4, 743, 447, 313. 99 1, 786, 472, 386. 11 219, 017, 248. 89 321, 943, 942. 65 3, 589, 966. 24 2, 419, 553, 702. 58 65, 463, 468. 58 21, 052, 529. 41 2,333, 037, 704. 59

CLAIMS REVIEW COMMISSION

Senator DIRKSEN. You may proceed.

Mr. MAXWELL. Mr. Nussear just informed me he understands this Commission is ready to operate again, so we will be receiving their

awards.

Senator DIRKSEN. Was my understanding correct that it had been more or less in a dormant state for a while?

Mr. MAXWELL. I would like to ask Mr. Nussear to answer that, if agreeable to you.

Mr. NUSSEAR. Yes, sir. I understand there was some question as to the former members of the Commission. I think that in the change of the administration, the Commission members went out, and there was a delay in the appointment of new ones. We received word this week that the Commission has been organized and is ready to function.

EXECUTIVE DIRECTION

Mr. MAXWELL. The next activity payable from this appropriation covers the overall direction of the Bureau of Accounts-the "Executive direction." That includes the Office of the Commissioner and the Associate Commissioner. It also includes the Office of the Executive Assistant to the Commissioner, which has the responsibility for reviewing current legislation or pending legislation and making reports to the Congress or the Budget Bureau as may be requested.

It also includes the Government actuary who has the responsibility for evaluating certain retirement funds, such as the District of Columbia teachers' retirement fund and the Foreign Service retirement fund.

Senator DIRKSEN. Now, you are estimating 377 positions, and that compares with how many in fiscal 1954?

TOTAL POSITIONS

Mr. MAXWELL. We have 388 right now. The average for 1954 will be 385.

Senator DIRKSEN. So there will be a modest reduction in personnel? Mr. MAXWELL. I would like to comment on that if you have a minute. On page 7 of the prepared statement we show a comparison of the 2 years 1955 and 1954. In 1954 we have available, including direct appropriations and inventories, $2,771,000. If we add to that the increase on account of the postage under Public Law 286, the gross requirements for 1955 would be $2,774,000.

În submitting our original estimates we anticipated we would be able to save around $74,000. So we asked only for $2,700,000. However, the House has made a further cut of $151,300, which really means that we must have to absorb next year or this year around $225,000, which is a reduction of over 8 percent.

At the moment we have programs where we think we can save $38,000 in improved procedures without impairing our operations. In other words, we can make these and continue the quality and quantity of our work. However, we have not been able to determine where we can save the remaining $187,000. For a while, we thought there was a possibility in a revised procedure, for processing depositary receipts

but we found that procedure would have to be tied in with a proposed change in the Bureau of Internal Revenue. It doesn't look like the change could be possibly effective until January 1, 1955, and we are not sure it is certain at that time.

We don't see how we can make $187,000 unless during the next few months we are able to develop additional procedures which might save us that amount of money. Otherwise we must reduce the number of employees by 26 or 27, or 7 percent.

HOUSE CUT

Senator DIRKSEN. You are in a fix because the boss man told us the Treasury would absorb the full House cut of $927,000?

Mr. MAXWELL. That is correct. When this arose we thought we would be able to get along with the reduced amount.

Senator DIRKSEN. You are going to have to talk nice to the Secretary.

Mr. MAXWELL. I do not now know what we will be able to do, but we hope we will be able to find some savings. In the event we are not able to do so, if the change in depositary receipt procedure does not develop January 1 as Mr. Humphrey suggested, we might have to come back and ask for a supplemental. You can be sure everybody in the Bureau of Accounts wants to make cuts and simplify procedures if

sible to save money.

pos

Senator DIRKSEN. What else do you have to offer for the good of the hearing, or is it Mr. Banning's turn to give us testimony?

DIVISION OF DISBURSEMENT

STATEMENT OF PAUL BANNING, CHIEF DISBURSING OFFICER

SUMMARY OF REQUEST

Mr. MAXWELL. I think that generally covers the picture for the appropriation "Salaries and Expenses, Bureau of Accounts." The other account, "Salaries and expenses, Division of Disbursement,” Mr. Banning is prepared to proceed.

Senator DIRKSEN. I will summarize for you so you will have a springboard from which to jump off. For the Division of Disbursement for fiscal 1955 the request is $14,600,000. That is an increase of $4,460,000 over the adjusted figure appropriated in 1954 fiscal year, which was $10,140,000.

Your statement will be inserted, and then you will probably have to engage in some very persuasive eloquence in order to explain that. I will also insert for the record the appropriations summary and certain justification material submitted by the Department. (The material referred to follows:)

APPROPRIATION ESTIMATE FOR THE DIVISION OF DISBURSEMENT

"For necessary expenses of the Division of Disbursement, [$11,000,000] $14,600,000."

EXPLANATION OF ESTIMATE

The Division of Disbursement is responsible for disbursing moneys of all departments except the Military Establishment, postal service, and certain corporations. Its functions include: (1) disbursing from appropriated, trust, and

special deposit funds (31 U. S. C. 492); (2) reeciving and depositing collections of departments with certain exceptions (31 U. S. C. 495); (3) issuing substitute checks for all disbursing officers of the United States Government (31) U. S. C. 528); (4) paying certified claims; (5) issuing United States savings bonds under the Government payroll savings plan (31 U. S. C. 757); (6) preparing vouchers for periodic payments from addressograph plates; and (7) preparing payrolls from addressograph plates for check and cash payments to employees.

The Division consists of a Washington disbursing office and 25 regional offices. In addition to the activities of the central and regional offices, payments are also made by delegation through 2,041 assistant disbursing officers, disbursing clerks and agent cashiers who are employees of other agencies, but who in disbursing public funds operate under the direction of the Division of Disbursement. For the most part agent cashiers are located at Government agency stations, hospitals, penal institutions, and field locations where small on-the-spot cash payments and collections must be made, (e. g., payment and collection on account of the veterans patients' fund, Federal prisoners' fund, etc.).

For the fiscal year 1953 a total of 188,708,437 items were handled with an expenditure of $10,257,905, or an average unit cost of $0.0544 per item. In the current year there will be 197,313,000 items with an expenditure of $10,140,000, making the average unit cost of $0.0514. The fiscal year 1955 will see a drop in the volume of work to 193,429,200 items. However, a new item of expense has been added as the result of Public Law 286, 83d Congress, which will require the Division to reimburse the Post Office Department for all Government checks transmitted through the mails. The requirements of this act have added $5 million or over 50 percent to the appropriation request which would otherwise be $9,600,000. This additional cost will increase the unit rate from $0.0496, which would otherwise have been the lowest ever attained, to $0.0755 for the fiscal year 1955.

The following tables reflect the workload, expenditure, and unit cost for the fiscal years 1953, 1954, and 1955.

Unit cost for fiscal year 1953.-The Division originally estimated a unit cost for 1953 of $0.0648. The initial figure was lowered by two factors. (1) The management improvement program produced savings of $815,559. These savings were derived from the redistribution of the area work volume, improved production control, earlier application of cost findings, intensification of the records disposal program, better printing and reproducing techniques, simplification of bond issuance procedures, conversion from cash to check payments for salaries, substitution of the combination voucher schedule for separate vouchers and schedules, extension of use of Model 9300 addressing machine and re-inking devices, introduction of bill feed method for writing income-tax refund checks, and miscellaneous smaller improvements, relating to refinements arising from the work simplification and cash awards programs for employees. (2) The appropriation for 1953 as made to the Division of Disbursement has been reduced for funds transferred to the Bureau of Accounts, as a result of the consolidation of the accounting for appropriations, which function formerly had been performed in the Division of Bookkeeping and Warrants and also in the Accounting Section of the Division of Disbursement. The change thus effected enables the maintenance of a single set of appropriation accounts in lieu of the two sets that had been required pursuant to law prior to the issuance of Treasury Order 164.

Unit cost for fiscal year 1954.-The unit cost for the fiscal year 1954 of $0.0514 for 197,313,000 items is three-tenths cents less than that in the preceding year. In projecting this rate, the Division extended the 1953 rate reduced by anticipated savings under the management program. This reduction includes all major programs for the preceding year and in addition thereto, supplemental savings from projects begun late in 1953 or not started until 1954. Expenditures for the fiscal year 1954 will be further reduced by curtailment of equipment purchases (not savings). After giving effect to the management improvements, reduction of expenditure for purchase of equipment, and transfer of the accounting function, the cost will be $10,140,000 for processing the 197,313,000 items or $0.0514 per item.

Unit cost for fiscal year 1955.-In 1955 foreseeable savings amounting to $182,911 has further reduced the unit cost to $0.0496, exclusive of the cost of penalty mail which will increase the unit rate by $0.0259. These savings are more fully explained under the heading "Analysis of appropriation base." By applying the unit rate of $0.0496 to the work volume of 193,429,200 an appropriation of $9,600,000 will be required in 1955, exclusive of the cost of penalty mail required which increases the appropriation request to $14,600,000. The 1955 cost has been computed on the present basis, although the latest index published by the Department of Labor indicates an upward trend.