CONSTRUCTION, BUREAU OF OLD-AGE AND SURVIVORS INSURANCE The Department of Health, Education, and Welfare will need authorization of an additional $3,870,000 from the old-age and survivors insurance trust fund in order to go forward with the construction of the new building for the Bureau of Old-Age and Survivors Insurance in fiscal year 1956. Two years ago, Congress authorized the expenditure of $1.5 million from the trust fund to prepare for the construction of such a building. Last year, Congress authorized an additional $20 million for construction. This request for an additional $3,870,000 will provide the Department with a total authorization of $25,370,000 which is the amount estimated by the architects under contract, to be needed for the entire project, including cost of land. The total amount is consistent with the considerations given to establishing a limit of cost for the building by the congressional committees during the second session of the 83d Congress. The $25,370,000 excludes the cost of special protective measures against bombing damage amounting to $2,600,000, which the Congress specifically disapproved last year. The request for the additional amount of $3,870,000 was based on the assumption that the unobligated balance of the $1,500,000 authorized in 1954 fiscal year will be available for actual construction costs. The Comptroller General in an opinion dated January 14, 1955, received by the Department too late for inclusion in the budget submitted to the Congress, has ruled that this 1954 fiscal year authorization is available only for preparing for construction. Accordingly, the additional amount of $3,870,000 requested will be sufficient to complete construction of the building only if authority is granted by the Congress making the 1954 fiscal year authorization of $1,500,000 available for actual construction costs as well as for preparation of construction. Subject to congressional approval of the additional funds requested, the building schedule provides for awarding the construction contract in the second half of fiscal year 1956. Under this schedule, the cumulative total obligations through fiscal year 1956 will exceed $23.6 million. A substantial portion of the additional funds requested will, therefore, be needed for obligation purposes in fiscal year 1956. An authorization of $25,370,000 will provide the Bureau of Old-Age and Survivors Insurance with a building large enough to house all the personnel of the Bureau's Division of Accounting Operations and the Bureau's headquarters staff which presently is located in Baltimore, Md. ADDENDUM TO OPENING STATEMENT ON CONSTRUCTION, BUREAU OF OLD-AGE AND SURVIVORS INSURANCE The House Appropriations Committee approved the $3,870,000 requested for "Construction, Bureau of Old-Age and Survivors Insurance.' Since the architects have estimated that the building will cost $25,370,000, the $3,870,000 will be sufficient to complete construction of the building only if the fiscal year 1954 authorization of $1,500,000 is made available for actual construction costs as well as for preparation of construction. The Comptroller General ruled, after we had already prepared our 1956 congressional budget, that the fiscal year 1954 authorization is available only for preparing for construction. Since this was not consistent with our previous interpretation upon which we based our estimate, nor the report of this committee on the supplemental appropriation bill 1955, the Department is requesting the Congress to make the $1,500,000 available for actual construction costs as well as for preparation of construction. We have attached language for this purpose, which we would like to have you consider, the changes from the original estimate being indicated by italics. "Construction, Bureau of Old-Age and Survivors Insurance: For an additional amount for construction of an office building and appurtenant facilities for the Bureau of Old-Age and Survivors Insurance, including equipment, acquisition of land (including donations thereof), and preparation of plans and specifications, $3,870,000, to be derived from the Federal old-age and survivors insurance trust fund, which together with sums heretofore appropriated for these purposes shall establish a limit of cost of $25,370,000, such sums to be consolidated and accounted for as one fund and to remain available until expended: Provided, That any funds derived from the default of the bond for construction of access roads in connection with the acquisition of such land shall be available for expenditure to construct such access roads." GENERAL STATEMENT Senator HILL. Mr. Christgau, you heard Mr. Schottland's testimony, of course, as to the Bureau of Old Age and Survivors' InsurYou are the Director under the Commissioner of that Bureau. We would be glad to have you make any further comment or suggestion or statement you see fit. ance. Mr. CHRISTGAU. Mr. Chairman, I have here a brief summary statement I would like to read for the record, and after that I would be glad to answer any further questions. Senator HILL. I do not want to cut you off. Could you summarize it for us? Senator POTTER. Then it may be made a part of the record. TOTAL PERSONS INSURED As Mr. Schottland pointed out, for the 1955 fiscal year, we are asking for $88 million, and he also pointed out that at the present time, old age and survivors' insurance covers 90 percent of the employed and self-employed persons. But I do want to point out the interesting fact that over 70,400,000 persons are now insured under the program. The really big workload that we estimate is that in the 1956 fiscal year we will be taking 2,140,000 claims. Also during 1956 we expect to pay 8,897,000 beneficiaries. By June 30, 1956, we will have reached that number. And we will be paying out during 1956 an estimated $5,361,000,000 in benefits. To give you a brief look at the organization, at the present time there is located in Baltimore our administrative office and our records center.. The actual claims are taken in 532 district offices throughout the United States. The claims are paid in six different payment centers throughout the United States. As you pointed out, at the end of this fiscal year, we expect to have about 18,000 employees to do that overall job. I might point out briefly that at the record center in Baltimore, there are about 5,000 employees and part of their work is maintaining the records of all of the 95,500,000 living persons with coverage, of whom 70,400,000 are insured. During 1956, that will involve the recording of 234 million earnings items. These are earnings reports of the people who work under the program. INCREASE IN WORKLOAD I might point out also that the various amendments to the act over a period of time have accelerated the increase of our workload. That was true of the 1939 amendments and the 1950 and the 1952; and as was pointed out, the 1954 amendments also very substantially increased our workload. So we are going from 14,000 employees last year to 18,000 as of this year, an increase of about 4,000 employees. Briefly, the 1954 amendments did this. They increased the coverage to about 10 million more people. They increased benefits for all retired workers and dependents and widows. They changed the retirement test and improved the retirement test and then provided 62284-55-40 for the protection of the disabled. Those, briefly, are the major provisions that were enacted. HOUSE REDUCTION As pointed out previously, the House reduced the appropriation from the $88 million requested to $84 million. I might say that the Bureau over a period of years has underestimated its workload. In other words, its workload has always increased faster than was anticipated or estimated. So there really is no fat left in the organization. These workloads that we were confronted with right along really sweated out anything we had that was in excess of what was needed. And we are fearful that a cut of $4 million, will cut out a lot of muscle that is needed to carry on the workload. We have been gradually increasing our staff this year, as I indicated, from 14,000 to the goal of 18,000, and during this period we have had to train all these new people. That, of course, has resulted in an accumulation of work. As Mr. Schottland pointed out, the pending claims now are 259,000, and there are that many claims in the mill. Normally, we have a 2-week load in the mill. That would be about 84,000. So the actual excess now, over and above what we normally should have, is about 175,000. And we expect to go into the next fiscal year doing all we can now, even in spite of that, with a carryover of around 100,000 claims over the normal amount of 84,000. I think that summarizes it, Mr. Chairman. ADDITIONAL EMPLOYEES Senator HILL. Let me ask you this question. If you had these additional employees, as provided in the budget estimate, the full $88 million, would there be any prospect, you think, in the future, of reducing these employees, after you once got your program going under the 1954 amendments? Mr. CHRISTGAU. There may be two possibilities. One is that we are constantly looking for new mechanical devices to process our workload, such as in the electronics field there is a constant improvement in that respect. Senator HILL. Is that what they call automation? But there is this to be considered. The Bureau workload is one of constantly expanding nature. There will be a constantly increasing number of people who are entitled to the old-age and survivors insurance. And as the 1954 amendments go into effect, we will have more and more claimants and as well as more and more employers whose accounts we will have to process. Senator POTTER. And Congress keeps amending the law? Mr. CHRISTGAU. That is right. Every time they amend it, it creates more work. NEW BUILDING IN BALTIMORE Senator POTTER. What do you plan to use your construction money for? Mr. CHRISTGAU. The plan, which has been under consideration for a number of years, is to build a new building in Baltimore. At the present time, we are located in six different buildings in Baltimore, and the plan is to construct a building just outside the city limits of Baltimore to house the operations of the Bureau. AGE REDUCTION TO 60 OF WIDOWS AND SPOUSES Senator POTTER. Let me ask you something else. How much of a drain would it be on the trust fund if Congress should reduce the age for widows of retired persons to 60? Mr. CHRISTGAU. Just widows? Senator POTTER. The spouses of the retired worker and widows, if they lowered the age to 60. Mr. CHRISTGAU. Leaving it the same for workingwomen and not reducing that? There is a difference there, of course. Senator POTTER. I would say the wives of retired workers and widows. Mr. BALL. My memory on that, Senator, is approximately sixtenths of 1 percent of payroll on a long-term basis. Senator POTTER. What percent? Mr. BALL. About six-tenths of 1 percent. Senator POTTER. That would not be enough, then, to drastically affect the fund, would it? Mr. BALL. Well, it is about one-twelfth of the entire contribution rate. It would be an increase of about one-twelfth. You see, it is six-tenths of 1 percent of a very large figure, practically all the payrolls in the Nation. And it is quite an expensive item, even though it sounds small when said as six-tenths of 1 percent. Senator POTTER. There is a lot of sentiment to have that done, and I am just wondering if Congress, in its wisdom or unwisdom, should enact legislation of that kind, if there should be any safeguards in the fund to provide additional revenue. I do not know. Mr. BALL. The financing of the program now, as it is set up, is roughly in balance, and this would increase the costs in such a way that new financing would be needed to cover the cost. Senator HILL. Well, you have a difference, too, do you not, between widows on social security and the railroad retirement? Mr. BALL. Yes. Senator HILL. In other words, 60 is the age of retirement. TRANSFER OF ADMINISTRATIVE STAFF TO WASHINGTON Mr. CHRISTGAU. There is one other item I did not mention yet, Mr. Chairman. The House Appropriations Committee did not approve the request to repeal the prohibition on the use of Bureau funds to relocate our headquarters staff in Washington, D. C. The committee also denied the authorization for special per diem for employees affected by such a move. We believe that in order for the Department to have a properly integrated staff amenable to the Secretary's leadership, this prohibition should be repealed. The close interrelationships between the Bureau's program and those of other organizational elements of the Department, as well as other Government agencies, make it highly desirable for the administrative staff to be located in Washington, D. C. Senator HILL. Where do you have your headquarters staff, here? Mr. CHRISTGAU. I have my headquarters in Washington, but I spend about 2 days in Baltimore and 3 in Washington. Mr. Ball, the Deputy Director, spends about all his time in Baltimore when he is not called to Washington for conferences. Senator HILL. How many employees would you like to transfer to Washington? Mr. CHRISTGAU. The request last year that was made was for about 450 positions, and that actually meant the moving of about 200 people. This year we have expanded our employment in Baltimore by about 800 up to now, and it will be 900 up to July 1st. We estimate that with the 600 positions transferred it would involve about 350 people who would be moved to Baltimore. There are now about 50 commuting from Washington to Baltimore daily. TOTAL COST OF TRANSFER Senator HILL. What would it cost to transfer those 350 people from Baltimore to Washington? Mr. CHRISTGAU. $127,000. Senator HILL. Why were they put there to start with? They did not have the housing here? I know a good many agencies were moved out. The Farm Credit Administration, I remember, went all the way to Kansas City or St. Louis, and they were brought back again after the war. But these people have never been brought back. Mr. CHRISTGAU. The matter has been under consideration for a number of years, and it was involved in this building program. As late as 1950, the House passed a bill establishing the new building in the District or near the District. Senator HILL. When you speak of establishing the new building, you mean providing for construction of a new building? Mr. CHRISTGAU. That is right. But now is has been determined that the construction of this new building shall be in Baltimore. We have already started the purchase of the site there. OFFICE SPACE FOR TRANSFERRED EMPLOYEES Senator HILL. In Baltimore? Where would you house these 350 employees? Mr. CHRISTGAU. They probably will be housed in the south building, here in Washington, in the Health, Education and Welfare Building, Senator. There are two buildings, the north building and the south building. Senator HILL. Do you have room there for these additional employees? Mr. CHRISTGAU. It would require transferring people out to other locations. Senator HILL. Where would they be transferred? Senator POTTER. To Baltimore? Senator HILL. What about that, Mr. Kelly? You are the overall man here. Mr. KELLY. There would be some space adjustments. It would be hoped that we could put them in either the north or south building |