COMMITTEE ON AGRICULTURE THOMAS S. FOLEY, Washington, Chairman W. R. POAGE, Texas, Vice Chairman JOSEPH P. VIGORITO, Pennsylvania JOHN BRECKINRIDGE, Kentucky JAMES WEAVER, Oregon ALVIN BALDUS, Wisconsin JOHN KREBS, California TOM HARKIN, Iowa JACK HIGHTOWER, Texas BERKLEY BEDELL, Iowa MATTHEW F. McHUGH, New York FLOYD J. FITHIAN, Indiana JOHN W. JENRETTE, JR., South Carolina NORMAN E. D'AMOURS, New Hampshire RAY THORNTON, Arkansas WILLIAM C. WAMPLER, Virginia Ranking Minority Member KEITH G. SEBELIUS, Kansas PAUL FINDLEY, Illinois CHARLES THONE, Nebraska STEVEN D. SYMMS, Idaho JAMES P. JOHNSON, Colorado EDWARD R. MADIGAN, Illinois PETER A. PEYSER, New York MARGARET M. HECKLER, Massachusetts JAMES M. JEFFORDS, Vermont RICHARD KELLY, Florida CHARLES E. GRASSLEY, Iowa TOM HAGEDORN, Minnesota W. HENSON MOORE, Louisiana PROFESSIONAL STAFF SUBCOMMITTEE ON CONSERVATION AND CREDIT W. R. POAGE, Texas E DE LA GARZA, Texas ALVIN BALDUS, Wisconsin FREDERICK W. RICHMOND, New York BERKLEY BEDELL, Iowa EDWARD R. MADIGAN, Illinois JAMES M. JEFFORDS, Vermont RICHARY KELLY, Florida COMMITTEE ON AGRICULTURE AND FORESTRY HERMAN E. TALMADGE, Georgia, Chairman CONTENTS Alvord, David, Office of the Governor of Idaho, Boise, Idaho__. Aspin, Hon. Les, Representative in Congress from the First District 195 Baldus, Hon. Alvin J., Representative in Congress from the Third 145 Boyt, James O., executive secretary, Midwest Water Resources Coun- 197 Carpenter, Cy, Minnesota Farmers Union, St. Paul, Minn.......... Cavanaugh, Gordon, executive director, Housing Assistance Council__ Dolbeare, Cushing, executive secretary, National Rural Housing Elliott, Frank B., Administrator, Farmers Home Administration, U.S. 207, 255, 320, 361 Farley, Jack, Kentucky Association of Homebuilders, Louisville, Ky__ Foster, John, Commissioner, Commission on Rural Water and National Demonstration Water Project, accompanied by Stan Zimmerman, National Demonstration Water Project---- Foster, Hon. John C., Georgia State Senator, Gainesville, Ga----- Frazier, Charles, director, Washington staff, National Farmers Orga- 165 Hansen, Oliver A., chairman, Agricultural Division, American Bankers Harbison, Robert, chairman, Cullman County, Ala., County Commis- Hart, John, president, National Association of Home Builders, ac- Hartmann, William, Jr., vice president, Land Improvement Contractors of America, Brookfield, Ill., accompanied by Michael E. Strother, Washington representative, Land Improvement Contractors of Hausler, Richard, assistant State regional representative, Appalachian Holmes, Hon. William, mayor, Marlin, Tex., representing National Independent Bankers Association of America, with covering letter Johnson, Reuben, director, Legislative Services, National Farmers Statement of—Continued Kirby, Harry C., president, Rural Home Builders Association of Pare Leahy, Hon. Patrick J., a U.S. Senator from Vermont.. Litton Ray, mayor, Roundrock, Tex., representing American Associa- Lowry, Daryl, master, Vermont Grange_ McIntyre, Hon. Thomas J., a U.S. Senator from New Hampshire_ Murray, William E., Legislative Specialist for Rural Area Develop- 78 319 163 190 101 228 Nestle, Mark H., Director, program evaluation staff, Farmers Home 230 Nolan, Hon. Richard, a Representative in Congress from the State of Oberstar, Hon. James L., a Representative in Congress from the State 411 412 Onweiler, Hon. William, Idaho State Representative, Boise, Idaho__-- 60 123 Scott, John W., master, National Grange_ Shelton, Thomas, vice president and general manager, Broiler Production Division, Perdue Farms, Inc., Salisbury, Md.. 157 192 Solem, James J., director, Office of Local and Urban Affairs, Minnesota 117 Sump, Alfred, member, Board of Supervisors, Page County, Iowa___. 100 191 Walker, William, Assistant Secretary for Rural Development, U.S. 204 Miscellaneous documents Iowa's First Area-Farm Water System, reprint of an article from 29 Waiting List-Water and Waste Disposal Grant Program of the Farmers Home Administration____ 96 Excerpts from interviews with farmers Eldon A. Johnson, Princeton, 156 Questions submitted to Farmers Home Administration by Hon. Bob 295 Question submitted to Environmental Protection Agency by Hon. Bob 316 Question submitted to Department of Housing and Urban Development by Hon. Bob Bergland 316 Questions submitted to Farmers Home Administration by Hon. Dick 395 FmHA MANAGEMENT CAPABILITY TUESDAY, JANUARY 27, 1976 U.S. SENATE, SUBCOMMITTEE ON RURAL DEVELOPMENT OF THE SUBCOMMITTEE ON CONSERVATION AND CREDIT OF THE Washington, D.C. The joint subcommittee met, pursuant to notice, in room 324, Russell Senate Office Building, Hon. Dick Clark, chairman, Subcommittee on Rural Development of the Committee on Agriculture and Forestry, and Hon. Bob Bergland, chairman, Subcommittee on Conservation and Credit of the Committee on Agriculture, presiding. Present: Senators Clark, Leahy, Curtis, and Dole, and Representatives Bergland, Poage, Baldus, English, Hightower, Bedell, Jeffords, and Kelly. STATEMENT OF HON. DICK CLARK, A U.S. SENATOR FROM IOWA Senator CLARK. The subcommittees will come to order. This is the first of 5 days of hearings on the Farmers Home Administration which the Subcommittee on Rural Development is going to be holding this week and next in cooperation with the House Subcommittee on Conservation and Credit. The first 3 days of hearings will be held here in the Senate and will be devoted to testimony from public witnesses. Next week, on Wednesday and Thursday, we will convene at the House Agriculture Committee to talk to representatives of the Farmers Home Administration, and to the GAO personnel who have helped us in our study of the Agency's operations. These are especially trying times for the Farmers Home Administration. Last week, as a result of an audit report from the Department, Senator Dole and I announced that Farmers Home Administration had overpaid an estimated $43 million to ineligible home buyers during the last 2 years. Earlier, the General Accounting Office reported that as a result of an archaic manner of handling housing accounts in local banks, both the Agency and the borrowers had paid unnecessary interest and subsidies of $18 million in fiscal 1974 alone. This kind of mismanagement is not pleasant to think about, especially at a time when we must also consider the fiscal 1977 budget for the Agency, but it obviously must be considered thoroughly. The President's budget slashes programs past the bone-particularly in the Department of Agriculture. And while I do not agree with that agricultural budget, Federal resources are limited and we must constantly strive for better management and efficiency in Government. The purpose of these hearings is not to dig old skeletons out of closets to dangle before the public. But the reason that our subcommittee began to study the Farmers Home Administration 2 years ago was a direct result of our feeling that the Agency was growing so fast with no corresponding personnel increases, that the potential for serious problems was increasing. The overpayments that Senator Dole and I announced last week represent just such a problem. I'm hopeful that we will find evidence during these next 2 weeks that the present Farmers Home Administration managers have set in motion a system of management and operation which will avert future misspending of funds and will cope with Agency growth in an efficient responsible manner. And that growth has been phenomenal. In 1968, Farmers Home had $4 billion in outstanding loans. In 1975, it had over $14 billion outstanding. And it is anticipated that by 1977 the figure will reach $25 to $30 billion. We are talking about programs that provide 80 percent of the housing loans in the State of Maine, and a sizable portion of the total borrowing on the national money market. The purpose of these hearings is to accomplish four things: To improve the financial and administrative management of the Agency, and its coordination with other agencies; To improve services to users of agency programs-the Nation's farm and rural community; To encourage planning and goal-setting for rural development by the Agency; And to determine whether any of the authorizing legislation or administrative regulations stand in the way of efficient administration or services to users. We will also want to take a look at the proposed budget for the Agency for the next fiscal year. Our subcommittee, with the help of GAO and others, has done 2 years of work in preparation for these hearings. During most of that period Farmers Home itself has been undergoing major management changes initiated by its Administrator. It is obvious to me that if the Agency is to put its new system of program management into operation, Congress is going to have to lend its help. These hearings represent a step in that direction. One final point, the Farmers Home Administration has about 4,000 people working in the field. Federal productivity reports indicate that these are among the hardest working personnel associated with the Federal Government. I am concerned about their morale as they read about oversight hearings and management mistakes. So it has to be a major intent here at the hearings to channel their hard work into the most efficient and productive avenues possible. I know that is also General Elliott's intention. |