Administrative expenses, Commodity Credit Corporation Appropriation Act, 1957... $31, 000, 000 Proposed supplemental authorization for increased volume of price support activities.. +2, 500, 000 Increase in price support operations____ Increase to provide a contingency reserve to enable the Corporation Increase for contribution to retirement fund pursuant to Public +644, 500 +89, 958 +2,780, 000 + 1, 385, 542 1 Represents portion of special limitation of $1 million for sales expansion which it is estimated will be unobligated at the end of the fiscal year. 1 Represents portion of special limitation of $1,000,000 for use only to expand sales which it is estimated will be unobligated at end of fiscal year. Function 1. Program formulation and direction This function includes formulating the programs and program policies; developing the operating provisions of the various programs; providing for the dissemination of these provisions to producers and segments of industry involved; and determining and facilitating the means for storing, managing and disposing of commodities acquired as a result of price-support operations. These operations are performed by the Board of Directors, the Advisory Board, the Administrator, the General Sales Manager of the Commodity Stabilization Service, and the CSS commodity divisions, and include continuous economic, analytical and other related work required on announced programs and on related commodities. The Agricultural Act of 1949, as amended, provides mandatory price support for the six basic commodities-corn, cotton, wheat, rice, peanuts and tobaccoand for the specific nonbasic commodities-tung nuts, honey, milk, butterfat, and the products of milk and butterfat. Price support for wool and mohair is mandatory under the National Wool Act of 1954. Price support for other commodities is discretionary. The level of support for designated nonbasic commodities and the need for the program as well as the level of support for other commodities must be predicated upon economic and other factors set forth in the act of 1949. The impact of these programs upon the national economy must be carefully considered. It is necessary to make these analyses not only on those commodities involved in price support programs but also to keep under constant surveillance the whole area of competing and substitute commodities, in order to assure that price support operations will not disadvantageously affect the prices and marketing of such competing or substitute commodities. Actual operations in the field are carried out through the Commodity Stabilization Service commodity offices, and the agricultural stabilization and conservation state and county offices. (See function 4.) The principal factors in the increase in estimated cost of this function are: (1) the reflection on a full-year basis in 1958 of certain barter and stockpiling and grain-program activities which, of necessity, were expanded during the fiscal year 1957 to cope with the large volume of price-support activity, and (2) the anticipated expansion in connection with the additional outlets under the special milk program, as heretofore explained in more detail under the heading "Increases and decreases." Retirement costs under Public Law 854 for fiscal year 1958 and increased printing costs of the Government Printing Office resulting therefrom are also included in the increase under this function. Function 2. Fiscal, transportation and storage services These services include (1) determining overall financing, fiscal and accounting policy and pricing within approved policies, (2) determining overall policy for custody, transportation, and storing, and (3) assisting in the formulation of claims policies and procedures which insure the protection of the interests of the Corporation in the settlement of claims. Included also is the technical supervision of these functions and the maintenance of the general books and accounts of the Corporation and handling of financing arrangements for all operations of the Corporation. These functions are performed by the Fiscal and Transportation and Storage Services Division, and, in addition to providing operational data for the everyday management and conduct of the business, they enable the Corporation to comply with the multitude of prescribed fiscal, transportation, and property accountability laws and regulations. The principal factor in the increase in estimated cost of this function is the increased fiscal and financing activity in connection with Public Law 480 and other disposal programs and barter and exchange operations, as heretofore explained in more detail under the heading "Increases and Decreases." Retire ment costs under Public Law 854 for fiscal year 1958 and increased printing costs of the Government Printing Office resulting therefrom are also included in the increase under this function. Function 3. Audit, compliance and investigation services These services are performed by the Audit Division and the Compliance and Investigation Division to determine whether the funds of the Corporation have been properly accounted for and its affairs properly administered, detect fraud or program violations and assist in criminal or civil litigation. In addition to specific recoveries to the Government resulting from fines, penalties, disallowed claims and collection of loans, this work has resulted in incalculable benefits derived from the factor of deterrence brought about through general knowledge that audits and investigations are being conducted. The increase in the estimated cost of this function results from increased audit activity in connection with the larger volume of management and disposal operations of the Corporation. Retirement costs under Public Law 854 for fiscal year 1958 are also included in the increase in this function. Function 4. Program field operations Programs are carried out in the field primarily through 8 Commodity Stabilization Service commodity offices and 48 State agricultural stabilization and conservation offices. Their functional operations consist of accounting for loans, inventories and costs, and the storage, management, and disposition of inventories of all commodities. The amounts required by the CSS commodity offices during the fiscal years 1957 and 1958 were determined in the same manner as for previous years. The operating budgets for these offices for the current fiscal year have also been prepared in this manner. The method used is based upon the monthly work status report. This report reflects the actual number of documents (freight bills, loading orders, notes, etc.) processed, and the actual man-days required for such processing for each office. The estimated program volume to be handled by each office was converted into the number of documents to be processed during each fiscal year. On the basis of experience, as reflected in the work status report, the productivity rates expected to be attained were applied to the documents to be processed to determine the man-days required. This covered all of the expenses of these offices, except funds used for fixed operating costs such as supervisory personnel and costs other than personal services which were estimated on the basis of past experience. The amount of funds required for program field operations is directly related to the volume of program operations. The attached table I reflects the volume of program operations for the fiscal years 1957 and 1958 and table II reflects the volume in terms of man-years and financial requirements for program field operations. The major increase in the estimated cost of this function is to provide for the installation of improved accounting equipment in the CSS commodity offices, increased costs of rented office space, and increased costs applicable to the ASC State offices. Partially offsetting this increase is a decrease in the estimated workload cost for the CSS commodity offices in the fiscal year 1958, as compared with the fiscal year 1957. This change is primarily due to an estimated decrease in commodity loan and acquisition activity. The foregoing is explained in more detail under the heading "Increases and decreases," for fiscal year 1958. Retirement costs under Public Law 854 for fiscal year 1958 are also included in the increase under this function. Mr. WHITTEN. Your estimated need is $38,400,000 for the coming year. We will be glad to have your general statement. GENERAL STATEMENT Mr. BEACH. Sir, that figure is inclusive of a contingency reserve of $2,780,000, which follows the practice initiated by this committee of setting up a reserve to take care of the fluctuations and deviations from the estimate in the program, which are actually transpiring in the Corporation's operations. The estimate itself is based on the workload, as we now see it, for crops which are not even planted. In fact, these are made approximately 18 months before this time. The history of the Corporation has been that it is impossible to estimate in advance what the actual volume of loans to be made will be, and what the volume of sales and other transactions will be. A simple change in policy can greatly affect the workload of the Corporation. The change in policy with respect to cotton sales was a good example of that. We have a tremendous paper workload as a result of the cotton sales program. The 1958 estimate is based on a system of production rates with respect to each of the documents we handle, that is at least as good as any rate we have ever accomplished to date. The rates for 1956 showed an improvement of about 65 percent over the rate for 1952. Putting it another way, if we were asking for the money to finance the manpower to handle this job, as we did in 1956, with the same rate of production as we did it in 1952 it would take 65 percent more manpower. Part of that increase in efficiency is, of course, due to the large increase in the volume of work, but other major parts of it are due to the increases in effectiveness and efficiency we have been able to accomplish. In the explanatory notes there is a statement showing the specific program volume as to the number of documents we plan to handle and the carload lots of grain and cotton which we plan to handle, and the production rates for both fiscal years, 1957 and 1958. The biggest part of the workload is in the handling of inventories; the maintaining of them and the acquisition and disposition of them. WORKLOAD OF CCC Mr. WHITTEN. I would like for you to put in the record the workload that you have had in 1957 and your expectations in 1958. (The information is as follows:) TABLE I.—Estimated volume of commodities, Commodity Credit Corporation price support and storage facility program, fiscal years 1957 and 1958 |