APRIL 3 (legislative day, MARCH 4), 1940.-Ordered to be printed Mr. GEORGE, from the Committee on Foreign Relations, submitted the following REPORT [To accompany H. R. 8446] The Senate Committee on Foreign Relations, having had under consideration the bill (H. R. 8446) to amend the act entitled "An act for the grading and classification of clerks in the Foreign Service of the United States of America, and providing compensation therefor", approved February 23, 1931, as amended, hereby report the same to the Senate without amendment and recommend that it do pass. For the information of the Senate, there is appended hereto and made a part of this report a communication from the Fresident dated February 7, 1940, together with a report by the Secretary of State to the President dated February 5, 1940, reading as follows: To the Congress of the United States of America: THE WHITE HOUSE, I commend to the favorable consideration of the Congress the enclosed report from the Secretary of State and the accompanying draft of proposed legislation to amend section 26 (4) of the act of February 23, 1931, as amended by the net of April 24, 1939, the purpose of which is to insert additional language which bas been found, in administering the aforesaid section 26 (e) as now established, to be necessary in order to carry out fully the purposes of this law. FRANKLIN D. ROOSEVELT. DEPARTMENT OF STATE, The PRESIDENT, if The White House: I have the honor to submit, with a view to its transmission to the Congress, you approve, a bill to amend section 26 (e) of the act of February 23, 1931, as amended by the act of April 24, 1939, the purpose of which is to insert additional language which, in administering the aforesaid section 26 (e) as now established, has been found to be necessary in order to carry out fully the purposes of this law. The first amendment inserts at the end of the language preceding the first proviso of section 26 (e), the language "and in determining the aggregate period of service upon which the annuity is to be based, the fractional part of a month, if any, in the total service shall be eliminated". In a decision dated May 12, 1939 (18 Comptroller General 845), the Comptroller General has interpreted the present language of section 26 (e) as follows: "Thus, in computing the annuities under that statute on length of service, a fractional year's service was in effect disregarded. Nothing appears otherwise in the original act or in the new formula for computing annuities prescribed by the amendatory act of April 24, 1939, which authorizes the adding of a fractional year's service toward longevity. Compare the provision appearing in section 5 of the Civil Retirement Act of May 29, 1930, 46 Stat. 472, as follows: "In determining the aggregate period of service upon which the annuity is to be based, the fractional part of a month, if any, in the total service shall be eliminated.' It is understood that this provision has been applied by the United States Civil Service Commission as authorizing the inclusion of whole months of a fractional year's service in computing longevity, but not a fractional month's service. However, I find no provision in the Foreign Service Retirement Act as amended, corresponding to the provision quoted from the Civil Retirement Act, or any other provision justifying any other conclusion than that a fractional year's service must be disregarded in computing longevity. * * *"' The statute thus interpreted may deprive an officer of service credit toward retirement of as much as 11 months of service during which he has made contributions from his salary, as provided by law. No such forfeiture of service credit takes place under the language in the civil-service retirement law and, as the insertion of language in the Foreign Service retirement legislation identic to the language of the civil-service retirement law as quoted by the Comptroller General, will make no change in the method of preparing estimates of appropriations (the total service of all officers being always considered in the computation of such estimates), it seems clear that the proposed amendment to remedy this inequity should be enacted. The second amendment inserts at the end of the second proviso of section 26 (e) as now in effect, the following language: "Provided further, That the officer may at his option also elect to have his annuity reduced by an additional 5 per centum of the amount which he elects to have paid to his widow, with a provision that, from and after the death of his wife, if the officer shall survive her, the annuity payable to the officer shall be that amount which would have been payable if no option had been elected." One of the principal objects of the aforesaid section 26 (e) was to authorize officers included in the Foreign Service retirement and disability system to make as adequate provision as practicable for their widows, on an insurance basis, by their voluntarily reducing the amounts of the annuities otherwise payable directly to such officers, and, with the funds made available by these voluntary reductions, to establish survivorship annuities for the benefit of their widows. It is exceedingly important, therefore, that there shall be legislative authorization for the establishment of such survivorship annuities on bases which, without adding to the liabilities assumed by the Government, will serve to induce as many officers as possible to make, at the time of their retirements, adequate provision for the future maintenance of their widows. The system of joint and survivorship annuities established in the law is functioning admirably and will be wholly successful in achieving its objects, except in those cases where a real doubt may exist as to whether in fact the retired officer may not survive his wife. In this latter class of cases, it is only natural that both husband and wife are extremely reluctant to reduce substantially their annuity income while both are living for the purpose of establishing a survivorship annuity for the wife, if there is serious likelihood that the wife might not survive the husband; in which case, the officer would be obliged to go on contributing a substantial part of his original base annuity for the rest of his life, in return for which he would only have received a brief period of protection for his wife, prior to her death, and for the years subsequent to her death he would be making substantial contributions toward annuities payable to others, without having received any commensurate benefit either in the form of annuity or protection for himself or for his wife. It is inevitable that such a situation will, unless corrected, deter a considerable number of officers from taking advantage of the provisions of the present law which are intended to enable them to make suitable provision for their widows. This is a new type of legislation and only through actual administration of the law was it possible to learn of the need for authorization to establish joint and survivorship annuities at a rate that would provide for the restoration of the officer's annuity to its original amount, in the event that he should survive his wife. Under section 26 (m) of the Foreign Service retirement law, the Secretary of the Treasury is vested with authority to perform the actuarial services required in connection with the Foreign Service retirement and disability system and it has therefore been ascertained through the actuary of the Treasury Department that it is wholly practicable to establish a proportionately higher rate for joint and survivorship annuities to be established on the basis indicated above and that such a rate would also be entirely fair to the Government. The language of this proposed amendment was prepared in collaboration with the actuary of the Treasury Department, who gives assurance that under the rate proposed therein any change in the amounts of Government appropriations that would be required for the support of the Foreign Service retirement and disability system, by the enactment of this bill, would be too slight even to permit of actuarial valuation. Section 3 of the proposed bill contains necessary administrative provisions to carry out the purposes of the bill and section 4 provides for the fixing of the effective date of the proposed legislation. It is my earnest hope that this bill may have your approval and that it may be enacted promptly, in order that retired officers of the Foreign Service may be in a position as soon as possible to take full advantage of the provisions of law that have been enacted to enable them to provide for their widows. Respectfully submitted. CORDELL HUL 76TH CONGRESS 3d Session SENATE { REPORT No. 1374 FOREIGN SERVICE ACCOUNTING PROCEDURE APRIL 3 (legislative day, MARCH 4), 1940.-Ordered to be printed Mr. PITTMAN, from the Committee on Foreign Relations, submitted the following REPORT [To accompany S. 3528] The Senate Committee on Foreign Relations, having had under consideration the bill (S. 3528) authorizing the adoption for the Foreign Service of an accounting procedure in the matter of disbursement of funds appropriated for the Department of State, hereby report the same to the Senate without amendment and recommend that it do pass. For the information of the Senate, there is appended hereto and made a part of this report a communication of April 1, 1940, from the Acting Comptroller General of the United States to the chairman of the Committee on Foreign Relations; also a communication from the Acting Comptroller General of the United States to the chairman of the Committee on Expenditures in the Executive Departments of the House of Representatives, dated March 26, 1940; also a letter from the Acting Comptroller General of the United States to the Acting Director of the Bureau of the Budget dated March 2, 1938; also a letter from the Acting Comptroller General of the United States to the Secretary of State dated January 12, 1939, reading respectively as follows: Hon. KEY PITTMAN, COMPTROLLER General of THE UNITED STATES, Chairman, Committee on Foreign Relations, United States Senate. MY DEAR MR. CHAIRMAN: There has been brought to my attention S. 3528, Seventy-sixth Congress, entitled "A bill authorizing the adoption for the Foreign Service of an accounting procedure in the matter of disbursement of funds appropriated for the Department of State," pending before your committee. For the use of your committee in considering S. 3528, there is transmitted herewith copy of my report, with enclosures, dated March 26, 1940, to the Honorable John J. Cochran, chairman, Committee on Expenditures in the |