in FY 1996, 37 percent of the total dollars of 7(a) loans processed, and 19 percent of the total number of loans processed, have been through the PLP program. This compares with 16 percent of the total dollars, and eight percent of the number of loans in FY 1995. This change can be attributed directly to the legislation passed by the Congress last year (P.L. 104-36), which eliminated the disincentive for banks to use the PLP program.

By the end of FY 1996 we expect our loan servicing centers to service SBA's entire portfolio of current commercial loans. This will greatly improve agency operations by utilizing automation and creating economies of scale, as well as improve the quality of service to our

customers.

Regular Salaries and Expenses

Funding for salaries and expenses reflects our ongoing initiative to serve our customers more efficiently and effectively and to save taxpayer dollars. The SBA recently completed a two-phase program which moved personnel from our headquarters and regional offices to various district offices close to our customers. To date, more than 200 employees have voluntarily moved to district offices. Since 1992, SBA's overall non-disaster and non-OIG staff has been reduced by 21.2 percent; and in the same period, headquarters staff has been reduced 28 percent. In the 18 months since I have been Administrator, moreover, our headquarters staff has been reduced 18.5 percent. The Agency expects to continue its efforts to streamline its operations.

The budget request for salaries and expenses (excluding OIG and disaster employees) is $383.2 million, which will fund 3,122 full-time equivalents (FTEs).

OFFICE OF INSPECTOR GENERAL

The Office of Inspector General (OIG), as an independent office within the SBA, conducts and supervises audits and investigations of SBA programs and operations. This office also detects and prevents fraud, waste and abuse, and promotes policies for improvement of economy, efficiency, and effectiveness in the administration of SBA programs and operations.

The budget request for the OIG is $10.0 million to fund 109 FTEs. This amount includes a current operational level of $9.5 million, and $500,000 to fund the 14 temporarily-appointed disaster employees currently funded by $3 million of no-year funding that expires in FY 1997.

The Agency, and I personally, fully support this request as being essential to fund critically needed OIG audits, investigations, and inspections -- all of which save Federal dollars, deter further violations of law, and help ensure SBA's positive impact on the small business community. An adequately-funded OIG is even more important as the Agency's loan portfolio expands.

CONCLUSION

Mr. Chairman, the 1997 Budget reflects the President's strong commitment to the nation's small firms and to a reinvigorated Small Business Administration. By seeking to expand the capital market frontier for small firms, we are continuing SBA's original purpose of helping to ensure that viable businesses and innovative entrepreneurial ideas -- which otherwise would not be able to obtain long-term financing or patient capital are funded.

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SBA's five goals -- increasing access to capital; reinventing the SBA to better serve its customers; reducing the burden of regulations and paperwork; enhancing education and training to small business; and being the President's "eyes and ears" in the small business community -continue to guide both this Budget and our daily work.

We look forward to working with you and the Congress in 1996 to ensure that America's small businesses prosper.

25-229 96-24

TUESDAY, APRIL 23, 1996.

ECONOMIC DEVELOPMENT ADMINISTRATION

WITNESSES

PHILLIP A. SINGERMAN, Ph.D., ASSISTANT SECRETARY FOR ECONOMIC DEVELOPMENT

CHESTER STRAUB, DEPUTY ASSISTANT SECRETARY FOR PROGRAM OPERATIONS

WILBUR HAWKINS, DEPUTY ASSISTANT SECRETARY FOR ECONOMIC

DEVELOPMENT

DEBORAH SIMMONS, ACTING BUDGET OFFICER

ASSISTANT SECRETARY SINGERMAN'S OPENING STATEMENT

Mr. FORBES. Mr. Singerman.

Mr. SINGERMAN. Thank you, Congressman Forbes and Congressman Mollohan, ladies and gentlemen. I appreciate the opportunity to present the Economic Development Administration's fiscal year 1997 budget to you today. I hope this is the first of many opportunities over the years to present the agency's annual budgets to you. Before I summarize our formal statement, I would like to offer some personal comments, if you don't mind. This has been a very difficult time for those of us in the Commerce Department who knew Secretary Brown and the other individuals who were on the plane with him, and it has been a sad time for us. I very much appreciate your statement, Mr. Forbes, and the personal statements that Congressman Mollohan and Chairman Rogers have expressed in sympathy with the Department and the families that suffered through this loss.

In President Clinton's eulogy to Secretary Brown at the National Cathedral, he spoke of the Secretary's mission statement for the Department, providing economic opportunities for all Americans. And that, I think, is one reason why the Secretary was such a strong supporter of EDA and its goals. As I think you know, he was the first Secretary of Commerce to testify on behalf of EDA before this committee, and he was a very strong public and private advocate for the agency. We are trying very hard during this time to continue his legacy and to carry on the trust that he had in us, in the agency and in the Department.

It is very helpful and it has been critical to know that we have. had your support during this time and over the years. That really strengthens our resolve to move ahead in the directions that he laid out. So I want to thank you for letting me say that before I give my statement.

Joining me today are three senior members of our staff: Chester Straub, our Deputy Assistant Secretary for Program Operations; next to him, Wilbur Hawkins, Deputy Assistant Secretary for Economic Development, who has ably served as Acting Assistant Sec(741)

retary on two occasions; and Deborah Simmons, who is our Acting Budget Officer. We have provided to you a summary of our statement and I would like to use that as the basis for my brief remarks.

In terms of our mission, we are the only Federal agency that has as its sole mission, the provision of economic development services and assistance to distressed communities; and within the Department of Commerce, we are the only agency that has as its mission, regional and community economic development.

What is special about EDA, I believe, is that it follows a bottomsup approach. We work in partnership with local communities, local governments, local economic development organizations, to assist them in supporting their plans for economic betterment for their communities and citizens.

We have done a lot over the last few years, and we are continuing to streamline the agency and make it more efficient. I know this has been an issue of concern to members of this committee, and I am pleased to say that we have made considerable progress, although a lot remains to be made. We have delegated decisionmaking authority to the regional offices; we have streamlined our application process so that we have a goal of reviewing completed applications within 60 days; we have completed a revised single application for all programs; we have changed the role of our regional legal counsels to be supporters of program activities, rather than watchdogs; and we have reduced our staff, mostly in headquarters, over the last year.

At the begining of FY 1995, our staffing was at the level of 355 employees. When we complete our downsizing, including a RIF in this fiscal year, we will be at 260 employees. That is a 27 percent decrease in 18 months.

We are moving into the future, once we go through that downsizing, to reorganize the agency in accordance with a strategic plan that was developed over the past year under the guidance of Price Waterhouse. We are in the process of developing program performance evaluation methods so that we can more effectively evaluate the impact of the programs that we are funding. We are moving systematically to resolve all outstanding audits and ensure that we have appropriate procedures to oversee the monitoring of our programs moving forward.

Management is a very important concern of mine, as I have discussed with members of this committee, and it is a focus of the management team that we have in place at EDA.

In terms of our partnerships with other agencies, we believe very strongly in that, and that is something that I bring to the agency from my 12 years as head of the Ben Franklin Partnership Program in Philadelphia. We work very closely with the Department of Defense's Office of Economic Adjustment to assist communities that have been affected by base closures.

We work very closely, as you know, with the Appalachian Regional Commission, managing funds that they award to communities on their behalf.

We are developing new relationships with the Department of Energy to assist communities that are affected by energy lab downsizing. We work closely within the Department with the Mi