Mr. ROLLIS. They operate with standards of effectiveness by which they judge the individual CAP. The reorganization we are going through will increase that field staff significantly to enable us to make more visits to CAP's and better assess them on a day-today basis.

Mr. ALLISON. I was simply going to say that we have the capability through the training and technical assistance category to provide the much needed training of our field staff to do the kind of monitoring that has not been available in the past so that particular category is very significant in terms of the issue you have raised.

OTHER FEDERAL FUNDS

Mr. CONTE. On page 3 of the justifications you note, "CSA administered four program dollars from non-CSA sources for every CSA dollar received for a total of nearly $2 billion."

Can you provide the committee with a breakdown of where the other $4 came from, including the percentage of money attracted from the private sector?

Ms. OLIVAREZ. Yes, sir.

[The information referred to follows:]

A 1975 CAA sample survey was conducted by Mariscal and Company and the results were projected to all of the CAAS. Of $1,559 million total CAA funding received:

79 percent ($1,227 million) was Federal funding: 22 percent ($336 million) was from CSA; 23 percent ($359 million) was from HEW; 28 percent ($438 million) was from DOL; and 6 percent ($93 million) was from other Federal agencies.

6 percent ($96 million) was State funding.

6 percent ($92 million) was local funding.

9 percent ($145 million) was private funding.

A subsequent survey conducted in the Summer of 1977 reflected a total of $2.0 billion, but the survey was not in sufficient detail as to sources.

CSA REORGANIZATION

Mr. CONTE. You also indicate that CSA is in the final stages of reorganization which began in 1976. You might have answered this question. What is the status of that reorganization? Has it resulted in either an increase or decrease in the number of staff and consultants, and can you provide the subcommittee with a breakdown of personnel by grade for before and after reorganization as well as the number of consultants and consultant-hours before and after the reorganization?

MS. OLIVAREZ. We will be very happy to.

[The information referred to follows:]

The structural reorganization of the Agency is complete and all offices shown are functioning under the mission statements for those offices.

Additionally, due to major Civil Service Commission evaluations of many of our regional offices, we have reorganized the functions in those offices to enhance their monitoring and evaluation procedures.

Because this reorganization required many positions changes such as changes in grade level and duties, we are in the midst of this process. Due to its complexity, it required extensive negotiations with our National Union and a tenative agreement was reached in the latter part of 1977. The procedures of that agreement are the basis of our continuing activities.

We anticipate that the bulk of our personnel changes will be completed by the end of March but that this will be a continuing process since our manpower ceiling is scheduled to be reduced from the current authorized ceiling of 1,042 to 1,015 by Fiscal Year 1979.

There were two consultants employed by the Agency prior to the reorganization and there are three consultants currently on board. None of their duties are related to the reorganization but rather are involved with the on-goung mission of the Agency. All of them are hired for a period not to exceed 100 days per fiscal year. We are restricted by statute from employing any consultant for a longer period. In the pre-reorganization period the two consultants worked a total of 800 hours (100 days x 8 hours) and it is anticipated that the three consultants currently on board will also work a total of 800 hours per consultant.

ENERGY CONSERVATION

Mr. CONTE. Has CSA been providing energy asistance for the Northeast during the recent snowstorm, and do you plan to continue providing such assistance? Put that in the record.

[The information referred to follows:]

Crisis relief has been provided by our grantees through 1977 funds remaining, both in the Special Crisis Intervention Program ($200.0 million) and the normal weatherization program ($110.0 million). Additional funds of $600,000 from the 1978 appropriation will be released tomorrow for Region I, and $300,000 to three states in the Midwest.

Mr. CONTE. Did the severity of this winter's storms tax the program to the point where a supplemental budget request may be necessary?

MS. OLIVAREZ. Yes, a 1978 supplemental for $200 million is requested within this budget request.

We have made available from our current 1978 appropriations money specifically for the states that have been declared disaster states as a result of the blizzard.

Mr. CONTE. From the supplemental?

Ms. OLIVAREZ. The supplemental is currently before the House, as you know.

Mr. CONTE. It is in conference. Currently before the Senate on the B-1.

MS. OLIVAREZ. Yes.

RURAL TRANSPORTATION

Mr. CONTE. Can you tell us more about the rural CAA transportation program? Is it only using Head Start buses for education programs? Is there anything to develop a public transportation system for the rural poor?

MS. OLIVAREZ. We would like to see a rural transportation plan developed, but it has to be done in conjunction with the Department of Transportation simply because we do not have the funds necessary to put together that kind of network.

Right now we are providing transportation in a variety of ways for low-income rural people to get to services, to get to functions, but our funds are very limited in that area. We do use Head Start buses, by the way, for these purposes.

ECONOMIC DEVELOPMENT

Mr. CONTE. Your decreased budget requests and the text of your justifications indicate dissatisfaction with the Community Economic Development Corporations. What is the major problem with this program? Is the lack of success mainly due to poor management?

MS. OLIVAREZ. I would say the lack of success has been due to the lack of supervision by the Washington office and the fact that a lot of the local CDC people didn't understand what we really meant by economic development. They were under the impression that they were to get involved in a lot of service programs rather than profitmaking ventures. We feel right now that the experience that we have had in the last seven or eight months that we have been there indicate that we have some exciting and excellent CDC's that are worthy of continuation, whether we fund them, or whether we link them up to other funding sources.

Secondly, we will be concentrating in helping the CDC's that have good ventures understand that ventures are their salvation, but it has to be profit-making ventures, so we are instituting some management control and quantitative measures. For example, $3 million in sales is an indication that we have a good venture going. By the same token, we are not afraid to eliminate the ventures that are not giving them any returns. It has been very difficult to convince a lot of community people that the capitalistic system is fine if they are part of it, and the experience that we have so far indicates that it takes many years to get a community development corporation to the point where they can start becoming self-sufficient.

Mr. CONTE. Will you submit for the record which CEDC's show losses and which have shown profits for the last two years, and to what extent are CEDC's a really viable way to help pick up community economic situations? Also please explain how increased technical support is going to help the program.

MS. OLIVAREZ. Very good.

[The information referred to follows:]

Seventeen CDCs have shown profits over the past two years; eleven CDCs have had overall losses during the same time period, and eight CDCs have had no business ventures during the past two years.

The second part of your question concerns the viability of the CDC model. While our results have been mixed, I am convinced that the CDC model still holds exceptional promise as an economic development model. The operational CDCs have shown the capacity and capability to manage and operate their programs; to leverage private sector, the federal, state and local funds; and to develop effective linkages with the business/financial community. With the tightened management of OED and more interagency cooperation between CSA and other Federal agencies, we are convinced that the program can achieve its legislative mandate.

The third part of your question focuses on what has been one of the biggest problems in the Economic Development program. Poor decisions made during the planning phase of venture selections and lack of adequate training and assistance to the mid-level and senior level teams operating ventures are the primary reasons for the failures of many of the ventures.

Over the past two years, OED has encouraged CDCs to divest from their portfolios 44 business ventures that showed no signs of meeting the CDCs projections or becoming profitable.

Increased technical support will eliminate the past weaknesses; in the initial selection of ventures, as well as management selection and training.

NATIONAL POVERTY RESOURCE CENTER

Mr. CONTE. CSA has been discussing the creation of a national poverty research center which would develop resources concerning Federal policies that have an impact on the poor. Can CSA assure the committee that the new research center will not become an

advocacy center which will attempt to use Federal dollars to lobby Congress either directly or indirectly?

MS. OLIVAREZ. It is a poverty resource center, as opposed to a research center, and that program has not been implemented at the agency.

Mr. CONTE. Is there any intent to implement it?

MS. OLIVAREZ. There is an intent because it is in the law we must advocate on behalf of poor people. Advocacy can take various forms. Obviously we are precluded from lobbying. We don't intend to lobby, but I do think the record has to show that we do intend to advocate very aggressively in behalf of poor people.

Mr. CONTE. I can see that. You have no intent to set up a national poverty research center. Where did I get that?

Ms. OLIVAREZ. Oh, because that proposal had been developed, has been analyzed, has been evaluated, has been the subject of cussing and discussing, and it is still in my office, and I can't say right now that we will not do it, but I can't say that we will do it.

Mr. CONTE. It would be unfair for me to ask for cost figures and all that, because it hasn't gone that far?

MS. OLIVAREZ. That is right.

Mr. CONTE. Thank you, Mr. Chairman.

CSA REORGANIZATION

Mr. PATTEN (presiding). Can you readily answer the questions of where you stand on reorganization? Do you know? Are you through with the reorganization process?

MS. OLIVAREZ. Well, to the extent that you can be through with the reorganization process, yes, but because our employment ceiling will fluctuate from 1977 to 1978 to 1979, the reorganization will continue to be a dynamic process, and we won't be through with all of the reorganization until 1979. The bulk of it, the structural changes, are already in place. We expect to have the reorganization of the regional offices done by the middle of March.

Mr. PATTEN. Mr. O'Brien.

Mr. O'BRIEN. I yield to Mr. Conte for a moment.

1979 BUDGET PROCESS

Mr. CONTE. I wanted to ask you, also, did you prepare this budget on a zero-base budget plan?

MS. OLIVAREZ. The 1979 budget; yes,

sir.

Mr. CONTE. As a result of that, what did you eliminate, if anything?

MS. OLIVAREZ. Could I defer to Mr. Gabusi, because he was the director of our ZBB effort?

Mr. CONTE. Before that, will you submit for the record the priorities, a list of priorities?

[The information referred to follows:]