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Agencies which reported 25 or more reduction in force notices at any one time during period Jan. 1 through Dec. 31, 1963

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Agencies which reported 25 or more reduction in force notices at any one time during period Jan. 1 through Dec. 31, 1963-Continued

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REASONS FOR INCREASE IN REQUIREMENTS

Mr. FOGARTY. As I recall your original estimate of need for 1964 was $119 million and now you estimate it will be at least $152 million. What occasioned the increase?

Mr. GOODWIN. That is right.

Mr. FOGARTY. What occasioned the revision upward of $12 million since January 21 when the deficiency request for $30 million was sent to us?

Mr. GOODWIN. This is due to increase in benefits in part, but principally it is due to an increase in the number of beneficiaries beyond what we thought we would have. This is primarily in the Federal employment, the UCFE. That is running currently at a rate of about 3,000 a week more than it did last year at a comparable period. Mr. FOGARTY. Why the sudden increase of $12 million since January 21?

Mr. NORWOOD. When the $30 million was made up the latest figure we had was through November.

In December and January the expenditures have run substantially higher than we had anticipated, and clearly on that basis the $30 million originally sought would be short; $42 million is our very best estimate now.

Mr. FOGARTY. This increase is because of the increase in Federal employees who have been laid off, cannot find jobs, and so are expecting compensation?

Mr. NORWOOD. Largely on them; yes, sir.

Mr. GOODWIN. One point to emphasize. We are going to be out of money on this by March 20.

Mr. FOGARTY. That was my next question. When will the States be out of money if they do not get additional funds?

Mr. GOODWIN. That is the answer.

Mr. NORWOOD. There is about $14 million left in the till.

Mr. FOGARTY. This is urgent, then?

Mr. GOODWIN. Yes, it is.

Mr. LAIRD. As urgent as last year's request for this same item? Mr. GOODWIN. There are larger amounts involved this year. With reference to last year I would like to say we had a substantial number of beneficiaries that were delayed in getting benefits last year.

Mr. NORWOOD. In May 1963 there were 53,000 payments actually held up for from 1 to 3 weeks in 33 States because the supplemental

at that time, which was before the Subcommittee on Deficiencies, did not clear in time to prevent the interruption.

Mr. FOGARTY. Mr. Laird?

Mr. LAIRD. I don't understand why this could not have been anticipated at the time of the last supplemental request unless there has been a drastic change in the economy of the country.

We had a supplemental request January 21.

Mr. NORWOOD. That was the one that was $30 million. It has now increased to $42 million on the basis of actual costs of benefits in December and January which were substantially greater than anticipated.

Frankly, we think November was abnormally low because of an unusual number of circumstances-holidays, unplanned interruptions, and we anticipated that the thing would behave better than it did. Now that the December and January figures are in it is clear that was a low estimate.

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EMPLOYEES' COMPENSATION CLAIMS AND EXPENSES

Mr. FOGARTY. Mr. McCauley, we shall take up your deficiency request for $5 million.

This request was submitted January 21 in House Document No. 203. Has anything happened since then to change the estimate?

Mr. MCCAULEY. No, sir. We feel the estimate is quite sound. Mr. FOGARTY. We appropriated the full amount you requested last year. What brings about the need for this additional appropria

tion?

Mr. MCCAULEY. In the first place, our request was inadequate last year. The amount we ourselves proposed was inadequate. The committee reduced that further so we were left with a substantial deficit at the end of this year.

We met that problem by deferring certain benefit payments until the 1964 appropriation became available.

Mr. FOGARTY. I thought we appropriated just what you asked for last year.

Mr. MCCAULEY. In the regular appropriation, yes, sir. The supplemental for 1963 was inadequate to start with and then was further reduced. The supplemental was not handled by this committee.

Mr. FOGARTY. Oh, I see. The reduction was made by the Deficiencies Subcommittee that handled these matters at that time. We shall put your prepared statement and the justifications in the record.

(The material referred to follows:)

STATEMENT OF WILLIAM MCCAULEY, DIRECTOR, BUREAU OF EMPLOYEES' COMPENSATION, ON SUPPLEMENTAL ESTIMATE FOR EMPLOYEES' COMPENSATION FUND

The estimate before the committee for supplemental funds in the amount of $5 million is for payment of benefits in fiscal year 1964, authorized under the Federal Employees' Compensation Act.

The Bureau has only limited means of controlling the costs of benefits chargeable to the compensation fund. Such cost factors as the number and severity of injuries, recurrences of old injuries, costs of medical care, and the wages for civilian employees have a direct influence on the cost of benefits and generally are not known to the Bureau in advance. Therefore, it is not possible to forecast the obligations against the compensation fund with a high degree of accuracy. The Bureau's estimates for 1963 for both regular and supplemental appropriations were too conservative, and funds were not available to pay all the obligations. Benefits accruing in June 1963 totaling about $1,546,000 were deferred until July and paid from the 1964 funds. The estimates for 1964 were prepared prior to approval of the Postal Service and Federal Employees Salary Act of 1962, Public Law 87-793. Accordingly, the estimates and funds authorized did not provide for increase in benefits resulting from the enactment of this legislation as well as the increase in compensation resulting from higher pay to wage board employees. On the basis of injuries reported to the Bureau during the first 6 months of 1964 as compared to the same period of 1963, it is estimated the 1964 workload will increase a little more than 1,000 cases or about 1 percent.

It is estimated the 1964 medical expenses are now expected to be $1,150,000 over the amount appropriated and will increase over those for 1963 by approximately $150,000. This increase is due to greater workload and to a decision by representatives of the Navy Department to require payment for outpatient treatment rendered to Bureau beneficiaries at naval medical facilities. In prior years, naval medical facilities did not bill the Bureau for this service. It is expected that about 8,400 outpatient visits will be made by injured employees to these facilities. The rate of $7 per visit was established, and it is expected that about $59,000 will be needed to pay the Navy for this service.

Section 35 of the Federal Employees' Compensation Act provides in part that Government departments and agencies shall reimburse the compensation fund for benefits incurred due to injuries or deaths occurring after December 1, 1960. It is expected that the increased benefit costs will be reflected in the reimbursement to the compensation fund under provisions of this section during subsequent years. Payments made during 1964 on account of these injuries and deaths will be billed to the departments and agencies for reimbursement to the compensation fund for 1966.

Further details concerning this request are included in the statements submitted in justification of the estimate. I shall be glad to supply any additional information the members of the committee may desire.

SCHEDULE ON SUPPLEMENTAL APPROPRIATIONS AND REVISED ESTIMATES

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Employees' compensation claims and expenses-Continued

8. Less total amount available..

9.

Estimated supplemental required..

10. Estimated supplemental included in latest budget..

11. Date needed:

For obligation, June 10, 1964.

For expenditure, June 30, 1964.

12. Estimated expenditures from supplemental:

In current fiscal year.

In next fiscal year..

After next fiscal year.

Total....

13. Actual obligations last 3 months:

$67, 000, 000

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