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PROVISIONS OF HOUSE BILL

There are about 27 lines in this bill devoted to the Federal Communications Commission as the bill passed the House. It seems to provide a total of $6,525,000, which is in excess of the appropriation last

year, but which is less than the budget. The committee now extends to you, Mr. Coy, the opportunity of explaining to the committee why it is that the Federal Communications Commission feels that the appropriation made by the House is not sufficient.

The Federal Communications Commission doubtless is aware of the fact that the Senate is closely scrutinizing all appropriations, so I am hopeful that in the examination of this bill, we shall be able to examine every item of your expenditure so that, when the committee reports, it will have all the facts behind it.

We will begin by inserting in the record at this point your letter to the committee. (The letter referred to is as follows:)

APRIL 16, 1949. Hon. JOSEPH C. O'MAHONEY,

United States Senate, Washington, D. O. DEAR SENATOR O'MAHONEY: I am promptly taking advantage of the opportunity given by your letter of April 11 to request that the Senate Committee on Appropriations increase the 1950 allowance for the Commission over that in the bill as passed by the House and delete the general provision in the House bill limiting the number of employees engaged in personnel work. The Commission would also like to have a hearing.

The specific changes requested in the bill as reported to the House are as follows:

Line 6, page 16, change "$6,525,000" to "$6,633,000."
Line 18, page 63, delete section 111.

The Commission is becoming alarmed by the ever-widening divergence between its increasing responsibilities and its diminishing appropriations. Because of the direct effect of this divergence upon almost every phase of communication the Commission is of the opinion that a hearing is very important, even though the amount involved is relatively small.

Although all the implications of the divergence cannot be covered here, sufficient high lights can be given to illustrate the seriousness of the problem. In the first place the reduction in staff is substantial for a small agency. The Commission would go from a peak employment of 1,385 for 1949 to about 1,320 employees for 1950 under the bill as passed by the House. Against this reduction are mounting problems and mounting work loads in many fields of activity. In the common-carrier field with its $10,000,000,000 investment and $3,000,000,000 annual revenues the problems are becoming critical. There is a growing inconsistency between interstate and intrastate long-distance telephone rates. Numerous States are in litigation about their telephone rates and are in need of help. The Commission has made progress in collecting facts for its telephone regulation but lack of adequate staff has made it impossible to perform the very necessary job of keeping portions of the data collected in the 1935 telephone investigation up to date. The Commission must, of necessity, make a thorough study of depreciation rates, license contract payments, prices paid for equipment, etc., in preparation for any proposals to revise long-distance charges.

Western Union is in difficulty. The merger did not solve the troubles of the domestic telegraph industry. Successive rate increases have not solved them. Western Union depends upon its $72,000,000 modernization program to make it competitive with the telephone company and the mails. A revision of its rate structure is a vital need.

International telegraph carriers are also offering increasingly complex problems. Their rate structures are unsatisfactory, as is also the assignment of radiotelegraph circuits developed under wartime conditions and the distribution of out-bound traffic by the land-line carrier monopoly among the competing international carriers. The question of merger in the international field will have to be reopened soon. The Senate Committee on Interstate and Foreign Commerce has just recently named a subcommittee to consider this problem, among others. I shall personally, together with Commissioner Walker and a number of the staff, spend the late spring and part of the summer in Paris working on the international problems. These high lights of some of our common-carrier problems will, I believe, raise the question in your mind as they have in mine as to how we are to meet a greatly increased work load with a sharply reduced staff.

In the safety and special services, the part of our activities covering such uses of radio as aviation, marine, police, railroad, dozens of other industrial uses, amateur, and citizens radio-our plight can be indicated with three sets of figures: In 1910 there were 9,896 authorized safety and special stations exclusire of amateur and citizens radio; as of June 30, 1918, there were 47,366; and we expect that there will be 89,945 by June 30, 1950. To a greater extent than might be realized at first those figures do indicate the Commission's problems in finding spectrum space for the new services, in providing engineering standards, in testing equipment, in coming to agreements with other nations, providing protection from interference for the frequencies utilized in this service, in licensing the actual stations, and in doing the many other things that fall to the regulatory agency trying to make provision for mushrooming radio services.

The picture in the broadcasting services is very similar to that in the safety and special services. In 1940, there were 817 authorized AM, FM, and television stations; on June 30, 1948, there were 3,057; it is estimated that there will be 3,829 by the end of fiscal year 1950. As of April 1, 1949, there were pending S62 applications for new stations in the broadcast field.

In spite of the urgency for increased activity in the three areas discussed above, in its budget request the Commission has asked for the largest increase for its laboratory work—it has requested that the personnel in this unit be increased from 16 to 25. The laboratory is so fundamental to the Commission's entire program that it cannot be held back longer. Even this small laboratory holds the keys to some of the major developments in radio. Furthermore, it holds the keys to our being able to handle much more safety and special work load without commensurate increases in staff, and it holds the keys to many of our policing problems.

The "policing” part of our work is the part dealing with keeping stations on their assigned frequencies after they are licensed and doing the many other things designed to keep the radio spectrum usable. This work is handled by the Field Engineering and Monitoring Division, which also licenses operators, inspects radio equipment on ships, and performs similar related tasks. In spite of the obviously pyramiding responsibility of this Division we have reluctantly provided for a decrease in its staff for 1950 in order to concentrate on work which we felt had even higher priority, work such as that in connection with the laboratory,

The Commission would also like to point out that the general provision under section 111 that personnel employees are not to exceed a ratio of 1 to 125 employees of the agency as a whole has serious implications that tend to defeat the purpose of the section. This Commission can speak with some authority on making reductions in personnel offices because in a little more than a year it has reduced its staff in the Personnel Office from 21 to 15 and it proposes to reduce it to 13 by July 1.

We have found that reductions can best be made when they are preceded by intensive work to increase efficiencies. By increased efficiency through better procedures a gradual reduction is made possible without disrupting the personnel program. In fact, in our case we feel the personnel program has been considerably strengthened. On the other hand, a drastic reduction in the personnel force can be such a disruption that it can ruin a personnel program. Another factor is that the bill as passed by the House makes a substantial cut in the Civil Service Commission. In the past cuts in the Civil Service Commission appropriation have been met by transferring more of the personnel work to the agency. Without commenting on whether or not this is advisable we do want to point out that such a transfer inevitably increases the staff requirements of the agency. For these reasons we request the Senate to delete section 111 from the House bill.

Although I don't want to put myself in the position of arguing with the House Appropriations Committee's report, I do not think it is necessary to state my disagreement with several of the statements in the report because those statements are misleading, in my opinion, and they may affect your actions. In the first place, the report states that the recommended amount of $6,525,000 is an increase of $175,000 over the current appropriation. This method of computation does not take into consideration the fact that the President bas requested a supplemental of $367,000 for 1949 to cover the pay increases provided by Public Law 900. When this supplemental is taken into consideration, the recommended figures are a cut of $192.000 below this year.

The second point with which I disagree is that because the Commission was not staffed to its full complement on February 21 there is indication of a considerable savings in the pay roll of the Commission during the current fiscal year, and that, assuming a similar situation existed throughout the next fiscal year, a rather substantial reduction could be made in the 1950 estimates. I should like to point out that there is inevitably a difference between the actual employment at any one time and the number of positions authorized for the entire year. At no time would all positions be filled ; as a matter of fact, there is never sufficient money to fill all positions. This is true by definition of terms and it is true of all agencies. In the case of the Commission, the employment had dropped under the peak reached earlier in the year as a result of a plan of the Bureau of the Budget and this Commission to make a systematic reduction of staff to the level provided in the 1950 budget. This program was reflected in both the amount the Budget Bureau recommended for our Public Law 900 surplemental and in the Budget Bureau personnel ceilings. As a matter of fact, even though we had wanted to we could not have staffed to the 1,407 positions mentioned by the House committee hecause the Budget Bureau personnel ceiling would have prevented it. I am not challenging the action of the Budget Bureau because I am in agreement with them. When a reduction is in order, it is good sense to let turn-over take care of it and thereby avoid the human misery and weakening of employee morale by forcing lay-offs.

The danger in following the logic of the House committee is easily shown. In its report the House committee states that it has included a provision excepting the appropriations from the Apportionment Act so that the Commission could “spend funds without regard to apportionment during the first part of the next fiscal year

*.” If the Commission were to make an unequal apportionment and spend its funds heavily in the first part of the year, when it went to the Congress the next year it would be in a position of having considerably fewer employees on its rolls than it had during the peak during the year. The House could apply the same logic that it has applied this year and make another reduction. In fact, if the logic is good this year, it would also be good for all future years and theoretically the Commission could eventually be wiped out by this logic.

The committee also gave as its opinion that the "Legal and Administrative Divisions of this agency are overstaffed and that some reduction should be made in these activities. It is, of course, impossible to say that the committee is wrong because this is a matter of opinion. The Commission feels that the figures included in the 1950 budget are the minimum. There is some evidence to support the Commission's conclusion in the fact that the function or activity "General administration" was given the greatest reduction in the 1950 budget, both percentagewise and in absolute numbers. Out of a total decrease of 25 positions, 18 were in general administration. This reduction was made in spite of the fact that the rapidly increasing number of radio stations of all types causes increases in the administrative work load. The Bureau of Law was reduced in the budget by two positions.

In conclusion, I should like to emphasize that even though $108,000 is not a large amount of money, it is of very great importance to this Commission in its current battle to handle an immense work load with very limited funds. Consequently, any favorable action that the Senate Committee on Appropriations can take will be of assistance in meeting the responsibilities of the Commission. Furthermore, the Commission would appreciate having a hearing so that we may tell you in more detail what we believe are the implications of constricting budget limitations upon this Commission.

Inasmuch as I am to be out of the city on May 5 and from May 13 on, the Commission will find it much more convenient if you could grant us a hearing before May 13 on any day except May 5. Sincerely yours,

WAYNE Coy, Chairman.

Senator O'MAHONEY. Mr. Coy, you are undoubtedly here with a prepared statement?

Mr. Cor. No, I have not a prepared statement. I would like to say some things about the House bill, if I may.

Senator O'MAHONEY. Very good, sir.

NO ACTUAL INCREASE IN HOUSE ALLOWANCE

Mr. Coy. First, I would like to say that what seems to be an increase allowed by the House of $175,000 is, in fact, a decrease of funds. The reason for that is that during the current fiscal year, the pay act gave an increase to our personnel for which we have a supplemental appropriation now pending to meet those increases in pay in the amount of $367,000. So, as a matter of fact, instead of $6,350,000 being available for this year, if we are to assume the passage of the supplemental appropriation to finance the Pay Act, our money available for this year will be $6,717,000.

SALARIES AND EXPENSES

EFFECT OF PAY INCREASE

Senator OʻMAHONEY. Let us not talk about any supplemental appropriation because that, I think, tends to becloud the issue here. În order that we may have this perfectly clear, suppose you tell us now the total amount of increased expenditures made inevitable by the incrased pay act, providing you have the same number of employees.

Mr. Coy. For this year?

Senator O'MAHONEY. Yes; for this fiscal year. I mean the year for which we are appropriating. In other words, I want to take this amount of $6,525,000 and find out how much of that must be allocated to the increased pay. Then, by subtracting that, we will know exactly how much you have available to carry on the functions which you were performing before and any new functions or duties that you may have to perform.

Mr. HoLL. That amount is $142,431 in the 1950 budget.

NUMBER OF EMPLOYEES POSSIBLE UNDER BILL

Senator O’MAHONEY. Would that account for the 1,349 employees, the number which the House report says were on the rolls on February 21

Mr. Coy. That would have accounted for the number which we had requested for the fiscal year 1950 of the Congress would it not?

Mr. Holl. That would provide for an average employment of 1,348.7. That might be stated as 1,348.7 man-years.

Senator OʻMAHONEY. That is substantially 1,349 employees as stated by the House.

Now, do I understand you to say that the amount of $442,431 is the total amount of the increased pay, not the total amount of pay, but the total amount of increase?

Mr. HOLL. Yes.

TOTAL SALARIES FOR PERSONNEL

Senator O’MAHONEY. What is the total amount of pay of these 1,349 or 1,348.7 man-years?

Mr. Coy. That is $5,973,810.

Senator O'MAHONEY. So that if we take the total appropriation allowed by the House which is $6,525,000, and subtract from that $12,431, we shall have the total appropriation which, under the House bill, you will have for all your functions, exclusive of the increased pay?

Mr. Coy. That is correct.

If you were to compare that figure with the total amount of funds we had available for this year, again without regard to the Pay Act, you can see that instead of the $175,000 which they say they have increased us, it is a decrease of $ 192,000 below the current year.

VACANT POSITIONS

Senator OʻMATIONEY. Now, going to the House report, there were 58 vacant positions in the Commission's establishment on February 21. What was the reason for that?

Mr. Coy. The reason for that is the normal reason. The number of positions which you have in the budget cannot all be filled because of the lapse which is applied in the amount of money which you have available. While we had in the budget for this year 1,407 positions, the average employment for the year could have been only 1,386.4 even if we got a supplemental to cover all the cost of Public Law 900. The number of positions vacant should be considered against the average employment rather than against the total number of positions.

More than that, by the time we were before the House committee, we had already been advised of what the President's budget was; that is, $6,633,000, which was, in effect, a $84,000 reduction below the funds available for this year; and we did not want to be in the position of having to drastically cut off some people at the end of the fiscal year. We were moving toward the employment that could be afforded within the President's budget.

LESS MONEY AVAILABLE

Senator O'MAHONEY. Will you explain what you mean when you say that the budget estimate was less than the funds available for this year, meaning, I take it, the fiscal year 1949!

Mr. Cor. I refer to the fiscal year 1949. The President's budget of $6,633,000 was less than the funds we assumed we were going to have available this year by $84,000.

Senator OʻMAHONLY. But the appropriaion last year was $6,310,000, and then there was the amount of $10,000 additional.

Mr. Coy. The total was $6,350,000.

PROVISIONS OF SUPPLEMENTAL REQUEST

You will not let me confuse you, but I must refer again to the supplemental. We are requesting a supplemental appropriation to cover the Pay Act in the amount of $367,000 which will increase this year's total appropriation to $6,717,000. The President's 1950 budget

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