The cost of financing these additional workloads will be offset by savings derived from decreases in claims and benefit workloads below those used in the budget request.

PROGRAM COST

The State administration of the unemployment compensation and employment-service programs is expected to cost $328,684,000 in 1960. This is an increase of $3,084,000 over the $325,600,000 which was appropriated for 1959. There are increases amounting to about $15,300,000 due to greater coverage of the program and the higher State salaries and other costs and increases which are largely beyond the control of the Bureau or the States.

These increases are offset by decreases amounting to $12,200,000 which are related to improvement in the economy which is anticipated for 1960.

Senator HILL. These funds come out of the Treasury, but they are reimbursable, are they not, from the tax?

Mr. GOODWIN. We have the Federal tax, Mr. Chairman, which brings in the amount of money, or it has been bringing in more. The appropriations have been getting pretty close to the total amount.

Senator HILL. Up to date we have not had a deficit, have we?
Mr. GOODWIN. That is right.

Senator HILL. Since the tax is designed to provide the amount neces

Senator HILL. In other words, the income from the tax has reimbursed the Federal Government for all the expenditures?

Mr. GOODWIN. That is right.

I thought I might identify for you, briefly here, the increasesSenator HILL. I think you had better identify them because it looks on the face of things you would not think you would be needing more money in 1960 than in 1959; that is in view of the trend of the last several months.

Mr. GOODWIN. Yes, sir.

SALARY RATES

The increase in State salaries costs-that may be the item you had in mind a minute ago, Senator Byrd-will cost about $8,300,000. This is based on experience in 1958 and the prior years.

The salary rates paid in this program are prescribed under State compensation plans and they must be comparable to other State salaries, the State salaries paid to other employees doing similar work in the State.

The economic and labor force growth and economic recovery will cause a larger number of employers and workers to be covered by the program in 1960. This will increase workloads in the tax collection and wage record functions and will increase costs by about $1,700,000. We are expecting an increase in coverage of about 1,300,000 workers and some 62,000 additional employers to be brought under the program.

There will be higher costs for rent of premises, replacement of worn-out and obsolete equipment, more work in the function con

cerned with prevention and detection of improper benefit payments and in the new program of unemployment compensation for exservicemen. These will increase costs about $3,100,000.

To prevent the misuse of Federal and State benefit funds it is necessary to restore to the former level functions which the State agencies were forced to curtail during the recession in order to cope with the rapid rise in unemployment claims and benefit payments. This will cost about $2,200,000.

What is involved there, Mr. Chairman and Senator Byrd, is that when unemployment is on the way up and there are very few employment opportunities, relatively few, the claims process can be short cut in certain respects without too much danger.

When the economy is going the other way and there are more job opportunities available, it is necessary to take more time in those interviews and some of the short cuts we made during the past year cannot be taken safely.

We estimate that the increase there will be about $2,200,000.

The improved economic outlook for 1960 is expected to lower the volume of unemployment claims and benefit payments and this will lower costs by about $3 million.

REDUCTION IN CONTINGENCY FUND

There is also a $9,200,000 reduction in the contingency fund. We think that with the trend in unemployment insurance workloads expected to be downward in 1960, that not much of the contingency fund will be needed for workload purposes so that a saving of $9,200,000 can be made from that source.

Now, those are the points that I wanted to make in connection with this.

Perhaps you would like to direct some questions on this now, Mr. Chairman.

Senator HILL. Senator Byrd.

Senator BYRD. No, thank you.

Senator HILL. All right, sir, what is your next item, Mr. Goodwin?

UNEMPLOYMENT COMPENSATION FOR VETERANS AND FEDERAL

EMPLOYEES

APPROPRIATION ESTIMATE

"For payments to unemployed veterans and Federal employees, either directly or through payments to States, as authorized by title XV of the Social Security Act, as amended, $160,800,000 and title IV of the Veterans' Readjustment Assistance Act of 1952, $135,000,000.

Unemployment compensation for veterans and Federal employees, next succeeding fiscal year: For making, after May 31 of the current fiscal year, payments to States, as authorized by the title XV of the Social Security Act, as amended, and title IV of the Veterans' Readjustment Assistance Act of 1952, such amounts as may be required for payment to unemployed veterans and Federal employees for the first quarter of the next succeeding fiscal year, and the obligations and expenditures thereunder shall be charged to the appropriation therefor for that fiscal year."

For new program legislation.

Benefit payments authorized by the Ex-Servicemen's Unemployment
Compensation Act of 1958, Public Law 85-848.

41, 200, 000

Proposed for later transmission: For payment of unemployment compensation to ex-servicemen as authorized by Public Law 85-848___

120, 800, 000

41, 200, 000

To provide for a full year's operation of unemployment compensation for ex-servicemen_.

Increase in coverage: In 1960, separation of 715,000 servicemen eligible to file claims is expected; 578,000 separations are expected in 1959_.

Increase of $1 in the average weekly benefit payments to exservicemen and Federal employees--

DECREASES

Improvement in economic conditions is expected to reduce the number of claims and the duration of unemployment-----Termination of unemployment compensation for Korean veterans in 1960.

Net change---

+23, 800, 000

+5,300,000

+4, 000, 000

-24, 500, 000

-35, 600, 000

-27, 000, 000

PREPARED STATEMENT

Mr. GOODWIN. The next one has to do with the appropriation request for unemployment compensation for veterans and Federal employees. These are for benefit payments and not for administrative purposes.

Senator HILL. These are direct payments to the individual?
Mr. GOODWIN. That is right.

I will submit my prepared statement on this item for the record.
(The statement referred to follows:)

STATEMENT OF ROBERT C. GOODWIN, DIRECTOR, BUREAU OF EMPLOYMENT SECURITY, ON THE 1960 APPROPRIATION REQUEST FOR UNEMPLOYMENT COMPENSATION TO VETERANS AND FEDERAL EMPLOYEES

Mr. Chairman, it is estimated that $135 million will be needed in 1960 for unex:ployment compensation payments to ex-servicemen, Korean veterans, and Federal employees. This is a decrease of $25,800,000 from the $160,800,000 available in 1959. When the budget was submitted we had estimated that $162

on would be required in 1959. This included a supplemental request for $41.20,000 submitted by the President. In acting on this request recently, the Congress reduced the supplemental appropriation to $40 million.

When we made up the estimates for 1959 and 1960 for unemployment compenmetlen for ex-servicemen we had no experience on which to base the estimates. As of now we have benefit payment expenditure reports from the States for the period from October 27 to March 31, 1959.

T IV of the Veterans Readjustment Assistance Act of 1952, as amended, ;rovides for the payment of unemployment compensation to veterans who served a the Armed Forces after June 26, 1950. This program terminates on January 31 10. As you know, compensation is payable at the uniform rate of $26 per week in all States for not to exceed 26 weeks of unemployment. Also, if a veteran is entitled to unemployment compensation under any other State or Federal law. such compensation must be paid first, and only a supplemental amount to bring the compensation up to $26 for the week is paid under this ** cram If the unemployed veteran has no other entitlement, the entire weekly le-eht amount of $26 is paid under this program.

We now estimate that $44 million in benefit payments will be paid to those Korean veterans under this program in 1959. Since the program terminates January 31, 1960, it will only be in effect for 7 months in fiscal year 1960. As certain veterans formerly eligible under this program, and ex-servicemen being discharged currently, are eligible for benefits under the new program of memployment compensation for ex-servicemen. It is therefore estimated that (*'* *8 million will be required in 1960, a reduction of $36 million from estimated 75% vex;wn-litures,

T

The unemployment compensation for veterans program is being replaced by the new program for ex-servicemen. In 1960 it is estimated that $70 million 1 be required for the payment of unemployment compensation to ex-servicemen. program, which was authorized by Public Law 848 of the 85th Congress, ***approved on August 28, 1958, and 1960 will be its first full year of operation. 19 it will be in operation for 8 months. This new permanent program of ployment compensation for ex-servicemen is similar in operation to the ** gna for civilian employees of the Federal Government. Benefits are paid • 25'e ex-servicemen on the basis of cash and equivalent wages earned while in the Armed Forces. The benefits are paid in ae ordance with appli“at e frut,sions of the State unemployment insurance laws. Ex-servicemen who entered the Armed Forces after January 31, 1955, and those with earlier service **se latest separation from active duty occurs after October 27, 1958, are chie for benefits under the provisions of the State unemployment insurance w if they have served at least 90 continuous days and have been separated fe ressons other than for bad conduct, or under conditions other than Cskuporabie,

the payment of unemployment compensation to Federal employees in Te me are requesting $57 million, a reduction of $4,800,00 from the $61,800,000 2-h is available in 1959. When the budget was submitted we had estimated that $3 million would be required in 1959. Under this program unemployment beers are paid to unemployed Federal employees as authorized by title XV of the Social Security Act, as amended. This program provides unemployment Izegrance protection for approximately 2.4 million Federal employees who are de the jurisdiction of the State unemployment insurance laws.

of improvement in economic conditions in 1960, it is expected that There will be a small decrease in the number of claims filed for benefits, and a

decrease in the number of weeks for which each claimant will file. The decreases will be offset by a slight increase in the average weekly benefit ra in 1960. The net reduction in cost from 1959 is estimated to be $4,800,000.

FUNDS AVAILABLE

Mr. GOODWIN. We unemployment

are requesting here $135 million

fo

Senator HILL. That is a reduction of some $25 million, $25,800,000 under this year?

Mr. GOODWIN. That is right. It is a decrease from this year.
We have $160,800,000 available in 1959.

More than half of this appropriation is for the new program of unemployment compensation for ex-servicemen and the rest of it is for unemployment compensation for Federal employees and a small amount to end the program for unemployment compensation for

veterans.

The Veterans program is being replaced by the unemployment compensation for ex-servicemen program.

Senator BYRD. Which program was replaced?

Mr. GOODWIN. The new program is called unemployment compensation for ex-servicemen. The old program that is being replaced was the unemployment compensation for veterans. That program was established by the Congress to meet the Korean problem. Those men are technically known as veterans. Those that are coming out of the service now are not technically known as veterans.

That has meaning in terms of the provisions of the GI bill and other things.

So Congress replaced the old program with one for those now coming out of service and it is virtually on the same basis as the unemployment compensation for Federal employees program. It is recognized as a different type of Federal employment.

If there are no more questions on that

Senator HILL. In other words, we have adopted a different program so far as the men who served in the Armed Forces are concerned? Mr. GOODWIN. That is right, sir.

Senator HILL. The older program we called program for veterans. Many of them in that program as set up had served in some war, either World War I or World War II or the Korean War.

As we get further away from the war we have this new program which we call the program for ex-servicemen; is that right?

COMBINING OF PROGRAMS

Mr. GOODWIN. That is right.

There is one additional point I would like to make on this request. Last year Congress combined the appropriations on these particular programs and we would hope that the Congress would continue that

Senator HILL. Congress did what?

Mr. GOODWIN. The appropriations were merged. Formerly they had been separate.

Senator HILL. That is right.

Mr. GOODWIN. This gives us a little leeway on the estimates. Sometimes our estimates are a little high on one and a little low on