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H.R. 4837, would satisfy Resolution 621 of the 1962 National Convention, a bill as passed by the House; hearings completed in the Senate and pending before Senate Post Office and Civil Service Committee, will if enacted, guarantee all Government and postal workers back pay and other retroactive benefits when they are restored to their positions following unjustified or unwarranted personnel action.

Physical Ineligiblity-Restored to Register on Appeal

Frequently veterans are determined physically disqualified by Boards of Civil Service Examiners for positions publicized by these particular Boards. On ap peals the Civil Service Commission's Regional Medical Officer determines that the veteran is physically qualified for a specific position and orders restoration of the veteran's name to the eligible list or Register. Because of the initial disqualification based on alleged physical condition the veteran may lose an opportunity of appointment to a particular position. It is the Commission's view that when the veteran's name is restored by the Civil Service Commission to the list or Register that he should be given priority certification that he previously lost due to the initial physical disqualification or that he be given a position in the eligible Register ahead of all others. This matter is to be further considered at our forthcoming preconvention meetings and if feasible a special recommendation may result therefrom.

Manpower Utilization in the Federal Government

Very recently the Subcommittee on Manpower Utilization, House Committee on Post Office and Civil Service conducted hearings on the use of contractor employees and active duty military personnel to perform work historically and successfully handled by Government civilian employees.

Congressman David N. Henderson, Chairman of the Subcommittee in announcing the hearings stated that “Time and again the attention of our Subcommittee is being called to the discharge of longtime Government civilian employees and their replacement by combat-qualified military personnel." The chairman said that military men and women are being used in what used to be Defense civilian jobs, such as managerial and clerical positions, skilled crafts such as carpenters, painters, etc. But even more important, said the chairman, is the increasing use of many Government agencies of contractor personnel. Mr. Henderson was critical of “the apparent willingness of some top management officials to resort to contractors for personnel to perform work that has been successfully and historically handled by Government personnel and generally at lower cost.” At these hearings some Government agencies acknowledged that it is frequently more expensive to contract work to private firms than letting Government employees do it. It was brought out at these hearings that the Defense Department on May 8, 1964, issued a memorandum calling for a tightening up of the policies on contracting out for personal services. The witness for the Department of Defense said that they would reexamine their policies, stating that, "We share your concern for the most effective use of military, civilian personnel and contractual services." The Defense Department witness further told the subcommittee that they were now making a study to determine which jobs now performed by the military can be performed by civilian employees.

The Federal Aviation Agency announced it is ending all "personal service" contracts with private firms whereby the work was done by employees of the companies. They stated that hereafter all the work related to research and development should be done by FAA's own electronic engineers, computer programmers, mathematicians, and other specialists.

Our authority to testify in opposition to the Government's practice of replacing career and civilian employees with military personnel and the contracting out of certain jobs relating to the maintenance and operation of Government buildings is based upon Resolutions 619 and 623 of the 1962 National Convention. We feel the Government's policy many times is a means of circumventing the Veterans' Preference Act.

Appeals

The new government-wide system for handling employee appeals from adverse actions of their agencies, after the first year of operation, has resulted in more appeals within Federal agencies and fewer appeals to the Civil Service Commission. The new system requires all agencies to operate systems for con

sidering employee appeals from adverse actions such as firings, suspensions, reduction in rank or pay. It also permits employees both veterans and nonveterans to appeal to their agency or to the Civil Service Commission. Employees have a second opportunity to appeal to the Commission if they first elect to appeal to their agency.

Of some 36,000 adverse actions taken during the first year of operation under the new program, only 1 out of 18 actions was appealed either to the employing agencies or the Civil Service Commission-3.4 percent to agencies and 2.3 percent directly to the Civil Service Commission.

The Civil Service Commission announced that of employee appeals made at the first agency level, 30 percent of the employees, or 3 out of 10, won their cases by having the adverse action reversed or modified. Of those who lost at the first appeal level, one out of four won a reversal or modification by going to the second agency appeal level. Of those appealing further to the Civil Service Commission, one of five were decided in favor of the employee.

Of all adverse action appeals made directly to the Civil Service Commission, one out of four were decided in favor of the employee.

Air Force-Reclassification of Guard Positions

In our last annual report to the National Convention we discussed the program of the Air Force in effecting the transition from guard positions to policeman positions, particularly in the Air Logistics Command. At that time we naturally were concerned with the effect this action would have on the affected personnel and if such a move was perhaps a means of circumventing veterans' preference. Therefore, we requested the Civil Service Commission to furnish us a complete report on the Air Force's new policy. We have been supplied the following information.

The program was completed as of December 31, 1963. During the course of the transition and in addition to normal complications in the program, more problems were imposed on most of the air material areas in the form of manpower reductions resulting from economy moves. Such economy moves resulted in losses in civilian manpower authorizations over the total period covered by the transition which amounted to approximately 150 positions. As a result of the transition 940 guard positions were changed to policeman positions. Of this total 658 Air Force employees in these guard positions qualified for and were appointed to police positions. Of those who did not qualify for police positions, 63 were retained in guard positions and 174 were reassigned to other positions. The reassignments were to other GS schedule jobs of the same grade or wage board jobs at an hourly rate of pay equal to or higher than the hourly rate of pay of the GS schedule. Of the remaining amount affected by this transition, 11 were voluntary reductions and at least 49 were promoted. During the course of this transition, 164 persons were separated. Of this number, 95 were separated on disability retirement and approximately 26 other cases are still pending.

FINANCE COMMISSION

Harold P. Redden, Massachusetts, Chairman

Francis Polen, Indiana, National Treasurer

Robert R. Fleming, Indiana, National Comptroller

To the 10 member National Finance Commission is given the task of establishing the annual budget. While the National Convention is the governing body and sets the amount of the annual dues, the convention does not have the authority to expend funds or to obligate the national organization financially. This right has been reserved for the National Executive Committee.

While we cannot report that 1963 was a successful year financially, we were able to reduce our anticipated deficit of over $206,000 to less than $57,000, because, while our income was $430,000 less than estimated, expenses were reduced by $580,000.

With 1964 being the first year to receive the full effect of the dues increase from $1.50 to $2.00, it is expected that the operations of the national organization will show a surplus of receipts over expenditures of $350,000, thereby reversing the trend of deficits which have been prevalent since 1955.

The National Finance Commission believes that in a few years our present deficit of $547,000 can be eliminated and some reserves accumulated for the benefit of future years.

In conclusion, I would like to note that the operations of the national organization of The American Legion is a $6.8 million-a-year undertaking. In 1963, 61 percent of this sum was derived from the annual membership dues, 31 percent from emblem sales and advertising in The American Legion Magazine, and the other 8 percent was received from donations and other miscellaneous revenues. Your attention is called to our auditor's report at the conclusion of this volume.

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THE AMERICAN LEGION CHILD WELFARE

FOUNDATION, INC.

L. Eldon James, Virginia, President

The report of The American Legion Child Welfare Foundation is included with the report of the National Child Welfare Commission.

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AMERICAN LEGION ENDOWMENT FUND CORP.

Harry W. Colmery, Kansas, President

This corporation was incorporated in 1925 under the laws of the State of Delaware to act as trustee under a trust agreement between it and The American Legion. At that time, The American Legion foresaw a need for continuing income to support its war veterans' rehabilitation and child welfare programs. Contributions were solicited on a national basis and the proceeds from this campaign were turned over to the corporation as trustee to be administered for the benefit of those two programs and the annual net income from the investment of the corporation's principal funds has been paid to The American Legion. Over the years a surplus has been accumulated in the principal funds as compared to the original amount placed in the corporation's keeping.

The financial condition of the corporation is best shown by summarizing as follows from the external audit by George S. Olive & Co. as of December 31, 1963.

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The investment of the funds of the corporation is limited by the original trust agreement to obligations of the U.S. Government, municipal bonds, and improved real estate mortgages at not in excess of 40 percent of the appraised value. At present the investment portfolio consists only of the first two categories.

The fund is administered by a board of nine directors who are elected by the members of the corporation appointed by the National Commander of The American Legion with the approval of the National Executive Committee. Its securities are lodged with a banking institution in Indianapolis under an agency account and their custody is under the joint control of the corporation and the agency bank. The corporation is prepared at all times to receive and administer gifts and bequests for the benefit of The American Legion's rehabilitation and child welfare programs.

EMBLEM COMMITTEE

Julius Levy, Pennsylvania, Chairman

James S. Whitfield, Missouri, General Manager

Meetings and Catalog

Since the previous National Convention report, the National Emblem committee has met twice. The meeting of the committee in September 1963, was for the purpose of considering bids, awarding contracts for 1964 requirements, and to carefully study operating policy. The second meeting in April 1964, was to study general operating policy, such as results of American Legion Magazine advertising; direct-mail brochures; revised methods of advertising; operating procedure to increase efficiency and lower operation costs; and other promotional plans for increasing National Emblem Sales.

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