RICHARD D. REDENIUS Mr. Redenius is currently Chief, Program Analysis Division in the Office of the Controller and is the budget officer for the Office of Economic Opportunity. He is a Cum Laude graduate (B.A., 1961) of Knox College, Galesburg, Ill., and a member of Phi Beta Kappa. He did graduate work in political science as a Woodrow Wilson fellow at the University of Chicago and then joined the U.S. Bureau of the Budget in 1962. After serving as budget examiner for programs of the Treasury Department he moved to OEO in 1967. Mr. Redenius was a National Institute for Public Affairs (NIPA) fellow at Harvard University during 1968-69, and received a masters degree in public administration in 1969. He is a member of Tau Kappa Epsilon social fraternity. Mr. Redenius and his wife Mary have three children and reside at 4247 Vacation Lane, Arlington, Va. THEODORE ROBERT TETZLAFF Address: 1111 18th Street NW., Washington, D.C. Education: 1958-62, John Adams High School, South Bend, Ind.; 1962-66, Princeton University, Princeton, N.J., 1966-69, Yale Law School, New Haven, Conn. Employment: 1969-70, Reginald Heber Smith Community Lawyer, Chicago, П.; 1970, legislative assistant, U.S. House of Representatives; 1970, director, National Conference on Police Community Relations, Los Angeles, Calif.; 1971-72, Office of Legal Services, OEO, Consultant, special assistant to the director, Deputy Director, Acting Director. Mr. FLOOD. Have you a prepared statement? Mr. FLOOD. Suppose you proceed as you wish. Mr. SANCHEZ. Mr. Chairman, I would like to point out that I have a rather large-sized group with me for the reason that we did not appear before this committee last time. New faces are involved, and I think it might be best for them, with your permission, to appear as observers. These additional people are all members of my senior staff who have not had an opportunity to witness this type of proceeding before. Mr. FLOOD. We issue "wound stripes" for this. You get those from the chief clerk on the way out, battle stripes, stars, and things of that type. If you see anybody limping around downtown, they probably have been up here within the last year. GENERAL STATEMENT Mr. SANCHEZ. Mr. Chairman and members of this distinguished committee, I am very pleased to be able to appear before you today to discuss the proposed fiscal year 1973 appropriation under the Economic Opportunity Act. As you gentlemen know, the initial thrust of the act visualized nationwide mobilization of resources to cure the problems of poverty in this country. That is when it was known as the poverty program. The attendant public notice of this initiative raised the hopes of the poor and left the impression that the Federal Government had a grasp on the root causes of poverty and that it was about to eliminate those causes. This simply didn't happen. It took some time to realize that poverty in this country could not be eradicated overnight. Many of the programs of the agency were designed in Washington and funneled to the field. Many were successful but many failed. Mr. FLOOD. It was never the intention of this program and it is certainly not your intention now, that you wave a wand and poverty will disappear nationwide, or anything like that. Mr. SANCHEZ. Unfortunately, too many people thought this was the intent and waited for this to happen. I think this is what gave us so many problems and is still giving us a problem. In 1969, President Nixon directed the OEO focus its efforts on research and development in the Government's efforts to reduce and eliminate poverty in this land. Since 1969, we have moved deliberately in that direction, and I am pleased to say today that our research and development planning has resulted in an R. & D. plan specifically designed to investigate major facets of poverty while attempting new and innovative approaches that may help us uncover some of the unknowns. Given the R. & D. emphasis which will create for us a fact bank of poverty causes and allow us to approach these causes methodically and deliberately, we anticipate a resurgence of effort on the part of our over 980 community action agencies throughout the country. The community action agency is a major artery for the delivery of services to the poor. In the beginning, theirs was a rough road rutted with some scandals, many false starts, and lack of direction. I believe that as we continue to emphasize our R. & D. efforts, we will be able to apply that which has been discovered through sound research. I am convinced, after traveling the length and width of this country, that the maturation process of community action agencies is beginning to show and to pay dividends. I have seen developing a cadre of experience and dedicated poverty workers throughout this country. I see the development of expertise in mobilizing community resources so that the needs of the poor are high on the list of total community priorities. The CAA's are finding th keys to city hall and the county seat, and are establishing credibility with State and local officials to the extent that the voices of the poor are being heard, mor than ever, by their local and State governments and are being articulated in the context of total community growth. As a result of this maturation and the beginning of a flow of information based on sound research, development, and experimental practices, the future of community action is bright. I see fewer crises and fewer false starts. COMMUNITY ACTION BOARDS OF DIRECTORS Mr. FLOOD. When Congress felt it was necessary, for obvious reasons, that they specify a percentage of the various boards of directors, called by different names-board of trustees, local commission, or what not be comprised, say, one-third of those people who are beneficiaries or intended beneficiaries under the law, the word started coming to us and is still coming from all over the country to Members, that while the intent was good, something like the League of Nations, sound in theory but doesn't work, that these people, the underprivileged one-third, the beneficiaries of the act itself, attend the meet ings, actually do not participate in most cases, and that it is the voice of the other two-thirds or one-third, whatever it might be, who dominate the proceedings. It is not clear whether it is deliberate or not, but at least there seems to be a lack of actual participation nationwide. I know in some sectors and for local reasons, their participation is sufficient, but we are advised, generally speaking, that is not the case in the last year. Have you heard that? They just go there and sit there and just say or do nothing, and the more vocal people take over. Mr. SANCHEZ. I have been here close to 2 years now, and I can say that about the time I came here I was hearing this. I am quite comfortable in reporting that the reverse process is taking place now. Mr. FLOOD. I am speaking now of within the last year. Mr. SANCHEZ. I think one of the things that we are dealing with in some of the reports we still get is, in fact, some lingering memory of some of the false starts. I am really convinced of this; and Mr. Batchelor, who is the Assistant Director for Operations and has direct control of the regions and the community action agencies, also agrees with me. Mr. FLOOD. Nearly all of this comment that we get, with rare exceptions, comes from Members of Congress. Mr. SANCHEZ. For example, in Los Angeles, which I believe is our third largest community action agency, the reverse is taking place. We have allegations that the so-called recipients have taken over. I see examples of both. In Mississippi, there are charges of "takeovers" by the poor people, the consumers. I think that you are referring to conditions which existed about 2 years ago, but the trend is changing in the other direction. We frankly would like to see the ideal in which both sides are participating. Usually what we find is one extreme or the other. I am beginning to see fewer crises and fewer false starts. OVERVIEW OF BUDGET REQUEST President Nixon has requested $760.2 million for the OEO in fiscal 1973, an increase of $55.6 million over the 1972 appropriation of $704.6 million. The President's budget also assumes transfers of projects and their funding from OEO to HEW of $10 million for family planning, approximately $21 million for comprehensive health, and $3 million for drug abuse. The budget request for 1973 is $562.6 million below the 1971 actual obligations mainly because Headstart, Follow Through, and VISTA are included in the OEO request. Funds for these programs will go directly to HEW and ACTION. H.R. 12350, which extends the basic authorization for the Office of Economic Opportunity for an additional 3 years became law on September 19, 1972. Included in that authorization are a number of features which dramatically impact on the budget of OEO. This new legislation establishes minimum funding reservations for local initiative and legal services programs of $328.9 million and $71.5 million respectively. These levels are consonant with the President's request for fiscal year 1973. However, in dealing with the OEO extender, the Congress also mandated earmarks of $18 million for alcoholic counseling and recovery programs, and $30 million for emergency food and medical services activities. While the two mandatory earmarks are subject to a 20-percent downward reprograming authority given OEO, they nevertheless require set-asides of significant unbudgeted sums regardless of the overall level of the appropriation ultimately approved by your committee for OEO. In addition, reservations and earmarks such as these are undesirable as they disrupt orderly program management as well as reduce the flexibility of the executive branch and appropriation committee in determining funding levels. A further complicating factor arises from the new raquirement that Puerto Rico be treated as a State in fiscal year 1973 for the purpose of allotment of OEO funds under section 225a. As I stated in my testimony before the House Committee on Education and Labor, January 25, 1972, "While we are extremely concerned that Puerto Rico receive a fair share of OEO funds, this should not occur at the expense of vital ongoing operations." The practical effect of this new provision is to mandate a significant level of new programing in the Commonwealth of Puerto Rico which within a stable budget request will require some offsetting reductions in community action agency programs elsewhere. I would like to take a moment to deal with each of these problems. EMERGENCY FOOD AND MEDICAL SERVICES OEO is proceeding with the obligation of $24 million for EFMS programs in fiscal year 1973. The program will be mounted from funds made available in the supplemental to the agency in June of 1972 (and available for 1973 utilization) in combination with new funding now being requested as a part of our regular 1973 appropriation. Funds will be utilized as in the past by community action agencies and Indian and migrant grantees. They will emphasize assistance to the elderly, the unemployed, and infants and nursing mothers. In addition, OEO is proceeding with much-needed special assistance in those areas hit hard by natural disasters this past summer. Mr. FLOOD. As a matter of fact, in my own district I think you have pending before you now an application for a million dollars from the Luzerne County Commission, which almost overnight you have been acting on because it was the center of the Hurricane Agnes disaster. I think this is a classic example of what you have in mind. Mr. SANCHEZ. As part of our assistance to the elderly, we are funding Project FIND which seeks out those elderly poor who are not aware of the benefits available to them under the various Federal food assistance programs. Finally, a small portion will be devoted to special nutrition-related programs such as treatment of parasites, techniques of nutrition education, and child feeding. We hope, through this combination of program efforts, to both address the special emergency circumstances which generated the supplemental appropriation and continue through 1973 those Indian and migrant programs which are addressing the needs of the poorest group within the poverty population. ALCOHOLIC COUNSELING AND RECOVERY By the end of 1970 OEO, was operating 240 service projects at a level of $12 million in the alcoholic counseling and recovery program area. In addition, six projects had been established to train people to fill key staff roles in local alcoholic treatment projects. During 1972, Federal alcoholism activities were concentrated in the National Institute of Alcoholism and Alcohol Abuse, and OEO projects were transferred to this unit in HEW. The only OEO obligations in 1972 ($1.9 million) were for Indian alcoholism projects. These have now been transferred as well and based on these decisions the President's budget request included no 1973 funding for OEO in this area. Adequate provision was made within the HEW request for continuation of all projects transferred. However, OEO's new authorization includes a mandatory provision which requires that we, within whatever level of funds is finally appropriated, set aside a minimum of $14.4 million for alcoholic counseling and recovery programs. Consequently, other OEO requests are being reduced by this amount so that we can both stay within the $760 million requested by the President while at the same time honoring this binding provision of our authorization. PUERTO RICO New legislation requires that Puerto Rico henceforth be considered a State for purposes of allocating minimum fair share funds by State under section 225a of the Economic Opportunity Act. The formula for determining each State's fair share is based upon : 1. The relative number of public assistance recipients in each State compared to all States; 2. The average number of unemployed persons in each State compared to all States; and 3. The relative number of related children living with families with income of less than $1,000 in each State compared to all States. The application of this formula to Puerto Rico will require $25 million for additional programing in Puerto Rico in 1973. The 1973 budget requests for those Economic Opportunity Act programs subject to the State distribution formula in aggregate were relatively constant between 1972 and 1973, basically providing for continuation of existing programs in place. This poses the classic dilemma confronted by an administrator of programs for the poor: From whom must I take in order to give to someone else? The case for additional programing in Puerto Rico is irrefutable and most compelling. Mr. FLOOD. I am curious about Puerto Rico. The ACTION people were here this morning. In the ACTION program, great emphasis is being placed upon Puerto Rico. The concentration of ACTION on the VISTA program in Puerto Rico exceeds that of any State in the United States, with the possible exception of Texas, much bigger than New York or California. The committee was curious as to why they were pointing out Puerto Rico as exhibit A for the VISTA program. Now, by coincidence, in the afternoon session you, not knowing |