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Whereas, categorical Federal Aid is looked upon by many educators and citizens as a valuable resource for reducing the disparity in the scholastic achievement between middle class and economically disadvantaged children, and

Whereas, a comprehensive systematic program of research and evaluation has never been undertaken to determine the most cost-effective approaches to reduce this disparity, although billions of dollars in Federal funds has been spent nation-wide since 1965, now therefore be it

Resolved, that the Board of Education of the Dallas Independent School District urge the Congress to pursue national legislation insisting on the inclusion of standard accountability and independent educational audit components in all existing federal categorical aid programs, and institute systematic evaluation of pilot research and development programs to build a body of research, and disseminate its findings so that all school districts across the Nation may benefit by these studies.

Mr. SCHNEEBELI. Congratulations on your sense of perception. It took most of us a lot longer to reach the same conclusions that you did.

You might also be interested that Senator Nunn this morning said he and 13 other freshmen Senators wrote a letter to Senator Mansfield asking that no Appropriations Committee actions be taken until there is some resolution of this question that you raised.

I foresee a great future for you in Congress if you continue in the way you started.

Mr. MILFORD. Has the committee come across the letter that was written by the freshmen Members of the House?

Chairman ULLMAN. I heard of it, but we would like to have a copy of it.

Mr. MILFORD. I will send you a copy for the record. If I recall it contained a vast majority of the freshmen class who made essentially the same proposal.

Chairman ULLMAN. Good. [The letters follow:]

HOUSE OF REPRESENTATIVES, Washington, D.C., March 7, 1973.

RESOLUTION

Whereas a Joint Study Committee on the Budget has been established in the United States Congress; and - Whereas, that bi-partisan Committee of Democrats and Republicans, Senators · and Representatives, has completed its interim study, issued a report and made tentative recommendations favoring an overall ceiling on expenditures and budget authority; Therefore, be it

Resolved, That the undersigned freshmen members of the 93rd Congress do hereby express their support for the tentative work of that Committee, and do further strongly urge their senior colleagues to take all possible steps to bring about at the earliest possible date Congressional Reform of the Budgeting Process—including an overall spending limit and provision for the necessary committee structure, staff and resources by which Congress may review and control expenditures.

John B. Conlan, James P. Johnson, W. L. Armstrong, Angelo Roncallo,

Robin Beard, Joel Pritchard, Ed Young, David Towell, Ralph
Regula, William M. Ketchum, L. A. (Skip) Balfalis, George
M. O'Brien, Donald J. Mitchell, Majorie S. Holt, Samuel H.
Young, David C. Treen, James G. Martin, Alan Steelman, Clair W.
Burgener, Bud Shuster, Benjamin A. Gillman, Paul W. Cronin,
William F. Walsh, Carlos J. Moorhead, Andrew J. Hinshaw, Mat-
thew J. Rinaldo, James Abdnor, Stan Parris, Robert J. Huber,
William H. Hudnut III, Gene Taylor, Trent Lott, Harold V. Froehlich,
M. Caldwell Butler, Dale Milford, Edward Madigan, Thad Cochran,
William S. Cohen, Joseph J. Maraziti, Robert W. Daniel, Jr., Robert
Hanrahan, Ronald A. Sarasin, Tennyson Guyer.

HOUSE OF REPRESENTATIVES, Washington, D.O., March 7, 1973.

RESOLUTION

Whereas, a Joint Study Committee on the Budget has been established in the United States Congress; and

Whereas, that bi-partisan Committee of Democrats and Republicans, Senators and Representatives, has completed its interim study, issued a report and made tentative recommendations favoring an overall ceiling on expenditures and budget authority; Therefore, be it

Resolved, That the undersigned freshmen members of the 93rd Congress do hereby express their support for the tentative work of that Committee and do further strongly urge their senior colleagues to take all possible steps to bring about at the earliest possible date Congressional Reform of the Budgeting Process—including an overall spending limit and provision for the necessary committee structure, staff and resources by which Congress may review and control expenditures.

BILL GUNTER.
JERRY LITTON.
CHARLES ROSE.
DAVID R. BOWEN.
STEVEN D. SYMMS.

HOUSE OF REPRESENTATIVES, Washington, D.C., March 7, 1973.

RESOLUTION Whereas, a Joint Study Committee on the Budget has been established in the United States Congress ; and

Wheeras, that bipartisan Committee of Democrats and Republicans, Senators and Representatives, has completed its interim study, issued a report and made tentative recommendations favoring an overall ceiling on expenditures and budget authority;

Therefore, be it Resolved, that the undersigned freshmen members of the 93d Congress do hereby express their support for the tentative work of that Committee, and do further strongly urge their senior colleagues to take all possible steps to bring about at the earliest possible date Congressional Reform of the Budgeting Process—including an overall spending limit and provision for the necessary committee structure, staff and resources by which Congress may review and control expenditures.

JAMES R. JONES. WAYNE OWENS. PAT SCHROEDER. Bo GINN.

HOUSE OF REPRESENTATIVES, Washington, D.C., March 7, 1973.

RESOLUTION

Whereas, a Joint Study Committee on the Budget has been established in the United States Congress; and

Whereas, that bi-partisan Committee of Democrats and Republicans, Senators and Representatives, has completed its interim study, issued a report and made tentative recommendations favoring an overall ceiling on expenditures and budget authority ; Therefore, be it

Resolved, That the undersigned freshmen members of the 93rd Congress do hereby express their support for the tentative work of that Committee, and do further strongly urge their senior colleagues to take all possible steps to bring about at the earliest possible date Congressional Reform of the Budgeting Process—including an overall spending limit and provision for the necessary committee structure, staff and resources by which Congress may review and control expenditures.

GILLIS W. LONG.

Mr. SCHNEEBELI. I would assume you have a considerable amount of influence in the freshman class. It is very large and we need the help of everybody in trying to pass a bill of this nature. So we are looking to you for some leadership on passing this.

Mr. MILFORD. I will give you my help including emptying the wastebaskets. Just call me, sir.

Mr. SCHNEEBELI. Thank you.
Chairman ULLMAN. Thank you very much.
Just one technical point.

It is our judgment that the procedures will work better at the congressional level with separate budget committees rather than a joint committee.

The joint committee procedures have some limitations that might nullify what we are trying to accomplish. If we can bite the bullet in the House on a ceiling, and the Senate does the same, and we can resolve the differences and conflicts in the normal legislative way we think separate committees are the best mechanisms for making these hard decisions.

Mr. MILFORD. My use of the term "joint committee” is to infer I wish it to be done in both Houses. Whether it is done by separate committees in each house, I would have absolutely no objection. I would just like to see it done in this entire Congress, and I would defer to the wisdom of those who are senior to me in figuring out how best to do it as long as we are following the principles outlined here.

Chairman ULLMAN. Thank you. You have been very helpful and I commend you as a freshman for coming before this committee, and I congratulate you for having done a fine job.

Mr. SCHNEEBELI. An auspicious start.
Chairman ULLMAN. Our next witness is Mr. David Linowes.

Mr. Linowes, we are happy to have you before the committee. You come well recommended as somewhat of an expert in this field and we very much welcome your expertise. You may proceed, sir.

STATEMENT OF DAVID LINOWES, C.P.A., NEW YORK Mr. LINOWES. Thank you very much, Mr. Chairman.

By way of introduction my name is David Linowes, partner in the International Accounting and Management Consultant Firm of Laventhol, Krekstein, Horwath & Horwath based in New York City, and I am a former vice president of the American Institute of Certified Public Accountants and adjunct professor of management at New York University. In recent years, I have also undertaken missions abroad for the U.S. Department of State and the United Nations.

I am particularly appreciative of being permitted to appear before you at this hearing today because for several years I have been very much concerned with the direction of our budgetary process and the great voids which have existed in its approach to the affairs of our Nation.

The social ills besetting America are well known to all of us. Their urgency too has been made clear. A recent mayors' meeting, for example, cited the crisis of the cities as “The major threat to the security of the Nation."

And an extensive Gallup survey showed one out of two respondents to believe our present unrest is likely to lead to a “real breakdown in this country.”

America is the wealthiest of nations, but it is poverty-stricken in that so far it has failed to marshal its great resources to cure spreading social ills. Nor, in my opinion, can we expect the surpluses now being found in State treasuries, or the flow of Federal revenue-sharing dollars to solve our growing domestic problems.

For, while we tend to see the solution to crime in the streets, aid to the aging, spreading drug abuse, in terms of more dollars, it just isn't so.

As a nation, our answer to society's most crucial problems has been to appropriate more money. That is what we have been doing for decades and our national problems still remain largely unsolved.

With the proposed cutbacks in Federal funds for a number of social programs, it is my judgment that we need a totally new approach for social problem solving. One that the Nation can and is willing to afford. I believe the Federal budgetary mechanism can be so modified as to effect such a new approach.

In effect, in the past, our approach in the management of government institutions has been to reward inefficient administrators at the expense of efficient administrators. The fact of the matter is the less productive a program administrator, the more money he receives to expand his operations because we equate spending money to getting the job done.

Money alone will not resolve our Nation's turmoil. The arbitrary slashing of programs in the HEW and HUD budgets will not in my judgment set our Nation on the right course. Revenue sharing will not revive our dying city services. Greater welfare expenditures will not make a dent in urban poverty.

Yes, money must be spent. But to achieve meaningful change we must look beyond the simple application of more dollars. We must insure that funds are applied correctly to solve the right problems. For this we need to add an important new dimension to our budgetary process, a qualitative measurement standard.

Incidentally, implicit in several comments made this morning by Congressman Rees of California was the same point, but he did not identify it separately.

Budgetary authorities should require government and social institutions to take a page from business organizations which effectively use management control and evaluating policies to determine both the objectives and performance of various programs.

By means of the purse strings we should require administrative leadership which will demand qualitative standards, meaningful for accomplishing the true agency objectives. I call this approach SocioEconomic Management.

In poverty programs, Congress tallies the number of people we feed, clothe, house, or how many dollars we give away. Of course, these are important on an emergency basis. But, our objective in poverty institutions really is making ablebodied people self-sufficient, employable, happier through self-respect.

Those responsible for the purse strings never apply this kind of standard to our outputs. Yet, this is what we should evaluate for our

poverty dollar spent. These results are measurable. Many standards for such measurement already exist, and in those areas where none are available, they can be established by interdisciplinary teams of sociologists, economists, psychologists and accounting experts working together.

In our prison and penal programs we measure the number of prison cells maintained, the number of prisoners housed, and use this measurement for determining the size of fund allocations.

What we should give at least equal consideration to is measuring how many men were rehabilitated for the funds spent last year. And how many we expect to rehabilitate for the funds to be spent this year.

Legislators should ask the kind of questions which will bring out whether or not administrators of the penal institutions should change the input combinations, the way they combine the resources in maintaining the prison programs, to get the best results. What combination will give the greatest number of rehabilitated prisoners.

I am afraid too many of our funding authorities do not ask the right questions. The nature of their questions make them satisfied with the easy answers, by the numbers. Value judgments should be placed at least on a par with number judgments.

Government agencies should tune in on a more comprehensive awareness of the need for fuller reporting. Along with each financial report should be a social report for submission to legislators, budgetary authorities, and supervising officials. For example, the number of poverty recipients who have been made self-sufficient during the year should be reported, along with the financial data for that same agency.

When government applies standards in the public sector, they are usually the least relevant ones. The accent is on the quantitative, the old numbers game is being played. As a result of confused goals, too many educational institutions are diploma mills, too many correction facilities are cell blocks, and too many poverty agencies are mainly food and shelter distributors.

I strongly believe that quantitative standards in dollars are no longer adequate. Qualitative standards should also be used to establish budgetary accountability and funding should be directly related.

In the many public agencies I have known in the past 25 years, I have found that administrators often get all mixed up in their objectives.

Several years ago as a consultant to the Secretary of the Department of Health, Education, and Welfare I learned that a unit of the Department which received massive sums of money to improve the health of children, never even determined whether or not its activities accomplished what it was charged to do.

They knew the number of medical checkups given, and the number of treatments but they simply did not know whether the children's health improved.

There was no built-in qualitative measurement procedure to make this determination and to report it to the budgetary authorities.

I urge the adoption of qualitative accountability requirements for all our Government agencies, so that Congress may have available meaningful data from which to establish its own priorities.

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