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So No. 1, as a performance indicator you might have results in terms of output; that is, are we getting those children enrolled and at what rate. You would have that kind of information.

The other side, which is much more difficult and from our standpoint almost scary, would be if the new chief financial officer that has been created for the U.S. Government were to say that they want to know information about output. If we apply output to the Head Start model, the question might not be the number of children being enrolled, but how well have they been equipped to compete with a disadvantaged background once they enter a school with children who do not come from that background. Boy, that is a lot more difficult to measure.

It would be an opportunity to get information about how well agencies are doing against what they have been given. I cannot imagine anybody who would be a better recipient for that kind of information, who would use it to better advantage, than the Appropriations Committees of the Congress. It certainly would be of enormous value to oversight committees.

If you look at the legislative record on this, and if you talk to the prime movers behind it-Mr. Darman at OMB, Mr. Brady at Treasury, and Mr. Bowsher at GAO-it is also a major objective of this legislation to reduce the vulnerabilities for the kinds of things that we saw and witnessed in the HUD scandals.

So there are a multiplicity of things that might come out of this. There is a great opportunity here. Whether that opportunity will be realized over time is another question.

The one thing I would say is that when this request was submitted, it was submitted as a joint effort by both ASMB and the inspector general. ASMB has a very major role to play in this process, as they will be the ones who will generate the chief financial officer. It is a clear case of a real partnership for better management in Government. We are probably better equipped in our Department to deal with this than any of the others that we have seen. But again, the burden is going to fall much heavier on us.

We are estimating that for the 60 departmental accounts and the add-ons to those accounts, there are going to be up to $100 billion in outlays that will fall under the new requirement for financial statement audits. That does not count the Social Security Administration, which we already have under financial statement audits, though that will be much more broad in the future.

That means that here within a finite period of time 80 percent of the outlays of the entire Department are going to be under financial statements that will be audited and reported.


Senator HARKIN. Is the budget request enough to do that? You have what, $9.5 million?

Mr. KUSSEROW. Well, as a startup. I may come back next year and be panic stricken, but right now I think that for the startup it is right. I would hope that by next year, if we did get this funding, we could come back and answer some of the questions that you have and have you look at what has been produced by this process, to make a determination of whether this is a good investment of resources or not.

There are a lot of question marks in this, and I will tell you that we are all challenged by it. I put challenged in a positive sense. We are scared to death at the same time, because of the enormous burden that is following it.

Mr. WILLIAMS. In addition to the $9.5 million which Mr. Kusserow is requesting to audit the statements in the budgets for the various operating divisions in the Department, we have also included $2.5 million to prepare those statements. So except for SSA, which already does a financial statement, the $2.5 million is for the other operating divisions to begin preparing them so that Mr. Kusserow can audit them.

Senator HARKIN. I did not know that. A total of $2.5 million for all of them?

Mr. WILLIAMS. For all the other agencies, right.

Mr. KUSSEROw. We have found from our experience that one way in which we have an advantage over other agencies is that we saw this coming. ASMB and the management side of our Department and the inspector general went ahead and did Social Security to begin to see if we could figure out what it would cost and how we would go about doing it and everything else. So we are forearmed on this.

I just thought it was terribly inappropriate that Mr. Williams would put in a commercial announcement for somebody else's appropriation while it is my time in the box. I would register a protest on that. [Laughter.]

Mr. WILLIAMS. It is money well spent, Mr. Chairman.

Senator HARKIN. That is what we call a side shot in this busi


I had a whole bunch of questions about this CFO, but in your remarks you have covered them all but one. Are you in favor of the Department's request to waive the CFO Act's audit requirements for some parts of HHS?

Do you want me to repeat that?

Mr. KUSSEROW. Yes; repeat it. [Laughter.]

What that question leads to, Mr. Chairman, is the fact that we have 3 years to fully implement this legislation before Congress comes back and reevaluates it. The question is, at how fast a pace should we do this in that 36-month period, starting in 1992 and carrying forward to 1995.

I know that you will find my next statement pretty hard to accept, but just take it on faith. I tend to be more aggressive and reckless than perhaps other people in the Department, so my feeling is that I would want to go as fast as we can on this, because I think that the more we learn up front the better off we are.

The real question, and one of the underlying reasons why this legislation came about from the Congress, is that we do know the financial systems are not in place yet to produce the statements that are required. When we go out to audit NIH, for example, I think there are roughly 38 different program accounts. If you look at the financial systems that support them, you find that they are not coordinated, and they are going to have a tough time meshing them.

So I think that the management side of our Department wants to use the time to repair the system, to standardize it, and to move

it forward. My feeling is that I will personally move very aggressively on this, whether or not an agency has its financial statements prepared. I will do the 220's, and I will do other work on the financial audit report. I intend to look at all 60 accounts in the first year, if I get the funding.

I did not mean to waffle too much on that.


Senator HARKIN. Thank you. I will have to read that.

That is all I have. Again, I appreciate your being here for such a long time. While we started this process a couple of years ago when I first took chairmanship of this subcommittee, my time was somewhat taken with some diversionary interests last year. I can assure you that for the next 6 years that I am privileged to serve as chairman of this subcommittee that I intend to delve into this whole area of accountability for all the Federal dollars that are spent in our bill.

It probably does not come as much of a surprise to you or anyone else in this room that I am a supporter of programs like Head Start, community health centers, and eradicating infant mortality. I look at the billions of dollars going through here, and I have discussed it with Senators Specter, Hatfield, and Bumpers. How do we get a handle on this and really make sure that we are not wasting a lot of money? Any time you have $100 billion out there, there has to be someplace you can tighten down on it and not affect the program itself or the recipients and the people you want to serve out there.

So we are going to look forward to working further with you, as we will other inspectors general in the other departments, to try to accomplish those twin goals of really making those programs work and then saving or cutting back as much as we can. That is why I am so interested in this indirect cost program. I am not certain where it is going to lead me, but I want to look at it very hard.

Mr. KUSSEROw. Mr. Chairman, let me just restate that we will be happy to work with your staff and provide as much information as necessary. I think I can speak also for ASMB by saying that we will be happy to keep you apprised of the development of the CFO legislation, once we start rolling on this thing.

Again, since you are going to be a prime user of whatever comes out of this process, we think you should be kept well informed as to what we are doing and how we are going about it, and have some input as well.

Senator HARKIN. I appreciate that. I was just informed, I did not know there is a vote on. There is 9 minutes left.

Thank you again very much.

Mr. KUSSEROw. Thank you, Mr. Chairman.


Senator HARKIN. There will be some additional questions from various Senators which we will submit to you for your response.

[The following questions were not asked at the hearing, but were submitted to the office for response subsequent to the hearing:]



Question. The budget, as you know, proposes a new initiative to combat high infant mortality rates in 10 "target cities." While the details of this initiative are not complete, it appears that most of the funds would be awarded to community health centers in designated target areas. I want to ask you about the existing infant mortality initiative we've been funding for several years through community health centers, known as the Comprehensive Perinatal Care Program (CPCP).

Have you done any studies of this initiative?

Answer. We have conducted a program inspection which assessed the initial implementation of the CPCP, an initiative of the Public Health Service (PHS) to reduce infant mortality through supplemental grants to community and migrant health centers. We found that: (1) the goals and objectives set forth in CPCP grant proposals approved by PHS have been in accord with the intended purposes of the program; (2) in some cases, PHS had limited information on how grantees planned to spend the CPCP funds awarded during the first year; (3) PHS has established a basic framework for gathering information useful for assessing the impact of CPCP services, although it is too soon to have been tested; and (4) many areas of the country with high rates of infant mortality have not been receiving CPCP funds because some could not prepare acceptable grant proposals and some high infant mortality areas do not have community health centers.

We recommend that: (1) PHS should strengthen its procedures for approving CPCP grants to assure adequate accountability for CPCP funds; (2) PHS should strengthen its efforts to provide technical assistance to community and migrant health centers preparing CPCP grant proposals so that they qualify; and (3) PHS should reexamine the approach for allocating CPCP funds to assure that these funds are directed to areas of high infant mortality.

Question. Why aren't areas with high rates receiving perinatal care grants?

Answer. The definition established by PHS for high infant mortality is 12 or more deaths per 1,000 live births. Nearly half of the nation's largest cities with high infant mortality rates have not been eligible for CPCP grants because they have no community and migrant health centers funded through sections 329/330 of the PHS Act.

Approximately 25 percent of CPCP grants have been awarded to centers serving areas with infant mortality rates below the threshold of 12 deaths per 1,000 live births. However, these areas may have pockets of higher infant mortality rates, and the CPCP funds may help some areas maintain their lower rates.

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Additionally, almost half of all community and migrant health centers have not applied for CPCP funds, while others including those serving areas with high infant mortality rates have applied and not been approved. Some were disapproved because they could not prepare an acceptable proposal.

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Question. Do you think if the grants were available to other health care providers, too, that we could tar et funds to high-impact areas more effectively?

Answer. Although our study did not address that question specifically, we believe that targeting more providers would help. However, as mentioned above, we did find that nearly half of the nation's largest cities with high infant mortality rates have not been eligible for CPCP funds because they lacked Federallyfunded community and migrant health centers, the required conduit for the CPCP funds. Our study recommends that PHS reexamine the approach for allocating CPCP funds to assure that these funds are directed to areas of high infant mortality.

Our analysis raises important policy issues as to whether these CPCP monies are being directed in the most strategic manner, and whether continuation of the present pattern of allocating these funds will serve the best interest of this initiative. Our recommendations include addressing the following policy questions: Should infant mortality rates figure more prominently in the application and funding process for CPCP funds? Should any increases in the CPCP appropriations be more selectively targeted to centers serving areas with the highest rates of infant mortality? How might perinatal services be supported more intensively in those very needy areas without community or migrant health centers? Is it a more effective use of limited resources to fund many centers in the neediest areas for more substantial support? Answers to questions such as these will allow the limited dollars available for the CPCP to achieve the maximum impact on this most pressing problem of infant mortality.


Question. Your office documented that administrative costs for the Foster Care program increased from $143 million to $400 million from fiscal years 1984 to 1988. These costs, for which the Federal

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