobs in their specific sector. 

So we are trying to respond to that, so as job seekers are looking 

for something, not to overwhelm them with a thousand jobs that 

they are not qualified for, so they get put down, even if it is just 

by the computer. So we are trying to tailor it so that they can look 

for jobs for which they have qualifications. 

And, finally, on that electronic tool front, we fully intend to put 

the SGA out at the end of this month to build a virtual one-stop, 

so somebody can look at what is available to them at a low-level 

reading so it doesn’t put somebody off, but they go into the one-stop 

knowing what they are qualified for because they have already pursued it a little bit. And we will give grants to community-based organizations so that they can support the use of that tool, not just 

a public workforce person. 

But, Congressman, this is an area where we need to reach out 

to our community-based and faith-based partners because we need 

help with this. Because, I will tell you something that someone, not 

in Congressman Ryan’s district, on another trip to Ohio, a one-stop 


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worker said to me, ‘‘You know, I have been in this system since 

CETA.’’ And, you know, I nodded my head. And she said, ‘‘It is different today.’’ And I nodded my head. And there were 500 or 600 

people in the audience. And she said, ‘‘In the 1970s or 1980s, if 

somebody came into my office and said, ‘If I don’t get a job this 

week, I am gonna blow my brains out,’ I would have said, ‘Oh, 

honey, sit down, have a glass of water, have a cup of coffee.’ Today, 

when somebody comes into a one-stop and says that’’—this is that 

woman saying it—‘‘I am looking for the gun.’’ 

So my folks at the one-stops feel the sense of hopelessness that 

their customers are feeling. They are looking for ways to deal with 

it. But we need to get faith-based and community-based organizations to help us. Because I am worried not just about the mental 

health of these folks, but about the safety in some of these areas. 

People are really hopeless out there, and we need to do more to 

restore a sense of hope by giving them real tangibles about what 

their skill sets can mean in terms of getting a good job. 

Mr. OBEY. Thank you. 

Ms. OATES. Now that we have left that on a depressing note. 

Ms. KANTER. Well, let me—— 

Mr. OBEY. Usually, I am the person that leaves everybody depressed. 

Ms. OATES. From pinata to, like, I am ready to sit and cry now. 

RECONCILIATION ACT AND FUNDING FOR COMMUNITY COLLEGES

Ms. KANTER. I think every organization, whether it is a one-stop, 

a community college classroom, or a counseling office, is reeling 

from the recession. And people are depressed. 

What is exciting and gives us a sense of momentum is, if the 

amount in the Reconciliation Act for the community colleges holds, 

our equal partnership with the Department of Labor—we have 

done a lot of work together, as I said. 

Part of it addresses the one-stops and how we can ramp up the 

human element. If you are depressed, the last thing you want to 

do sometimes is sit down at a computer and try to figure out what 

is right for me. You want somebody there who is motivated to say, 

‘‘Look, I am going to take you through this. I am going to show you 

the way.’’ If you enter a community college, we have supportive 

services. 

We are hoping with that $2 billion—$500 million every year for 

4 years—we can really incentivize. We are not sure whether the 

regulations are going to allow us to do as much as we want to do, 

that maybe the AGI—the American Graduation Initiative—would 

have allowed us to do. But we are going to incentivize getting those 

students, those clients, into the right program with the support 

that they need. 

So, for example, if they need to visit a counseling group that is 

available to them through a community college, they could take a 

class that would be called ‘‘Career Training’’ or ‘‘Career Preparation.’’ They may be taking an English class. One of the innovations 

is, can you put these real-life challenges into the classroom and 

support the faculty to adjust the curriculum to acknowledge what 

the students need? 


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I know we have had a program called ‘‘Puente’’ for many years. 

It has combined counseling and teaching so that students are 

learning English, are finishing the requirements for that literacy 

level they need, but are getting the support along the way and 

have a human being to talk to while they are in the program. 

So I think we can build on some of the lessons learned over the 

last 10 years to really use that money well to get these people into 

jobs and lift their confidence moving forward. 

Mr. OBEY. Why don’t we take one more question from any Member who wants to ask one before we shut this down. 

Mr. Tiahrt. 

Mr. TIAHRT. Thank you, Mr. Chairman. 

And I don’t want to end on a bad note either, but I do see—— 

Ms. OATES. I hear a ‘‘but’’ there. 

COST OF REGULATIONS

Mr. TIAHRT [continuing]. I do see great opportunity in our community because of the American people and the innovation they 

have provided over and over. And, you know, I think we do all try 

to live out what we believe will work. 

And my view of how the economy works is, we have to, in a 

world economy, be able to make things here less expensively than 

we do today. We have been the number-one economy because we 

are the most productive economy. And the things that draw away 

from that productivity are the things that concern me. 

And that is why I bring up, you know, the cost of regulations 

now, which are almost 18 percent of anything we make. And our 

corporate tax structure is now 35 percent. It is the second-highest 

in the world. Our liability costs, because of the tremendous litigation we have, are the highest in the world. And, in energy, we send 

$700,000,000,000 overseas every year. 

So, in order to take on those burdens of higher costs, we try to 

make our employees very productive and give them the ability to 

move freely in the workplace and bring their own innovation to 

their own job. And that is where I think we are different than the 

rest of the world, and it has helped us. But one of my goals is to 

try to keep us from burdening up those jobs with things that distract away from being productive and making things. 

You mentioned the one-stop center. The one-stop center in Wichita is the next building over from my office. And, in talking with 

the people that work there, they have good ideas and they do good 

work, but I am not sure they know of all the funding streams that 

are available to them. 

So I am going to, kind of, ask you. I know we have the WIA, 

Workforce Investment Act. And I know that we bumped some 

money in with the stimulus bill. And there is in some mandatory 

spending that is available in the Trade Adjustment Act. Are there 

other funding streams available? Could you provide me with a list 

of those funding streams that are available to them? 

Ms. OATES. Sure. Sure. 

[The information follows:] 

One-Stop Career Centers provide access to a wide range of services covering many 

federal agencies and programs. Several partners are required to be physically or virtually present in the One-Stop Career Centers, while other programs are optional 


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partners. The degree to which funds from partner programs are available for OneStop operations or to One-Stop customers is often the subject of Memorandums of 

Understanding between the partner programs. 

Mandatory One-Stop Partners: 

— WIA Adult, Dislocated Worker and Youth 

— Wagner-Peyser Employment Services 

— State Unemployment Insurance 

— Job Corps 

— Youthbuild 

— Trade Adjustment Assistance 

— Senior Community Service Employment Program 

— Migrant and Seasonal Farmworker Program 

— Indian and Native American Program 

— Veteran’s Workforce Investment Program 

— Local Veterans’ Employment Representative Program 

— Disabled Veterans’ Outreach Program 

— Adult Education 

— Postsecondary Vocational Education 

— Vocational Rehabilitation 

— Community Services Block Grant Employment and Training Programs 

Optional One-Stop Partners: 

— Temporary Aid to Needy Families (TANF) 

— Supplemental Nutrition Assistance Program (SNAP) 

— Higher Education, including community colleges 

— Youth Corps 

— Other appropriate Federal, State, or local programs, including programs in the 

private sector 

Mr. TIAHRT. And if I may ask for a couple of other things for the 

record—by the way, this is confusing, the budget is confusing, because we have budget authority, and then we have outlays, and 

then we have obligated and unobligated. In the budget for fiscal 

year 2010, it does refer to the $1,400,000,000 that I talked about 

as an unobligated balance carried forward. 

So I want to know, how is this impacting—specifically with the 

WIA funding, could you tell me, like, since 2007, how many people 

are taking advantage of this program on a year-by-year basis? 

And then, also, could you tell me, when we get people out of the 

programs, how many have held a job for, like, 2 years or so, 1 year 

and 2 years? 

Ms. OATES. We can do 6 months and 12 months. That is what 

we collect. 

Mr. TIAHRT. Okay. That would be good. All right. Thank you. I 

appreciate that. 

Ms. OATES. We will get that to you. Thank you. 

[The information follows:] 

Workforce Investment Act programs served 1.662 million adults and 357,890 dislocated workers in PY 2006; 2.803 million adults and 396,150 dislocated workers in 

PY 2007; and 5.171 million and 671,790 dislocated workers in PY 2008. These are 

the number of participants in the programs, as reported by states in their WIA Annual Reports. The number of adults has increased in recent years due to changes 

in reporting to include self-service participants as significant resources are utilized 

to provide resource rooms and access to services via the Internet. The increase in 

the number of dislocated workers is likely due to the down turn in the economy in 

calendar year 2008/2009. 

The employment retention rate for the WIA Adult program was 82% in PY 2006, 

84% in PY 2007, and 83.5% in PY 2008. For the WIA Dislocated Worker program, 

the employment retention rate was 88% in PY 2006, 87% in PY 2007, and 86.0% 

in PY 2008. These results are obtained by looking at the percentage of those program completers (known as exiters) who were employed in the 1st, 2nd, and 3rd 

quarters (3, 6, and 9-month intervals) compared to all who exited the programs. Additionally, states report annually the employment retention rate at 12 months. For 

the WIA Adult program, the 12-month retention rate was 80.4% for PY 2006, 83.8% 


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for PY 2007, and 82.3% for PY 2008. For the WIA Dislocated Worker program, the 

12-month retention rate was 85.9% for PY 2006, 86.8% for PY 2007, and 84.8% for 

PY 2008. 

Mr. TIAHRT. Thank you, Mr. Chairman. 

Mr. OBEY. Ms. Roybal-Allard. 

CONSOLIDATION OF REHABILITATION SERVICES EMPLOYMENT

PROGRAMS

Ms. ROYBAL-ALLARD. I, like other Members, have been concerned 

about the consolidation of a lot of programs and the shifting it to, 

you know, competitive grants. And that is certainly true with the 

consolidation of several of the Rehabilitation Services Administration employment programs, which you have put a lot of vocational 

rehabilitation State grants into that whole consolidation. 

And my question is, in doing that—without these dedicated resources, these services programs may not necessarily receive funding under the larger State grant program. So my question is, what 

plans does the Department have to ensure that the unique needs 

of, for example, disabled individuals will continue to be met by the 

Vocational Rehabilitation State Grant? How do you guarantee 

that? 

Ms. POSNY. When we are talking about the consolidation, some 

of the consolidations are the migrant workers, for instance, or supported employment. So—— 

Ms. ROYBAL-ALLARD. That is the one I had in mind. 

Ms. POSNY [continuing]. Those are the ones that we were talking 

about. 

What we want to do is put the money in the base. So those populations are still going to be served, and the way we will know they 

will continue to be served are the performance outcomes. They will 

still have to indicate to us and provide the data to us that these 

populations are being served and how well they are being served. 

What this allows us to do is to streamline the services. Right 

now, we are duplicating services because we serve those populations within what I refer to as the base as well as in the separate 

programs. With the consolidation, we are going to streamline and 

make sure they are still going to continue to be served; they are 

just going to be part of the base. 

Ms. ROYBAL-ALLARD. But what happens is—I mean, you will 

have to find that out because they will be reporting back to you. 

Ms. POSNY. That is correct. 

Ms. ROYBAL-ALLARD. But in the meantime—and I don’t know 

what the length of time would be, when you find out, well, gee, 

that we are not reaching this particular population—in the meantime, these people are not getting the services. 

CONTINUATION OF SERVICES UNDER CONSOLIDATION PROGRAMS

So I guess my question is, or the concern I have is, that there 

shouldn’t be a gap. We shouldn’t be waiting to see, gee, all these 

people over here have been suffering, have not gotten services, so 

now we need to do something about it, particularly when we have 

programs in place that ensure that there will not be a break in 

services. 


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Ms. POSNY. I look at this as being a continuous flow. You are correct. For right now, they are being served as separate programs. 

Under the consolidation, they will continue to be served, but it will 

be within the larger program. There will not be a break in service 

at all. They are going to continue to be served, and they will continue to provide the data to us, just not as separate entities. It will 

be part of the program in its entirety. 

Ms. ROYBAL-ALLARD. Okay. I will have to look and see a little bit 

more on how that is going to work. 

Ms. POSNY. Okay. 

Mr. OBEY. Mr. Cole. 

Mr. COLE. Thank you, Mr. Chairman. 

And thank all of you. It has been a very interesting hearing. 

BUSINESS INVESTMENT IN TRAINING

I think, if my notes are right, Secretary Kanter, you had, actually, I thought, one of the most dreadfully depressing but maybe 

important statistics in your testimony. You mentioned that there 

were, if I got it right—I may have it wrong—90 million or so people 

with low training, no access to college, and we are only reaching 

2.4 million or something like that. 

Ms. KANTER. Actually, 93 million. 

Mr. COLE. Gee, thanks, I really appreciate that correction. But 

it does, back to Chairman Obey’s point, give us some idea of the 

dimensions of the challenge. 

I don’t know the answer to this, but I am curious as to—just to 

pick up on a line of questioning that Mr. Tiahrt had, too—that is 

almost too big for government to do, and that is beyond a multiple 

of our resources to deal with. 

What are the kinds of things that we are doing to incentivize private businesses who are employing these people, in many cases, 

somewhat, some of them, to come back and reinvest? What should 

we be doing in terms of tax credits for people that will do additional training for their workforce or that will give them the time 

off they need, in many cases, to actually go back and pick up the 

skills they need, and to, again, incentivize those companies to, in 

a cooperative way quite often, work with us in technical training 

and what have you? 

Ms. KANTER. We are working very closely with the Department 

of Labor, as both Jane and I have said. I hope you come away with 

the understanding that we have a commitment to work as equal 

partners to reach out to the public and private sectors. 

Mr. COLE. And that is good. But, again, to Congressman Tiahrt’s 

point, we have a big labor force, so you really have to bring businesses directly into this. And I am really more interested in 

incentivizing the employer to train the worker that they need than 

not. I mean, they know their needs. And, quite often, you know— 

and they can provide some of the capital. They are going to need 

to provide some of the time, some of the support services. What are 

we doing to incentivize them to do that sort of thing? 

Ms. KANTER. I will give you an example. If you look at Cisco Systems, they are a great employer. We have regional training academies at our 2-year colleges, at our 4-year colleges, and in our high 

schools with a common curriculum that is giving access to people 


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at different levels. So, for a high school student, they get access. 

I went to a community college class where there was a laid-off 

worker who came back and received the Cisco training. Cisco provides the curriculum; and our faculty adopted the curriculum. It is 

very high-quality training, it is internationally benchmarked. I 

have even talked to CEO John Chambers about it. 

I think an added value we could ask business to do is to let their 

workers know that we have the largest tax college credit now available, the American Opportunity Tax Credit, which is going to be 

put toward the cost of tuition, fees, and course materials, where 

taxpayers could actually have that benefit while they are working 

in a job. I think there is a lot of communication that we can do. We also are excited about having that $2 billion in the Reconciliation Act to look at ways that we can partner and incentivize the 

private sector to work more closely with higher education. We also 

had private-sector folks on our P–16 community regional task 

forces advising us. 

PROMISING PRACTICES

So we have new roles for business where I think they will have, 

hopefully, a more motivated and more excited set of people coming 

in as we move forward. 

Ms. OATES. And, if I could impose, we have some real examples 

of promising practices. I mean, in Mr. Tiahrt’s district, you know, 

where it is aviation, a lot of those aviation employers have sitebased education that is not directly aligned with their current job 

but helps to move them up, because that is an industry that is always changing. 

But we see great benefit in employers who have site-based adult 

basic ed courses or site-based adult English-learning classes for 

employees who don’t yet have the English skills they need to do 

their job at 150 percent or to move up the ladder. 

So I think you have a great idea with this idea of a tax credit. 

I mean, the one problem that I think we see is that a small employer has a very difficult time giving their employee time off during work because it stops their productivity. But if they allowed 

them to stay an hour, things like travel time and child care and 

things like that are really abated. 

So, if there is some—I don’t know what the dollar amount would 

be because I really don’t understand corporate tax credits. But I 

think if you put some incentive out there for people to think about 

doing that—and it might not have to be a big incentive, you know, 

to pay the light bill or whatever, or to pay the janitor to stay an 

extra 2 hours in some cases—I think you would get a lot more businesses to say, ‘‘Oh, that makes sense. I would do that.’’ 

But, again, remembering for that small employer, it has to be, 

I think, at the end of the workday or before the workday begins, 

because they just can’t give up a worker if they only have 30 employees. It really does impact the phone not getting answered or 

something not moving down the line. 

But I think it is a terrific idea. I think most of the 

businesspeople that I meet with are always trying to figure out 

what they can do. They are not big enough to do tuition reimbursement; they don’t have that kind of cash. But if you went to them 


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and said, ‘‘We will have a community college provide the adult 

basic ed instructor if you provide the room,’’ I think they would be 

open to that. And if you put a little sweetener in it, they would 

probably be wide open to it. 

Mr. COLE. Thank you. 

Thank you, Mr. Chairman. Appreciate that. 

Mr. OBEY. Thank you. 

Did you want to say something? 

Mr. JEFFERSON. Yes. 

WORK OPPORTUNITY TAX CREDIT

Representative Cole, just make sure that the veterans are also 

represented in the dialogue. We actually have a Work Opportunity 

Tax Credit that provides a tax credit of $2,400 for veterans hired 

and also $4,800 for disabled veterans, as well. And we are making 

sure that our employment representatives and our State directors 

raise awareness of that when they are talking to employers and to 

CEOs. 

Mr. OBEY. All right. Thank you all for coming. Appreciate it. 


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(355) 

WEDNESDAY, APRIL 14, 2010. 

FY 2011 BUDGET OVERVIEW: SOCIAL SECURITY 

ADMINISTRATION 

WITNESS 

MICHAEL J. ASTRUE, COMMISSIONER, SOCIAL SECURITY ADMINISTRATION 

INTRODUCTION OF WITNESS

Mr. OBEY. Well, good morning, everyone. 

This morning we will hear from Michael J. Astrue, who is the 

Commissioner of Social Security. 

One big problem facing Social Security is long delays in processing applications for disability benefits. It is now taking an average of about 3.5 months to get an initial decision. If the application 

is denied, as more than 60 percent are, there is a right to appeal 

to an administrative law judge. However, almost 700,000 such appeals are pending, and they take an average of 15 months and 

much longer in some cases. 

These appeals are important because more than three-fifths of 

people who do appeal wind up winning on appeal. Overall, it takes 

almost 2 years from filing an application to receiving a decision on 

appeal. That can be disastrous for someone who is disabled and unable to work and urgently needs the benefits that they have earned 

in order to help pay the mortgage and buy groceries. 

The challenge of keeping up with disability claims is getting bigger. In part, that is because Baby Boomers are getting older and 

into the most disability-prone years. An even bigger problem is that 

applications are up 29 percent as compared to 2 years ago, as normally happens during a recession. 

The workload challenge goes well beyond disability claims. As 

the population ages, applications for retirement benefits are rising. 

Also since we now use Social Security numbers for so many things, 

including verification of eligibility to work, the issuing and tracking 

of those numbers has become a critical function. 

During much of the last decade, Congress tended to appropriate 

less than the administration requested for Social Security operations. But in the last 3 years, we have tried to do the opposite in 

order to help keep up with workloads. We added $148,000,000 

above the request in fiscal 2008 and $127,000,000 above the request in 2009. Further, the Recovery Act included $500,000,000 for 

SSA to use over 2 years to accelerate hiring, pay more overtime 

and do other things to reduce backlogs and keep up with the new 

claims driven by recession. 

It appears that this funding having an effect. Social Security 

hired 8,600 new employees in fiscal year 2009, the largest hiring 

in 35 years. Just last week, Commissioner Astrue announced that 


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another 900 people would be hired for field offices to reduce waiting times. The disability hearing backlog has actually begun to 

come down. 

Also, while we want to make sure that people get the benefits 

they need and have earned, we also need to make sure that people 

do not continue receiving benefits they no longer need or aren’t entitled to. Two years ago, we resumed providing dedicated funding 

for Social Security program integrity. These funds were used to 

conduct continuing disability reviews to determine whether recipients remain eligible for benefits and to check for changes in earnings and assets that could affect payments to SSI beneficiaries. 

Last year, we appropriated $758,000,000 for program integrity, a 

50 percent increase. This investment is expected to yield 

$6,000,000,000 in savings over 10 years. 

Our witness today, as I said, is Michael Astrue who has been Social Security Commissioner since 2007. Interestingly, the Commissioner is one of the few top-level officials who do not leave office 

when Presidential administrations change. Rather, although he 

was appointed by President Bush, Mr. Astrue’s 6-year term will 

continue until January of 2013. 

Mr. Commissioner, welcome to the subcommittee. Your full written statement will appear in the record. We would ask you to give 

us an oral summary for about 7 minutes or so. Please proceed. And 

as I say, we will put your full statement into the record. 

Before we proceed, however, I would like to ask Mr. Tiahrt if he 

has any comments. 

INTRODUCTION OF WITNESS CONTINUED

Mr. TIAHRT. Thank you, Mr. Chairman. 

I will be brief. I want to thank you, Commissioner Astrue, for appearing before this subcommittee to testify regarding the Social Security Administration’s fiscal year 2011 administrative budget request. As your testimony highlights, the Social Security Administration’s discretionary budget funds its operations of Social Security and Supplemental Security Income program that affects virtually every American. 

Moreover, the agency provides a range of important services associated with administering these big programs, including disability reviews and eligibility redeterminations. Again, these are 

important activities to millions of Americans. You are requesting 

an overall fiscal year budget of $12,500,000,000 your budget request is well focused on continuing to improve on your core functions, increasing staff productivity, as well as making needed investments in technology and infrastructure. 

However, I suspect you may be understating what your resource 

needs are actually going to be this year. Congress recently passed 

and the President signed into law the health care reform package 

that may have added new responsibilities and activities to your existing workload and increasing your funding needs starting this fiscal year. Hopefully you will tell us whether this is true or not. 

And of course, these budget and funding decisions are taking 

place in a fiscal environment that is difficult. As everyone agrees, 

the current fiscal path that we are on is unsustainable both in the 

short term and long term. In the past several years, we have seen 


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a massive increase in debt and spending with deficits over 

$1,000,000,000,000. 

As an example of the magnitude of the problem in the short run, 

under the President’s fiscal year 2011 budget, if fully implemented, 

deficits would never go below $700,000,000,000 in any year and 

would climb to above $1,000,000,000,000 by the end of the next 10 

years, and that assumes a recovered economy and a wind-down of 

the wars in Iraq and Afghanistan. 

It is worth pointing out that these projected deficits are not the 

results of an inherited policy about which the administration is 

helpless but policy choices made in the President’s budget. Nor is 

it a revenue problem. The President’s budget proposes to raise 

taxes by $1,800,000,000,000 over the next decade. 

Hopefully Congress can do better to get spending and deficits 

under control without large tax increases. But regardless of which 

budget is used and who is in political control, it will require tough 

budget choices across the board if we are going to get a handle on 

the unsustainable fiscal path. Resources are limited. 

Let me close by saying, thank you for coming. I look forward to 

your testimony on your fiscal year 2011 budget request and your 

insights on the issues and challenges you face in your agency today 

and down the road. 

Thank you, Mr. Chairman. I yield back. 

OPENING STATEMENT

Mr. ASTRUE. Chairman Obey, Ranking Member Tiahrt, members 

of the subcommittee, thank you for this opportunity to discuss our 

fiscal year 2011 budget request. We greatly appreciate the vital 

support that you have given us over the last several years. We 

have made substantial improvements because of increased funding 

and because of employee productivity, which has risen by an average of 4 percent each year during my tenure. 

The President’s 2011 budget request of approximately $12,500,000,000 is essential to our continued progress. While we 

had expected that workloads would increase due to the aging Baby 

Boomers, the recession has resulted in over a million more Americans filing claims this year over what we were projecting just a few 

years ago. 

Nevertheless, we are improving service across the agency, despite soaring workloads. In fiscal year 2009, we reduced the hearings backlog, improved DDS quality, improved our program integrity efforts, and reduced waiting times for callers to our 800 number and visitors to our field offices. 

This progress is in sharp contrast to the state of the agency 3 

years ago. Years of funding below the President’s budget had undermined the hard work and dedication of our employees and had 

damaged our services and important stewardship activities. We 

committed to fix those problems, and today I am happy to highlight 

some of our accomplishments. 

We are wisely using your investments to produce measurable, 

positive results for the American people. Over the last 15 months, 

despite the recession, we have reduced pending hearings by over 10 

percent after a decade of steady and troubling growth. We now 

have under 700,000 cases pending for the first time since 2005. 


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Even as we have eliminated the oldest cases first, we have reduced 

the time it takes to make a decision by more than 3 months from 

a monthly high of 532 days in August 2008 to 437 days in March 

2010. 

Our greatest improvements are in the most backlogged offices. 

For example, processing time in the Atlanta North hearing office, 

which used to be approximately 900 days, has dropped nearly 45 

percent since February 2007, and it will drop yet again when the 

Covington office opens in the fall. By fiscal year 2011, we will increase our administrative law judge corps to 1,450. These additional ALJs and the opening of 25 new hearing offices, including 

our fifth national hearing center, which only works on backlogged 

cases around the country, will dramatically decrease the backlog 

and processing times over the next 2 years. 

For all our success, I know that our hearings backlog is unacceptable. With your support, we will eliminate it by the end of fiscal year 2013. While this backlog remains our number one priority, 

we must address other workloads and deliver high-quality services 

across the agency. We are maximizing the hiring and overtime authority in the State DDSs to handle the steep increases in initial 

disability claims. In four States with the capacity to hire, train, 

and house additional employees, we are creating teams that will 

help the most overwhelmed States. We are also expanding our Federal disability units to assist those States as well. 

Unfortunately, our progress is impeded when a State furloughs 

DDS employees whose salaries we fully fund. These unconscionable 

decisions do not benefit anyone. Furloughs only delay benefits to 

our most vulnerable citizens. For many of our most vulnerable citizens, we have recently expanded our fast track disability processes 

by adding 38 new conditions to our compassionate allowances program. This fiscal year, between compassionate allowances and the 

QDD program, we expect to approve about 140,000 claims in 2 

weeks or less for applicants with the most severe disabilities. 

Soon we should be able to move all cases much faster. Our health 

IT pilots in Massachusetts and Virginia have demonstrated that 

electronic medical records can substantially reduce disability processing times. We used over $17,000,000 in Recovery Act funding to 

expand health IT to 15 additional providers across 12 States. We 

also now have the top three online services in the private and public sectors as rated by the American Customer Satisfaction Index. 

OPENING STATEMENT CONTINUED

Our creative marketing campaign, starring Patty Duke, has 

made our new easy-to-use online retirement application a huge success. In fiscal year 2009, over 30 percent of retirement applications 

were filed online, more than doubling the number from fiscal year 

2008. I would be describing a very dire situation indeed in our field 

offices if we did not have this new application. 

We reduced our 800-number wait times by 25 percent with the 

help of additional staff. Our 800-number service should continue to 

improve with the opening of our first new teleservice center in 

Jackson, Tennessee, in over a decade. 2011 is a critical year because the President’s budget would allow us to reduce the hearings 

pending by another 50,000 cases, to complete 236,000 more initial 


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disability claims, and to increase our program integrity efforts 

through 31,000 additional medical CDRs. 

To sum it up, we need your continued support to continue this 

kind of progress. Thank you, and I am happy to answer any questions you may have. 

[The prepared statement and biography of Commissioner Astrue 

follow:] 


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Mr. OBEY. Mr. Tiahrt. 

NEW SUPPORT CENTER

Mr. TIAHRT. Thank you, Mr. Chairman. 

In the Recovery Act, there was $500,000,000 set aside for a new 

site. The GSA is trying to select—I guess they have to be within 

40 miles of the headquarters in Woodlawn, Maryland. There was 

a hearing about it in Ways and Means. And I guess what I would 

like to know is, when will you select the site? I don’t think one has 

been selected. 

And secondly, the GSA IG did an analysis to determine if a new 

facility and new site was actually required because there is an impact on your employees and some security questions. Would you 

bring us up to speed on this? Do you have a selection site? Is it 

really justified? 

Mr. ASTRUE. First of all, let me clarify that under the statute, 

I don’t actually get to decide. I get to kibitz and provide notice to 

Congress, but it is a GSA responsibility with the approval of OMB. 

We certainly have been working very actively to support GSA in 

this endeavor. We are very eager to get this facility up and running. Aside from the Recovery Act aspect—and this would be the 

largest project in the greater Baltimore area—under the Recovery 

Act for the security of our data and having adequate backup in 

case there was a catastrophic interruption, the sooner we get this 

facility up and running, the better it will be for the American public. 

We have had some delays from the original timeline. It took a 

couple months to answer the questions from the joint committee 

hearing in December. I believe that the staffs have been briefed 

fully now on all the questions that came out of that hearing, and 

the GSA is moving forward and hoping to pick a site some time 

later this spring. 

SUPPORT CENTER SITE SELECTION

Mr. TIAHRT. Okay. But it was due in March. It is not going to 

be ready in April. It is going to be May you think? 

Mr. ASTRUE. I think it is unlikely it will be in April. I think there 

is a real possibility, I would say it looks to me, and I try to keep 

as close to this as possible, but it is a probable May–June time 

frame, but it is not an automatic process because they don’t automatically go to the—as I understand the GSA process, it is not like 

other forms of government contracting where it automatically goes 

to the lower bidder. They model best demonstrated practices in the 

private sector, and they go out and do a negotiation with the most 

highly ranked candidates. So there is a little bit of unpredictability 

in the timeline because there is not sort of the set cutoff date that 

you would see in a standard government procurement. At least 

that is the way I understand the process. 

Mr. TIAHRT. Okay. Well, I guess since you don’t get to make the 

final choice, we will give you a little slack on that. 

EFFECT OF HEALTH CARE REFORM ON SSA

Mr. ASTRUE. Thank you. 


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Mr. TIAHRT. The health care reform bill has been signed into law. 

Mr. ASTRUE. Yes. 

Mr. TIAHRT. It has a lot of impact on a lot of government agencies. Even though the benefits really don’t start until 2013, we 

have a taxing impact; we have other changes that are going to 

come to your agency. Could you explain what impact the health 

care reform bill will have on the Social Security Administration? 

Mr. ASTRUE. Sure. I have a 10-page chart with all our obligations 

under the new Health Care Reform Act. The good news is that 

there are really only two that I would characterize as fairly substantial. I want to thank members of this committee and all our 

committees of jurisdiction for realizing that we get in a typical year 

two to four additional statutory responsibilities. Often that is not 

compensated. That has made it difficult sometimes with our core 

mission. 

And as the bill evolved, there was less impact on us than what 

we anticipated. So the two primary impacts are the means testing 

of Medicare part D. We will need to have a new business process 

and systems coordinating with CMS by the end of the calendar 

year in order to fulfill all our responsibilities under that. We also 

have a substantial new number of verification responsibilities. I 

think we are expecting—I will provide detailed numbers for the 

record. But if I remember correctly, about $52,000,000 of impact for 

this year and next year. In fact, the fact that that number came 

in lower than what we had budgeted was a factor in allowing us 

to release the 900 FTE for the frontline staff. 

[The information follows:] 

HEALTH CARE REFORM

The new health care reform legislation imposes two main obligations on the Social 

Security Administration with deadlines this fiscal year or next. These obligations 

are high-risk pool verifications and means testing of Medicare Part D claimants. 

The new law also requires us to provide verifications for the new health insurance 

exchanges beginning in 2014. 

The administration is still formulating final cost estimates for the health care reform legislation. These estimates will be available at a later date. 

NEW HIRES

Mr. TIAHRT. So you are releasing 900 FTEs? 

Mr. ASTRUE. We released another 900. What we did is, when the 

appropriation came through, if I remember correctly, in December, 

we released most of our money immediately. But then because it 

is a big complicated agency and there are a lot of contingency factors, we do one or two—I think one year, three—releases a month, 

2 months, 3 months later as we see how things are going. 

A couple things broke well for us. The health care bill had less 

impact than we anticipated. One of our big systems projects that 

was required by court order came in on the low end of the spectrum. So that was one of the reasons why we felt comfortable releasing as many FTEs as we did. We weren’t sure when we got the 

money in December that we would be able to do that responsibly. 

Mr. TIAHRT. So this is an expected growth that you are not able 

to hire on? Or are you laying people off? 

Mr. ASTRUE. No. We added another 900 over what we had released in December. And I think this is a good thing from a service 


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delivery point of view. What we did try to do that was different this 

time—we did just a little bit of experimentation with it last year. 

I have come to the conclusion that the longstanding metric that we 

have used to deliver staff shortchanged offices of certain profiles. 

And when you went around and looked around the offices, you saw 

inner city offices and border offices struggling a lot more with wait 

times than offices with other profiles. So while not all the additional staff is going to offices of that profile, we did decide this time 

around to invest disproportionately in about 200 offices that met 

our new standard of most stressed. 

Mr. TIAHRT. Thank you, Mr. Chairman. Thank you. 

Mr. OBEY. Ms. Lee. 

Ms. LEE. Thank you, Mr. Chairman. Thank you for your testimony and also for your service. 

Mr. ASTRUE. Thank you very much. 

Ms. LEE. Social Security really is the most successful antipoverty 

program in history. The Social Security Administration ensures 

that millions of American seniors have a secure retirement and 

work to give the disability and other vulnerable populations the 

support that they need to live independently and pursue meaningful careers. Especially for women and women of color, Social Security has really been their lifeblood. So just thank you for helping 

to shepherd this important program through. 

Mr. ASTRUE. Thank you. Well, it is an honor to be a part of it. 

It really is. 

PRIVATIZATION OF SOCIAL SECURITY

Ms. LEE. Yes, it is really great. I oftentimes think about what 

would have happened several years ago had we privatized Social 

Security, given what happened to the outrageous collapse of Wall 

Street and the largest investment banks. Personally, I think that 

we would have been, or at least Social Security would have been 

dismantled had we privatized it. And I don’t know how you see 

that in looking back now, given what happened with the financial 

markets and still the lack of effective regulation, if we had 

privatized that. I would like to get your thoughts on that. 

EFFECT OF RECESSION ON RETIREMENTS

Secondly, let me ask you about when retirees are retiring, given 

the recession, given the high rate of unemployment, are you finding 

that more people are deciding to retire? What is it, at age 62 rather 

than—or at least get their benefits at 62 rather than—what is it 

now, 66, 65? 

Mr. ASTRUE. It is interesting. When we get media inquiries, 

there is often a perception that more people are delaying retirement because of the 401(k) being the 201(k) effect. And there is 

clearly an identifiable group of people who are delaying retirement 

because their private savings are not what they had hoped that 

they would be. 

But those numbers are dwarfed by the number of people that are 

retiring early really out of desperation. And a person laid off in 

their 60s typically finds it much more difficult to find new employment than someone who is much younger. So we are looking at 

roughly—and we will provide the detailed numbers—but roughly in 


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the range of 300,000 to 400,000 more retirement claims than what 

we were projecting a couple years ago. 

[The information follows:] 

APPLICATIONS FOR RETIREMENT BENEFITS AND THE ECONOMIC DOWNTURN

Based on the most recent economic assumptions, we estimate that in FY 2010, 

we will receive over 375,000 more retirement, auxiliary, and survivors claims and 

over 730,000 more disability claims that we had estimated for FY 2010 only two 

years ago. 

Preliminary data suggest that the age distribution for total applications we received in FY 2009 was not substantially different from prior years, suggesting that 

there were increases across all ages 62 through 70. 

Ms. LEE. You mean at age 62 versus those who have been working? 

Mr. ASTRUE. Those are certainly before the age of 70. Most of 

those are early in the sense that if they are not 62, they are 63 

or 64. 

Ms. LEE. When does it kick in, at 62 you are eligible? 

Mr. ASTRUE. Yes. 

Ms. LEE. And then the next is what, 65, 66? 

Mr. ASTRUE. Well, it is not a cliff. It gets complicated. But there 

is a gradation, and basically, the longer you wait, the higher your 

benefit is. 

Ms. LEE. Right. 

ONLINE RETIREMENT ESTIMATOR

Mr. ASTRUE. One of the things we are trying to do is provide people much more detailed information about that. So we communicate with them in advance of retirement about that. We now 

have an online estimator that, in contrast with the past, ties in 

with your own record. So if you want to see how much you will get 

on a monthly basis if you retire at 62 or 64 or 68.5, you can run 

those numbers. It is particularly important, in my opinion, for 

women because you have the advantage that you are going to live 

a lot longer, typically about 7 years on average. So a lot of women 

in particular tend to underestimate how long they are going to live 

and what their benefits will be. We are trying to provide a lot more 

information. 

UNEMPLOYMENT AND DISABILITY

Ms. LEE. I understand that. What I am trying to get at is—for 

example, given the nature of this recession and given the huge unemployment rates, if a person becomes unemployed at 61 or 60 and 

had had planned to apply for benefits at 65 or 66, do you see the 

60- or 61-year-old saying, Uh-oh, I probably won’t get another job, 

or I can’t afford to wait, and I am desperate. I need a check, so I 

am going to apply now versus wait. 

Mr. ASTRUE. Right. If they are 60 or 61, they can’t apply for retirement because there is a sharp line at 62. Where we do see them 

is, and in fairly high numbers, they apply for disability. That is 

why the disability claims are up, again, approximately 700,000 a 

year from what we were projecting just a few years ago. And some 

of those people do end up qualifying. But most of them, because the 

motivation for applying is economic and not medical, most of them 

will end up probably being denied, I would believe. 


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DIVERSITY OF STAFF

Ms. LEE. Okay. 

And finally, if you could get the committee a breakdown of the 

diversity of your staff in terms of by ethnicity and gender, job category for clarification as well as if you do any contracting out, I 

would like to see how you contract with small businesses, small 

and disadvantaged businesses, women-owned businesses and what 

have you. We would like to see that. 

Mr. ASTRUE. I would be delighted to provide that for the record. 

[The information follows:] 


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Ms. LEE. Thank you. 

Thank you, Mr. Chairman. 

Mr. OBEY. Mr. Cole. 

REMOVAL OF ADMINISTRATIVE LAW JUDGES

Mr. COLE. Thank you, Mr. Chairman. 

I have got a particular problem I want to highlight and get some 

suggestions on. You have got a great staff. There are great people 

all the way through the system. They do a wonderful job. I know 

the ones in my area and in my State quite well, and I am pleased 

with all but one. We have a particular case where we have a judge 

who literally sits on cases for years. So what are the procedures 

whereby—and I could get multiple congressional offices that would 

tell you the case workers have the same problem, just over and 

over and over again. 

When you find a case like this with a judge who is literally not 

making a decision—I don’t care what the decision is, but literally, 

we are talking years, not months, for people—what procedures do 

you have to identify and remove somebody like that? 

Mr. ASTRUE. We have somewhat limited authority in this area. 

I think the chairman and I had some discussion about this the last 

time I was here. There are restraints on what we are allowed to 

do because of some of the excesses from the 1980s. Typically in 

these types of cases, we try to do everything we can through counseling and try to identify issues, and if there are legitimate issues, 

try to provide the support that we can. In order to move along a 

case like that, it really has to be extraordinarily extreme before the 

Merit Systems Protection Board will allow us—— 

Mr. COLE. This one really is extraordinarily extreme. 

Mr. ASTRUE. Well, by extreme, I am talking more years rather 

than months. I understand your situation. I am sympathetic to it. 

We have relatively few judges in that category, but we do have 

some. We had one who did, I think, no cases for 6.5 years. And if 

you want us to have more tools there, you do need, I think, as 

a—— 

Mr. COLE. I would love to get suggestions from your office as to 

what the appropriate tools from your standpoint you would need to 

act. Because again, I do recognize you are limited as to what you 

can do. This is not a complaint addressed at you, and it is certainly 

not a complaint addressed at the overwhelming majority of people 

and certainly the great majority of judges that we work with. But 

again, I talked to other Members from my State, and it is just unbelievable. It has been going on for years. 

Mr. ASTRUE. I do know who you are talking about. 

Mr. COLE. I suspect you do. 

Mr. ASTRUE. And I do concur that it is a serious problem, and 

I think that Judge Cristaudo and his staff have been trying to do 

everything they can to turn it around for you. 

Mr. COLE. They have. 

Mr. ASTRUE. But it is one of those situations where there is a 

tension between judicial independence and timely service to claimants, and that is a balance that, to a large extent, the Congress has 

drawn. If the Congress would like a different balance, the Congress 

will need to change the law. 


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Mr. COLE. Again, if you have any suggestions as to the type of 

tools that would be helpful to you, I would certainly like to consider 

them. 

Mr. ASTRUE. We would be happy to talk to you to go through 

what the statute requires. 

SOLVENCY OF THE TRUST FUNDS

Mr. COLE. That would be very helpful. 

If I might, let’s move to something, I don’t know if it is more 

pleasant, but it is interesting to say the least. Obviously, for 2011, 

we have had payouts now exceed pay-ins earlier than we anticipated. We all know we have a serious problem. We all agree very 

much with what Congresswoman Lee had to say. This is a very important program, a great program, a program that has to be sustained. 

If you were making recommendations to Congress, what are the 

things that you would suggest we do to ensure the long-term solvency of the Social Security fund? 

Mr. ASTRUE. I am a little stuck on that question. One of the 

things when I was nominated that was negotiated between the 

President and the Congress was that I was to stay out of solvency. 

So the only thing I am allowed to say is to refer you to Secretary 

Geithner and Director Orszag. I am not—we play purely a technical support role when it comes to solvency these days. 

Mr. COLE. So no opinions whatsoever? 

Mr. ASTRUE. I didn’t say I had no opinions. I just said I studiously keep them to myself these days. 

Mr. COLE. Okay. Well, maybe that will give us a second thing to 

talk privately about. But I would be very interested. Obviously, you 

have a unique perspective and knowledge on the system. So what 

you can share would be very helpful. 

Mr. ASTRUE. What I would say, I do want to commend Chairman 

Pomeroy, who just took over the Ways and Means subcommittee. 

I had a long chat with him yesterday, and he indicated that he was 

going to be having a solvency hearing later this year. And I believe 

that is the first one in the Congress in over 5 years by a committee 

of jurisdiction. 

And I think it is important—all I will say is this. I think it is 

important to start the process as soon as possible to get as much 

input and transparency. I think there is a legacy of mistrust that 

came out of the privatization debate. Everybody on both sides of 

the aisle knows we have to deal with this issue. Everyone is scared 

to deal with it. I think the sooner we start this, take some time, 

get the experts, lay it out, I think that we will all be better off if 

we start early and we spend a lot of time in sort of soliciting input 

and trying to get as much consensus in a bipartisan way. 

Mr. COLE. I certainly agree. And I actually think there is an opportunity to do this here because people are aware in Congress of 

the dimensions of the problem. So I look forward to actually a bipartisan process. 

Thank you very much, Mr. Chair. 

Mr. OBEY. Mr. Alexander. 


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ECONOMIC DOWNTURN AND SSA

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

Sir, in your opening paragraph there, you cite, ‘‘More recently, 

the recession has driven numerous economically distressed persons 

and families to us looking for help.’’ Talk to us about what that 

help would be, what they would be asking and what you might do 

to help. 

Mr. ASTRUE. Well, they come in for a whole variety of reasons. 

One of the ones that is incredibly important that we tend to overlook is the survivors’ benefits. When a parent has died young, that 

is an incredibly important support for the children. So we see that. 

We see people coming in for disability benefits, for retirement benefits. We have people coming in for replacement cards. We have people coming in because there is confusion on one of these identification verification systems. 

And one of the things that has been hard in the past year is— 

I make a point, I read every violence incident report in the agency. 

And our people are on the frontline with a lot of disturbed people. 

When I started, we were probably getting about three to five a 

week. We are probably up to 20 a day now. And the intensity of 

what is happening is much worse, much more troubling. We have 

had more actual assaults. It is a very difficult environment that 

our claims reps and others are working in now. And they do a masterful job of trying to help people in those situations, and we provide as much help in our programs. 

We do a lot of help for Medicare. We register people for food 

stamps. We do a lot for these people. But there are a lot of desperate, angry people who come into our offices where there is nothing we can really do for them except refer them to another social 

service agency. It is hard. And often, when people are told there 

is nothing we can do, that is the trigger point for a threat or actual 

violence. It has been a very tough year in that regard. 

Mr. ALEXANDER. Thank you, Mr. Chairman. 

Mr. OBEY. Mr. Tiahrt. 

PRODUCTIVITY AND THE BACKLOGS

Mr. TIAHRT. Thank you, Mr. Chairman. 

I noticed in your testimony that you said you improved your productivity by 4 percent in the last 3 years. 

Mr. ASTRUE. Yes. 

Mr. TIAHRT. And then, later on, you talked about the hearing 

backlog, and you have a chart in here that shows it is increasing. 

How did you measure increased productivity when your backlog is 

increasing? I can’t make the two come together. 

Mr. ASTRUE. Well, we have multiple—our backlog for the hearings has actually been going down. It took us 22 months to break 

the increase. We had had pretty much a steady increase of approximately 70,000 cases a year for many years. It took us about 22 

months to get it to level and then that started going down. 

Most of our other backlogs at work are going down. The one that 

is going up right now is in the DDSs, which are the first two levels 

of review, because they are getting—they were scaled at the beginning of this decade for about 2,000,000 cases a year. They are getVerDate Mar 15 2010 09:09 Nov 16, 2010 Jkt 058234 PO 00000 Frm 00403 Fmt 6601 Sfmt 6602 E:\HR\OC\A234P2.XXX A234P2

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ting this year probably about 3,300,000 is what we were projecting. 

And even with all the staff additions, they did not have the staff. 

And we also ran into the furlough issue with a number of States, 

which made it difficult to process cases. 

But having said all that, we are still at about 800,000 cases 

pending, which is quite a bit less than what we were projecting just 

a year ago. I think they have really done a heroic job. Their productivity measures are way up in terms of the processing of the cases. 

They have been more productive than ever. But the cases are going 

up just because the workloads are an avalanche. 

Mr. TIAHRT. Based on a number of cases or on the time frame 

that each one is—— 

Mr. ASTRUE. It is for each person. Basically, it gets complicated, 

but the measures go for each person who is working, what is the 

output in terms of work. 

MEASURING WORKLOADS AND PRODUCTIVITY

Mr. TIAHRT. And you measure that in how many cases they process or—— 

Mr. ASTRUE. There is a composite measure that goes into something that we call the PPWY. We can provide a breakdown for you 

about how we measure productivity both for the DDSs but for the 

other field services as well. We have had for many years—OMB 

has assumed a 2 percent increase in productivity for the agency. 

And that is about what we did for the first part of the decade. So 

I am really proud of the effort that we have made in the last 3 

years with all this avalanche of work that we have basically doubled our productivity increases for the last 3 years. 

Mr. TIAHRT. I am curious as to how you measured it. What were 

the factors? If you could give it to me, I would appreciate it. 

Mr. ASTRUE. Yes, sir. 

[The information follows:] 

AGENCY PRODUCTIVITY

The factors used in calculating productivity include the amount of work completed, the workyears used to complete the work, and the workyears it would have 

taken to complete the work in the prior year’s work environment. Using FY 2009 

as an example, we know how much work we completed in FY 2009 and the 

workyears used to complete it. 

To calculate how many workyears it would have taken to complete this same 

workload in the FY 2008 work environment, we first calculate the FY 2008 production rates. We calculate production rates for each of our workloads by dividing the 

FY 2008 completed work by the FY 2008 workyears used to complete that work. To 

determine how many workyears we would have needed to complete this work in the 

FY 2008 environment, we divide the FY 2009 completed work by the FY 2008 production rates. We compare the workyears needed based on the FY 2008 production 

rates to the actual workyears used in FY 2009 and the resulting percentage change 

represents the change in productivity. 

The productivity increases cited in the testimony represent the overall net effect 

of productivity changes across all of our workloads. Despite the dramatic spike in 

the number of disability claims we have received, we have successfully increased the 

rate at which we process work, due in large part to our success at increasing benefit 

applications filed online, expanding the use of time-saving technologies in our operations, and our continuing efforts to streamline and simplify our business processes, 

policies, and procedures. 

Productivity is based on the amount of work completed; it does not take into account the amount of work received. Accordingly, it is possible to experience both an 

increase in productivity and an increase in pending work. 


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Mr. TIAHRT. Thank you. 

Thank you, Mr. Chairman. 

Mr. OBEY. Mr. Cole. 

Mr. COLE. I am fine. 

DISABILITY APPLICATIONS AND APPEALS PROCESS

Mr. OBEY. Mr. Commissioner, let me talk about the appeals process. When I look at what the numbers are, I am mystified because 

what it appears to me—or the situation appears to be this way: On 

average, 63 percent of applications for disability in the first instance are turned down. And then, on appeal, over 60 percent of 

those appeals are approved. I mean, I understand why the agency 

wants to set the right balance. But it seems to me that there is 

something systemically wrong when you have that kind of discombobulation between the first set of numbers and the second set 

of numbers. And you know, I understand that conditions may have 

changed from the time of the first application to the appeal. I understand all of that. But this has to provide lots of wear and tear 

on the applicants. 

Mr. ASTRUE. Sure. 

Mr. OBEY. How do you analyze that problem? And what do you 

specifically do to correct it? 

Mr. ASTRUE. One of the things that I think is important to remember is you go through every step of the process, and what is 

the numerator and what is the denominator? And it is not the 

same group of people moving from the DDSs into the hearings and 

appeals process because over a million people just simply will not 

appeal. So it is by definition the close cases for the most part that 

are going into the hearings and appeals. So I think that the number doesn’t look as unfair when you consider that a substantial 

number of people, for one reason or another, accept the decision. 

Certainly what we are trying to do is try to make sure that we 

are as accurate as possible. The DDS accuracy had been 93, 94 percent for most of the last decade. We have done a steady increase. 

We are up to about 97 percent, and we think that we can do better 

with the health IT, because one of the largest sources of errors is 

an incomplete medical record. So even when someone is actually 

making the right decision on the basis of the information they 

have, if that is not the full story, which is often the case, then they 

make what is ultimately the wrong decision. So we are looking to 

provide more up-to-date medical standards. We have new systems 

in place to make sure that examiners, who are often inexperienced, 

are primed with what the full regulations are and what all the requirements are and try to make the best decision-making that we 

can. 

There are going to always be cases that are close calls that are 

rightly turned down by the DDSs, where the person’s situation continues to decline, and by the time they go to the hearing, they are 

a legitimate allowance. There are also cases that are difficult inherently without the visual inspection of the claimant, which they 

don’t have in the DDSs. And one of the strengths of the hearings 

and appeals process is the judge actually gets to look at the claimant, judge the demeanor, can look at functional capacity, and that 

often also means something that doesn’t look compelling on paper 


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becomes compelling when you actually see the claimant in the 

flesh. 

Mr. OBEY. Well, I guess I would just say that I recognize the validity of some of the things you say. But we are still faced with the 

fact that in a majority of cases, you have got a reversal. And that, 

to me, indicates that it is just a basic dysfunction there. I don’t 

know what to do about it, but—— 

Mr. ASTRUE. I certainly acknowledge that we make tens of thousands of mistakes annually, no doubt about that. It is a huge system. We have limited control over a lot of things. We are doing the 

best we can. I think we are making it better, but I don’t quarrel 

with the proposition that we still have a long way to go to make 

it the way that I think we would both like to see it be. 

DISABILITY APPLICATIONS AND THE APPEALS PROCESS CONTINUED

Mr. OBEY. I mean, it almost makes me think that, well, these 

poor suckers were turned down the first time. Then they had to go 

out and get a lawyer. When they got a lawyer, then they got some 

action. I hate to push people into having to—— 

Mr. ASTRUE. Well, I think sometimes—again, I don’t think it is 

that motivation. But I do think that there is a value—the system 

is very complicated. It was originally designed to be very simple 

and not to have lawyers. And as with most government programs, 

it became incredibly complicated over time. Certainly on appeal, 

most claimants do benefit, in my judgment, from having a representative. And often it is very simple in that, for certain types 

of disabilities, the claimants don’t want to even tell us that they 

are disabled. So, for instance, if you are disabled because of a sexually transmitted disease, certain types of psychiatric conditions. I 

mean, we just had a hearing that we are trying to improve our 

standards for schizophrenics. And when they come in, they almost 

universally deny that they have a mental illness at all, and they 

claim that it is back pain. So there is a reason why it does look 

different on appeal when you have the advisers and lawyers, at 

least in certain categories of cases. 

CHIEF ECONOMIST

Mr. OBEY. Okay. 

Let me switch subjects. The Social Security Act creates the position of Chief Actuary for the Social Security Administration. That 

actuary is supposed to report directly to the Commissioner. To help 

insulate the actuary from political pressures, the Social Security 

Act also specifies that, once appointed, the Chief Actuary may be 

removed only for cause. This arrangement, it would seem to me, 

would serve Social Security and the Nation well because the independence and professionalism of the actuaries are absolutely crucial. 

In this regard, I believe that the current Chief Actuary, Steve 

Goss, has served the Nation well through his independence and 

professionalism. But I am also aware of the fact that you have created a new position in Social Security, and that is Chief Economist. 

And I understand the person you appointed to that new position 

had been nominated by President Bush to be deputy commissioner 

but was not confirmed by the Senate. Your announcement of the 


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creation of the Office of Chief Economist said that the new official 

‘‘would be the agency’s chief economic adviser with a coordinated 

role across all components in the planning and delivery of agency 

products that involve economic analysis.’’ 

I guess I would have thought that the Chief Actuary would be 

the Social Security Administration’s Chief Economic adviser. Certainly economic analysis plays a major role in the actuary’s product. Your announcement of the new Chief Economist position, 

therefore, I think it might suggest that he has some role in supervising the planning and delivery of the actuary’s report. If that is 

the case, it would appear to be, in my view, a violation of the provisions of the Social Security Act governing the Chief Actuary’s position. 

CHIEF ECONOMIST CONTINUED

Could you please explain why you created a new Office of Chief 

Economist, what the functions of that office are, how they relate to 

the Office of Chief Actuary? And also, can you tell us what you are 

doing to ensure that the independence of the Chief Actuary’s Office 

is maintained despite the creation of this new position? 

Mr. ASTRUE. Sure. So in an agency as big and complicated as Social Security, there are sometimes decisions at the time that seem 

easy, simple and uncontroversial that take on a life of their own. 

And this was one of them. We have had for decades an associate 

commissioner position, which Dr. Fichtner holds, that supervises 

within either the Office of Policy or the Office of Research—and 

there have been a number of reorganizations over the years—most 

of the economic work in the agency. It runs some of the international studies that we do. 

In recent years, we have been providing an increasing support 

role to the Treasury Department for their FLEC activities, which 

are their financial literacy activities. So it is a staff of about 25. 

And this administration has a number of senior level economists 

that have been working with Dr. Fichtner, and it seemed largely 

to me to be a relabeling function to make it a little clearer for the 

public and other agencies as to who was supervising our economic 

research activities. And it did not strike me as a big deal at the 

time. 

Subsequently, there have been a whole set of concerns that have 

been raised that I don’t think would relate to anything that we 

were trying to do. We actually hadn’t formally changed the office 

at the time that we made the announcement. So we have held off 

on that. We are working through those issues. And certainly I don’t 

see any more conflict in what was intended between what has 

worked pretty happily for the last several decades. But I understand the concerns. We are looking at them. I don’t think that we 

would be doing anything that should be viewed as compromising 

the independence of the Chief Actuary. 

Mr. OBEY. So can you assure us that whatever you are doing, the 

independence of the Chief Actuary’s Office will be maintained despite the creation of this new position? 

Mr. ASTRUE. Oh, absolutely. I mean, I think that it really, in 

terms of my intention, wasn’t supposed to be substantially different 


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going forward than it has been for the last 20 years. So I don’t 

think that there is any horrible change in the works. 

Mr. OBEY. Okay. That is a good answer. Let me ask one more 

question and then ask other members to comment. Or no, let me 

call on them first, and then I will do this one at the end. 

Ms. McCollum. 

PRIVATIZATION OF SOCIAL SECURITY

Ms. MCCOLLUM. Thank you, Mr. Chair. 

I am glad we are having this hearing today because, quite frankly, we need to be talking about Social Security. And I, like all 

Americans, am very concerned about retirement in this country. 

But Social Security is an important program. 

For 75 years, millions of Americans have avoided poverty, have 

been able to retire with dignity and security in their retirement 

and have health care provided to them as well. From, just in Minnesota alone—nearly 13,000,000 seniors nationally and 141,000 

seniors in Minnesota are above the poverty line because of Social 

Security. So it is a safety net. 

And one of the things that has been talked about a lot—and I 

know discussed and I know you have opinions on this—is 

privatizing Social Security. But it was the only guarantee left for 

millions of Americans during this recent financial collapse, Wall 

Street bail out. Millions of Americans opened up their mail to find 

that over $2,000,000,000,000 in retirement savings and 401(k)s 

were lost, gone, not there. And that is the Congressional Budget 

Office’s numbers that I am using. So I have to wonder, what would 

have happened had that all been privatized? Where would the safety net have been? 

So I see, you know, taking Social Security, which is a safety net, 

and putting it out there in the stock market with all of its fluctuations, removing that guarantee of dignity and security for many of 

our seniors. And quite frankly, it is just not a gamble I feel comfortable taking. 

So I have a couple of questions kind of what you think would 

have happened. I know I just shared with you what I think and 

what I also know with $2,000,000,000,000 worth of retirement savings investment just disappearing. So had the efforts to privatize 

Social Security been successful, what would they have been on current senior retirement security today? And are there any proposals 

pending that you are working on or that you are aware of to privatize any aspects of Social Security? And what are you going to 

do to make sure that Social Security is secure from fluctuations in 

the stock market? 

Mr. ASTRUE. As I mentioned earlier, when I was confirmed in 

February of 2007, the explicit deal both with the President and 

with the Senate Finance Committee was that I was to stay out of 

privatization and in fact solvency generally, and that I am really 

not supposed to be saying anything more. Secretary Geithner has 

the lead for the administration on all those types of issues. So that 

was what I promised the Finance Committee in February 2007. I 

have not expressed an opinion on any of those subjects since. 

If you have questions technically in terms of what would have 

happened under different proposals, we would be delighted to run 


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those numbers for you and supply you with that information. But 

it has been very clear that part of keeping Social Security nonpartisan and out of politics has been to stay out of these issues. So 

I am afraid I can’t say much more than that. 

Ms. MCCOLLUM. So, Mr. Chair, let me pull apart what you have 

said. In order to keep Social Security, this discussion, nonpartisan, 

you have no opinion on privatization or you won’t state it because 

it becomes partisan? 

Mr. ASTRUE. I think it is the latter. I would like to think that 

I am familiar with the issues about the agency. Since I was nominated in 2006, other than what I said on the record in the confirmation hearing, I haven’t said anything substantive about privatization since then. I don’t say anything either about solvency. 

Ms. MCCOLLUM. This isn’t about you. This is about Social Security. I am talking about Social Security. I mean, the CBO says 

$2,000,000,000,000 would have evaporated out of 401(k)s. And I 

mean, people were calling our office. They were watching what was 

happening to their retirement. Had Social Security been privatized, 

would that money, as CBO—what would have happened to the Social Security? 

Mr. ASTRUE. We are happy, depending on which of the proposals 

you want us to assume, if you provide us with the assumptions—— 

Ms. MCCOLLUM. Mr. Chair, I can see my time is up, and by answering or even asking a question about protecting Social Security 

by not having it privatized, that it is political. 

Mr. ASTRUE. If I could just say, I have been under direct orders 

from two Presidents and the Senate Finance Committee to not engage on this topic. 

And I am sorry, I don’t mean to be unresponsive, but I think I 

would be disrespectful to the President if I entered into that territory. 

Mr. OBEY. Ms. Roybal-Allard. 

Ms. ROYBAL-ALLARD. Welcome, Commissioner. 

Mr. ASTRUE. Thank you. 

STATE FURLOUGHS OF THE DDS

Ms. ROYBAL-ALLARD. As I know you are aware, due to unprecedented budget shortfalls, many States have been forced to furlough 

their State employees. And unfortunately, in California, these furloughs have included Disability Determination Services division 

employees whose salaries are paid by the Social Security Administration. As I understand it, for every day these employees are furloughed, California loses $850,000 in Federal reimbursements, employees lose a day’s pay, and the payment of over $420,000 in 

much-needed Social Security benefits to residents with disabilities 

is delayed. 

I know that you have been working tirelessly to persuade the 

State Governors to put these employees back to work, and I applaud you for your efforts, because it really is unconscionable that 

during this economic time of hardship, in particular, that the decision to furlough these DDS employees is taking place at this time. 

Can you talk about the impact State furloughs are having on the 

Social Security Administration’s ability to process disability benefit 

claims, the effect it has on the disabled community, and what can 


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Congress do to help you in your efforts to re-instate the DDS employees? 

Mr. ASTRUE. Thank you. I appreciate the question. It has been 

devastating for morale in the States where we have had these 

types of furloughs. We already have very high turnover in many of 

these States. It is making it harder for us to retain the caliber of 

people that we need to retain for this important work. We are taking in 700,000 or so more claims than we expected just over 2 years 

ago. 

We have blunted the impact in some of the States by diverting 

cases to four States where we have developed additional capacity. 

We also have more Federal reviewers, I believe, than we have had 

at least since the 1980s. So, in some States, we have been able to 

blunt the impact, but if you look at the furloughed States, the processing times have been going up much faster than for other States, 

and sometimes it has been at an extremely distressing rate. 

And I will provide for the record detailed information about the 

impact on the States where the furloughs have been substantial. 

But I do want to thank—we have found that our best line of persuasion has been to work collaboratively with the Congress because 

most Governors don’t actually care very much what my opinion is, 

but they care what the leaders in their congressional delegations 

think. And so we have worked hand in hand with many Members 

of Congress. 

[The information follows:] 


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STATE FURLOUGHS OF THE DDS CONTINUED

Mr. ASTRUE. It has almost always been because we have been 

working hand in glove on a bipartisan way with the congressional 

delegations, and that has made all the difference in the world. 

Ms. ROYBAL-ALLARD. Is there anything more that you think can 

be done? 

Mr. ASTRUE. Yes. Well, I think the statute and the regulations, 

again, are 1980s that contemplate a different set of problems. They 

contemplate a time when there was tension between the States and 

the Federal Government, and the concern was that the States 

would walk and just not process these cases. It didn’t really contemplate this type of situation. And I think it would be timely perhaps to ask GAO to take a look at what has happened, what the 

impact has been, and to look at what some of the alternatives 

might be from a statutory point of view of addressing this concern. 

To be honest, when Governor Schwarzenegger did it the first 

time, I thought it was so difficult to comprehend that I didn’t see 

it as a trend, and I was wrong. I also think that we are going to 

see States in fiscal distress for quite some time, so I and probably 

my successor and successor’s successor will be dealing with this 

issue. So I think it would be timely for Congress to take a look at 

what has happened and to consider what the various responses 

might be. 

Ms. ROYBAL-ALLARD. My office will be contacting you. 

Mr. ASTRUE. Great. Thank you. 

ACCESSIBILITY OF THE SSA WEBSITE FOR THE BLIND

Ms. ROYBAL-ALLARD. There are 20 million legally blind and visually impaired people in the United States. And with the aging of 

the baby-boomer generation, that number is expected to increase by 

another 4 million by the year 2015. And it is my understanding 

that these individuals rely on computer screen readers to navigate 

the Internet, but unfortunately a high percentage of Web sites, including the Social Security Administration Web site, are not compatible with this technology and remain inaccessible to the disabled. 

Given that part of the Social Security Administration’s mission 

is to provide assistance to disabled individuals, are there plans to 

make the Web site compatible with assistive technology like screen 

readers? 

Mr. ASTRUE. We had a lawsuit brought by one of the representatives of the blind group that we were not able to resolve, and we 

had a court order that required us to make a number of upgrades 

in our notices. It was a frustration to me with all the layers between everyone that we weren’t able to sit down and work out a 

negotiated settlement. But it has been a big focus of activity. 

This year we are fully compliant with the court order. We are almost finished with the system’s upgrade. I think it is a matter of 

just a couple of weeks before we are done, and it is my understanding that the court and the plaintiffs are happy. And when 

that is done, I believe that the Social Security Web site and other 

materials will be the most accessible of any in the entire Federal 


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Government when we are done. So it should be a substantial improvement completed within a matter of a few weeks. 

[CLERK’S NOTE—Later corrected to ‘‘we are working on the notice 

systems upgrade pursuant to the court order. It is my understanding that the court and the plaintiffs are happy. And when 

that is done, I believe that the Social Security materials will be the 

most accessible of any in the entire Federal Government. So it 

should be a substantial improvement.’’] 

Ms. ROYBAL-ALLARD. That is good to hear. Thank you so much. 

Mr. OBEY. Mr. Honda. 

Mr. HONDA. Thank you, Mr. Chairman, and good morning. 

Mr. ASTRUE. Good morning. 

BACKLOG DEMOGRAPHICS AND MULTILINGUAL SSA EMPLOYEES

Mr. HONDA. Two quick questions. One is the backlog that you 

have discussed a lot in your report. I was curious to understand 

what the demographics of the backlogs are in terms of age and language. I have a bill that I just introduced that would provide a 

bump in salaries in terms of having a language, and if it is required, then that should apply. So the kind of needs that your 

agency has, have you seen a need for employees with another language? And I was wondering whether this is something that you 

could see as a beneficial attractant for the position that you want 

to fill in the future? 

Mr. ASTRUE. That is a very good question. We have a lot of information on this subject, and we will provide a lot of that for the 

record. But let me say the most important thing that we have done 

recently. I came to the conclusion after a couple of years looking 

at how we were allocating staff for our field offices that we were 

underestimating the stress on certain types of offices. And you 

could see that in the outcomes, that some offices had relatively 

short waiting times, and some of them really had abysmal waiting, 

you can’t walk in and not be embarrassed. And it is very complicated. It took a while to try to figure out why that was, because 

we have been doing things the same way for decades. And I think 

we finally came to the conclusion that our metric for distributing 

staff underestimated certain things that were important. 

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So we are experimenting. Again, we may do it differently the 

next time, with a four-element metric to try to measure—try to fix 

where we have been undercounting. One of the things we have 

looked at is volume of work that involves another language, because by definition if someone comes in and doesn’t speak English, 

it takes a little bit more time to accommodate that person. So we 

are trying to factor that in so that the offices that are dealing with 

a high number of people who do not speak English are not disadvantaged in the staff allocation. 

I can’t swear to you, because we have only just did the release 

a couple weeks ago, that we have got it right the first time around, 

so we are going to be looking at it and reassessing it, but we are 

trying to be sensitive to those types of issues. 

Mr. HONDA. When you say you got it right and you talked about 

metrics—— 

Mr. ASTRUE. I am saying I am not sure that we got it right with 

the new attempt. It is an experiment, we have exercised the best 

judgment we know, but we are going to look at what happened, we 

are going to look at the effect at the offices. It is probable we will 

decide to make some additional adjustments the next time we do 

this, but we don’t know yet, because we haven’t actually hired the 

900 staff yet. 

Mr. HONDA. Okay. So looking at your constituencies, when you 

break it down, you have that information, and you are breaking it 

down by age and place of birth and language? 

Mr. ASTRUE. We generally know, for instance, the percentage of 

work in each of the field offices that involve someone who is not 

a primary English speaker. I believe we have got other kinds of demographic data as well. I am not 100 percent sure exactly what we 

think we know and what we think we don’t know, but I would be 

happy to supply that for the record for you. 

[The information follows:] 

DEMOGRAPHICS OF FIELD OFFICE CUSTOMERS

We examine the constituent demographics of each field office service area when 

making decisions about service delivery and hiring. Regional and area staff review 

local demographics, such as household economic data, language preference, and the 

age and number of residents, in determining staffing and client needs. Our field office managers thoroughly understand the demographics of their service areas and 

align staffing with those demographics. 

DEMOGRAPHICS OF VISITORS TO FIELD OFFICES

Mr. HONDA. Help me understand. When we work with our recipients, whether they are youngsters or oldsters or disabled or whatever, don’t we have information on them as to their background, 

place of birth and language needs? 

Mr. ASTRUE. We do, but when we check people in, they don’t supply that to us, so we only know what we know by the records that 

we already have. And depending on what they are coming in for, 

we may not know for every type of service—for instance, someone 

is coming in, we may not have detailed demographics. I would have 

to go back and check. 

Mr. HONDA. So the only way you know is just interaction, and 

that is it. There is nothing we check off on in order to keep records 


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so that we know how to create that metric and be able to hire staff 

that would match the needs of our clients? 

Mr. ASTRUE. What I believe we know is when someone checks in 

automatically coming in on something we call the VIP system, with 

an appointment, we have whatever information that we maintain 

for that individual generally in our computer records, which we call 

the ‘‘numident.’’ So certainly we would have that. I am sure that 

we have run studies at other points in time to try to look at different ways of assessing through surveys what our populations look 

like, but I am not sure off the top of my head what we have done 

recently and what it says, so I would have to supply that for the 

record. 

[The information follows:] 

LANGUAGE AND SERVICE IN FIELD OFFICES

When a person comes into our office, he or she can indicate a language preference 

when checking in at our Visitor Intake Process (VIP) kiosk. We also capture language preference data when people call to make appointments. We use this data to 

ensure that our offices meet the language needs of the local population. We have 

bilingual staff and where those are not available, we offer interpreter services. 

Mr. HONDA. Okay. So given the great numbers that I have read 

here, and the government tries to be more like Nordstrom’s, would 

it be a logical administrative direction that we find out what our 

population looks like and how we can anticipate the future populations so that we can match our staffing to that? 

Mr. ASTRUE. That we have certainly done. And we are going 

through another strategic plan where we are trying to reassess the 

workloads and what they look like and what we have to do. And 

we are trying to be sensitive to the needs of particular populations. 

So, for instance, we are going to have our first Spanish-language 

on-line service shortly, which I believe will be the first in the Federal Government, and that should be up and running in the fall. 

So we do look at special populations, we do look at demographics, 

but, again, I think to tell you completely and accurately what we 

do for all of them, I think I would be more comfortable supplying 

that for the record. 

Mr. HONDA. I just want to ask, would this be an administrative 

necessity so that this is what we have to do and that is a directive, 

or is that something that needs to come through statute? 

Mr. ASTRUE. Certainly I think for the most part assessing the demographics of the populations that we serve is something where I 

have adequate administrative authority in terms of running studies 

and numbers to see exactly what the populations looked at from 

different angles. I don’t think I need additional statutory authority 

to do that. And if, after we supply the information for the record, 

and you see what we do do and what we do know and what we 

don’t do and what we don’t know, if you have got suggestions for 

things that we ought to be doing, I would be very open and would 

welcome those suggestions. 

Mr. HONDA. Thank you, Mr. Chairman. 

Mr. OBEY. Mr. Tiahrt. 

Mr. TIAHRT. I am fine. 

Mr. OBEY. Ms. McCollum. 

Ms. MCCOLLUM. Mr. Chair, I do have another question, and it 

has to do with IT. 


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I heard clear in your response to the other Members that you 

really want to do what you can for customer service—— 

Mr. ASTRUE. Yes. 

INTERNET CLAIMS

Ms. MCCOLLUM [continuing]. And make it absolutely the best. 

And we know that health information technology is going to totally 

revolutionize the way in which we have information on disability 

that could be used and possibly used in disability termination. So 

with IT, with the patient’s permission, you could obtain medical 

records in a timely fashion. 

Could you talk a little more about the Internet claims, the Iclaims that you are doing for seniors? You know, the information 

that I have is in 2009, on-line claims represented 83 percent of the 

total retirement claims growth. Can you kind of talk about what 

is trending with that? 

Mr. ASTRUE. Sure. 

Ms. MCCOLLUM. And then the other thing that comes with it, I 

mean, in my district I have seniors that are very tech savvy, who 

have firewalls and all kinds of security systems and everything 

built into their services. But I am concerned about comments that 

I have heard for seniors who might not have access to this kind of 

technology is, oh, go to the library, or go to an Internet cafe, means 

totally different security systems and access to get back in a timely 

fashion. So tell me a little bit more about how you see medical 

records, as well as going more with I-claims. 

ELECTRONIC MEDICAL RECORDS

Mr. ASTRUE. Medical records are tremendously important. And 

you are exactly right. In the public’s mind we are a retirement/senior citizens agency, but when you actually look at where the administrative money is going, it is overwhelmingly over on the disability 

side, and a huge part of that is chasing down paper medical 

records. We are the largest repository of medical records in the 

world, and it is a lot of time, and it is delay, and it is a source of 

error. And it is important both for quality and for timeliness to try 

to make sure that whatever systems are being built for electronic 

medical records fit seamlessly with ours, and, when there is appropriate consent, just a push of a button can transfer records. 

And we have done this on a trial basis with a couple of the very 

small entities that are already there: MedVirginia and Beth Israel 

Deaconess in Boston. And even without having changed our business process yet, it is a thing of beauty, and I think it really will 

be paradigm changing. It could, I think, cut processing times in 

half. So it is a wonderful, good thing, and the sooner it gets here, 

the happier we will all be. 

In terms of the electronic services, as I was coming on board in 

2007, the National Academy of Sciences had been commissioned to 

look at our preparedness for the baby boom and electronic services, 

and they had a very negative report, which the draft response from 

the agency was going to reject most of it. And I read the report and 

said, no, this is the road map to the future, I basically embrace this 

report, we are not going to reject this. 


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So we have worked very hard to try to break down our business 

processes, make them as simple as possible, which is something 

that we and other government agencies don’t do often enough, and 

then try to embrace the highest level of user friendliness to new 

programs. And so this has really been welcomed by the American 

public. We had been flat with the old retirement application form 

for a decade at about 10 percent of the public using it, and we 

knew that a lot of people tried it and gave up in frustration. We 

are up, I think, today to about 37 percent using it, and the level 

of satisfaction is extremely high. 

But for all the improvement, I think the way to conceptualize 

this is this is a service option for people who want it. For none of 

these electronic services have we made it more difficult or problematic for people to get service the traditional way. In fact, I would 

suggest by the efficiencies that we have picked up for the people 

who don’t want to come into our offices, the claims reps are less 

pressured than they would otherwise be, and they are able for the 

people who come into the office to spend more time and provide 

high-quality service than they would be able to do if we did not 

have this choice of service. I think it has been a win-win for the 

American public. They have been extremely well received. 

We still have a lot more to do. We just launched the Medicare 

only application. We have got the Spanish-language retirement estimator coming, and we hope to do a Spanish-language retirement 

application next year as well. 

ELECTRONIC MEDICAL RECORDS CONTINUED

Ms. MCCOLLUM. Mr. Chair, if I may, one of the things about the 

whole issue of electronic medical records—they are very exciting— 

were private entities, public entities, the Federal Government 

spent a lot of money in developing these records, but we know 

there is a lot of problem with the records talking to each other as 

they go from institution to institution. And I know that there has 

been discussions taking place about how to make—not selecting 

one vendor, but selecting a language that is interoperable with all 

of these different. 

And I don’t know where we are on that, but as we look at going 

with the Social Security Administration and the rest and the investment that we have been in IT, I would like to maybe have this 

committee find out where the administration and where the oversight is to make sure that we have systems that are interoperable 

with each other. And that would be helpful for us in moving forward with this, because if we don’t, we are going to have a big 

mess, and we are going to land up reinventing a system that could 

have been invented right the first time. 

Mr. ASTRUE. Mr. Chairman, I would endorse that. There is a 

standard-setting committee at HHS that is trying to set the standards for the country as a whole, which we have been active on. As 

a matter of fact, one of our people chaired it for a period of time. 

But I think it is an incredibly important topic, it has future implications for our disability programs, and I think that is a tremendous suggestion. 


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FINANCIAL LITERACY

Mr. OBEY. Just two last questions. I understand that the Social 

Security Administration has a financial literacy program and a related program called the Special Initiative to Encourage Savings. 

Our subcommittee staff is told that spending on these projects has 

increased from $9 million in 2009 to $15 million in 2010, to an estimated $22 million in 2011. Now, nobody can argue that financial 

literacy isn’t important, but I believe the Federal agency who is the 

lead role on this is supposed to be the Treasury Department, and 

they receive a specific appropriation for that purpose. 

Now, I know that the Social Security Administration is a member of the Federal Finance Literacy and Education Commission 

along with a large number of other agencies, but the law setting 

up the Commission does not create or expand any authorities for 

Social Security to undertake financial literacy activities, at least 

not that I can find. The mission of Social Security, in my view, is 

running Social Security, not taking the public to school generally 

on financial matters. Could you please explain the purpose of your 

agency’s financial literacy program and what activities are carried 

out with those funds and the legal authority for those activities? 

Mr. ASTRUE. Sure. My understanding is that we have had for 

some time, certainly before my arrival, research activities in the 

area of retirement and savings, and that specifically I believe it 

was the Congress that encouraged us to—I think, so that they 

would have some degree of independence to contract out to some 

academic institutions to do that work for us. And so we have had 

three academic institutions that have been doing that type of work, 

which I would say has been extremely helpful to the mission of the 

agency, in my view. Most of the additional work that we have been 

doing has been to support administration initiatives in the area of 

promoting savings and financial literacy. 

But certainly it is a fair question. I will go back and take a look 

and make sure that everything we are doing is consistent with 

what we should be doing. 

Mr. OBEY. Well, what is the legal authority? 

Mr. ASTRUE. Well, I believe that we have specific authority, and 

I will have to go back and check. When the academic institutions 

were set up as part of the research—the research consortium that 

is set up under our research budget, that we got fairly specific 

guidance from the Congress on that, I believe. But I will go back 

and take a look. It is an important question. I don’t want to wing 

an answer for you. 

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REDIRECTION OF FINANCIAL LITERACY FUNDING

Mr. OBEY. How much field staff or DDS workyears could the Social Security Administration fund if those resources were redirected 

into disability processing or field service? 

Mr. ASTRUE. Back of the envelope, so obviously we will submit 

a more precise answer for the record, probably in the range of 150 

to 200 FTEs. 

Mr. OBEY. A couple for each State? 

Mr. ASTRUE. Yes. 

[The information follows:] 

FINANCIAL LITERACY FUNDING

Once funds are appropriated, we do not have the authority to redirect resources 

budgeted for financial literacy to process work, because the financial literacy funding is part of our research budget within the SSI appropriation. A separate Limitation on Administrative Expenses (LAE) account provides the funding for salaries 

and benefits. 

Using the FY 2011 average agency salary and benefit rate, each $1 million in 

funding pays for about ten employees for one year. Accordingly, $15 million would 

pay for about 150 people, and $22 million would fund about 220. 

Mr. OBEY. I have got two other questions for the record, or I 

would like you to respond to for the record, but other than that, 

thank you very much for coming. 

Mr. ASTRUE. Thank you. 

Mr. OBEY. We appreciate it. 

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(i) 

W I T N E S S E S 

Page 

Astrue, M. J ............................................................................................................. 356 

Corr, William ........................................................................................................... 1 

Domenech, Daniel .................................................................................................... 172 

Donaldson, Nancy .................................................................................................... 103 

Ganzglass, Evelyn .................................................................................................... 103 

Grindler, Gary .......................................................................................................... 1 

Jefferson, Raymond ................................................................................................. 230 

Johnson, Brian ......................................................................................................... 103 

Kanter, Martha ........................................................................................................ 230 

Lee, Karen ................................................................................................................ 103 

Levinson, Dan .......................................................................................................... 1 

Oates, Jane ............................................................................................................... 230 

Perez, Omar ............................................................................................................. 1 

Posny, Alexa ............................................................................................................. 230 

Richmond, Greg ....................................................................................................... 172 

Seminario, Peg ......................................................................................................... 103 

Van Roekel, Dennis ................................................................................................. 172 

Weingarten, Randi ................................................................................................... 172 

Wilhoit, Gene ........................................................................................................... 172 


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I N D E X 

COMBATING HEALTH CARE FRAUD AND ABUSE 

Page 

Chairman’s Opening Remarks ................................................................................ 1–3 

Deputy Secretary, HHS Opening Statement ......................................................... 3–6 

Deputy Secretary, HHS Written Statement .......................................................... 7–17 

Acting Deputy Attorney General, DOJ Opening Statement................................. 18–19 

Acting Deputy Attorney General, DOJ Written Statement.................................. 20–35 

Inspector General, HHS Opening Statement......................................................... 36–37 

Inspector General, HHS Written Statement.......................................................... 38–50 

Special Agent, HHS Opening Statement................................................................ 51–52 

Special Agent, HHS Written Statement................................................................. 53–59 

Recovery Audit Contractors..................................................................................... 60–63 

Contract Eligibility................................................................................................... 63–65 

Information Technology Investments ..................................................................... 65–67 

Health Care Fraud and Abuse Control Discretionary Funds .............................. 68 

Performance Measures ................................................................................ 68–70, 91–92 

Fighting Fraud ......................................................................................................... 71–73 

Medicare Trust Fund ............................................................................................... 73–75 

Recovery Audit Contractor Demonstration Program ............................................ 76–78 

Provider Enrollment .......................................................................................... 78–79, 81 

Working With the Private Sector............................................................................ 79–80 

State Cooperation .................................................................................................... 80 

Health Care Fraud Prevention and Enforcement Action Team (HEAT)....... 82, 92–94 

Health Care Fraud and Abuse Control Program................................................... 83–87 

Program Integrity Allocation Decisions.................................................................. 87–89 

Return on Investment.............................................................................................. 89–91 

Improper Payments...................................................................................... 94–95, 97–98 

Clean Claims............................................................................................................. 95–96 

Best Practices for Program Integrity...................................................................... 96–97 

Electronic Health Record and Electronic Medical Record..................................... 98–99 

Discretionary Health Care Fraud and Abuse Control—Parts C and D............. 99–100 

Health Care Fraud and Abuse Control Appropriations Language .................. 100–101 

LABOR AND EDUCATION PRIORITIES/ESEA REAUTHORIZATION 

Chairman’s Opening Remarks ............................................................ 103–104, 172–173 

President, National Association of State Workforce Agencies Opening Statement................................................................................................................... 104–105 

President, National Association of State Workforce Agencies Written Statement................................................................................................................... 106–117 

Director, Workforce Development, Center for Law and Social Policy Opening 

Statement .......................................................................................................... 118–119 

Director, Workforce Development, Center for Law and Social Policy Written 

Statement .......................................................................................................... 120–133 


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Executive Director, Alliance for Worker Freedom Opening Statement........... 134–135 

Executive Director, Alliance for Worker Freedom Written Statement............ 136–143 

Director of Safety and Health, AFL–CIO Opening Statement......................... 144–145 

Director of Safety and Health, AFL–CIO Written Statement .......................... 146–152 

Director, Washington Office, International Labor Organization Opening Statement................................................................................................................... 153–154 

Director, Washington Office, International Labor Organization Written Statement................................................................................................................... 155–161 

Executive Director, American Association of School Administrators Opening 

Statement .......................................................................................................... 173–175 

Executive Director, American Association of School Administrators Written 

Statement .......................................................................................................... 176–182 

President, National Association of Charter School Authorizers Opening Statement................................................................................................................... 183–184 

President, National Association of Charter School Authorizers Written Statement................................................................................................................... 185–188 

Executive Director, Council of Chief State School Officers Opening Statement................................................................................................................... 189–191 

Executive Director, Council of Chief State School Officers Written Statement................................................................................................................... 192–194 

President, American Federation of Teachers Opening Statement ................... 195–196 

President, American Federation of Teachers Written Statement .................... 197–206 

President, National Education Association Opening Statement ...................... 207–208 

President, National Education Association Written Statement ....................... 209–218 

FY 2011 BUDGET OVERVIEW: 

JOBS, TRAINING, AND EDUCATION 

Chairman’s Opening Remarks ............................................................................ 235–237 

Ranking Member’s Opening Remarks ................................................................... 237 

Employment and Training Administration ........................................................... 238 

Partnerships ......................................................................................................... 238–239 

Recovery Act Investments ....................................................................................... 239 

Pathways Out of Poverty ........................................................................................ 239 

Assistant Secretary for Employment and Training, DOL Written Statement................................................................................................................... 240–250 

VETS ......................................................................................................................... 251 

Unemployed Veterans ............................................................................................. 251 

Transition Assistance........................................................................................... 252–253 

Assistant Secretary for Veterans’ Employment and Training, DOL Written 

Statement .......................................................................................................... 254–261 

Under Secretary, Department of Education Opening Statement ........................ 262 

President Obama’s Goal for 2020 ........................................................................... 262 

Higher Education and the Workforce .................................................................... 262 

Special Populations and the Workforce ................................................................. 262 

Elementary and Secondary Education ............................................................... 262–263 

Pell Grants ............................................................................................................... 263 

College Access Grants ............................................................................................. 263 

Career and Technical Education Training ......................................................... 263–264 

Reauthorization of the Workforce Investment Act ................................................ 264 

College- and Career-Ready Standards Program ................................................ 264–265 

Under Secretary, Department of Education Written Statement...................... 266–270 

Assistant Secretary for Special Education and Rehabilitation Services, Department of Education Opening Statement ....................................................... 271 

American Recovery and Reinvestment Act ............................................................ 271 


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Special Education Grants to States .................................................................... 271–272 

Vocational Rehabilitation State Grants Program ................................................. 272 

National Activities and the Workforce Innovation Fund ..................................... 272 

Supported Employment for Youth With Significant Disabilities ..................... 272–273 

Assistant Secretary for Special Education and Rehabilitation Services, Department of Education Written Statement..................................................... 274–278 

Carryover .................................................................................................................. 279

Obligated Versus Expended ................................................................................ 279–280 

Green Jobs Act...................................................................................................... 280–281 

Huge Disparities in Communities of Color ................................................ 281, 283–299 

Summer Youth Jobs Program ................................................................................. 282 

Emergency State of Minority Unemployment ....................................................... 299 

Comprehensive Jobs Package.............................................................................. 299–300 

H–2A...................................................................................................................... 300–302 

Women Veterans ...................................................................................................... 302 

Veterans Courts ....................................................................................................... 302 

Emergency Grants................................................................................................ 303–304 

Federal TRIO Programs .......................................................................................... 305 

Career and Technical Education......................................................................... 305–307 

Early College and Pell Grants............................................................................. 307–309 

H–2B ......................................................................................................................... 309 

Public Service Loan Forgiveness Program ............................................................ 310 

Elimination of the Career Pathways Innovation Fund..................................... 310–312 

Job Corps .............................................................................................................. 312–315 

One-Stop Centers ................................................................................................. 315–316 

Reconciliation Act and Funding for Community Colleges ................................ 316–317 

Cost of Regulations .............................................................................................. 317–319 

Consolidation of Rehabilitation Services Employment Programs ....................... 319 

Continuation of Services Under Consolidation Programs................................. 319–320 

Business Investment in Training........................................................................ 320–321 

Promising Practices.............................................................................................. 321–322 

Work Opportunity Tax Credit ................................................................................ 322 

Questions for the Record ..................................................................................... 323–359 

FY 2011 BUDGET OVERVIEW: 

SOCIAL SECURITY ADMINISTRATION 

Chairman’s Opening Remarks ................................................................................ 361–362 

Ranking Member’s Opening Remarks ................................................................... 362–363 

Commissioner’s Opening Statement ...................................................................... 363–365 

Commissioner’s Written Statements ...................................................................... 366–392 

Payments to Social Security Trust Funds ...................................................... 377–379 

Supplemental Security Income ........................................................................ 380–387 

Limitation on Administrative Expenses ......................................................... 388–390 

Office of the Inspector General ........................................................................ 391–392 

New Support Center ................................................................................................ 393 

Support Center Site Selection ................................................................................ 393 

Effect of Health Care Reform on SSA .................................................................... 393–394 

New Hires ................................................................................................................. 394–395 

Privatization of Social Security .............................................................................. 395 

Effect of Recession on Retirements ........................................................................ 395–396 

Online Retirement Estimator ................................................................................. 396 

Unemployment and Disability ................................................................................ 396 

Diversity of Staff ...................................................................................................... 397–407 

Removal of Administrative Law Judges ................................................................ 407–408 


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Solvency of the Trust Funds ................................................................................... 408 

Economic Downturn and SSA ................................................................................. 409 

Productivity and the Backlogs ................................................................................ 409–410 

Measuring Workloads and Productivity ................................................................ 410–411 

Disability Applications and Appeals Process ......................................................... 411–412 

Chief Economist ....................................................................................................... 412–414 

Privatization of Social Security .............................................................................. 414–415 

State Furloughs of the DDS .................................................................................... 415–419 

Accessibility of the SSA Web Site for the Blind .................................................... 419–420 

Backlog Demographics and Multilingual SSA Employees ................................... 420–423 

Demographics of Visitors to Field Offices .............................................................. 423–425 

Internet Claims ........................................................................................................ 425 

Electronic Medical Records ..................................................................................... 425–426 

Financial Literacy .................................................................................................... 427–429 

Redirection of Financial Literacy Funding ............................................................ 430–437 

Information Technology Fund ................................................................................. 437–438 

Problems Caused by Spike in New Disability Applications ................................. 439–443 

Progress on New National Support Center ........................................................... 443–446 

Electronic Filing of Social Security Claims (iCLAIMs) ........................................ 446–448 

Social Security Productivity .................................................................................... 448–454 

Occupational Information System .......................................................................... 454–460 

Continuing Disability Reviews (CDR) and Redeterminations ............................. 460–471 

SSI Non-Medical Redeterminations ....................................................................... 471–472 

Office of the Chief Economist ................................................................................. 472 

Health Information Technology (HIT) ................................................................... 472–474 

Reinstating Reconsiderations ................................................................................. 475 

Current Appeals Process ......................................................................................... 475 

Disability Processing Time ...................................................................................... 476 

Estimated Cost of FTE ............................................................................................ 476–483 

Programs, Projects, and Activity Costs .................................................................. 483–486 

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