Mr. MOORE. We are asking for less people, but the amount of their salaries has increased over the original estimate.

Mr. THOMAS. We are putting it up to you as a direct question. What is the answer?

Mr. CLARK. It can be done.

Mr. THOMAS. Do you think it ought to be done?

Mr. CLARK. I am doubtful whether it should be done, but it can be done.

Mr. THOMAS. Why are you doubtful?

Mr. CLARK. Well, I am afraid because of the activity in most of those offices, and we have been watching that very closely. Wherever the average number of daily contacts shows a decrease, we have been closing those offices out. But they serve a purpose for the veterans in these communities, and to take that service away from them at one full swoop I am afraid would bring a reaction as well as an additional load on the regional offices which might be hard to take care of.

Mr. THOMAS. I am talking about the contact service. Why cannot the contact service be drastically reduced?

Mr. CLARK. Someone has to do the work.

Mr. THOMAS. Why cannot it be reduced on the theory that the veterans know what to do and where to go? If they do not know, they can certainly write letters.

Mr. CLARK. Well, writing letters takes personnel. If you can avoid letter writing by having the veteran make a personal contact with the office, I think it is a saving. For instance, in our New York regional office, my last figure shows we still have slightly over 4,000 contacts per day in that office.

Mr. THOMAS. Most of these agencies show a decrease. For example, administration services shows a decrease of 158 persons; finance, a decrease of 396; utilities, supplies, and real estate, 206; claims program, a reduction of 237; vocational rehabilitation and educational program, 1,111. Then the loan guarantee program is increased 824 people.

READJUSTMENT ALLOWANCE PROGRAM

What is this program No. 7000 where you have an increase of 11? Mr. KELSEY. That is the readjustment allowance program, providing payments for unemployed or self-employed. The money for 11 man years is required in order to cover the cost of salaries of agents in the various States which we must retain on the rolls under the law, unless the law is changed so that we can have one readjustment agent handle two or more States.

Mr. THOMAS. That is in your State headquarters, where you want to consolidate them?

Mr. KELSEY. That is right.

Mr. THOMAS. There certainly ought not to be an increase of 11 jobs. Are you providing for an increase in jobs, an increase in pay, or what?

Mr. KELSEY. That provides the money for those men who must be kept on the rolls pending the passage of the appropriation act by the Congress.

Mr. THOMAS. If you translate that into terms of increase in pay, it is about a 10 percent increase in pay. You are not going to put any more men on the payroll; are you?

Mr. KELSEY. No; but the amount of money provided for in the estimate submitted to your committee for the 1951 fiscal year was predicated upon the fact that a certain number of those men would be off the rolls all during the fiscal year.

Mr. THOMAS. We based it on the fact that that amendment would go through?

Mr. KELSEY. Yes, sir.

VETERANS' EDUCATION APPEALS BOARD

Mr. THOMAS. What about the increase of five jobs in the executive administration program, where you already have 1,057? Those are all in the District of Columbia; are they not?

Mr. MOORE. That is correct.

Mr. CLARK. That is for the Veterans' Education Appeals Board. Mr. THOMAS. You mean you are giving five more to the Appeals Board?

Mr. CLARK. Yes, sir.

LEGAL DIVISION

What about the Legal Division? I notice you have an increase there. How much, exactly, do you have for the Legal Division, Solicitor's Office-$100,000?

Mr. MOORE. That is to bring the salaries to the average pay, with no increase in personnel.

Mr. THOMAS. Why the increase in pay to the tune of $100,000? They all got that increase in pay last year.

Mr. MOORE. But our estimates were made before that pay bill went into effect.

Mr. THOMAS. How much of this is for within-grade promotions? Mr. MOORE. Not very much-simply to bring them to the average salary now being paid. The within-grade promotions are already taken care of.

Mr. THOMAS. Is there any increase in salaries in here?

Mr. MOORE. No, sir. That is the amount we did not have in the budget sent up by the President, to bring the pay up to the proper level.

TRAVEL

Mr. THOMAS. What about your travel item, where you have an increase of $159,000? That is for employees, and there is not any in there for beneficiaries. Why the increase for employees' travel?

Mr. KELSEY. Part of that is for the increase in the loan guaranty group activities.

Mr. THOMAS. How much of this $159,538 is for your Loan Guaranty Section?

Mr. KELSEY. $139,538.

TRAVEL FOR THE VETERANS' EDUCATION APPEALS BOARD

Mr. THOMAS. For what is the other $20,000?

Mr. MOORE. That is for the Veterans' Education Appeals Board which was just mentioned.

Mr. THOMAS. That $20,000 is for what purpose now?

It

Mr. MOORE. That is for travel for members of the Board. entails certain travel on the Board members to go to the various districts.

Mr. THOMAS. To what board are you referring some new board set up under the Taft-Teague bill?

Mr. CLARK. That is right-the Veterans' Education Appeals Board.

Mr. THOMAS. What is the Veterans' Education Appeals Board?

Mr. STIRLING. Under Public Law 610, which is the Taft-Teague bill, that law sets up a board of appeals composed of three members, independent of the Veterans' Administration, to which these schools who object to the rates established by the Veterans' Administration may appeal. The Veterans' Administration, under the law, is required to supply the personnel and the money. Is that not true?

Mr. CLARK. That is true.

Mr. THOMAS. Is their decision final?

Mr. STIRLING. Their decision is final so far as the Government is concerned.

Mr. THOMAS. There are only three members, and you are setting up $20,000 travel expense for them?

Mr. STIRLING. I am not familiar with this estimate, but I take it that board will have to travel to the different sections of the country to hear these appeals rather than to hear them all here in Washington. Mr. CLARK. They will have to take clerks and hearing people with them.

Mr. STIRLING. Yes, sir.

Mr. THOMAS. Did the Bureau of the Budget take that item of $20,000 for travel into account?

Mr. MOORE. Yes, sir. They took everything in here into account.

GRANTS, SUBSIDIES, AND CONTRIBUTIONS TO STATES

Mr. THOMAS. What about the item for grants, subsidies, and contributions, where you have an increase of $2,330,000?

Mr. MOORE. That is the item Mr. Stirling was just speaking of. That is contributions to the States-State aid.

Mr. THOMAS. For what purpose?

Mr. STIRLING. Under Public Law 610.

Mr. THOMAS. That is the Taft-Teague Act?

Mr. STIRLING. Yes, sir. Section 4 of that act reads:

The third sentence of section 3 of Public Law No. 16, Seventy-eighth Congress, as amended, is hereby amended by adding before the period at the end thereof a comma and the following: "or (4) rendering necessary services in ascertaining the qualifications of proprietary institutions for furnishing education and training under the provisions of part VIII of such regulation and in the supervision of such institutions."

Mr. THOMAS. Did not the State agencies already have that duty? Mr. STIRLING. They have that duty with reference to Public Law 679, training on the job, but they do not have or claim they do not have the personnel in order to do this job. Under Public Law 610, the Taft-Teague bill, certain standards for schools operated for profit were set up.

Mr. THOMAS. How did you arrive at the figure of $2,330,000 for State expenses?

Mr. STIRLING. That figure was arrived at as follows: It is estimated that 10,000 proprietary institutions will be inspected. One inspector will be required for each 40 proprietary institutions. Thus, 250 inspectors will be needed. In addition, 50 administrative and supervisory officials will be required, and there should be 175 stenographic and clerical workers to provide necessary services for these officials.

Based on information concerning operations under Public Law 679, Seventy-ninth Congress, it is estimated that the following average annual salaries will have to be paid: supervisory officials, $6,000; inspectors, $5,000; and clerks, $2,400. Travel funds for supervisory officials and inspectors will average $1,200,000. Application of these salary and travel rates to the indicated number of employees gives $2,330,000.

Mr. THOMAS. Does the Veterans' Administration have any authority as to the number of employees these State inspecting agencies can appoint?

Mr. STIRLING. We enter into an agreement with each State, and a letter is now in process to go out to each governor stating the provisions of Public Law 610 and asking them to submit their estimates. Mr. THOMAS. What estimates have they sent in?

Mr. STIRLING. No estimates have come in as yet.

Mr. THOMAS. In the final analysis, the Veterans' Administration can control this figure?

Mr. STIRLING. We believe so.

Mr. THOMAS. It is not mandatory that you give them what they request?

Mr. STIRLING. No, sir.

Mr. THOMAS. And regardless of what the State agencies are going to request, your figure for fiscal year 1951 is $2,330,000 to reimburse the State agencies for this inspection service?

Mr. STIRLING. That is correct.

Mr. THOMAS. You have no control over their findings?

Mr. STIRLING. No, sir. Their findings are final.

Mr. THOMAS. And are binding upon you?

Mr. STIRLING. Are binding upon the Veterans' Administration.

Mr. THOMAS. That is what the law is today; is it not? If they approve an agency, whether it is good, bad, or indifferent, you have to set it up in business?

Mr. STIRLING. That is correct.

Mr. THOMAS. What does this section add, other than the administrative cost, which you have not borne heretofore?

Mr. STIRLING. Nothing, except the new law does set up certain standards, but the law specifically holds the State approving agency responsible for the final decision. This law is different from Public Law 679 and Public Law 377 having to do, respectively, with training on the job and institutional and farm training. Under both of those

laws, we do have some control which we do not have under Public Law 610.

REFUNDS, AWARDS, AND INDEMNITIES

Mr. THOMAS. What is item 13, "Refunds, awards, and indemnities," where you have an increase of $775,000?

Mr. MOORE. That $775,000 is the total increase. There is no change in that item of refunds, awards, and indemnities. That is $15,000 as submitted and $15,000 in the revised request.

Mr. THOMAS. The sum of $775,000 is for the No. 7000 programs? Mr. MOORE. Yes, sir.

UTILIZATION OF GENERAL SERVICES SUPPLY FACILITIES

Mr. ANDREWS. Do you use the facilities of the General Services Administration in the purchasing of common-use goods?

Mr. CLARK. We do, Mr. Andrews. We have gone along with that whole program of the General Services Administration as fast as they have developed those programs.

Mr. ANDREWS. Can you buy goods cheaper from them than you can buy it yourself?

Mr. CLARK. Some items, I think, show savings, although the program is not old enough to make any actual or factual determination about how it will work out in the long run. I feel sure it will represent savings.

Mr. ANDREWS. Are you planning to increase your purchases through General Services?

Mr. CLARK. We are.

HOSPITAL POLICY

Mr. PHILLIPS. I have no questions. My only comment would be that I am more favorable toward the request for money to operate hospitals than I am toward the policy by which it is being applied.

The Veterans' Administration has not consulted the Census Bureau on where the veterans are now. California now has 10,570,000 people and is the second largest State in the United States; yet, you still think the veterans are back in the Middle West or in the South somewhere, where you are building hospitals. We have tubercular veterans walking the streets, and we have NP veterans in county hospitals, State hospitals, jails, and everywhere else, and you close up our hospitals in California, especially Birmingham and Corona. Both of them were available to you with a little readjustment in your placing of the veterans and would have given you adequate hospital facilities.

I would like to ask-not to intrude that question into the discussion of whether you ought to have $9,000,000, but frankly because it affects all of us in California-how soon you are going to make a little investigation of where the veterans are right now?

Mr. CLARK. Congressman, right now our construction program is pretty much fixed and pretty much controlled. In the construction. of hospitals which is going on at the present time, each of those institutions was approved sometime in the past, as well as the location, the type of hospital, and the number of beds, and there is not anything we could do about shifting one of those hospitals under construction