J61 7976 SECOND DEFICIENCY APPROPRIATION BILL, 1946 HEARINGS CONDUCTED BY THE SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES, IN CHARGE OF DEFICIENCY APPROPRIATIONS, MESSRS. CLARENCE CANNON (CHAIRMAN), LOUIS LUDLOW, EMMET O'NEAL, LOUIS C. RABAUT, JED JOHNSON, JOHN TABER, RICHARD B. WIGGLESWORTH, EVERETT M. DIRKSEN; ON THE DAYS FOL LOWING, NAMELY: WEDNESDAY, FEBRUARY 27, 1946. BUREAU OF THE BUDGET STATEMENTS OF FREDERICK J. LAWTON, ADMINISTRATIVE ASSISTANT TO THE DIRECTOR; AND H. W. STONE, BUDGET EXAMINER INCREASED PAY COSTS DUE TO PAY LEGISLATION Mr. LUDLOW. Mr. Lawton, we will open the hearings with that section of the bill calling for the largest amount of appropriation— those provisions calling for supplemental appropriations on account of pay legislation effective from the commencement of the current fiscal year and not heretofore implemented by appropriations. The estimates were contained in House Document 437. The items I believe begin on page 44 of the subcommittee print and extend over to page 80. All told, they call for an appropriation of $409,534,576. GENERAL STATEMENT Mr. LUDLOW. Would you like to make a general statement at this point? Mr. LAWTON. The supplemental estimates now under consideration aggregate $409,534,576 and affect 448 appropriations. They represent the additional amounts required for the fiscal year 1946 for all agencies of the Federal Government, including the legislative and judicial branches and the District of Columbia, to cover the increased pay costs granted by the Federal Employees Pay Act of 1945 (Public Law 106), the act of July 6, 1945 (Public Law 134), the act of July 14, 1945 (Public Law 151), and the act of July 21, 1945 (Public Law 158). Mr. LUDLOW. For the purpose of the record, will you tell us in a line what each one of these acts is. Mr. LAWTON. Public Law 106 is the Federal Employees Pay Act covering employees who are covered under the Classification Act of 1923. Public Law 134 is the Post Office Pay Act. M533127 1 Public Law 151 relates to police and firemen in the District of Columbia and the Panama Canal. Public Laws 158 and 160-A, which is an amendment thereto, relates to the District of Columbia teachers and also to the teachers in the Panama Canal. Mr. LUDLOW. Thank you. Mr. LAWTON. Of the total of $409,534,576 requested, 52 percent or $212,486,700 is chargeable against Public Law 134. Briefly, this law reclassified the salaries of employees in the field service of the Post Office Department, and established salary rates for clerks at third-class post offices and for special delivery messengers at firstclass post offices. A new rate of 150 percent of base pay was established for overtime. A new system of automatic promotions was provided for the inspection service, custodial service, rural-delivery service, motor-vehicle service, mail-equipment shops, equipment and supply personnel, and as many as nine additional steps of automatic grades were added to the existing automatic classifications. The wartime temporary increase of 20 percent in the equipment allowance for rural carriers was made permanent, and the travel allowance of railway postal clerks was increased 33% percent. It also established transportation allowances for special-delivery messengers at first-class post offices. The base pay of regular clerks and carriers and railway mail service employees was increased on the average about 20 percent. Inequities in pay of supervisory employees were adjusted in most instances in excess of 20 percent. Night-work differential of 10 percent of base pay was extended to certain groups of employees who did not heretofore receive it. It was further provided that substitute personnel shall be employed at least 2 hours when ordered to report for duty. While the rate of 15 percent for computing postmasters' allowance for rent, light, fuel, and water at fourth-class post offices was not increased, the increase in their base pay resulted in an increase of about 20 percent in these allowances. Only $3,172,695, or 1 percent of the total, is chargeable against Public Laws 151 and 158. Public Law 151 grants base pay increases to the members of the Metropolitan Police, the United States Park Police, the White House Police, and the Fire Department of the District of Columbia, similar to those granted other employees by the Federal Employees Pay Act of 1945. Public Law 158 granted base pay increases, averaging 17 percent, to the teachers of the District of Columbia. By decision of the Comptroller General the benefits granted by these two laws were made applicable to the policemen, firemen, and teachers of the Panama Canal. The remaining $193,875,181, or 47 percent of the total, is chargeable against the Federal Employees Pay Act of 1945. This act is applicable to (1) civilian officers and employees in or under the executive branch of the Government, including Government owned or controlled corporations, and in or under the District of Columbia municipal government, and (2) those officers and employees of the judicial branch of the Government, the Library of Congress, the Botanic Garden, and the Office of the Architect of the Capitol who occupy positions subject to the Classification Act of 1923, as amended. It provides base pay increases averaging 15.9 percent for those employees covered under the Classification Act of 1923, as amended, overtime at the rate of time-and-one-half on basic compensation up to $2,980 and at lower rates on basic compensation above that level (employees of the legislative and judicial branches receive additional compensation in lieu of overtime amounting to 10 percent of their base pay up to $2,900), a 10-percent differential for night work, pay for work on holidays at the rate of one-and-one-half times the basic compensation, and shortens the waiting period between within-grade promotions. It is estimated that approximately 1,240,000 employees receive benefits from this act in one form or another. In general, the following groups of officers and employees are excepted from the provisions of the Federal Employees Pay Act of 1945: Elected officials; Federal judges; policeman, fireman, and teachers of the District of Columbia; postal employees; employees of the Tennessee Valley Authority; and employees who are paid in accordance with local prevailing wage rates. No provision was made in the annual estimates of appropriation for the fiscal year 1946 for these increased pay costs as the temporary overtime pay laws expired on June 30, 1945, and at the time the 1946 Budget was prepared we had no definite knowledge of what kind of pay legislation would be enacted to supplant the expiring laws. Similarly, the 1946 appropriations contained in the Second Deficiency Appropriation Act, 1945, approved July 5, 1945, made no provision for these costs as the estimates were transmitted to Congress before June 30, 1945, the date on which the Federal Employees Pay Act of 1945 became law. We have delayed the submission of these estimates as long as possible in an effort to obtain more accurate data as to the additional funds required and to satisfy ourselves that as much as possible of this additional cost is being absorbed within presently available funds. It will be noted that 52 percent of the total cost of $855,902,203 will be absorbed within existing funds, primarily because Army, Navy, and the war agencies could curtail their programs following the surrender of Japan to such an extent that they absorbed practically all of their portion of the increased cost. Leaving out Army, Navy, and the war agencies, the remaining departments and agencies absorbed approximately 16 percent of their portion of the total cost. In our instructions to the agencies we asked for data with respect to their expenditures, unliquidated obligations, and estimated obligations for the remainder of the year and advised them that they should make every effort to absorb as much as possible of the pay increase cost. We asked them to be realistic in their projections of employment and obligations for the remainder of the year and to take into account the savings to be realized through the acquisition of supplies and materials from surplus stocks and to live off their inventories to the greatest extent possible so that every dollar could be used to offset the pay increase costs. The data and estimates submitted by the agencies were carefully analyzed in the Bureau of the Budget and further reductions totaling $25,706,547 were made in the agencies estimates. We also took into account the savings in certain appropriations that could be transferred to other appropriations to reduce the amount of these supplemental estimates. PAY INCREASES ABSORBED BY VARIOUS ACTIVITIES Mr. LUDLOW. As I understand, 52 percent, or $443,425,109, of these pay increase obligations will be absorbed by the various activities; that is your understanding, is it? Mr. LAWTON. That is right. Mr. LUDLOW. And can there be added to that the $25,000,000, or is that $25,000,000 a part of it? Mr. LAWTON. The $25,000,000 was reduced from the estimates submitted by the agencies. It has already been taken into account. Mr. LUDLOW. You think no larger amount than that $25,000,000 can be further absorbed? Mr. LAWTON. It was our best judgment in submitting these estimates, that that was the limit that we could go at this time. Mr. LUDLOW. Are you allowing a safety margin in any of the items, or are you figuring right down to rock bottom? Mr. LAWTON. We attempted to figure them as close to rock bottom as we could. There are a few cases where, of course, no absorption at all has been made, because we knew there would be supplemental estimates coming up here; in such items as the Veterans' Administration. EXCLUSIVE USE OF ESTIMATES FOR PAY INCREASES Mr. LUDLOW. Perhaps the greater portion of the appropriations affected cover both salaries and expenses. Will it be the policy of the Bureau to see that the additional amounts are used exclusively for compensation increases under the laws which occasion this estimate? Mr. LAWTON. Our estimate was predicated on the assumption that every saving possible would be made in other obligations. We took that into account when we arrived at the amount of the estimates and attempted to provide only that amount which would be needed to pay the salaries for the remainder of the year. Mr. LUDLOW. The really big supplemental amounts, apart from the Post Office Department, are Veterans' Administration, $54,168,000; Department of Agriculture, $21,319,100; Treasury Department, $42,303,400. Considering numbers of personnel affected, the amounts may be no greater proportionately than a number of other items. They are very large amounts, however. Are you satisfied that they are justified by actual employment? Mr. LAWTON. Yes, Mr. Chairman. The Departments mentioned, of course, have extremely large groups of employees. In the Treasury Department, the Bureau of Internal Revenue alone has a larger number of employees than many of the other departments. We felt that this was the best estimate we could make and the minimum that would be needed to carry out the functions that they have to perform for the balance of the fiscal year. Mr. LUDLOW. As I understand from the document embracing the estimate, these additional amounts do not anticipate any additional personal services we may be asked to appropriate for, for the remainder of the current fiscal year? Mr. LAWTON. No. Any amounts that you may be asked to appropriate and the amounts which were appropriated in the De cember supplemental include Pay Act costs and they were on the full-rate basis of present salary scales. Mr. LUDLOW. Does this submission apply solely to positions appropriated for prior to the First Deficiency Appropriation Act, 1946? Mr. LAWTON. This submission applies to the appropriations that were provided prior to the December act in the sense that in that act the positions were provided for at the full rate, and positions subsequent to that time have been provided for at the full rate. This is in a sense a deficiency, caused by the Pay Act and takes into account their present obligation status. It is less, of course, in most cases than the amount required to meet the Pay Act, as you will notice from this column showing the amounts to be absorbed. Mr. LUDLOW. Do you have a detailed break-down that you could give us of the requirements of the different activities embraced in this estimate? Mr. LAWTON. It is embraced in the estimate. The estimate contains the amount for each appropriation. There is a table in the back that gives that information. Mr. LUDLOW. Very well; I had not seen it. Mr. TABER. In this connection, have you figured any increase in your personnel on the part of these agencies? Does any of this money go toward providing an increase in personnel? Mr. LAWTON. This estimate is not based on providing additional personnel for the agencies involved here. It is to meet the costs of the Pay Act. Mr. TABER. Exclusively for the pay? Mr. LAWTON. That is the purpose. Mr. TABER. There is not anything here that would permit these agencies to increase the number of their employees? Mr. LAWTON. We certainly had no intention of submitting any amount for that purpose. Mr. TABER. When did you do this job, the first of the year? Mr. LAWTON. It was done just after the submission of the regular budget. We asked for the total available funds, their estimated reimbursements, the total amount available for obligations in 1946, deducting any transfers, and arrived at a net available fund. We deducted the expenditures to October 31 for both personal services and other objects, and arrived at an unexpended balance, took their unliquidated items of obligation into consideration, and a projection of their obligations for the balance of the year, and arrived at an estimated unobligated balance or estimated deficit. Mr. TABER. Are any of these units going to get more money through these estimates than they would have been allowed if the Pay Act were in effect at the time that the original estimate was made up, after deducting the appropriations that have been available to them? Mr. LAWTON. I think the contrary is true. I think they are getting less because of the latter submission. Mr. TABER. Are there any cases where they are getting more? Mr. WIGGLESWORTH. I notice, Mr. Lawton, there are a great many items in here that do not seem to be pay increases. Are these items all covered by the laws that you referred to? Mr. LAWTON. Yes; all the items covered in title 2 of the bill. |