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nation itself; they include traditional liberal arts colleges such as my institution, as well as major research universities, church- and faith-related colleges, historically black colleges and universities, women's colleges, junior colleges, and schools of law, medicine, engineering, business, and art.
Simpson is a Methodist college of 1,100 full-time and 700 part-time students on the outskirts of Des Moines. We have had solid enrollments and solid fund raising for years. We enjoy a fine reputation dating to 1860 when we were founded. Tuition and fees at Simpson next year will be $9,500.
Before I outline NAICƯ's position on funding for a variety of federal higher edu. cation programs, it may be useful for me to review the last ten or so years of federal student aid policy and funding, as well as the role that independent institutions have played in helping the broadest variety of individuals attend their campuses.
Over the last ten to fifteen years, the federal government has implicitly assigned to independent colleges and universities what formerly had been its own primary role of helping needy students finance attendance at the nation's private colleges and universities. This shift of responsibility for student financing has had profound financial implications for our institutions. In the 1975–76 academic year, the federal government provided $3.421 billion in grants to students attending independent colleges and universities, while the institutions themselves awarded $971 million in their own grant funds. (These figures are in constant 1987-88 dollars). By 198788, however, federal grants to these students had declined to $1.101 billion, while the-institutions were providing $1.994 billion in grant funding (again, in constant 1987–88 dollars). On average, this institutional commitment represented 14 percent of each school's educational and general expenditures. In the first seven years of the 1980's, institutionally provided grants rose in real terms by 87 percent. Our schools now provide an estimated $2.5 billion in undergraduate student financial assistance, and more than $3.0 billion overall.
To put this equation another way, the federal government provided 83 percent of all of the student financial assistance awarded in this country in 1980-81. Nine years later, that figure had dropped to 73 percent. Also, in 1980–81, institutionally provided student aid represented twelve percent of total student aid. Nine years later, that figure was 21 percent colleges and universities had picked up almost all the slack created by the federal government.
The enormous sums of money that independent institutions have had to generate in order to keep their doors open to individuals from all walks of life has carried with it an exacting price: If taken from the operational budget, it decreases funds available for science labs, for the library and for academic programs; it contributes to tuition increases; and it drains endowments that, for the vast majority of our members, are extremely limited. Our members simply cannot afford to continue upping the amount of their own funds devoted to student aid. In recent years, a number of prominent independent colleges and universities have been forced, with great reluctance, to abandon their “need blind" admissions policies.
A principal reason why the federal student financial assistance programs have served students in the independent sector less than adequately may be traced to the functioning of the Pell Grant program. Pell Grants have received huge appropriations increases since fiscal year 1980, amounting to 37.8 percent in real terms, but even these generous increases failed to prevent the maximum grant from losing 19 percent to inflation. The vast majority of these Pell Grant increases went to provide grants to older, independent students, most of them attending proprietary schools. Independent students now receive more than 60 percent of all Pell Grant funds. Between 1980 and 1990, the number of Pell Grant awards made to students attending proprietary schools rose by 172 percent. The corresponding increase for students attending four-year colleges, both public and private, was only 10 percent.
In a sense, then, Pell Grants have become the 800 pound gorilla of the federal student aid programs, absorbing huge amounts of increased funding while having a diminishing impact on college students, especially those attending four-year institutions—through no fault of congressional appropriators. Unfortunately, the enormous sums of money needed to sustain- the Pell Grant program has limited the funds available for the campus-based student aid programs, and for other higher education programs as well. All of the campus-based programs lost considerable ground to inflation over the 1980–91 period: Appropriations for Supplemental Educational Opportunity Grants (SEOG) dropped by 11.9 percent; those for College Work-Study (CWS), by 32.3 percent; and funding for Perkins Loans, by 67.5 percent. In 1980, total funding for the three campus-based programs represented slightly more than 50 percent of the Pell Grant appropriation, but by fiscal year 1991 that percentage had dropped to 23.6
percent. The funding trends for Pell Grants and the campus-based programs are of enormous concern to our institutions because the campus-based programs, as well as State Student Incentive Grants (SSIG), tend to be more responsive to the needs of dependent students from working or lower-middle-income backgrounds. They also tend to be awarded to traditionally aged students working toward a baccalaureate degree. For example, in 1988–89, 62 percent of all SEOG funds were awarded to dependent students, while, as noted above, more than 60 percent of all Pell Grant awards go to independent students. SEOG funds are awarded only to needy students. In 1988–89, 72 percent of SEOG funds granted to dependent students went to those coming from families with incomes of less than $24,000. Clearly, these are not even “middle-income” students.
The majority of Simpson students are traditionally, aged eighteen to twenty-one year olds, single, living on campus, and classified as dependent. They pay a much higher tuition rate than our part-time students, who are mostly classified as independent.
As mentioned, the campus-based programs provide great assistance to students pursuing baccalaureate degrees. In 1988–89, 76 percent of SEOG funds went to students enrolled in four-year programs, while more than 90 percent of Perkins Loans were awarded to individuals at four-year colleges.
NAICU believes that the federal government needs to put more emphasis on helping students obtain a baccalaureate degree. It is the attainment of a bacalaureate degree that makes the diserence economically for most Americans. College graduates have consistently earned higher wages than those who do not graduate from college, and this spread has grown over the last two decades as our nation's manufacturing base has contracted. In 1987, individuals who had completed four or more years of college received a significantly higher annual wage than those whose education was limited to high school (43.8 percent higher for men, 56.7 percent higher for women).
For these reasons, we wholeheartedly urge you to support fiscal year 1992 increases for the campus-based programs that are endorsed by the higher education community: $250 million more for SEOG; $55 million more for CWS; and $44 million more for Perkins Loans. An increase of $36 million for the SSIG program will also achieve the goal of providing enhanced federal support for traditionally aged college students who have limited means or hail from working families. NAICU also supports an increase in the Pell Grant maximum to $2,000. Pell Grants are the bedrock federal student assistance program. They merit continued support, despite the fact that large amounts of funding are needed to raise the maximum award even modestly.
NAICU also strongly supports funding for non-Title IV programs supported by the entire higher education community. This includes $12 million more both for Part A and Part B of Title III, and a $7 million increase for Part C endowment grants. NAICU also urges the subcommittee to provide $50 million in Title VII in facilities grants in fiscal year 1992.
Finally, we support an increase of $13 million for the graduate and professional degree programs in Title IX. These programs are increasing in importance as an impending facility shortage booms, and the percentage of minorities in the population grows.
I appreciate this opportunity to testify, and would be happy to answer any questions that you might have.
Senator HARKIN. Thank you very much, Dr. Jennings.
Again, my congratulations to you on running a really great institution, Simpson College. Of course, I am a little biased. It happens to be in my home county where I was born and raised. It is an outstanding institution of higher learning.
Dr. JENNINGS. We are proud that you are up here, too.
Senator HARKIN. It is an institution that had some tough times and has come back. I think your enrollment is probably up again.
Dr. JENNINGS. We have a record enrollment of 1,700 this fall.
Senator HARKIN. Well, as you know, as I will mention to everyone else here today—I just might as well get a record and play it here-because of that budget agreement last year we have some really tough situations facing us in terms of funding. Last year, as you know, we were able to get the Pell grant up by $100. We did the SEOG's and the SSIG's.
Again, this subcommittee is very supportive of all three of those. I particularly am interested in the SSIG and seeing how much more we can do there, because that is more bang for the buck because the States match it. For every dollar we put in, the States have to put in $1. They do not have to if they do not want to, but if they want to utilize it they can match it dollar for dollar, and it works out pretty darn well. So it is good leverage.
We will do our best, Dr. Jennings.
Dr. Carlo Mainardi, accompanied by Mary Martin, American College of Hematology.
(No response.] STATEMENT OF CYNTHIA EISENHAUER, DIRECTOR, IOWA DEPART.
MENT OF EMPLOYMENT SERVICES, INTERSTATE CONFERENCE
OF EMPLOYMENT SECURITY AGENCIES Senator HARKIN. How about Cynthia Eisenhauer, the Director of the Iowa Department of Employment Services, here for the Interstate Commerce of Employment Security Agencies.
Ms. EISENHAUER. Good morning. I am Cynthia Eisenhauer, director of the Iowa Department of Employment Services, here representing the front-line workers across the country who are administering the Nation's Unemployment and Employment Security Programs.
We are grateful for your support and that of the committee in the past for the administration of the Unemployment Programs and Employment Security Programs. Your support of the most recent supplemental appropriations for unemployment insurance has enabled us to make timely payments to the growing numbers of unemployed workers across the country.
The written testimony that we submitted to you substantiates the State's requested level of funding for fiscal year 1992. We believe that our requests are responsible and consistent with the provisions of the Budget Enforcement Act.
With respect to unemployment insurance funding, we support a base staffing that would be sufficient to handle an average of 2 million claims per week. That is an increase over the current funding level that enables us to handle 1.8 million claims per week. Since 1975 the level of unemployment claims filed per week has never been below 2.2 million.
For employment service operations, we are requesting a modest inflationary increase to $838 million. Americans have been bombarded with studies projecting dramatic changes in the work force and the workplace, and we believe our Employment Security agencies are key in helping employers and workers cope with these changes. In Iowa, for example, large employers are proclaiming a labor shortage while the number of unemployed exceeds 80,000. It is our job to make the match.
In December Iowa's local job service offices were able to fill 97 percent of the job orders that were placed in the job service offices. In January when the unemployment rate jumped a full percentage point, our local offices only filled 40 percent of the job orders that were placed with the offices. The reason was because no one had time to match the job with the job seekers. They were all out in front taking unemployment claims.
There is one element of the request that in my view will encourage responsible spending, enhance the delivery of services to the unemployed, and keep us from coming to you each year for a supplemental appropriation. Best of all, it will not increase spending. That is the establishment of a contingency reserve fund to make funds available for unanticipated increases in unemployment.
Unemployment projections, as you know, are made ğ months before the beginning of a fiscal year, and the related appropriations are set at that time as well. If actual unemployment as in recent years exceeds projections, then States must come to Washington to beg for a supplemental appropriation in order to pay timely benefits.
Senator, I have had 18 years executive experience in public financing. I was director of business and finance for the Iowa Public University system and worked in the executive branch Budget Office overseeing complex State budgets. Never until I came to the Department of Unemployment Services had I met with a system of public financing so dysfunctional as this unemployment insurance financing mechanism. A contingency reserve fund would not increase spending. It would make funding available when it is most needed.
Finally, you should know that those of us in Employment Security Administration are consistently and constantly developing unique and innovative approaches to becoming a valuable resource to employers and to workers.
In Iowa on May 2 in Marshalltown we will open our pilot project, Office of the Future. It is a one-stop shop to get answers on all work force issues. It is not going to be called a job service office any more. It is going to be called a work force center. It is highly automated, user friendly, and the cornerstone is a joint intake form that combines over 100 Government intake forms into one fourpage document. Automation funds have allowed us to do that, we have been the recipient of a couple of automation grants. We would encourage continuation of automation grants for both employment services and unemployment insurance funding.
Thank you very much.
STATEMENT OF CYNTHIA EISENHAUER, DIRECTOR, Iowa DEPARTMENT OF
EMPLOYMENT SERVICES Mr. Chairman, members of the subcommittee, my name is Cynthia Eisenhauer. I am Director of the lowa Department of Employment Services, and am here today representing the Interstate Conference of Employment Security Agencies (ICESA). ICESA is the national organization of state officials who administer the nation's unemployment insurance laws, public Employment Service, and labor market information programs.
First, Mr. Chairman, let me thank you for the support that you and this subcommittee have shown for the unemployment insurance system in the past. Most recently that support was evidenced when this subcommittee provided supplemental funds to meet the shortfall in appropriations for the current year. The appropriation of supplemental funds in early April, although not the full amount of the shortfall
, has brought some measure of relief to the overcrowded conditions in offices throughout the country.
In past years, we told you of our concern that unemployment insurance base staff had been reduced during the years of low unemployment to a level at which it would be impossible to handle recession level workloads without serious disruptions in service. As you know, in this recession, there have been long lines in local offices throughout the country, some unemployed workers have waited up to 6 hours to file claims, and in some states unemployment checks have been delayed for weeks. We believe that the only way to ensure that adequately trained staff are available during a recession is to maintain a larger number of base staff throughout ups and downs in the economic cycle. ICESA supports increasing the base staff in fiscal year 1992 from the current level, sufficient to process 1.8 million claims per week, to a level sufficient to handle an average of 2.0 million claims per week. This increase would cost approximately $45 million above the President's request. A chart is attached to our written statement (Attachment 1) which displays the history of unemployment insurance workloads since 1975. It shows that the actual average weekly claims level has never been less than 2.2 million. Thus a base staff level sufficient to process 2.0 million average weeks insured unemployment will not leave staff idle during years when unemployment is low, but will ensure a core of trained staff to respond to recession-level unemployment.
The chart also displays a comparison of projected and actual average weekly insured unemployment. In some years, the projections are lower than the actual workload, and in other years the projections are higher. This is not surprising since these estimates are made nine months before the beginning of the fiscal year. When the projections are too high, appropriated funds in excess of the amount needed to process the actual workload are held by the Department of Labor, not allocated to the states, and revert to the Employment Security Administration Account at the end of the fiscal year. However, when the projections and the appropriation based on those projections are too low, the shortfall in funds results in overcrowded offices, long lines, and payment delays such as we are now experiencing.
Currently, supplemental appropriations are the only means to make more funds available when unemployment projections are too low. A second chart attached to our written testimony (Attachment 2) illustrates the history of unemployment insurance supplementals. In ten of the last eighteen years, supplemental appropriations, averaging close to $200 million each, have been necessary to provide additional funds for unemployment insurance administration. Although the Congress has provided funds to help the states handle greater workloads, the time consumed by the supplemental appropriations process has meant that unemployed workers have been subjected to long waits for service and unconscionable delays in payments for months before supplemental funds have been available.
In order to make additional funds available when they are needed, rather than after substantial damage has been done, ICESA urges you to consider establishing a contingency reserve fund, as part of the fiscal year 1992 and subsequent appropriation bills, which would make funds available for unanticipated increases in un. employment. The administrative funding arrangements for other state-administered entitlement programs are structured in ways that permit additional monies to be spent without action by Congress. Federal entitlement programs, such as Social Security, have appropriated contingency reserve funds which can be made available when workloads increase unexpectedly.
Unemployment insurance is by far the most volatile of these entitlement programs. As we have seen just this past year, unemployment and claims for benefits can increase dramatically in just a few months. The need for a contingency reserve mechanism for unemployment insurance, to provide additional funds when they are needed, has been demonstrated for the past two years. Such a mechanism would not increase spending, but would make monies available when they are needed, without the time consuming necessity for a supplemental appropriation.
Providing a base staff level sufficient to process an average of 2 million claims per week and establishing a contingency reserve fund for unanticipated increases in unemployment would provide the stability and certainty in funding that this program needs if it is to fulfill its mission to alleviate personal hardship and stabilize