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RELIEF OF DISBURSING OFFICERS

APRIL 23, 1935.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed

Mr. COCHRAN, from the Committee on Expenditures in the Executive Department, submitted the following

REPORT

[To accompany H. R. 151]

The Committee on Expenditures in the executive departments having had under consideration H. R. 151, report the bill back to the House with the recommendation that it do pass.

This bill provides for the relief of disbursing officers of the Government for overpayment of wages on Civil Works Administration projects and waiving recovery of such overpayments where no fraud is involved.

Early in November 1933, the Civil Works Administration requested the Administrator of Veterans' Affairs to utilize the services of the corps of disbursing officers of the Veterans' Administration throughout the United States to effect disbursements of Civil Works Administration funds. It was arranged that all payments would be made by check. The organization of the disbursing units was accomplished promptly and it was possible on Saturday, November 25, 1933, to place in the hands of employees on Civil Works projects, checks covering wages earned during the week.

During the period November 25, 1933, to March 31, 1934, nearly 60,000,000 individual payments were made to persons furnishing direct labor on Civil Works projects at an hourly wage. These payments were made by some 4,000 assistant disbursing officers assigned at various points throughout the country and were largely based upon time records maintained by upwards of 10,000 individual timekeepers attached to the different projects. Approximately $720,000,000 was disbursed for wages.

Pursuant to the prescribed accounting procedure, the pay rolls were forwarded promptly after payment, to the auditor attached to the State civil works headquarters for an independent administrative examination. Where this examination disclosed overpayments, underpayments, or other discrepancies, an exception slip was prepared

and transmitted to the local civil works administration with instructions to effect adjustment on a subsequent pay roll.

Generally, the overpayments were traceable to one of the following causes: Error in computation, error in stating wage rate, error in reporting time, error in transferring time data to pay roll, payment made for time in excess of the allowed maximum work week.

When the major activities of the Civil Works Administration were terminated on March 31, 1934, there were outstanding a large number of these overpayments which could not be collected because the persons in arrears were no longer on the pay roll. The highest average wage was less than $16 per week and the average overpayment probably does not exceed a couple of dollars. The difficulties in focating the men overpaid would be almost insurmountable and even should they be located, recovery could be had in a negligible number of cases, inasmuch as great numbers of former Civil Works employees are now recipients of public relief. The net result of attempting recovery would be to impose an additional cost on the Federal Government and would involve the harassment of thousands of blameless citizens who are struggling to rehabilitate themselves and who, in all probability, would be unable to reimburse for any overpayment.

Considering the magnitude of the Civil Works operations, the pressure under which the clerical forces worked to avoid delay in payment of wages, the number of persons engaged on timekeeping, payroll preparation and check issuance, the short time afforded for the selection of personnel and the issuance of procedural instructions, it is apparent that some degree of error could not be avoided.

The Comptroller General in a letter to Mr. Hopkins under date of May 7, 1934, reviewed the situation along that line and recommended that the bill be passed relieving the disbursing agents, and the Comptroller General submitted the bill which your committee reports.

The representative of the Comptroller General's Office, Mr. Frank L. Yates, and Mr. H. W. Breining, representing the Veterans' Administration, appeared before the committee and urged favorable action. on the legislation. A letter from the Comptroller General to Mr. Hopkins on the subject follows:

Hon. HARRY L. HOPKINS,

COMPTROLLER GENERAL OF THE UNITED STATES,
Washington, May 7, 1934.

Administrator Federal Civil Works Administration.

MY DEAR MR. HOPKINS: I return herewith the papers left with this office by Mr. Corrington Gil, one of your assistants, for consideration of a proposed bill for the waiving of recovery of overpayments to persons engaged on projects under Federal Civil Works Administration, except in cases of manifest fraud.

In view of the haste that appears to have attended the inauguration of the Civil Works program, there were, in all probability, numerous pay-roll errors resulting in over and otherwise irregular payments; and in view of the nature of the program and those employed, there would likely be little chance for paying officers to adjust their accounts through now, accomplishing recovery from those so overpaid.

Normally, administration must be such as to render pay-roll errors negligible, and procedure should be such as to make possible adjustment of all such errors in connection with the next payment. It is appreciated, however, that in the prosecution of the Civil Works program employment was frequently for but a short period with little opportunity to adjust errors when once made.

Then too, there appears for consideration the apparent object of the program and the fact that employment was not always based upon a Government need, but rather upon a purpose to place unemployed in an employed or at least a pay

roll status, and thereby, among other things, increase their purchasing power. Viewed from such angle there would appear need for less concern as to exact amounts paid or as to whether full-time service was in all instances actually rendered, no fraud appearing.

As matters stand, these erroneous payments will, as a result of audit action, become disallowances in the paying officers' accounts and be for recovery accordingly. Your proposal, however, goes only to waiver of recovery from the one who benefited by the overpayment while the really serious matter is the unsatisfactory condition of the paying officer's account and his liability accordingly.

While there seems no valid reason why anyone benefiting financially as a result of a pay-roll error should not promptly refund the overage, in view of the little opportunity afforded accountable officers to protect themselves in connection with pay-roll errors and considering the object of the program and expenditures thereunder, there does seem reason for recommending that the Congress by appropriate legislation authorize this office to allow credit in their account for overpayments not the result of their own negligence, where chance of recovery seems slight, and in the absence of anything suggesting fraud. And in such connection, in view of the probable difficulty of now even locating the payees, to say nothing of effecting recovery, there would seem some justification for wiping the slate clean; that is, authorizing not only credit in the accounts but waiver of collection of averages-in the absence of fraud. In view of all the circumstances this Office would be disposed to report favorably on a proposal for legislation accordingly. Legislation to accomplish such result should be in substance as follows:

"That the Comptroller General of the United States is hereby authorized and directed to allow credit in the accounts of disbursing officers for any overpayment of wages heretofore made to or on behalf of any person for services rendered in connection with any project under the Federal Civil Works Administration, nothing to suggest fraud appearing, and in such cases where credit is allowed in the accounts of the disbursing officer under this act no recovery shall be required from the person receiving the overpayment."

Sincerely yours,

J. R. MCCARL, Comptroller General of the United States.

Both Mr. Yates and Mr. Breining made it plain to the committee that this was not a bill for the relief of bonding companies, but was a bill for the relief of Government agents who were absolutely innocent of wrongdoing and were simply following out the instructions of their superiors.

The Federal Emergency Relief Administration comments as follows: FEDERAL EMERGENCY RELIEF ADMINISTRATION, Washington, D. C., April 22, 1935.

Hon. JOHN J. COCHRAN,

Chairman Committee on Expenditures,

Washington, D. C.

MY DEAR MR. COCHRAN: Reference is made to your request for an estimate of the total amount of Civil Works Administration pay-roll overpayments made by the disbursing officers for the Civil Works Administration.

A study has been completed of all the exceptions taken by the General Accounting Office to date in connection with the audit of the disbursing officers' accounts, and it was found that out of $140,000,000 paid out during the period under study, exceptions for all reasons totaled $109,311.30. Approximately 40 percent of this amount has already been cleared, and it is expected that the balance will eventually be cleared, with the exception of those items representing overpayments and they will not aggregate an amount of more than one-tenth of 1 percent of the total expenditures. As the total pay-roll expenditures Amounted to approximately $750,000,000 for the entire Civil Works program, the amount of uncleared exceptions representing overpayments would be approximately $750,000, and it is confidently expected by this Administration that the final amount will be less than that.

Very truly yours,

CORRINGTON GILL, Assistant Administrator.

VIEWS OF MR. CARPENTER

Having reserved and been granted the right to file a minority report by the committee in regard to H. R. 151, I take advantage of this right to do so, and hereby express my opposition to this bill.

While no one wishes to penalize any one for mistakes they do not make and for which they are not responsible, yet to pass such a bill providing

That the Comptroller General of the United States be, and he is hereby, authorized and directed to allow credit in the accounts of disbursing officers for any overpayment of wages heretofore made to or on behalf of any person for services rendered in connection with any project under the Federal Civil Works Administration, nothing to suggest fraud appearing, and in such cases where credit is allowed in the accounts of the disbursing officer under this Act no recovery shall be required from the person receiving the overpayment.

would be the placing by Congress of their stamp of approval on a loose and wasteful method of handling public funds.

It would in addition thereto be the starting of bad precedent and an excuse for avoiding responsibility in regard to the handling and distributing of public funds in the future, that might ultimately lead to a public scandal.

One of the reasons given by Frank L. Yates of the Comptroller General's office in favor of this bill is

that if the relief proposed by the bill is granted, it will undoubtedly save the General Accounting Office considerable money in the auditing of pay rolls, most of which has been completed by now. (See hearings, p. 4.)

I do not understand why the pay rolls should not be audited, and if they have been, then I fail to see how there would be any saving in this respect by the passing of this bill.

Another objection to this bill is that there is no certainty as to the amount involved. According to one statement, and this was based upon a guess, the errors amounted to one-tenth of 1 percent of $400,000,000:

Mr. YATES. My recollection is that the amount allocated to Civil Works was $400,000,000, and the errors would probably run, making a guess, as much as onetenth of 1 percent. (See hearings, p. 4.)

Mr. YATES. Yes, to some extent; but just what the figure is I cannot say. Actually in the General Accounting Office we have postponed following up these small balances until we can ascertain what action Congress might take on this bill. (See hearings, p. 5.)

and other statements were made estimating the amount involved at $700,000 and again at $750,000:

Mr. CRAVENS. How much does it cost?

The CHAIRMAN. It would cost one-tenth of 1 percent of the amount paid out. Mr. Yates says there was about $400,000,000 and this statement here says $700,000,000 paid out. It is either $400,000 or $720,000. (See hearings, p. 6.) The payment is about $2 to an individual and $750,000 is involved. (See Hearings, p. 9.)

If there is no more certainty in regard to the amount involved than was developed at this hearing, it might develop that these errors amounted up in the millions, which would result, according to the terms of this bill, in an outright gift to someone or more.

While I am opposed to this bill, if it is passed, in my judgment, it should be amended at least in three respects: