INCREASE IN EMPLOYEE PRODUCTIVITY While workloads are running heavier than was anticipated, employee productivity has also increased. Improvements in the field offices were referred to above. A similar improvement has taken place in the Comptroller's Division in Washington where work is centralized on accounting, the payment of claims, and other financial transactions. The increased efficiency of operations in the Comptroller's Division is largely attributable to automatic data processing equipment, which was purchased by FHA last December, as authorized in the 1964 budget, after having been rented previously. ADP applications put into effect before June 30, 1962, are estimated to result in savings of 255 man-years valued at about $1,312,000 during fiscal year 1965. Further applications during the current year are estimated to increase the savings to 311 man-years valued at about $1,620,000 in fiscal year 1965. Staffing for ADP studies has been completed during the present year and a training program has been established to provide an adequate programing staff. An important application related to mortgage note servicing has already been put into effect during the current year and a second major application on acquired home property accounting will have been partially put into effect by the close of the current year. Twelve other applications have been identified for immediate study. REDUCTION IN MORTGAGE SERVICING Mortgage servicing requirements in the Comptroller's Division have been further reduced by the continuing sale to FNMA of purchase-money mortgages on home properties. Through March, mortgages valued at $122 million had been transferred out of a total of $175 million to be transferred during the current year. In the budget year, mortgages valued at $250 million are expected to be sold to FMNA, so that by June 30, 1965, the FHA portfolio of purchase-money home mortgages requiring servicing will be reduced to $76 million. Net income has been increased by approximately $600,000 in the budget year through a new policy of calling outstanding debtentures (issued in payment of insurance claims) with the highest interest rate first. In addition, agency income will be increased by about $950,000 through investment of surplus funds in Treasury bills rather than in notes under a change in investment policy worked out in cooperation with Treasury Department. Thus, significant advances have been made in the current year in managing an increasingly heavy workload. In the coming fiscal year, a further increase in workload may be anticipated even beyond the budget estimates. If FHA is to keep abreast of its expanding workload and maintain the advances made during the current year in providing service to the public and in disposing of acquired properties, the full amount of $90,125,000 requested for fiscal year 1965 will be required. NONADMINISTRATIVE EXPENSE ESTIMATE The FHA nonadministrative expense limitation covers the operating or "production" activities of the agency-initiating insurance, maintaining insurance on the books, and settling insurance claims, which includes payment of such claims, the acquisition, management, and disposition of mortgages and properties, and the liquidation of title one notes. These activities are carried on both in the field and the central office, where the Comptroller's Division is the largest nonadministrative organizational unit. Estimated nonadministrative expenses for fiscal 1965 amount to $79,750,000, on increase of $3,185,000 over the curent year's limitation, as shown below: Item 3 staff and related costs, increasing 4 percent over the current year's estimate, is largely attributable to the following increases in workload: 1. Increase in mortgage insurance applications examined (units) (6 2. Increase in home mortgage insurance claims (10 percent). 53, 000 4,000 13, 000 223, 921 Insurance initiation. There were 892,505 unit applications for mortgage insurance examined in fiscal year 1963; it is estimated that this number will increase to 922,000 in the current year and to 975,000 in fiscal year 1965 requiring additional average employment in 1965 of 126, or 2.3 percent as compared with a 6-percent increase in applications examined. The percentage in staff requirements is relatively so small because of the improvements in employee productivity described in detail in the "Total expense estimates" section above. Insurance maintenance.-The units of mortgage insurance in force will increase from 4,503,461 at the end of fiscal year 1964 to 4,727,382 by June 30, 1965, an increase of 5 percent. Provision has been made for some strengthening of the field staff (35 man-years, or about 15 percent) engaged in this function in an effort to combat defaults and handle mortgage servicing problems promptly; the balance of the increase (7 man-years in the Comptroller's Division) is an increase of 2 percent in the staff assigned to this function. Insurance settlement.-As indicated above, there will be an increase of 4,000 home mortgage insurance claims (10 percent) in fiscal year 1965, and it is estimated that sales of acquired home properties will increase 42 percent, from 31,000 to 44,000. These increased workloads will require an additional staff of 168 employees in fiscal year 1965, an increase of 8.6 percent in the staff now engaged in settlement activities. Anticipated improvements in productivity resulting from conversion of the mortgage note servicing and the acquired home property accounting functions to electronic data processing, reducing the average employment requirements in fiscal year 1965 by 55 man-years, will produce even greater savings in fiscal year 1966 when the conversion process for these functions has been completed. Detailed information by object of expense and by organizational unit with respect to staff requirements is presented below in this section. 1 Total average employment and expenses adjusted for shifts between limitations would be 7,932.2 and $71,284,916, respectively. 79,750,000 CONTRACTUAL SERVICES AND SUPPLIES ADMINISTRATIVE EXPENSE ESTIMATE The administrative expense limitation, covering the overhead functions of the agency, encompasses three broad categories of activity: line supervision, program supervision and advisory services, and fiscal and administrative management. The personnel requests of the agency for fiscal year 1965 are discussed below under these headings. At the beginning of the current fiscal year, a reorganization of the central office was put into effect to provide better coordination and more efficient operation of the agency. Two new top level positions were established, an Associate Deputy Commissioner for Operations and an Associate Deputy Commissioner for Management. The Office of the Assistant Commissioner for Field Operations was abolished, and responsibility for field operations was assigned to the Associate Deputy Commissioner for Operations, who was also made responsible for the Assistant Commissioners for Multifamily Housing, Technical Standards, and Property Disposition, for the zone operations commissioners, and for the newly established position of Assistant Commissioner for Home Mortgages. The Associate Deputy Commissioner for Management is responsible for the Assistant Commissioner for Administration, the Assistant Commissioner-Comptroller, and the Director, Audit and Examination. Estimated administrative expenses for fiscal year 1965 amount to $10,375,000, or an increase of $875,000 over the fiscal year 1964 limitation. Of this amount, $175,000 results from higher pay rates under Public Law 87-793. A summary of the additional costs for fiscal year 1965 is as follows: Fiscal year 1964 limitation___ Add: 1. Net increase in personal services due to higher pay rates in Public Law 87-793 2. Staff and related costs.. 3. GAO audit_. Deduct: Reduction in extra day's pay--. Fiscal year 1965 request_-_ $9,500,000 +176, 000 +719, 000 +5,000 -25,000 10, 375, 000 The fiscal year 1965 request for $10,375,000 would permit the strengthening of program supervision and advisory services and would allow the increases necessary for the fiscal and administrative management elements to keep pace with the general growth in the workload, programs, and staff of the agency. SUMMARY OF FHA BUDGET Mr. BROWNSTEIN. Mr. Chairman, in the FHA we are asking for a total of $90,125,000, which is an increase of $4,060,000 over our current year's limitation, and $1,481,000 of this, or 37 percent, is needed to cover the cost of the pay increase under Public Law 87-793. Many of our field offices now are creating backlogs. And while we have introduced a number of shortcutting mechanisms, and are using our automatic data processing to the maximum, we are still not giving the public the kind of service that we would like to be able to give. We believe that it is quite essential, if FHA is to play the role that we think it ought to be playing in the housing market, that we give the prospective home buyer, as well as the builders and the mortgagees, prompt service. This we are trying to do. But it becomes progressively more difficult as our workload increases. And we would urge that we be authorized the entire amount requested. Senator PASTORE. How many jobs-new jobs? Mr. BROWNSTEIN. 431. Senator PASTORE. Of the 500 that you mentioned? Senator PASTORE. How many did you say? |