EFFECT OF DISAPPROVAL OF BUDGET REQUEST,

Mr. ROONEY. Yes. Let me put it this way. If the committee were to feel this was properly the subject of a regular supply bill rather than a supplemental, what would be the consequence of deferring this until next year?

Mr. COVEY. The men would not get their salary, and they have been working full time since their appointment the 1st of July.

Mr. ROONEY. They have been appointed.

Mr. COVEY. Both men were reappointed to full-time positions, both referees, and the Judicial Conference made these changes effective. July 1 subject to the procurement of the appropriation.

Mr. PRESTON. Off the record.

(Discussion off the record.)

Mr. COVEY. I might say under the Bankruptcy Act (11 U. S. C. 68 (a) (b)), the authority to change those positions and fix the salaries is placed in the Judicial Conference.

Mr. ROONEY. The Judicial Conference should do things in a more businesslike way.

Mr. COVEY. The Judicial Conference meets twice a year, once in the spring, usually in March, and in September. When situations come along like in these cases when the referees' terms expired on June 30, that is the time to make a resurvey and realinement of the positions. That is in accordance with the act.

Mr. PRESTON. They may have the authority, but they do not have the money, Mr. Covey.

(Discussion off the record.)

Mr. ROONEY. We have gotten to the point where the bankruptcy division comes up here for money, not once a year or twice a year, but 3 or 4 times a year.

Mr. COVEY. I cannot keep up with the work until I have the money to handle it. The situation is developing so fast I cannot keep ahead of it. We came in with a supplemental for the fiscal year 1957. Our request was submitted in January, and although we had an increase of 11,000 cases in 11 months over the year before we did not get the money to take care of that until the 21st of June.

Mr. ROONEY. That is a quorum call. We shall now answer our names and return.

(Short recess.)

Mr. ROONEY. The committee will now resume its sitting.

INCREASE FOR PART-TIME REFEREE POSITION

I should like to inquire with regard to this increase in salary for one part-time referee, from $2,500 to $4,000.

Mr. COVEY. That position was not increased at the time of the general increase when the salaries were raised to the new ceilings. The man that was there was not entirely satisfactory and the judges of that district recommended no increase until they could make a change. They made the change.

Mr. ROONEY. Where was this?

Mr. COVEY. At Decatur, Ala. They made the change and then recommended the increase which we recommended to the Judicial Con

ference, an increase from $2,500 to $4,000 a year. That was one of the few positions in which no change was made at the time of the general increase.

WORKLOAD DATA AT DECATUR

Mr. ROONEY. What is the situation in regard to the bankruptcy caseload at Decatur, Ala.?

Mr. COVEY. The caseload in Decatur, Ala., in 1956 was 99 cases. In the 6-month period ending December 31 there were 50 cases.

Mr. ROONEY. So it is substantially the same?

Mr. COVEY. Substantially the same, that is correct.

Mr. CLEVENGER. How far would these people have to go if this office was closed in Decatur?

Mr. COVEY. The office in Alabama?

Mr. CLEVENGER. Yes. Maybe they do not need one there if they have one within a reasonable distance.

Mr. COVEY. There are three cities

Mr. ELLIS. Florence, Sheffield, and Tuscumbia?

Mr. COVEY. Florence, Decatur, and Huntsville, I believe. The nearest referee would be at Birmingham, and that would be, from those cities, perhaps 100 miles. But we have had a referee at Decatur since the salary system was started in 1947, and he holds court in those three towns.

Mr. CLEVENGER. They want to raise the salary to $12,500?
Mr. COVEY. NO. The increase there is from $2,500 to $4,000.

Mr. ROONEY. This is a part-time referee.

Mr. COVEY. It is a part-time position.

Mr. CLEVENGER. That is all.

Mr. ROONEY. One further question on this: Of course this money is not directly appropriated out of the Treasury. This would come out of the referees' salary fund. Is that correct?

Mr. COVEY. That is correct.

EXPENSES OF REFEREES

Mr. ROONEY. The next item is entitled "Expenses of referees" and is in the amount of $172,000. This request is also contained on page 5 of House Document No. 198.

We shall at this point in the record insert pages 4, 5, 6, 7, 8, 9, and 10 of the justifications.

(The material referred to is as follows:)

EXPENSES OF REFEREES, UNITED STATES COURTS, 1958

Expenses of referees: For an additional amount for expenses of referees, $172,000, to be derived from the referees' expense fund established in pursuance of the act of June 28, 1946, as amended (11 U. S. C. 68 (c) (4)).

DISTRICT COURTS, REQUEST: $172,000

Expenses of referees, United States courts, 1958 (indefinite appropriation,

Included in budget to date_
Included in House bill...

Revised estimate for 1958-
Additional amount needed.

1 See p. 50 of budget for 1958.

special account)

1

1 $2, 210, 700 2, 199, 700 2, 371, 700 172, 000

PURPOSE AND NEED FOR SUPPLEMENTAL FUNDS

It is requested that a supplemental amount of $172,000 be authorized for the expenses of referees for the fiscal year 1958. This additional sum is necessary because of the increase in the number of bankruptcy cases in the courts which it is believed will exceed the estimate of 74,000 cases on which the 1958 appropriation was based by 8,000 cases. It now appears that approximately 82,000 bankruptcy cases will be filed in the district courts in the fiscal year 1958.

During the first 9 months of the fiscal year 1957 a total of 53,478 cases were filed as compared with 45,089 in the corresponding period of 1956. This is a numerical increase of 8,389 cases, or 18.6 percent. The average numerical increase per month is 932 cases. At this rate of increase 73,270 cases will be filed in 1957, whereas the original estimate was 66,000 cases.

The average daily filings in January 1957 (22 filing days) was 282 cases. The average daily filings in February 1957 (19 filing days) was 342 cases. The average daily filings in March 1957 (21 filing days) was 363. Flings during the month of March, which totaled 7,265, represent an alltime high since the establishment of the Administrative Office. They exceeded the previous high of 6,503 established in February of 1957 by 672, or 11.7 percent. Filings during the March 1957 quarter totaled 19,965 cases. This was an alltime high exceeding the previous high of 17,353 established in the quarter ending December 31, 1956, by 2,612 cases, or a gain of 15 percent. In the light of these developments it appears certain that a volume of approximately 82,000 new cases will be reached in the fiscal year 1958.

01

02

04

The estimate of $172,000 is composed of the following items:

Personal services_

Travel___

Communication services

Penalty mail_

08 Supplies and materials_.

09 Equipment--

Total_____

$130,000

6, 000

4, 000 15,000

6, 000 11,000

172, 000

The estimate of $130,000 for personal services will provide 40 temporary positions in the following grade classifications:

20 grade GS-3 clerks, at $3,175 per annum_ 20 grade GS-4 clerks, at $3,415 per annum.

$63, 500

68, 300

Annual cost___.

Rounded to----

131, 800 130,000

Under the Bankruptcy Act (sec. 55a), the court must cause the first meeting of creditors of a bankrupt to be held not less than 10 nor more than 30 days after adjudication of bankruptcy. At least 10 days' notice by mail must be given to creditors of a bankrupt of the first meeting and all subsequent meetings of creditors, of all sales, and other actions enumerated in the section involving the rights of creditors.

Because of the emergency situations that have developed in many districts where the rising volume of work cannot be handled by present personnel it seems advisable to provide additional personnel on a temporary basis. If the work in a district levels off the temporary positions can easily be discontinued and assistance made available in some other areas where the work is falling in arrears. In this manner the maximum benefit may be obtained from the available funds for personal services. It has been found possible to employ satisfactory clerks on a temporary basis in most districts. In many instances former employees of the bankruptcy court are willing to accept employment for several months but because of family responsibilities cannot accept permanent positions. Moreover, such employees need little or no instruction in the work.

The increasing volume of cases has caused a corresponding increase in the travel of the referees, who must travel to the various places of holding court in their territories, and in the expense of communications, penalty mail, office sup plies, and equipment. The estimates for travel, communications, penalty mail, and office supplies are based on an increase of approximately 8,000 cases in the volume of new business in 1958. The estimate for equipment is to provide type. writers, desks, and other office equipment for the 40 additional clerks.

93523-57-13

No appropriation from the general funds of the Treasury is required in this estimate. It is requested that the supplemental funds needed be made available out of the referees' expense fund, which is composed entirely of filing fees and charges paid by the parties to bankruptcy proceedings. The increased payments into the referees' expense fund arising from the increased volume of cases will be sufficient to meet the added amount of this request.

INCREASE IN NUMBER OF BANKRUPTCIES

Mr. ROONEY. These justifications indicate, do they not, that at the present time we are still at an alltime high in number of bankruptcies; is that correct?

Mr. COVEY. Yes, sir.

Mr. ROONEY. As a matter of fact, your present figures would indicate that you are now almost 12 percent over the previous high of February of this year. Is that correct?

Mr. CovEY. No; February of this year was not the high month. The high month was March. The filings in March were about 11 percent over February.

Mr. ROONEY. Your figures are 12 percent over the February 1957 figures, and how much over the March 1957 figures?

Mr. COVEY. The yearly figures for 1957 show an increase of about 19 percent. The increase in February over February a year ago was 15.4 percent.

NUMBER OF NEW POSITIONS REQUESTED

Mr. ROONEY. It should be noted that this request would entail the addition of 40 clerks to the Federal payroll. Is that correct?

Mr. COVEY. Yes, sir.

Mr. ROONEY. That is, 40 additional clerks over the present strength? Mr. COVEY. Yes, sir.

Mr. ROONEY. How many additional positions have you received already for fiscal year 1958?

Mr. Covey. 40 positions.

Mr. ROONEY. And how long ago was it that we voted you those 40 additional positions? Was that in the third supplemental?

Mr. COVEY. No; in the 1958 general.

Mr. ROONEY. In the general bill?

Mr. COVEY. Yes.

Mr. ROONEY. So that, some months back, we gave you 40 additional clerks and now you come along and want 40 more. Is that correct? Mr. COVEY. Yes, sir.

Mr. ELLIS. You notice, Mr. Chairman, these are temporary positions.

Mr. ROONEY. Yes; I notice that.

Mr. CLEVENGER. The salary is not temporary. That is the most permanent thing in the world.

Mr. ROONEY. How long would it take you to fill these positions? Mr. COVEY. Probably a matter of 4 to 6 weeks.

Mr. ROONEY. Then, in the ordinary course of things, with what started in the other body this afternoon, it might be sometime later in the fiscal year before we get this show on the road?

Mr. COVEY. I suppose that is possible.

Mr. ROONEY. If there are no further questions, thank you, gentlemen. Come back and see us again, but not too soon.

Mr. COVEY. I wish it were possible to keep ahead of the situation, and I certainly have tried to do it, but I just cannot keep up with it. Mr. PRESTON. Do these full-time referees practice law?

Mr. COVEY. No, sir; they do not.

Mr. ROONEY. Thank you, gentlemen.