Mr. CONTE. I have no argument there, but there are a lot of headaches involved with it. Right within the post office itself. The regular employees and the subs don't like it. They don't want to see anybody come in and take these salaries away.

Mr. GRONOUSKI. We haven't taken any jobs away and we have done just exactly what the employees have asked us to do in using cut hours and giving them flexibility in their vacations. What has happened in the past that has been very disturbing to our employees is that when the time came when they could take a vacation with their kids in the summertime, we just weren't able to give them a vacation at that period of time. This has very much liberalized our approach of giving them vacations when they can take them with their kids and it has had a very good impact on cutting down excessive hours.

As I say, on both counts we are doing something that the employees' organizations have strongly fought for.

Mr. CONTE. All right, you are going to take these 7,490 employees off the rolls in another week and you are going to replace them with career employees. Then it should follow that next summer you won't need temporary employees.

Mr. MCMILLAN. Mr. Conte, we have always had summer employees and as far as I can see, we always will have to have them because immediately when you put a career substitute on, then you have to give him vacation.

So, during the heavier vacation period, June, July, and August, we just can't give them the vacations unless we are permitted to put on some summer employees.

Mr. GRONOUSKI. I think there are two reasons why--and as you say, I won't be here, but I still have an interest in the postal service there are two reasons why I think we will need summer employees next year. One reason will be that, as Mac says, we will have a continuing need for replacement for vacation times; and second, I think we still will be operating in the excess overtime category.

We will still be working people more hours above 40 hours a week than is efficient to us, especially with the time and a half for overtime, if that occurs.

As I sit here today, I would anticipate that next summer we will need summer employees again.

Mr. CONTE. How many would you anticipate that you will need, based upon the fact that you are going to get 8,896 new employees plus 5.204 for increased volume of mail?

Mr. GRONOUSKI. Very likely less than this year because the overtime problem won't be as severe, but there will still be an overtime problem. Mr. CONTE. Could you give us a ballpark guess on how many you are going to need?

Mr. GRONOUSKI. I would prefer to have my very good friend and able successor, Larry O'Brien, give you that another day.

Mr. ADDABBO. Mr. Postmaster, may I congratulate you on your past 2 years of service? I wish you well and I know you will have success in your new endeavors.

I know this is a trend with the State Department of sending the best qualified men to the right positions.

Mr. GRONOUSKI. Thank you.

PERSONNEL CEILINGS

Mr. ADDABBO. On the supplemental and on the justification we received, at page 2 where you speak of personnel ceilings, and 13,200 additional positions and 6,784 man-years, now is this 13,200 positions or 6,784 man-years or both?

Mr. GRONOUSKI. It is both. If you put someone on, for instance, on a Saturday, 4 hours, in terms of man-years it is one figure. In terms of people it is one person. In terms of man-years it is-say 4 hours a week, that is only 200 out of 2,000 hours, so it is only about 10 percent of a man-year.

Therefore, both figures apply. They both have their own meanings.

Mr. ADDABBO. You would need 13,200 additional positions plusMr. GRONOUSKI. To accommodate the 6,700 and so on man-years. Mr. STEED. You are saying it takes 13,000-plus people to do this many hours of work?

Mr. GRONOUSKI. That is right.

Mr. CONTE. That is at 2,080 hours a man-year?

Mr. BELEN. Yes.

Mr. ADDABBO. Under item A you have in process of allocation 3,171 positions which I take it were unfilled as of August 25.

Mr. GRONOUSKI. We dated the memorandum August 25 but it is as of accounting period 1, which ended July 16 of 1965.

This came rather soon after our appropriation was ultimately approved.

SHORTAGE OF FUNDS AND DEFICIT SPENDING

Mr. ADDABBO. That would also reflect a saving or unexpended funds from these general appropriations and still, with that, you run into this large shortage?

Mr. GRONOUSKI. Right after the budget was adopted, and we knew where we stood, the first thing I did was get on the telephone communication system with our 15 regional directors to explain the whole budget picture to them.

I pointed out that while we had x amount of manpower, we could only use manpower as long as we had money to pay for it so we still had to be very careful in the use of manpower because where we got the additional positions we had some reduction in the operation funds so we were kind of in a position where we had to keep watching both columns, both the expenditure money and the additional people.

Mr. ADDABBO. I believe you mentioned in your statement the October 7 day and you wouldn't be able to pay the bills October 8.

Mr. GRONOUSKI. At the present rate of spending, and Lord knows we have been tight, the regional directors all around the country are crying on our shoulders.

Mr. ADDABBO. You don't mean the entire appropriation will be used up?

Mr. GRONOUSKI. Below our first quarter apportionment. You see, we have certain strict rules on apportionment, which are good to have, as a matter of fact. Our apportionment for the first quarter-we can't go into the second quarter apportionment in the first quarter by law. Consequently, we have to live in our quarterly allowance, which is a

rational breakdown of the full year's appropriations into four quarters. As things are going right now, as I say, we are actually not in a deficiency because the quarter isn't up, but technically we are spending at a faster rate than our quarterly apportionment. And we will be one day short, in effect, which is an intolerable situation, of course. If we don't have additional funds, then we inevitably are going to have to make some drastic changes in service. As I say, I don't like to come making that case, but this is not something that I am looking ahead on, this is something which is right now.

Mr. ADDABBO. Actually, you don't have a $10 million deficiency in this quarter.

Mr. GRONOUSKI. $10.5 million will be the deficiency, if we continue at the present rate, at the end of the first quarter.

Mr. ADDABBO. Which would be in September.

Mr. GRONOUSKI. July, August, and September. It would be October the 8th, closed out.

Mr. ADDABBO. You say for the first period which ended July 16. Are you setting up monthly periods or quarterly periods?

Mr. GRONOUSKI. We have quarterly apportionments, but we break our year into 13 accounting periods, and we control our expenditures and our operations on a 13-period basis. That is for our own internal control.

Mr. ADDABBO. In other words, there are periods and quarters?
Mr. GRONOUSKI. Yes.

Mr. ADDABBO. And the quarter will have a $10 million deficiency? Mr. GRONOUSKI. The Budget Bureau does not concern itself with our 13 accounting periods, but we do because this is how we know where we are going.

Mr. ADDABBO. And the shortage for the quarter will be a little over $10 million?

Mr. GRONOUSKI. It looks like we are going to spend, at present levels of services, 22 percent increase over the past, and it will be $10.5 million.

Mr. MCMILLAN. Our shortage was in excess of $6 million the first two periods.

REVENUE AND MAIL VOLUME

Mr. GRONOUSKI. I want to emphasize again that this is not all bad, in that the increase in volume is bringing in revenue at a faster rate from the mail users than our deficiency is accumulating. So, from the point of view of the overall budget of the Government, we will end up, after getting this supplemental-we will end up this year on the basis of the present trend with less of an obligational authority than we anticipated when we went into this budget year.

Mr. ADDABBO. Except if the increase in volume is in second, third, and fourth class mail it gives you a greater deficit because these are mailings at a loss. Our first class mail carries a plus.

Mr. GRONOUSKI. The fact of the matter is we are over $8 million ahead already in revenue of what was estimated.

Mr. ADDABBO. But this is not profit; this is estimated income.

Mr. GRONOUSKI. This is additional revenue over what we had estimated.

Mr. ADDABBO. Still you are running at a loss on second-, third-, and fourth-class mail on the breakdown of what it costs to handle mail and what we are getting from the user as revenue.

Mr. GRONOUSKI. On an overall basis, a fully allocated basis.

Mr. ADDABBO. But we can get to the point of no return where you increase volume, but as you increase volume in second-, third-, and fourth-class mail your deficiency is greater.

Mr. GRONOUSKI. The fact of the matter is our increase in revenue is running in excess of our increase in additional money we need to handle this volume.

Mr. BELEN. So it must be in first class.

Mr. NICHOLSON. If I could give a little amplifying detail there, Mr. Addabbo, our original submission of the budget for 1966, the combination of revenue anticipated and costs anticipated resulted in an estimate of new obligational authority needed, the difference between revenue and appropriations, of $858 million. Now, after adjusting the figures for the new revenues that we are getting and increasing the spending authority by the amount of this supplemental request, instead of being $858 million new obligational authority, it drops to $723 million, a decrease of $135 million in new obligational authority, which is what the taxpayer ultimately pays.

To carry on that line of reasoning just a little further, after the public service allowances have been netted out, instead of having a revenue deficiency of $234 million that we originally anticipated, after the new revenue and after the passage of our supplemental request, instead of being $234 million the postal revenue deficiency will drop to $78 million. So that our financial picture is better because of the actual volume and working conditions that we are experiencing after the allowance of the spending authority that we are now requesting. Mr. COHELAN. Mr. Chairman, I do not have any questions. I just want to say what a great pleasure, General, it has been to be associated with you during your tour. I think our country is fortunate to have men like you in the public service.

Mr. GRONOUSKI. Thank you very much.

Mr. CONTE. I want to join the chairman and other members of the committee to say that the general is leaving us with mixed emotions. I certainly enjoyed our association here for the past 2 years. I think you have done an extremely fine job with a very difficult assignment, and you certainly have been a hard-working, dedicated public servant. You can take great pride in your accomplishments. I want to wish you every success in your new assignment. I know it is a very responsible one, and I hope in my travels on the Foreign Aid Committee I will be able to come over and see you.

Mr. GRONOUSKI. Thank you, Congressman. I will be looking forward to the visit.

Mr. STEED. Mr. Robison.

SUMMER EMPLOYEE PROGRAM

Mr. ROBISON. Mr. Gronouski, congratulations to you also from this quarter. I am sorry to lose you, though I know your successor is going to be a very amiable and very capable man.

Before you leave, let me ask you just a very few questions about the summer employee program. How many employees in this category did you have in 1964? Can anyone give me a rough figure?

Mr. MURPHY. 1,500, Congressman.

Mr. ROBISON. And in 1965 it zoomed up to 7,490.

Mr. GRONOUSKI. Actually, it is a little higher than that, overall. It is 8,600 overall.

Mr. MURPHY. The final report is 8,600.

Mr. ROBISON. How were these employees selected? Can you tell me the general pattern of selection?

Mr. GRONOUSKI. Do you have our instructions on selection?

Mr. MURPHY. Yes, sir, I do. To make a short answer, Congressman, they were selected under schedule A authority, existing authority which the Post Office Department has in the field. We are one of the few agencies that have this existing authority in the field. They were paid at the rate of $2.29 an hour, which is the substitute mail handler rate, level 3 rate, which we use for all summer and seasonal assistance. We also use it for the Christmas rate as well. These persons were selected by the regional directors on the basis of referrals which we received from a number of sources, the U.S. Employment Service, congressional referrals, and referrals from postmasters, interested youth groups such as we have here, the United Planning Organization, and that type of organization in the communities. I have the regulations which I will be happy to enter into the record. Mr. ROBISON. If the chairman is agreeable.

Mr. STEED. The regulations will be inserted at this point in the record.

(The regulations referred to follow :)

SUMMER EMPLOYMENT

The Civil Service Commission has issued new instructions and regulations regarding summer employment. Those pertinent to the postal establishment are reproduced below for the information of postal employees. In addition, supplementary instructions for the guidance of postal officials are contained in the following paragraphs.

Summer employment means any temporary limited appointment or Schedule A appointment with an effective date between May 1, 1965, and September 30, 1965.

Commission instructions

"In all summer employment in Washington and throughout the United States, whether temporary limited appointment or Schedule A, agencies shall observe the following requirements as well as others applicable under the authority used:

"1. Appointments shall be made without regard to race, religion, sex, or political or personal favoritism.

"2. Employment in the same department or agency of sons or da ghters of employees is prohibited.

"3. Employees and applicants must be informed of the limitation on appointment of relatives."

Emergency situations

"The summer employment regulations (section 338.202 for employment in the competitive service and section 213.3101 (b) for employment under Schedule A) do not apply to appointments made to meet emergency situations that (1) involve an actual and immediate threat to life or property and (2) cannot be dealt with by employment of persons not prohibited by the regulations. As an example, an explosion or major fire at an isolated station or depot may require emergency use of all manpower immediately available."