none of these funds pay for the benefits, but this is also a trust fund in which I believe there is about $2 billion out of money in that trust fund.

Now in my State, what is happening-and I think in other States as well-where they feel that they are underfunded, they are in the process, and in the practice of diverting employer tax revenues, before they get to the trust fund to backfill the shortfalls in State's allotments for unemployment insurance administration.

Do you think this is a healthy trend? I would not want to see you in any way reduced or diminished in your leverage to get the highest efficiency in the operations and in the process. But nevertheless, what is happening, is the diversion, before you ever get control of that money. And I am not sure that I think that is a healthy trend.

How do you respond to that?

Secretary MARTIN. In two ways: One, I was not aware of that particular practice in your State. We should look into it. We are certainly hearing from the States and the States Governors. And I have talked to a number of the Governors on this issue. In regard to the trust fund-the problem is not expressly limited to this fund. There are always demands you can hear it in transportation and in other areas. But since I am not familiar with what specifically your State is doing, I will be happy to examine it and get an answer back to you.

APPROPRIATE UNEMPLOYMENT INSURANCE FUNDING LEVEL

Senator HATFIELD. The State legislature has been asked by the Governor to divert $6 million from employer tax revenues, in order to have sufficient resources to backfill, and be able to operate because of the shortage of support for employment security activities that is coming through the normal process.

Now you are talking about process, and I am concerned that a problem may be arising. Remember in the supplemental, the administration requested $100 million. But the estimates from the States, ranged from $150 million to $200 million. Now is it just process, or are there different bases of estimates and evaluations? Are we comparing apples and oranges? I am concerned about a process in which the States are forced to override you, or so to speak, circumvent the administration's request for funding.

Secretary MARTIN. There are two things: One, we are picking up about $100 million in carry-over; and, two, we are fully funding 1992 for the next fiscal year. So we are talking about a relatively brief period of time here.

Again, no one on this side of the table is familiar with the particular instance of which you speak. And so we will examine that quickly to see what effect it has.

There is still going to be a gap, because the supplemental is not going to pass today. It is not even going to be in the process line for a while. So part of what States are doing is waiting for all of us to get the supplemental, whatever the amount. I certainly cannot tell, perhaps you could tell me, what the time line is on the supplemental. We would like the supplemental to get moving as quickly as possible.

Mr. JONES. Senator, I think that both comments are actually true. The figure of $100 million or $200 million are fixed figures, in terms of the needs of the system. There is no question about that. It is based on the projected unemployment rates and workloads that the States have across the base. The differential comes in two things: How much carry-over the State might have had; and Second, how they process their claims, a highly variable issue from State to State, as well as how much is in staff, how much is in mechanization, and other kinds of things.

The third point you raise, that States tend to make things fungible, is, in fact, both a positive and negative. The answer is yes, all States do it to some extent. It is an appropriate thing to do. The laws have been designed, in fact, to allow that flexibility to occur from time to time. If it were to occur on a long-term basis, it would be counterproductive, obviously, because the employment services staff is needed to assist people getting back to work.

Senator HARKIN. But you are addressing this diversion?

Mr. JONES. Yes, sir; we keep a very close line on exactly what each State does.

Senator HARKIN. Because my information indicates that the State of Oregon, since 1988-in 1988 it was almost $4 million; another $4 million in 1990; and this year it is $6 million. So there is a trend line, that I would think that would concern the Department here, for at least one State. And I do not—I just do not understand the process that clearly to know whether it is a flaw in the system, or whether it is a valve to let off some special steam at a moment of time and need, and maybe it is acceptable.

But it seems to me there is a cause and relationship between the level of funding that we appropriate, and the growing tendency of a State to compensate, and at the same time, not meet the inefficiencies of the process that the Secretary is trying to leverage, maybe, in limiting that total. I do not know.

PERCENTAGE OF UNEMPLOYMENT INSURANCE CONTINGENCY FUNDED

Secretary MARTIN. Let me add something here, as long as you promise not to get too angry at the messenger.

We are not going to fund administration at 100 percent under the supplemental. We will be funding it at 75 percent. Now, if you are on the Federal level, you may look at that and say, well that is appropriate, because it is allowed under the law. We are in deficit. It makes some sense and you can understand the philosophical underpinnings.

If you are a State official, however, you want everything funded at 100 percent. So when you hear from your State officials, part of the comments that they will be making is that the Department is not fully funding the program. And that is true.

Under the decisions made for this budget, funding will be at 75 percent under the supplemental. And I do not want to have you blind-sided by that.

REDUCED STATE UNEMPLOYMENT INSURANCE STAFF

Senator HATFIELD. If I could just add one more brief question on that, do not forget, Madam Secretary, we are dealing with two

trend lines at this moment. We have had about a 25-percent reduction of staffing levels, and we have had an increase in the unemployment insurance claims workload, as your charts show.

So I think we would have to consider those two trend lines as

well.

Secretary MARTIN. I heard the second trend line-a 25-percent decrease?

Senator HATFIELD. A 25-percent reduction in staffing, as I have my information here. Just prior to this period, State unemployment staff levels dropped by 25 percent, from 57,000 to 43,000.

Secretary MARTIN. There is no disputing the numbers. If the dollars are not enough, where one gets it is an extraordinarily difficult decision.

Senator HATFIELD. I'm sorry, Mr. Chairman, I did not mean to intrude.

Senator HARKIN. Did you have any followups on this one area of questioning?

I have a little followup on this area, too.
Secretary MARTIN. Please.

PROPOSED ADMINISTRATIVE FUNDING CHANGES

Senator HARKIN. Unemployment benefits are an entitlement. But the staff and resources needed to deliver them are not an entitlement. A number of State employment security agencies have suggested to us that we include appropriations bill language, to automatically trigger additional funding for processing unemployment claims if workloads run above some anticipated level.

Another idea relates to this contingency issue. Now this subcommittee has established contingency reserve appropriations for social security offices, and Medicare claims processing, to allow OMB to release extra funds in the event of some large workload that happens.

Would you support establishing a similar reserve fund for State unemployment offices?

Secretary MARTIN. The Department is looking into this. We are examining alternatives. We are not ready to take a position on them yet. But we are looking at alternatives to the system. The goal of the Department of Labor, under any stewardship, is to have the most efficient system possible for an entitlement. If an entitlement is there, it should move as quickly as possible.

Senator HARKIN. Are you speaking mostly about a contingency reserve, or are you speaking of an automatic trigger? Secretary MARTIN. The automatic trigger.

Senator HARKIN. You are looking at everything, right?

Secretary MARTIN. Yes; however, we feel that the automatic trigger would not necessarily make the system work better and the contingency fund would affect the process. So we are looking to be

sure.

I have to add a little anecdotal comment here. I represented the congressional district that had the highest unemployment in the country in 1982. So I am very familiar with what unemployment can do to people and with the incredible negative effects it has if

the Department is not as efficient as it can be and if the State system is not as efficient as it can be.

So both for personal and professional reasons, we are examining the entire process. And though the Department cannot comment now, the examination continues.

Senator HARKIN. I appreciate knowing that. And after you have looked it all thorough and you have suggestions, if you would let us know, I would appreciate it.

Secretary MARTIN. Yes; and again, I understand that we work separately, but if you have any ideas, we welcome them.

Senator HARKIN. Like you, we are looking.

Secretary MARTIN. It is difficult. The Budget Act, with its limitations, does make us face the economic, internal realities. If we are going to talk about one program, we have to talk about where the money comes from. And it makes us all much more rational and realistic. It takes some of the fun out of it, I will tell you, and some of the demagoguery. But if you have some brilliant ideas, Mr. Chairman, I would sure like them.

EMERGENCY SUPPLEMENTAL

Senator HARKIN. Well, no brilliant ideas, just a contingency fund and permitting OMB to release them. Again, I go back to this use of the word "emergency."

You are right. Emergency was somewhat narrowly defined, but it is my understanding to the best that I have been able to read it and understand it, that they could define, obviously, a rise in unemployment of a certain amount as being that kind of an emergency. We tend to look at emergencies in the aggregate, you know.

Secretary MARTIN. Yes; but we are not yet ready to do that.

Senator HARKIN. If it is an act of God or something like that, like a hurricane or something like that, we can understand that. But for an individual who has a family to feed and mortgage payments to make and lost their job, waiting 4 or 5 or 6 weeks is pretty dire emergency, too, and so I think it can be defined in that way.

Secretary MARTIN. Yes; the Senate could do that, or the House. I am not sure there is consensus yet on redoing the budget bill the first month out, which is, in effect, what you may be suggesting. But certainly the Department intends to remain sensitive to the human costs here.

Senator HARKIN. You are right. It does take both parties. We could go first, I suppose.

Secretary MARTIN. Yes.

Senator HARKIN. But unless we thought that there might be

some

Secretary MARTIN. Gentlemen first, I have always said.

Senator HARKIN. Well, I think there is probably more of a willingness here to do that. We would have to understand that OMB would be willing to do that too.

Secretary MARTIN. Well, I bow to your greater expertise about the Senate and its feelings. I certainly cannot claim-

Senator HARKIN. Well, I do not know. I think so, but I, you know, I just have heard from a lot of my fellow Senators, especially the

New England Senators, who are really having a lot of problems in this area.

Secretary MARTIN. Well, certainly, I think we can work together very closely to make sure that the system is, it seems right to use the word, "humane," because the word efficient sounds so cold. But the answer is, as efficient as possible, so it can be at its most humane. And I look forward to working with you on that.

Senator HARKIN. Thank you, Madam Secretary. I have some other questions that I-especially, I have one about ADA that I wanted to followup with you, and I will do that at the end.

Secretary MARTIN. All right.

Senator HARKIN. I will turn and recognize——

Secretary MARTIN. Could I add something here, Mr. Chairman? Senator HARKIN. Yes.

Secretary MARTIN. If I do not have an answer, I will truly tell you I do not, and we will try to get back every answer as quickly as possible.

Senator HARKIN. I appreciate that candor. Thank you.
Senator Specter.

HARDCORE UNEMPLOYED JOB TRAINING

Senator SPECTER. Thank you, Mr. Chairman.

Madam Secretary, starting with the issue of job training for the hardcore unemployed, I would be interested in two lines of responses. One, what your thinking is at the moment, and second, whether you would be willing to address this in a comprehensive way and prepare a program which would obviously require more thought than tentative views at this kind of a hearing.

Because I believe that it is a matter of such importance it is my request to you that you have your Department focus on it sufficiently to come up with a comprehensive approach regarding how to deal with the problems of a city like Philadelphia, which has an unemployed force of 220,000 to 300,000 people, where, until the recession, it had been a labor shortage area.

It is obviously a complicated issue, one where I believe we need substantial participation from the business community where they have a real self-interest in training people for their own specific employment programs, but one where I believe there has to be leadership and cooperation and some resources from State and Federal Governmental agencies.

So my first question to you is, would you be willing to address this issue of looking for some sort of a comprehensive program from the Department of Labor?

Secretary MARTIN. Yes.

Senator SPECTER. OK.

Secretary MARTIN. I could say more, but how about a nice simple yes, because it deserves it?

Senator SPECTER. And the adjunct to that would be, say a little more. What are your thoughts at the moment? [Laughter.]

Secretary MARTIN. I tried for the quick answer. I remember being on the other side and always regretting the long, involved

answers.