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the coffee pot in the day room because everybody has an opinion on that.

BARBERSHOP

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At the risk of getting into that kind of thing, and where we spend an inordinate amount of time talking about something that is very low-level expenditure, do you want to talk about salaries for the barbershop? [Laughter.]

Mr. ZIGLAR. I am very happy you asked that question, because the amount of time that we spend on the barbershop, the hair care services issue, is out of proportion to the expenditure. That is a perfectly good example, I must say.

We have been attempting to reach parity, if you will, where the barbershop shop is not losing money and it is carrying its own weight. The hair care services, I am sorry. I come from where a barbershop is a barbershop.

Senator BENNETT. I am sorry I led you down that road with my question.

Mr. ZIGLAR. As you know, we have put it on a commission structure. We have changed the level of compensation for the barbers in connection with the commission structure. There is still a lot of unhappiness there about salary levels, at least among some of those barbers there, and we are attempting to address it.

There are a variety of, two or three different ways of going about this that we are discussing with your staff and with the Rules Committee. In the final analysis, Senator, it is probably not the most popular thing to say, but my view is this thing ought to be privatized.

It ought not to be a Senate function, but that is just my own personal view of it, and I think they have done that over in the House, as I understand it. I think it is working over there, and I would in the long term like for us to be able to try to consider the option of privatizing. In the short-term however, in order to maintain civility, we are looking at several options in terms of making adjustments so that people who have been here for a long time are not suffering in their income as a result of our making changes in the system.

So I think there is some equity, some fairness we need to bring to the process, but in the long term I am not sure that this is a function that the Senate ought to be in, but that is just my personal view, Senator.

, Senator BENNETT. I will not add to the amount of time spent discussing this issue, other than to comment, if you want to talk about fairness, I do not understand why I have to pay the same price that the Majority Leader has to pay. (Laughter.]

Mr. ZIGLAR. I am not responding to that one, Senator. (Laughter.)

Senator BENNETT. Thank you very much. We appreciate all you do, and appreciate your staff, and we will pay close attention to the request you made. I think this is a responsible budget request, and we will try to respond to it in a responsible way.

Mr. ZIGLAR. Thank you very much, Mr. Chairman. We appreciate

CONGRESSIONAL BUDGET OFFICE

STATEMENT OF DAN L. CRIPPEN, DIRECTOR

ACCOMPANIED BY:

BARRY B. ANDERSON, DEPUTY DIRECTOR
POLLY E. HODGES, BUDGET AND FINANCE OFFICER

BIOGRAPHICAL SKETCHES

Senator BENNETT. Our third witness is Mr. Dan Crippen, the Director of the Congressional Budget Office. Good morning, sir, and he is joined by Barry Anderson, the new Deputy Director of CBO, and Polly Hodges, the Budget and Financial Officer.

As the Sergeant at Arms leaves he seems to be taking all of the crowd with him.

Mr. Crippen, we welcome you to the committee. I understand you assumed your position on February 4, and so this is your first appearance before the committee. We will submit for the record and institutional memory of the committee a copy of your biography as well as Mr. Anderson's biography, and we welcome you to this most demanding and essential kind of service upon which the Congress depends so heavily.

[The information follows:)

BIOGRAPHICAL SKETCH OF DAN L. CRIPPEN Dan L. Crippen is the fifth director of the Congressional Budget Office. Mr. Crippen, who was appointed in February 1999, has served in senior positions in the White House and the U.S. Senate and is a specialist in issues relating to the federal budget, health care, retirement, trade, and telecommunications.

From 1987 to 1989, he served as the President's adviser on all issues relating to domestic policy, including the preparation and presentation of the federal budget. In the Senate, he served as chief counsel and economic policy adviser to the Senate Majority Leader from 1981 to 1985, working on major tax and budget bills as well as other legislation.

Mr. Crippen also has substantial experience in the private sector. Before joining CBO, he was a principal with Washington Counsel, a consulting firm. He has also served as executive director of the Merrill Lynch International Advisory Council and as senior vice president of the Duberstein Group. Mr. Crippen has a Ph.D. in public finance.

BIOGRAPHICAL SKETCH OF BARRY B. ANDERSON Barry B. Anderson has had a lengthy career in the federal government. From 1988 to 1998, he was the senior career official at the Office of Management and Budget, where he directed the analysis behind and the production of the President's budget proposals. From 1980 to 1988, he held various management and analytic positions at OMB, and from 1972 to 1980, he was an economist with the General Accounting Office.

Before his appointment as Deputy Director of CBO in February 1999, he was a vice president with the Jefferson Consulting Group. Mr. Anderson has a B.S. from the University of Illinois, an M.B.A. from the University of Washington at Seattle, and has done postgraduate work in econometrics at George Washington University.

54-224 99-11

Senator BENNETT. CBO has requested $26.8 million for fiscal 2000, which is a 4.5 percent increase over the 1999 level, which I assume we will be told is once again with the COLA's.

I will ask you the question that I do not ask anybody else, why the COLA is 4.5 percent when inflation in fact is at zero, effectively, but that seems to be the way the Federal Government works.

We welcome you here. We are delighted to have you, and look forward to your testimony.

Mr. CRIPPEN. Mr. Chairman, I hope I will be pleasantly brief. I would like to introduce, as you already recognized, my Deputy, Barry Anderson, and for the record want you to know that Barry retired about this time a year ago from the Office of Management and Budget after 18 years of service in the executive branch. Before that, he worked at the General Accounting Office. Frankly, if he had declined my invitation to join me, I do not know whether I would have taken this job. He is a very valuable resource and is very knowledgeable about how these things work.

With your permission, sir, I will submit my prepared remarks for the record and just spend a couple of minutes summarizing.

FISCAL YEAR 2000 REQUEST

As you said, for fiscal year 2000 we are requesting $26,821,000— an increase of 4.5 percent over our fiscal year 1999 appropriation. That request funds our current staff ceiling of 232 full-time-equivalent (FTE) positions. We are not asking for any additional positions.

Personnel costs continue to dominate our budget, accounting for 86 percent of the request. Computer-related spending accounts for 8 percent, a historical low. Administrative expenses use up the remaining 6 percent.

In order to help offset the 6 percent increase in personnel costs that we anticipate for next year, we plan to reduce spending for automated data processing by 7 percent.

Mr. Chairman, as you said, I have only been at the Congressional Budget Office (CBO) a few weeks, and I have discovered, even though I knew something about CBO before I arrived, that

ere is much more there than meets the eye. Just since February 3, when Barry and I moved into our offices, CBO has issued seven major reports and studies, presented testimony to congressional committees 12 times, and produced 58 cost estimates for proposed legislation, all of that in the past seven weeks.

Mr. Chairman, sometime ago you also asked CBO to develop an early-warning system to keep the Congress informed of fluctuations in spending and revenue patterns, and I want to do a 30-second report for you. We developed our Monthly Budget Review, which is widely circulated on the Hill and available on our Web site. It has actually become one of our most popular products, judging from the number of requests we are getting, and so it was a very good suggestion you made, and we are glad to have implemented it.

In fact, our products are now available on the Web and in hard copy. Virtually the same day we issue a report, we also put it up on the Web, and it has been a very popular site. Traffic is increasing daily.

PERSONNEL ISSUES: RECRUITING AND RETENTION

Now, Mr. Chairman, despite our apparent productivity, we face a continuing challenge to recruit and retain top-quality professionals. Indeed, that is my biggest challenge. After we get through the first few weeks of dealing with the President's budget and the budget resolutions, I desperately need to turn to this issue.

We are well below our FTE ceiling because we are increasingly outbid in the job market. Although we understand that we cannot radically alter our salary structure, we are seeking your permission to offer bonuses for new hires and also to reward outstanding performance. Those bonuses will not entail additional appropriations but rather a reallocation of resources. Our competitors both inside and outside government have the authority to offer such bonuses.

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Y2K STATUS REPORT

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Finally, Mr. Chairman, I want to mention briefly where we are on the Year 2000 (Y2K) issue. As you know better than I, it is not possible to predict the severity or duration of any potential Y2K effect. We are taking what I hope you will agree is a commonsense approach. There is nothing in our mission around the first of the year that is critical to the operations of the Congress.

Our first priority, as it must be for all agencies, is to ameliorate the possibility of a localized problem that might hinder our ability to access our computer files. Such a scenario would make it difficult for us to supply basic information to the Congress on a timely basis. As insurance, we will maintain copies of all of our critical data bases. For example, the CBO baseline-the primary tool against which we measure all legislation and which we normally complete in December—will be made available in both hard copy and in several stored media forms. We will be able to use it manually as well as on computers.

We have a team that plans to be in the office on New Year's Eve to conduct a series of final tests. Live testing is the only way to evaluate and respond to any problems that might arise; that approach will give us a few days if we need additional time to fix things up.

As with many other agencies, our biggest_vulnerabilities are those in interconnections outside our purview. Fortunately, most of our contact with the outside world consists of interconnections with other Federal entities that are taking the same prudent steps and that you are monitoring in this process. We do not rely on outside, nonpublic vendors to any great degree.

PREPARED STATEMENT

With that, Mr. Chairman, I thank you for the opportunity to discuss our appropriation request with the committee today. I would be happy to address any questions you have.

[The statement follows:]

PREPARED STATEMENT OF DAN L. CRIPPEN Mr. Chairman and Members of the Subcommittee, I am pleased to present the fiscal year 2000 budget request for the Congressional Budget Office (CBO). The mission of CBO is to provide the Congress with the objective, timely, nonpartisan analysis it needs for making decisions about the economy and the budget and to furnish the information and estimates required for the Congressional budget process. CBO does not make policy recommendations; instead, it presents the Congress with options and alternatives in a wide range of subject areas, all of which have economic and budgetary effects.

I submit as an attachment to this testimony our latest Director's Report on Work Activities of the Congressional Budget Office, which we submitted to the Senate and House Committees on the Budget in January. That report documents in detail our major work products and activities during 1998 and our work plan for 1999. It also includes a statement of CBO's policies for preparing and distributing estimates and analyses and lists the current membership of CBO's Panel of Economic Advisers.

FISCAL YEAR 2000 REQUEST For fiscal year 2000, we are requesting $26,821,000—an increase of 4.5 percent, or $1,150,000, over our fiscal year 1999 appropriation. That request funds our staff ceiling of 232 full-time-equivalent positions. We are not asking for any additional positions.

Personnel costs account for the largest share of CBO's budget-86.2 percent. Computer-related spending accounts for 7.5 percent, a historical low. Administrative expenses account for 6.3 percent, which is below our historical average. Specifically, our request: -Provides a 6 percent increase in spending for personnel, which comprises

annualized fiscal year 1999 pay raises, merit increases for fiscal year 2000 averaging 2 percent of pay, and a 4.4 percent across-the-board pay adjustment in January 2000 (the increase in the President's pay assumptions). The budget proposal assumes that performance and recruitment bonuses will be paid for by reduced merit pay raises and savings from staff turnover. - Realizes a 7 percent reduction in spending for automated data processing (ADP) and systems and for data and model development. That reduction includes $100,000 in savings from moving the mainframe applications of CBO's Tax Analysis and Health and Human Resources Divisions from House Information Resources to the Library of Congress. (That estimate contains no adjustment for the possible relocation of four mission-critical mainframe applications main

tained by the Budget Analysis Division.) -Spending for all other expenses, such as utilities, printing, and supplies, in

creases by 2 percent. Price increases averaging 3.8 percent are offset by a drop in the demand for spending in several areas, such as copier replacements and graphic arts.

AREAS OF CONCERN RELATING TO CBO'S BUDGET REQUEST Although CBO should be able to maintain its current workload with the funds requested here, the agency is increasingly concerned about its ability to offer the salaries and benefits needed to remain competitive in today's tight labor market.

Most CBO employees are economists and other quantitatively skilled professionals, all of whom are in particularly high demand. We are finding it increasingly difficult to retain our experienced workers, which is one reason that CBO's merit pay request for fiscal year 2000 is so important.

Attracting top-flight new employees is also a problem that could prove critical to our work. Competition for top-quality Ph.D. economists is intense; thus, those economists now demand very high salaries. The limitations on the compensation we can offer candidates have become a major impediment to attracting top talent. With increasing frequency we lose qualified people to employers who can pay more.

CBO operates at a disadvantage compared with federal employers that can provide locality pay raises and give lump-sum bonuses to attract and retain exceptional workers. To help, overcome that competitive disadvantage, we have requested the authority to give bonuses using funds already in our personnel spending base. Those lump-sum payments would be used to attract new employees and to reward outstanding performance. They would enhance CBO's ability to compete with the General Accounting Office, the Congressional Research Service, other federal agencies, and the private sector for professional and management talent.

If granted that authority, no more than 1 percent of budgeted payroll would be used for recruiting and performance bonuses. At least 75 percent of the total bonuses awarded would be based on performance, and the maximum allowable individual award would not exceed 10 percent of the employee's annual salary. Awards to employees would not increase their base salary level and hence would not affect contributions for retirement and life insurance.

Also, to relieve growing salary compression, CBO has asked the House and Senate Budget Committees to raise the pay rates of the CBO Director and Deputy Director

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