Can you tell us why the distinction? I do not quite understand. Mr. GOODWIN. We generally take the position that the States can spend only such money as we allocate to them. That is our feeling as far as we are concerned. Generally we will not finance a deficit that we did not approve. This would be in one respect at least, a deficit which had not been concurred in by us.

Now, for the second half, we are here before this committee requesting a supplementary for all States for the second half so that if that is approved, there will be no question about the New Jersey amount for the second half and it would be normal for that to replace the appropriation that came out of State money.

I would not at this moment like to give a complete and final answer on the New Jersey problem simply because the problem has not been specifically presented to us. I might be doing an injustice which I wouldn't want to do. I am merely talking of the principles under which we operate.

Mr. FERNANDEZ. Then, that principle, as I understand, is this: They would be entitled to reimbursement for expenditures going on now, because, although belatedly, Congress is making appropriation for the second half, or you assume that it will?

Mr. GOODWIN. Yes.

Mr. FERNANDEZ. Therefore, they are dipping into their own funds to some extent now, and are to be reimbursed from the appropriation that is being made?

Mr. GOODWIN. That is right.

Mr. FERNANDEZ. Following that theory if the Congress does not appropriate funds to take care of the second half, then would you say they would not be entitled to reimbursement?

Mr. GOODWIN. If they don't there is nothing we can do about it. Mr. FERNANDEZ. Isn't this the distinction? They cannot be reimbursed, even though they are entitled to it?

Mr. GOODWIN. That is a second question, whether or not they are entitled to it.

Mr. FERNANDEZ. As I understand your testimony, what you meant to say is that they could be reimbursed if there were money appropriated for the second half. Not having appropriated it for the first half, they could not be reimbursed for expenditures of State funds in the first half. That does not mean to say they were not entitled to it. Mr. GOODWIN. No; except that the principle is that we cannot make money available to one State without making it available to all other States on a comparable basis.

Mr. FERNANDEZ. I am not speaking of one State; I am speaking of all the States that had to do that to carry on.

Mr. GOODWIN. We would take a close look at that problem before making a final decision.

If we found, for instance, that all the States had incurred, say, a backlog, and that the Congress appropriated enough money to meet that problem generally, in the State, then we might be able to allocate some money to all States for that purpose.

Mr. FERNANDEZ. Your answer, then, was not based on the fact that they didn't have any notice that appropriations wouldn't be sufficient or anything of the sort?

Mr. GOODWIN. It is based principally on equitable treatment between the States.

Mr. BUSBEY. Will the gentleman yield?

Mr. FERNANDEZ. Very gladly.

Mr. BUSBEY. I might say I am thoroughly convinced by the number of telegrams I received last year, from the various Štates throughout the Nation, that they were on notice all right.

RECOGNITION OF INCREASES IN SALARY

Mr. FERNANDEZ. Now, then, Mr. Goodwin, if sufficient appropriations are made under the law you would recognize any increases in salary and they would be properly paid out of the appropriations?

Mr. GOODWIN. What we have requested here is funds and authority to meet the salary request for the fourth quarter of the year.

PURPOSE OF CONTINGENCY FUND

Mr. FERNANDEZ. This contingency fund was for the purpose, was it not, of taking care of increases in salary which were approved by your office?

Mr. GOODWIN. Originally it was, yes; and then that was changed last year.

Mr. FERNANDEZ. That contingency fund was established because the law required you to carry this load?

Mr. GOODWIN. The law requires the financing of this program by the Federal Government.

Mr. FERNANDEZ. Shouldn't the proper notice to the States of changes if there is to be a change, be by changes in the basic law? Wouldn't you think so?

Mr. GOODWIN. I have not thought of it in quite that way, Mr. Congressman. We had used that same point in another way and that was that we had felt that we ought to make restoration or we ought to ask the Congress to make restoration because the States had not had an opportunity to plan for this drastic change.

Mr. FERNANDEZ. Aren't they, in your opinion, entitled to look at the basic law and make their plans accordingly and isn't it our duty, so long as the basic law is not changed, to carry out the basic law and appropriate the money?

Mr. GOODWIN. Yes, I think it is.

Mr. FERNANDEZ. I think that is true. If there is to be a change in the basic law, wouldn't that be in order?

Mr. GOODWIN. The contingency portion is carried over from year to year.

Mr. FERNANDEZ. I am not talking about the contingency language. The contingency language merely provided for the contingency. The basic law says this program shall be paid for by the Federal Government and the State is entitled to look at that basic law and plan accordingly.

Mr. GOODWIN. That is true but it doesn't spell out just how it is to be done.

Mr. FERNANDEZ. The contingency fund is only one method of anticipating the problem in carrying out the basic law.

Mr. GOODWIN. That is right.

Mr. FERNANDEZ. On this budget request, after the budget finally did approve your request and sent it to Congress, it approved it with changes, did it?

Mr. GOODWIN. Yes. It approved what came up on the language which was for the fiscal year 1954. They went along with the change and restored what we had last year.

Now, the point that the chairman made a little while ago is that that is different from what the Bureau of the Budget approved in fiscal year 1955, about which the committee hasn't heard, yet. For fiscal year 1955, the language would permit the use of the contingency fund for any general changes. In other words, across-the-board changes. It would exclude the individual increments. In the Federal language, it would be within-grade changes or promotions.

ACTION TAKEN BY BUREAU OF THE BUDGET

Mr. FERNANDEZ. You are required to justify this $14,500,000, and the figure of $20,500,000, here. But first, you had to justify these requests before the Bureau of the Budget. Is $14,500,000 what you asked for before the Bureau of the Budget?

Mr. GOODWIN. We asked for $16,164,000 on the supplemental, before the Bureau of the Budget.

Mr. FERNANDEZ. And how much did you ask for in the other item? Mr. GOODWIN. On that one they approved the full amount.

Mr. FERNANDEZ. Do you mean after they reduced the first figure from 16 million to $14,500,000, they didn't notify you so that you could prepare to revise your figures and justify them here?

Mr. GOODWIN. We got the information last week.

Mr. FERNANDEZ. After you asked for it, but not before they sent the request down to the Congress?

Mr. GOODWIN. That's right.

Mr. FERNANDEZ. It seems to me the Bureau of the Budget ought to notify you when changes are made in requests so that you can have time to prepare and to change and justify your figures accordingly.

Mr. GOODWIN. It presents a real problem. We got caught on this problem very badly last year, Mr. Chairman. It was a day that you weren't here, but it was on the Mexican farm program when we got our markup from the Bureau of the Budget late one day, after working ourselves one day, and we were scheduled up here the following day. There were adjustments necessary as a result of the markup and we were unable to get our house in order to appear before the committee. We did appear before the committee, which was a mistake, and made a very poor showing. However, that does highlight our problem.

Mr. BUSBEY. You are certainly entitled to more time than you have apparently been allowed because of the way the Bureau of the Budget handles these matters.

Mr. FERNANDEZ. I think the committee appreciates your problem and what I am driving at is, I think the Bureau of the Budget ought to appreciate it, too, and cooperate.

That's all, Mr. Chairman.

EFFECT OF APPROPRIATING AMOUNT REQUESTED IN SUPPLEMENTAL ON

STATE EMPLOYMENT

Mr. BUSBEY. Mr. Goodwin, if the entire $14,500,000 was allowed by the Congress, would that permit the States to employ all the people that they had laid off because of the cuts that were made by the Congress in the bill last year?

Mr. GOODWIN. No. What will happen there, Mr. Chairman, is that they will be controlled on expansion that they can make in the States by the formula which we use in connection with the contingency fund. In other words, they will have to justify, on specific workload, any expansions that are made in personnel and, as you know, before they can qualify for contingency money, they will have to absorb an amount of 10 percent of the increase.

Now, in some States they may end up with as large a work force, or maybe a larger one, because the workload has increased to the point where it would be justified. It is double, you see, in general, what it was a year ago. In other States, the increase in personnel will be proportionately smaller.

Mr. BUSBEY. I hope you will forgive me for again referring to my native State of Illinois. I have been under the impression that Mr. Bernstein, who is the director of this program in the State of Illinois, has run as good a shop out there, and in as efficient manner as is done in any State in the United States.

Mr. GOODWIN. He has done a very good job, I am sure.

Mr. BUSBEY. Notwithstanding that fact, I still say that there was a certain reduction in force that could be made without jeopardizing or crippling the program in any way, shape, manner, or form.

It may be that the cut last year was a little too drastic. If it is proven that way, I assure you I will be the first to admit any part of the mistake that I made and do what is necessary to correct it. As strong principled as I am on certain things, I am not one to ever take the attitude that I am always right. I have been wrong on many occasions and I expect to be wrong on many more occasions, but whatever I do, I try to do in fairness to all according to what, at the time, is my best fair judgment.

I have had some talks with Mr. Bernstien, and I think he could have laid off some employees and, especially if we had not run into this situation of increased workload, could have carried forward an adequate program.

Mr. FERNANDEZ. Will the gentleman yield for a quotation from my old school copybook?

Mr. BUSBEY. I couldn't refuse to yield to my good friend from New Mexico under any circumstances.

Mr. FERNANDEZ. My copybook used to say, "Give me a man who never made a mistake, and I'll give you a man who never did anything."

Mr. BUSBEY. I come back at my critics in my district by telling them, "Show me the man who is never criticized, and I'll show you the man who never does anything."

Mr. GOODWIN. In connection with what you have just said, Mr. Chairman, I would like to say this, I felt at the time the cut was too drastic, and I still feel that it was. I think the situation we are up against is one where our problem, and the problem we are coming to

you with, today, and the one that needs emphasis, is the additional load that has grown out of the increased unemployment.

Mr. BUSBEY. I appreciate that, and it gives me a great deal of concern. Unfortunately we had no way of anticipating that, and had to go on the record. I don't think that your testimony before the committee last year anticipated this degree of unemployment that we are experiencing at the present time.

Mr. GOODWIN. That's right.

WEEKLY CLAIMS FILING

Mr. BUSBEY. Now, just one thing more. I notice the Bureau of the Budget's letter states:

This proposed supplemental appropriation is necessary to provide for increases in the claims workload and for the increased costs beginning April 1, for State salary increases and a return to weekly claims filing.

There is $1,272,300 for taking claims weekly from April 1 to June 30, 1954. Why is it necessary to take these claims weekly?

Mr. GOODWIN. There are two reasons why taking them weekly is better than biweekly. One is that it has some relationship to the incidence of fraud. If you have a man reporting to claim his benefits every week, it cuts down on the incidence of fraud.

Mr. BUSBEY. Before we leave that, how much has fraud increased because these claims filings have been on a weekly basis instead of biweekly?

Mr. GOODWIN. We have no objective measure of that, Mr. Busbey, at the moment. We have the informed judgment of the State administrators and they are almost 100 percent in agreement on this point.

Mr. BUSBEY. States like Minnesota and West Virginia have never been on a weekly basis; have they?

Mr. GOODWIN. There are a few States that have not been on a weekly basis. In that connection, the more populated States, the States where you have the high degree of urbanization, it seems to be more important in those areas than it is in the less populated States. Mr. BUSBEY. Has there been any more fraud in Minnesota and West Virginia, because they report biweekly instead of weekly?

Mr. GOODWIN. We do not have a controlled study on those States which would give us objective data on that. My feeling would be on the basis of the judgment of the State administrators, generally, that almost under any circumstances you will have less fraud with weekly reporting than you will with biweekly.

In some of the States, where fraud is not a major problem, the difference might be very slight, but my own judgment is that there are there would still be some difference.

Now, the other point is that biweekly reporting is objected to strenuously by the beneficiaries, themselves. They object to having to go 2 weeks until receipt of the check. That, of course, does not conform to the usual pattern of payment of industrial wages. Most of that is on a weekly basis, and a good deal of the objection is made to the biweekly reporting, on that basis. Those are the two principal reasons that the States generally do not like the biweekly reporting. There are a few exceptions.