following: An increase of $79,416 for within-grade promotions, an increase of $48,000 for the full-year cost of pay raises effective in 1966, an increase of $27,000 for a career-ladder promotion plan, an increase of $3,284 to meet increased contributions to the Federal Employees' Compensation Fund, a decrease of $5,000 which represents the cost of furniture and equipment purchased for new positions in 1966 which will not be repeated in 1967, a decrease of $24,000 reflecting departmentwide adjustments in financing the working capital fund, and an increase of $2,000 to place financing of four positions transferred to the Office of the Solicitor during 1966 on a full-year basis.

As for program decreases, in line with the President's policy of improving management and cutting costs, the Office of the Solicitor has streamlined procedures and organization while at the same time providing effective and essential services to the Department at less cost.

The Division of Labor-Management Laws, handling legal matters under the Landrum-Griffin Act, has not experienced anticipated workload increases and as a result of productivity increases can absorb a decrease of two positions and $22,500. Management improvements allow us to reduce three positions and $30,200 in the area of legal services to the veteran's reemployment rights program. We will continue to provide all of the legal services required by that organization. We are in the process of arranging for absorption of the third-party litigation function under the Federal Employees' Liability Act in another organization or fund. This change will mean a reduction of six positions and $52,300. We also plan to reduce the amount of backup service which we now provide to the Department of Justice on litigation under the Longshoremen's and Harbor Workers' Act. Duplication and overlaps in the preparation of the cases will be avoided and a savings of five positions and $53,000 will result. Along with the rest of the Department, the Office of the Solicitor is presently involved in an effort to cut printing and travel costs by at least 10 percent. These cost reduction actions will allow a savings next year of $31,700.

In conclusion, I believe that we are presenting a budget which reflects both our duty to provide comprehensive legal services to the Department of Labor and the need for economy and good management in conducting the Government's business.

SUMMARY OF BUDGET REQUESTS

Mr. DONAHUE. Then I shall proceed briefly to outline that statement and our budget request for this year.

To put it briefly, we are asking for a slight decrease in the amount of our budget from last year, a decrease in the amount of $59,000. I think probably it would be well for me to review very briefly the changes which we would propose from last year.

CAREER-LADDER PROMOTIONS

First of all, there are some increases to offset the decreases. The first increase is what we call career-ladder promotions. That means for the first time we are getting amounts of money for promotions which are not absorbed by attrition in order to carry out what we have been doing for the last 4 or 5 years; namely, giving annual grade increases to attorneys who come in at grades 7 and 9, and who are found satisfactory and then more or less automatically promoted up to and through grade 12 but not beyond.

In the past we have had to absorb this amount of money completely. Part of it has been absorbed, of course, by what I call attrition, referred to a few moments ago, that is, people leaving the office for one reason or another and decreases in personnel which we could not replace as rapidly as we might have liked, resulting in added amounts of money on hand which have been used for purposes of these promotions in the past.

Now the Budget Bureau for the first time has allowed us $27,000 to make up for that part of it which cannot be absorbed.

WITHIN-GRADE INCREASES

The next item, $130,700, is for other mandatory items, that is, withingrade increases, salary increases, items which we cannot escape or avoid, and which we need to meet through a budget item.

There are eight items of decreases.

FUNDING OF THIRD PARTY ACTIONS

The first one is not a decrease even though it looks that way in the budget. That is the amount of money which we spend trying to promote what we call third party actions under the Federal Employees Compensation Act.

In explanation of that, let me say that we have a small staff which is constantly examining the claims of Federal employees once they have been allowed.

If it is found, upon examining the file, that the injury to the Federal employees has been due to the negligence of a third party, then, as required by the terms of the statute, we get in touch with the injured employee, tell him we think he probably has a good cause of action against the third person, tell him to go get a lawyer if he wishes to do so, and to sue to recover any damages which have been caused to him. If and when he recovers, the amounts of money which he has recovered are due to the United States in the amount of benefits paid to the injured employee. The remainder, of course, is the employee's own

recovery.

We have been successful through this device of collecting during the past fiscal year some $850,000 of actual offsets against benefits actually paid. These offsets go into a fund, the Federal employees compensation fund.

It had been our thought that rather than finance the cost of collecting this amount of money out of general funds appropriated by the committee that the very fund for which we recover this amount of money should pay for the costs of collection.

We talked this matter over with Congressman O'Hara, who has been holding hearings most recently in the House Labor Committee, on amendments to the Federal Employees Compensation Act, and he readily agreed to this proposition. He is providing in his amendments what I believe is a rather noncontroversial amendment which would permit us to charge off these costs, approximately $50,000, to the fund rather than have them appropriated from the general funds.

Another item which is a saving in our office-I wish to say we pruned pretty carefully all of our activities with the thought of trying to reduce those items which contribute the least in our opinion to the needs of workers and wage earners, and we try to cut down on those in every place we can.

59-316-66-pt. 1——49

CASES UNDER LONGSHOREMEN'S AND HARBOR WORKERS ACT

One item which we thought fell into that category was the services which we give primarily to the Department of Justice in court cases arising under the Longshoremen's and Harbor Workers Act. These are usually suits mainly by employers to protest the decisions of the deputy commissioners of the Bureau of Employees Compensation. They are actions in court.

In the past we have been in the habit of taking over a good deal of the preparation of those suits in behalf of the Department of Justice, helping out the staff of the Department in Washington and helping out the U.S. attorneys in the field.

First of all, this arises under a rather old statute which goes back to 1927, with a good deal of experience under it.

The claimant usually is one whose protests involve comparatively uncomplicated questions of fact, as to whether he was in the scope of his employment, for example, or not. Or, to put it another way, the claimant very frequently is in a position where he is covered either under the Federal statute or under some State statute. For example, if he should be injured along the waterfront in Rhode Island it might well be a question as to whether he is subject to the Rhode Island law or subject to the Federal law, the point being that he is covered by one statute or the other and thereby minimizing, at least in my mind, the need to try to litigate to establish the dividing line between the State law and the Federal law since he has protection under one or the other.

Another point which persuaded us to try to cut out this assistance, which we are doing, is that the parties are usually well represented in court, anyway. If an employer contests the granting of a claim he is represented by insurance companies. The Department of Justice can do an adequate job in representing the Government on the other side, and I think that our added activity is a little bit of frosting on the cake, you might call it. Therefore we have decided to reduce that function with the complete agreement and concurrence of the Department of Justice with whom we talked before we took any action in this matter.

VETERANS' REEMPLOYMENT RIGHTS CASES

Another item of decrease is the handling of veterans' reemployment rights. Here again we have a statute which has been on the books since 1946 which has been pretty thoroughly litigated. We have made a complete digest of all the opinions and court cases, which I have with me, in two volumes, within the past year or so, for the assistance of the Veterans' Reemployment Rights Officers is throughout the country in their dealings not only with veterans but with U.S. attorneys in forwarding cases. We believe that the opinions and advice and preparation of cases here again can be reduced to a minimum. This is accomplished through decentralized handling of cases by our Regional Attorneys in the field and having them submit those cases to the U.S. attorneys direct, and giving the Bureau here in Washington opinions in those rare and unusual cases where opinions are needed despite the fact that we have two volumes of opinions digested and ready at hand for their use.

PRODUCTIVITY INCREASE

There is here a fourth item called a productivity increase, $22,500. It has been estimated by others that that is the increase in our productivity. I am gratified to see we are doing better than we have been doing in the eyes of others, and the only question remaining in my mind is where that most adequately would be absorbed.

We reached the conclusion that it could be best absorbed in the legal services which we provide under the Landrum-Griffin Act, under the reporting requirements and the election requirements.

It has been my experience during the past 4 years that the amount of litigation and activity under this statute has been substantially overestimated. I believe since 1959 we have had only about 85 election cases total, and something like 130 total pieces of all sorts of litigation under the statute, which is a comparatively light workload when you consider that each year we have between 1,500 and 1,600 district court cases under the Wage and Hour Act, litigation which has in the inain been filed by us.

In view of that comparison we thought that that was probably the most likely place where we could absorb this kind of a productivity increase.

TRAVEL AND PRINTING REDUCTIONS

The next two items, of course, travel and printing, are decreases which we can absorb by having people travel less and printing less things, and by using cheaper methods of reproduction.

The mandatory and financing items total $29,000, $5,000 for the cost of furniture for new positions in 1966 for which we are not asking funds in 1967, and $24,000 for transfer to another bureau to account for decreased use of the Working Capital Fund by the Office of the Solicitor.

In sum, then, Mr. Chairman, those are the increases and the decreases with the total net decrease of $59,000 going from $5,650,000 down to $5,591,000, and going from 495 positions down to 479 positions, a net decrease of 16 positions in all.

Mr. FOGARTY. This reduction is possible because of management improvement according to the justifications.

Mr. DONAHUE. We hope so. That is the best way to put it, anyway. I think we can give as good services and yet at the same time

TRANSFER OF FUNCTIONS TO THE DEPARTMENT OF JUSTICE

Mr. FOGARTY. Are these true management improvements or is this just shifting certain work to the Department of Justice?

Mr. DONAHUE. I don't think it would be a shift. I don't think the Department of Justice would readily agree to it in those terms. I think we were providing an added service which was not really needed, for example, under the Longshoremen's Act.

Mr. FOGARTY. Do you think the Department of Justice will take as much interest and do as good work on these cases as the Department of Labor?

Mr. DONAHUE. I think under the circumstances, yes. To put it a little more accurately than that, I think the cases have not needed the

degree of attention which we have been giving them in the light of the issues involved.

Lawyers for the parties and in the Department of Justice, for example, can as easily handle factual questions of whether somebody is in the scope of his employment, whether he is on duty at the time, and problems of that sort.

The question of what is the jurisdiction of the court, where the dividing line is between the State and Federal law, each having exclusive coverage, is to me a comparatively unimportant question if a person has protection under one or the other of the two.

I think we may be performing less services in this area but I think there is perhaps less need really for providing topflight and meticulous services in this area.

As I say, the Department of Justice readily agrees this is the case. Mr. FOGARTY. Then why should we not eliminate your office and transfer it to the Department of Justice?

Mr. DONAHUE. There are many functions we perform that the Department of Justice does not perform.

Mr. FOGARTY. If we gave them the money they could, couldn't they? Mr. DONAHUE. I am not sure they could do as effective a job for the Department as a whole if they were physically away from it. I believe in the field as a whole the answer is "No." If you are counting on the U.S. attorneys to represent us in wage and hour cases, for example, I don't think they would do anywhere near as effective a job as our own specialists. I would be very much concerned if those types of activities were transferred, or if anybody had thought of transferring them to the Department of Justice.

Mr. FOGARTY. That is why I am apprehensive about this transfer you have been discussing. I thought that the Department of Labor would do a better job for the employee, show more interest in them as a worker, than the Department of Justice would.

Mr. DONAHUE. I certainly would agree with the chairman that it is a matter of judgment as to what activities you can rely on the Department of Justice for, and in what activities we proceed to give them added aid and assistance.

It was a matter of our judgment that the Longshoremen's Act was one area where we could cut back a bit without damaging, everything considered, the rights and interests of workers protected by the Longshoremen's and Harbor Workers Act.

Mr. FOGARTY. Do the unions agree with you on this?

Mr. DONAHUE. I haven't talked to them about it, as a matter of fact. I am not sure as to the extent in which they are or are not interested. Mr. FOGARTY. Do they know you are recommending this transfer? Mr. DONAHUE. No; I have not talked this over with the longshoremen or their organization. Chances are good they don't know about it, therefore.

REVISED REGULATIONS FOR WAGE BOARD DETERMINATIONS

Mr. FOGARTY. Tell us about the revised regulations for wage board determinations and what their effect will be.

Mr. DONAHUE. This is something not completely new in so far as changeover is concerned. We have in effect changed the basis for our