marketplace. these individuals have significant knowledge and experience and resources to use with their own business initiatives. the benefit from education and mentoring to start and run a small business. score clients over 55 make up the largest client demographic. you recognize what an important contributor they are to the economy if you will help us to continue to meet the growing need. i'll be pleased to answer any questions to provide documentation. think you for the opportunity to testify. >> i am so happy to be here. into the members of this committee i am delighted to share my thoughts on what it takes to be a late in life

entrepreneurs there are currently 9 million this is the only statistic i will give. there are 9 million coming over the next decade i and the odor of senior living solutions for the first time to abide assisted living solutions to public housing in miami 1996. in fact, he may not remember revisited 1988 in reverse so happy to see you there. we have worked with public and private entities in 23 states. later we will open the first public assisted living facility right here in washington d.c.. our projects with medicated in medicare spending

generating thousands of jobs and helping the profit margin. for the past two years we have partnered with low income tax credits for affordable housing and investors to grow our bottle that has required a major of undertaking on our part. in 1995 i created senior giving solutions as a for-profit going to grow the firm we had to be propelled by profits under the secretary of beijing i developed a very good understanding of aging issues with a good network is the facility to be able to bring funding to miami. i have lived long enough to learn from failure and how

to deal with downturns in the inevitable ups and downs that entrepreneurs go through. changing the way we care for the of low income seniors is not a new idea but nobody had come up with a good model. looking a real business at age 50 was changing life circumstances as a career change. empty nest. end of the marriage. loss of a job. i reached with an urgency to leave a vacancy to make monday, said to live those years. we have a desire to impact the world. for a long time i dreamed of creating something lasting

that would prevent a -- to help other generations what kept me up that night was the fact i did not have health insurance. when i term ended i came to miami with an idea and a few thousand dollars per guy wanted to convert public housing into assisted living away to the director he gave me the award winning project helen sawyer and then i went to the state legislature and got 1.2 million dollars. you very good at raising money for other people but not myself unfortunaunfortuna tely. [laughter] i believe you're there senator nilsson at that time [laughter] restarted helen sawyer with a promise it would be self-sufficient by the end of the year it generated one million dollars of

profit at the end of the year. receiving the first pension back in 2006 in ben 2010 not only gave recognition to what i did also provided a lot of people who have helped us with developing with the budget how to raise money either in or is about to electronic records, of blocking, a facebook than ever wanted. however i am almost catching up with my kids. my fellow interpreters but i want to recognize score and sba and have contributed a

lot of knowledge in the money to my initiative. but also the fellow entrepreneurs don't have or not as lucky as i have been if they do the capital and connections and somebody to open doors for them. discrimination is real it is a major factor. america is a young country but we have no models to encompass all people. think of the innovators someone young to develop an idea in the crotch or a dormitory. that is the exception the real interpreters -- entrepreneurs today. bobby need help. it is very difficult to bring in new ideas to the government they the people like us who are committed

with the public interest in mind i and disciplined and very disruptive. [laughter] those are the qualities that have gotten be here today. i thank you very much. >> senator nelson is an honor. i understand what you read about technology. [laughter] i am a senior entrepreneurs and grateful to be here today to explore it the opportunity we all have as a country and that the shin to open a and expand the untapped resource to create their own self-reliance as small as their communities a and also to acknowledge my colleagues i am

extraordinarily impassioned on this subject in dr. o'neil has the data to back up my passions thank you for being here to do that. i have just returned from the state of florida were relaunch a brilliant new program to extraordinarily receptive audience. i am especially delighted senator collins is here because i started my first enterprise as a senior entrepreneurs and the state of maine and i don't know any state as early on to support entreprenuerial activity and was will come to a senior as missile starting a program for seniors to connect them to technology. that program grew from 12 seniors in portland within five years at 20,000 across the country and supported, i

did not start with buckets of money. what we tried to do is help them to understand how they tapped into resources that exist whether education or community centers where enciphers had the idea what connectivity would be i went to people who worked with seed years and asked. we will put up a poster agent say it is free. and literally said to computers have a you flummoxed does the world wide web did you visions of spiders? [laughter] they came on a saturday

morning and as they learned and as the program built redeveloped alliance with microsoft that gave a huge grant for seniors erin technology that they continue to deliver but then we partnered with national institutes of health putting all health care information of wind and they said the greatest concern is seniors cannot access because they do not know how to use the technology. so we created a program that trains seniors how to use a technology and how to evaluate the information they find online. and i am a senior but there

are incredible seniors out there with the untapped resources like joe in north carolina his concern was to help all black rural farmers leading arms because they cannot continue to live on the farms of the first created a farmers' market to sell produce then realized they had all this produce lefty is a bioengineered so he turned that excess produce to turn into biofuel. then why can't we have people create products for this? now they are creating from the seed then needed to start their small businesses to maintain the form -- a

farm so now they create forms for the biofuel converter. it is a skewed to business -- a huge business also called the greening of black america is an extraordinary program. you have heard statistics but yes seniors are creating businesses and wattles in entrepreneurs this trumping aging. i will not go into the many stories that we have 34 million self identified seniors who want to start businesses in does not touch the millions who are intimidated by the of word entrepreneurs to do not conceive of themselves that way. so my aid program has the

only curriculum for those self identified seniors it is free specifically designed for the senior deeds. i am the fellow in massachusetts talking with the director and i said what about the millions who are intimidated by the word entrepreneurs? we must find a way to tap into their spirit and created a program that is a combination of entrepreneurs education and action but catalog through improper and worked extraordinarily well because the two keywords are yes a and it is positive development you working in community with other seniors

who are thinking of seeking entrepreneurship helps them leverage the resources they have in terms of working together to come up with an idea that is so powerful as opposed to most programs are either/or. but the improvisation is extraordinarily effective tool. we officially launched the studio with 40 people in florida over the weekend. we hope to cap at 30 but the demand is extraordinary. relaunched in florida. just from the pilot program we have had invitations from 12 countries from austria, india, to create this program as well as 40

cities in the united states so we literally have the tiger by the tail end to your point about the numbers of seniors to start businesses people want to explore starting a business of their own. how do id code that history? that is another thing that we do. one of the exercises is decade by decade however old they are pre-ask them to please identify an accomplishment they are proud of that they achieved each decade. the try to get them to understand they have been thinking that all their lives whether raising children in office, internal or external and full

involvement came up with a story, imi overtime? [laughter] >> called those spots. >> sorry. >> i suddenly realized i was in the negative. >> i will insert senator landrieu statement also from aarp that is supportive of the hearing and i will defer my questions. senator collins? >> i know that senator scott has to leave and i wondered if i could allow him? >> did you very much. as i listen to you i was thrilled. it is a great panel i will walk away with some boldness

words. my question has to do with being a small business owner myself understanding of the pain and agony in trepidation, the experience some have had in their lifetime that allows for us to render a statement why so many more actually succeed at a level that is significantly higher than the young folks getting involved. baby to learn from you. there is access to capital is were i want to focus my one question before i have to beef. -- i had to leave. i had a difficult time finding access but i realized the red tape the tax code do not lend themselves to succeeding. i pledge like to hear comments

to your thoughts on approving the tax code if we have any so you can reinvest your own bloody as opposed to looking for ways to find capital that depends to a venture-capital it is a high price. do you have thoughts on ways to ask us to contemplate the discussion on tax reform to benefit seniors? or the red tape you have to go through from local to state or federal level that combination i imagine could be a struggle that times. >> i used to have black hair when i started. [laughter] >> i had the afro. >> we have to build facilities.

the main problem is irs has the capital. the three agencies that i work with hunt has the capital also operating subsidies and hhs has the medicaid waivers they don't talk to each other they worked in silence there is no national capital program in the united states. each agency has their own little program with just an example that you could help us solve common of wind you work with tax credits they have regulations that actually work against getting a license facility. the tax credit does and there is a multitude of regulations that each has

the interferes with each other you cannot force services with somebody saying it them assisted facility but the other says it you don't we take a license a way. that is the conflict that occurs all the time because there is no coordination at the federal level with different funding services. >> interagency cooperation is vital. without one-stop concept cover of would you like to add? >> i uninterested with an employee benefits. there is a 6 percent chance to be reemployed. . .

the government can modulate this program and say all right really give you the money but we won't give me the money to set up the home and dream up an idea. we are giving you money so you can get training so that you can understand if you can do this and then start the business. that's just one. the interdependent -- interdepartmental work but there are small initiatives.

helping seniors entrepreneurs is not going to take millions of dollars. >> we are unfortunately pulling on my coattail because we are out of time. perhaps we can bring the committee back together to talk about microlending because there may be a component than camby salter microloans. thank you very much. >> senator collins. >> thank you mr. chairman and ironically i am going to start off just where my colleague senator scott left off. it seems to me that it may well be harder for seniors to get the financing that they need and i see a lot of nodding of heads on the panel. even though it may be a small amount, and an idea of allowing long-term unemployed to use

their unemployment benefits as a startup loan for a well-defined business plan to start a small business but i want to go across the panel and talk about the financing issue because it can see where some lenders would be reluctant to invest in a seniors new business not knowing who would take it over, whether or not they are going to run out of time or energy or decide that they want more leisure time, perhaps because of stereotypes because of not knowing that they are more likely to succeed than a business operated by a far younger citizen. so let's talk about first of all is it harder for seniors to get

financing and second, what can we do about that? oftentimes it's a very little amount of money that is necessary but it may be hard for a senior to take it out of savings that are there for retirement purposes. do we have microloan programs that are targeted at seniors the way we do for veterans for example or other groups and i will start with ms. montgomery. let's just go down the panel. >> thank you for that question ranking member collins. at the sba we understand the small business owners or entrepreneurs have the challenge with accessing capital which is why are we are committed to opening up doors to access additional capital for them to start their businesses. the sba has a number of loan products designed to encourage

lenders to provide access to funds to underrepresented and underserved communities such as our encore entrepreneurs and loan products that started a lower a marked we have a small loan and vantage point and manned additionally our microloan programs that are used by nondepository lenders such as community development financial institutions and those loans can go as low as about $500 up to about 200 or $350,000. what we do through our research partners at the sba is to help individuals in our encore entrepreneurs identify and know where those resources exist. a lot of times people don't know about microlending programs and cdfi's so our volunteers at the

small business development centers in whitman's business centers have relationships with these institutions and can guide our entrepreneurs down the right path to accessing that capital. >> mr. yancey. >> thank you for the question senator collins and thank you for referencing the knife maker in maine one of our terrific clients. you know bruce started his business with a small amount of capital. it was not tank funded. what we know about our clients scores less than 10% of our clients actually get an financing for their business. as a banker by training although it's been many years ago we did not lend into the start environment for reasons that made sense. it was too risky. of those encore on printers -- entrepreneurs are self funded through savings, not through retirement. we don't believe it's the right

thing to do to reach into for a one case and their vehicles that will allow you to do that but as it defines senior now i am not going reach into that and i think that's the right prudent thing to do and we wouldn't encourage others. i think microloan opportunities for the seniors make a great deal of sense. i think express opportunities for some of the loans that the sba has offered in the past and still offers like express there is value in something along those lines. i personally like the idea of speaking with someone who is a little more mature who has baby grey or no hair that has that experience and understands the importance and has either made payroll or had balance sheet responsibilities or in some way has been gainfully employed over time that knows how to operate

in a business environment. those are the types of risks that i think all thinkers including myself would look for at the time. i think that there are things that you can do. i think there are things that would be valuable and i think above all it's critical that we continue to promote the importance of senior entrepreneurship in the value it can bring to the communities into our economy economy. >> thank you. i'm of -- i know my time has expired so i will get the responses from the other three on the next round. thank you. ms. bretos. i tried to do that as well as the chairman and i don't think i succeeded. >> thank you and i just want to say from the outset that my experience with the sba and score in particular has been wonderful. they really are committed to helping small businesses. i like the idea very much of microlending. i just went through two and a

half years of trying to get a loan from celtic bank in miami and it was a disaster. i don't know whether it was backed by the sba. i assume so but i basically had to give my house as collateral in order to get $100,000 in loans so there are major problems. i think of somebody with a 232 mortgage guarantee loan we could do something and our problem is the revenue. we don't have sufficient revenue to back a loan and then they have to take your house instead. that is a problem. >> thank you. >> microloans are hugely effective in this arena because in order to mitigate seniors financial risk we encourage them to start small so we have been specifically working with global programs such as axion.

there is an axion usa and cuba is a microloan program and we also encourage people and its government could open the access to information about programs like kickstarter.com ,-com,-com ma if we could make them more inclusive for the seniors because there is a lot aimed at young people or women entrepreneurs. there is no language really that includes seniors and our greatest example is an 88-year-old grandmother who started a company called happy canes and she started it with a 3000-dollar fund from kickstarter. this is also a beautiful example of the intergenerational aspects her grandson saw that she had decorated her own cane and he said can you make more of those? she said well yes i have lots of time. so he said how about selling them?

she said i have to get all the supplies so he launched this kickstarter campaign and within something like three days she had over $3000 for this business which she markets on etsy. so you have all kinds of interrelated ways in which to take a small business finance by a microloan forward through social media arcades and on line businesses. it's a fabulous opportunity for seniors and also seniors with disabilities. we must not rule them out. a huge percentage of them are self-employed or have very small businesses. >> thank you. dr. o'neill. >> thank you chairman collins and senator nelson for this opportunity to join this really passionate panel who i must -- why must they have great data to back up. it's true that older adults who don't sell fund or bootstrap their startups which is really the majority otherwise say the

key barrier is access to start up capital. and it's a kind of a paradox because for banks seniors are really their key clients. seniors have the majority of assets in banks but banks don't completely understand the needs of this population. one of the things elizabeth and i have done is bring together cross sector groups are really better understand the whole phenomenon of senior entrepreneurship and i think going forward the microloans and crowdfunding and other technologies like that need to be made accessible for older adults. the great thing about her loans in my institutions as they often are able to provide it vice as well as loans. that has been a key thing. we have seen in other countries like the u.k. they have actually had microloans organizations who specifically target the long-term unemployed. the long-term unemployed really have especially when they are

older have a disproportionate chance of staying unemployed for a very long time. this is a segment that really deserves our focus and policy attention. >> thank you and thank you mr. chairman. >> senator casey. >> mr. chairman thank you very much for calling this hearing and ranking member collins as well. it's a very interesting topic and it's one that i think there's a lot of review and scrutiny by members of the united states senate and i would include the house and that as well. it's particularly interesting because i look at as they liked it when i represent pennsylvania, we have about 2 million seniors in our state and when i consider what they have done in their lives up to that point in time it's really extraordinary. when you think about -- i am at the end of the younger end of the baby boom generation. when i consider the generation just before the baby boom folks

who might in their 80s now or close to that, they have lived through not just a remarkablremarkabl e time period but they have contributed so substantially to what we take for granted today. in a sense we take for granted we have a middle class. they have dealt it. especially after world war ii. if you consider the contribution they made to several wars in defending the country and reserving freedom and all of that. we sometimes take that for granted today and then just the ability they demonstrated to adapt to change. a lot of what i hear from our witnesses today and constituents back home is when they reach a certain point in their lives if they have been entrepreneurs or during work for a two goodies

with an entrepreneurial spirit that undergirds it they run up against as you have outlined here today a couple of asic challenges. one of them is just the challenge that comes with financial insecurity. there is never been a time in her history when there have been more reasons to feel that insecurity, the volatility of the economy has never been more apparent than in the last couple of years, certainly in the last decade. i think one of the reason for the sense of insecurity frankly as washington. they don't see washington working together on a regular basis. they are a little better lately with a two-year budget in one year appropriations so that provides some lesson but let's face it there is a lot of insecurity when people don't see

this place working. they scratch their head and say what does it mean for my bottom-line? so there have been plenty of reasons to be worried in addition to this speed up technological change. i guess i see this issue of the security, the financial security issue as well as the basic dignity issue. our self-worth is tied up in what we do and how we do it and this idea that if you have spent most of your life union entrepreneur and creating jobs and creating wealth and being successful that the idea when you hit a certain age you have to shut the engine off doesn't make a lot of sense so for all those reasons and more it's very important. i will leave time for questions. i think i will do what senator collins did. i will start with you and just go from my right to left. around here if you make 10

recommendations you probably won't get to 10 in terms of the enactment of new legislation or pushing the administration to do something or insisting that an agency do something. i will limit everyone to one but if there was one thing starting with you doctor you would hope that the house and the senate would do in the next year to foster better policy or to bring about a better, more opportunities i should say for encore entrepreneurial opportunities what would you recommend if you had to boil it down to one, either legislation or policy? >> thank you and since we say encore entrepreneur specifically i will take that specifically in that sense. we really are talking about the

people who go into self-employment after 50. this is important to note, there are a third of people who are self-employed after 50 came in after 50 so the others, the other two-thirds are people who have been self-employed throughout their career. they are very different and they need our help because they are the ones that are just a portion of all he likely to be unemployed or have been pushed into entrepreneurship or self-employment than the groups before it. i come back to the idea of the unemployment and if it's because i think that is shown in other places to have made a big difference in getting that group back into the labor force back into creating tax revenues back into contributions for social security and medicare and altogether the most important thing is when people are self-employed we have seen that they work much longer and they retire much later than wage and

salaried individuals. this is another very good thing and we encourage longer work which helps our fiscal outlook tremendously. >> thank you. >> i know i'm going to test the forbearance of the chairman. [laughter] >> my number one priority would be to change government's attitude toward towards seniors. we need in this country as is happening across the globe to think of seniors as assets and not liabilities. there is always talk about seniors. don't worry, we are not taking this away and we are not diminishing this entitlement or graham and it's always a net negative rate i think we have to turn that into a positive and i think as i was quoted in "the new york times" over the weekend we have to start thinking of this knotting gloom and doom terms as the oncoming silver tsunami.

we have to think of seniors as assets and not liabilities. they are silver lining in this country. what they can contribute. they are not a silver tsunami, they are silver lining and believe me they will be yielding holden dividends. >> thank you. ms. bretos. >> i would say that most of my colleagues what they have drop bombs with his access in government especially for the purpose that you mentioned. most of our work requires changing policy not necessarily through the extension which i know is very difficult. i was a lobbyist once so i understand the process. there is something called the office of social innovation and civic participation that has been in effect for four or five years. they do not have a phone.

they don't answer e-mails. i have been trying to talk to them for the past four years. something like that that could be said that would connect us with the federal government, federal agency. i don't have a problem with senator nelson and never have. every time i want to come and see him he makes time for me but it's difficult to access government. somebody that would coordinate the efforts of all entrepreneurs >> if i want an appointment with senator nelson i should call you. [laughter] mr. yancey. >> as you would anticipate we would hope we would have continued access to quality training mentoring and support for the senior entrepreneurs who

have many great qualities great knowledge and need a bit of assistance in applying that in the small business environment. to continue that support and to continue to have that access your spa score small business development centers and other programs i think are important to the success. >> senator casey i would echo mr. yancey and to say continue the support of the small business administration so we continue to do this work. as i stated in my testimony we have always been serving. our research has been serving this population and is allowed allowed -- and allowing us your support would be beneficial. >> thank you mr. chairman. >> ms. bretos what was that government office he said did not answer the phone? >> that's the beauty, nobody knows about it. it's called the office and it's

the mandate. it was created under that mandate to identify human and financial capital to bring about community solutions. is the office of, it's not associated with the white house. the office of social innovation and civic participation. the director is a mr. greenblatt and he is incommunicado. >> we will see if you will answer my call. >> i'm sure he will. >> thank you. >> tell me, since you started a business although you had had quite a bit of experience in business before your senior years, what do you wish you would have known before taking

on the task of organizing that business? >> i think of it had known i wouldn't have done it. [laughter] so it was better that i didn't. i think for me, i was very naïve and had illusions. i think for me to understand that it was not going to be easy, that there were going to be a lot of people who would think that i am a goner, that it don't have a plan on who is going to take over, the lack of capital. there are a lot of ups and downs. what was good for me is that i learned to sail very often. i failed at almost everything i had done in my life and if i had learned before he started this how to fail that would have been

a big accent for me but i would do it again. >> you obviously did it successfully because you have this miami senior living solutions. >> that is about it. and also it has brought me here in front of you which has been a success. >> dr. o'neill, interestingly we have a new health care law. a senior, a citizen all their life work for a company. they retire. maybe their company doesn't provide for health insurance. maybe it does. but if they suddenly find themselves just before that

period of medicare at age 65 and thus the fact that health insurance is available now through the health insurance exchanges help at all and making the decision in that seniors mind to start up a new business? >> yeah this is a very good question and we actually have quite a bit of research around this question. what you are really referring to is a phenomenon that sometimes is described as job block and i call it job anchor for your health insurance is tied to your workplace. you may or may not want to leave work to pursue an entrepreneurial path because as we have heard there are lots of risks in entrepreneurship and to add on top of that the risk of not being covered if a health condition arises is going to be a big one.

we also know in many of us have cited the statistics from the kauffman foundation that it's in that 55 to 60 or year age group where we have a high entrepreneurial already so this is a group that is probably very likely, more likely to have a pre-existing condition, let's be clear about that. so studies have looked at surveys of what stops people from pursuing entrepreneurial paths and many people often cite the lack of options to get health care. we have seen a natural experiments where some in health care have ruled out outside of the workplace that the rate of entrepreneurship has gone up in a recent survey by the brookings institution thinks the aca may unleash over 1 million more self-employed people into the market.

putting that aside we have studies that looked at the difference in the probability of going to entrepreneurship at age 65 versus 64. it's a simple switch to medicare and it's about or 10% higher. in all including a meta-study and 20 studies by economists and labor policy people it seems to indicate that this should have some sort of it oozed. i can't comment on the overall net effects of the aca but it is very important component that could be very substantial. >> who's who study with that but said a million new jobs would be created? >> that's the brookings institution which we can make available to you. the other studies of the 64/65 transition is not surprising the cost and study. it seems they really are the source of interesting as a foundation that's it towards

entrepreneurship in america. they have a lot of interesting work that we can all learn from. speaker2: what degree does the aca, giving certain tax credits for businesses, 25 employees and under play into this? >> i think on that question i will turn to some of my panel. >> that is more of a tax question. that would apply to any age. tell us some more dr. o'neill about the benefits, the economic benefits of senior entrepreneurs. >> well it really seems that there are several economic and social benefits. individuals staying in the workforce longer which as i mentioned earlier this is a

well-established fact that the self-employed retire later. they indicate they are going to retire later and they do retire later and that of course is a tremendous benefit to society. if people do work longer and they are doing things they enjoy we benefit from the tax revenue and we benefit from the continued contributions to our social programs and on top of that we do have concerns that we will have some shortages in some areas so it's a good thing that people continue to work. it also allows these individuals to increase their standard of living in retirement and particularly for people who were unemployeunemployed for long periods getting back into the workforce has obvious benefits. we also know that more than half of small business owners in the united states are age 50 and over and it has been said before on this panel that small

business is a net producer of jobs and the economy so the extent that we are supporting this has major effects in terms of business creation and job creation and the spillover effects of that. >> if i could with your permission, at least one major piece is that the older you get the more involved again in social issues so it think entrepreneurs like myself are definitely concerned with solving social problems like homelessness, like children so that i am sure has a spillover effect. somebody solving social problems after all. >> in a river and we started with over 60% and now it's closer to 70% of the entrepreneurs with whom are starting

green businesses so that is going to have a huge environmental impact. >> anyone on the panel comment. there's a common perception more seniors working is going to take away youth employment but the study show it's exactly the opposite. it creates more youth jobs. comment on that. >> that is absolutely true. in fact one of the individuals in your state of florida was a senior who started a company and the company grew so much faster than he anticipatanticipat ed that he had to hire his children to help scale that organization so that works both ways. the seniors and intergenerational business startups but also the seniors who create jobs are creating jobs for young people. cost 30 knows no age boundary and it's true so the jobs they create and it -- everybody benefits from that. the study by aeo

documented that if just one in three small businesses hire just one additional employee the unemployment rate in the united states would be zero. >> i just wanted to talk about in my particular case we create an average of 50 new jobs with benefits, usually young mothers with little children. so we have created in the past 17 years over 7000 new jobs with them if it's throughout the 23 states that we are working in. when higher old people too of course. [laughter] >> i think we all recognize the contributions that small business makes to employment so it stands to reason as more senior entrepreneurs start more opportunities for employment for younger people and others. many of these being

entry-level positions with training will become available so i think the more we can encourage this fantastic phenomenon the better we are going to be as a country and as a community. >> again i support what ken says. small business ownership and small business in general have a great impact on our economy. engaging entrepreneurs so they have the opportunity to create new jobs will benefit not only additional older individuals but as well younger people who are able to seek employment with those opportunities. >> senator collins any final comments? >> thank you mr. chairman. i just want to thank our panel today. i think this has been a fascinating hearing that is really going to help increase public awareness of the critical and growing

role that senior entrepreneurs and oncor entrepreneurs are playing in our economy. i loved ms. isele's characterization of the changing demographics as a silver lining rather than a silver tsunami. that is a wonderful line and i hope you don't mind if i start using it but it was really interesting. i must say prior to the chairman suggesting that we do this hearing i have no idea that more older people were starting businesses than the very younger parts of our population. this has been an eye-opener for me as well. thank you mr. chairman. >> senator collins i am frequently reminded and perchance you are as well in art capacities

of the senior senators of our respective states that upon introduction people get tongue-tied and instead of saying the senior senator from florida they introduce me as the senior citizen of florida. >> that's so true. it happens to me as well. >> well this has been a tremendous hearing. we want to thank you and the meeting is adjourned.

welcome one and all. great to see our witnesses. great to be here with senator johnson, and we'll call this hearing to order. i appreciate the effort of all of you to get here today. i'm glad we're having the hearing today, and not tomorrow. if we were having it tomorrow we might not be having a hearing. today's hearing, as you know, is focused on the costs of not

being prepared for extreme weather events, and exploring the ways that our federal government can increase resiliency in our communities, and just to underbehind this, and save money. save money in the long haul. we have deficits coming down, they're still too much. down from $1.4 trillion, i think, four years ago, this year expected to be down to about $550 billion. only $550 billion. that's still way too much and we have to continue to look in every nook and cranny and figure out how do we save more money. that's the focus of today's hearing. but, i will try to take about five minutes for my opening statement and yield to senator johnson. i'm delighted that he's here, and then we'll recognize our first panel of witnesses. each witness will have about five minutes to offer your statement to our committee. following your statements we're going to have a question and answer period. then a second panel of witnesses will come forward, and we look forward to hearing from you, as well. but, unfortunately, extreme

weather appears to be the new norm. and events like superstorm sandy, which came to my shores and our shores in the mid-atlantic a year or so ago, seen recent wildfires in other parts of the country, dangerous tornadoes, destroyed droughts, it may well be the -- just the tip of the iceberg of what's to come. and even today the east coast is preparing for yet another snowstorm, while the west coast is experiencing a historic drought, and increased fire danger with no end in sight. i have a friend of mine who is from australia, and he tells me that they had the hottest weather in their history. so go figure. it's just sort of a crazy world that we live in right now. for years i've been working with a number of my colleagues, our colleagues, to address the root causes and unfolding effects of what i believe is one of the biggest challenges of our generation, that's climate change. according to the u.s. global change research program extreme weather events have increased in frequency over the last 50 years or so and they're expected to

become even more common, more intense, and more costly. but let me just make a point and underline this if i could. today's hearing is not intended to hash out climate science. that's not what we're trying to do. instead it's about trying to find common ground, as our country debates how to address our changing climate and the extreme weather i believe it's likely causing our witnesses will deliver to us a clear message, and that is put simply, the increase in frequency and intensity of those extreme weather events are costing our country a boatload of money. not just a cost that's measured in lives that are impacted but in economic and financial costs as well. for example the damage from a storm still fresh in many of our minds, superstorm sandy, which impacted again my own state of delaware and many of our neighbors is estimated to have cost our economy $75 billion. think about that, $75 billion in financial damages and that's enough to run a number of departments of our federal government and have money left over. that's just one storm.

we're also hearing reports about the devastating effects of california's severe drought and how it's impacting the wildfire season in that state and the cost to the west. not only are wildfires growing in frequency and severity but we're now seeing severe fires and wildfire conditions in winter and spring, well beyond the traditional wildfire seasons of summer and early fall. these fires are enormously expensive to fight, and recover from, and they pose serious threats to lives and property, damaging homes and businesses alike. according to a 2013 report by insurance company the nearly 40 wildfires last year in the united states cost our economy over a billion dollars. these economic damages can deliver devastating blow to many local communities, to states, as well as to our own federal government. fema, federal emergency management agency alone has obligated i'm told over $80 billion in federal assistance for disasters declared in fiscal years 2004, through 2011. $80 billion. however, the cost to the federal

government is not just limited to disaster relief. as an insurer, of both property and crops, the government faces additional significant fiscal exposure. for example, since the creation of national flood insurance program in 1968, through december 2013, fema's debt from insurance payments to that program have totalled approximately $24 billion. and even before superstorm sandy total debt from payments to the national flood insurance program was almost $18 billion. the cost of these weather events keep going up at a time when we're trying to bring our government spending down. that is one of the reasons why, for the first time, our gao, the government accountability office, last year listed climate change as one of the biggest fiscal risks facing our country in its high risk list report. just to remind us all, every two years, beginning of everything congress, gao gives us a list. senator johnson heard me to say

that before, we use that as our to-do list in this committee to figure out ways to save money and get better results for less money. we're thankful for that to-do list. in response to this historic announcement house oversight and government reform committee chairman darrell issa and this is a quote from darrell, the comptroller general has made it very clear that we've not prepared properly, that the federal government has a financial risk that we have not properly mitigated, said i think it's a wake-up call to us all. i couldn't agree more. gao's report is a call to action for both congress and the administration, warning us that our country must start thinking now about how to better prepare and adapt to a new climate reality. today our witness from kwchlt ao will further detail these financial risks to our communities, to our taxpayers and hopefully offer some commonsense solutions that my colleagues and i can work with the administration to see implemented. fortunately, this administration along with a number of state and local governments are starting to focus their efforts on

preparing for the very real threats posed by extreme weather events and climate change. last fall president obama issued an executive order on climate preparedness, that incentivizes investments in more robust roads and buildings that may be more expensive but can hold up to more intense storms. i commend the president's approach, and believe it is very timely as rebuilding efforts continue from superstorm sandy and other recent natural disasters. i look forward to hearing more about the president's efforts, efforts by states like delaware and a bunch of other states to do a better job protecting our communities, and our taxpayer dollars from these challenges. as we continue to debate how to reduce our deficits i believe we can't afford to ignore the impacts these weather events are having on federal spending, a little extra planning combined with prudent, targeted investments can go a long way in saving both lives and taxpayer dollars. i believe this is a perfect example of that very wise maximum -- i used to hear from my grandmother all the time, an

ounce of prevention is worth a pound of cure. thanks again to our witnesses for being here. we're eager to hear your testimony with that i'm going to turn over not to our ranking member senator mccain, but our ranking member acting ranking member senator johnson from wisconsin for any thoughts ron that you'd like to toss in. glad that you're here. >> thank you, mr. chairman. of course i'm mindful the reason i'm sitting in this chair is because dr. coburn is not here. he's in our thoughts and prayers. want to thank you, want to thank our witnesses, and looking forward to the testimony. when it comes to this issue, the questions i'm going to be looking to have answered is, first and foremost, since i've been here, been looking into this issue, we're really declaring federal disaster declarations much more frequent basis now. is that because we really have, you know, a higher instance of the types of disasters that require that? or are we just too quick to declare those disasters?

i'm afraid that if we have an overreliance on the federal government help, is that restraining the mitigation? the new word i'm hearing resilience in terms of, you know, how we prepare -- are we being pennywise and pound foolish by not spending the money up front to mitigate, and again, is it overreliance on federal help when these disasters hit, everybody's expecting the federal government to come in and pay for things, as opposed to actually mitigating these risks ahead of time. and so from my standpoint coming from the private sector i certainly understand that a private insurance market really is very -- provides very strong discipline in terms of mitigating risk. you know, whether it's fire risk in a plant, basically insurers come in there, if you put in sprinkler heads every six feet apart versus every 24 feet apart, you're going to have -- you're going to be able to mitigate that risk and lower your insurance price.

so i really haven't experienced that. the private sector insurance market is very good discipline to those risk mitigation efforts. and it goes -- those are the kind of questions i'm asking in terms of how can we, certainly utilize the federal government in the most efficient way because, you know, like you said, mr. chairman, we don't have the money to do all these things. so look forward to the testimony. >> thanks so much. joined by our fellow from little state, alaska, little state with a big population. a couple of great senators. mark would you like to say a word or two? >> you bet, small population but a state with a big punch but i would say in homer, alaska, i think last week we had green grass. so, you know, it is -- things are definitely changing. first, mr. chairman, if i could just -- i'd like to read a statement for the record, and if that's okay, and i apologize, i won't be able to stay but i want to make sure this is fairly important issue, especially when you talk about extreme weather

events and how to prepare for them. but first let me say, mr. chairman i want to thank you, and i appreciate you holding this hearing to examine what i consider the true cost of not being prepared for impacts in extreme weather. we're about to feel it. as i drove in today i drove across salt. because they're waiting for snow to fall, to melt it. in alaska that would be unheard of. but that's, you know, the way it works. now the weather conditions also change, i'm sure we'll have power outages and many other things. you know, we understand very extreme conditions in alaska, and normal winter day in barrow or fairbanks will get to below zero many times. and in some cases, that would be extreme down in the lower 48, but not in alaska. alaska truly is on the front lines in the terms of changing climate, the effects of extreme weather, and existing challenges facing our communities and funding, including retreating sea ice, rapidly eroding

shorelines, thawing permafrost, ocean acidification, this reality puts many communities at risk throughout our state. the army corps of engineers and the gao have both released reports identifying last ka villages imminently threatened by erosion. many of these villages have experienced incredible, extreme weather. 30-plus villages at risk of literally falling into the ocean or disappearing totally. flooding wiped out a village in alaska called galina. totally in what's amazing about it we read about a lot of issues in lower 48. we had a whole village wiped out by flooding. and no place to evacuate, the closest place was 270 miles away. all had to be done by air in order to move these people out quickly and now they're trying to rebuild in a very short time, and the winter set in and it was also very difficult. and i know when people talk about climate change, they get nervous, is it the, you know they want to debate the science on it. i'm telling you climate change is occurring. my state is the example of it.

of what the impacts are. and it is extreme. and we are seeing the impacts economically, and from all levels. our state has the longest coastline in the united states, while in both incredible beauty but also its economic value, also requests and has enormous vulnerabilities in the sense of the impacts it has alaska's unique position as an arctic state presents a variety of advantages to leverage the challenges to overcome this extreme issue. you know, i have to tell you, alaska is clearly on the front line with dealing with the issue of climate change. we have our own task force set up. we have been active in it. we have focused on what we can do to mitigate the issues in these extreme changes in weather patterns that are impacting us on a day-to-day basis in alaska. let me say that, you know, as the president's climate action plan moves forward, and the state and local and tribal leaders task force on climate

change preparedness begins to develop a recommendation i'm confident investing and mitigation is the right decision. we always spend the time, mr. chairman, always after the fact. picking up the pieces, and the costs are huge. you know, we had a hearing in alaska through subcommittee that i chair here with fema, and the corps, talking about what we can do before these situations. but when we know they're going to happen, we have 30-some villages on the list. we know they're going to fall into the ocean. we can do something now or we can wait until something bad happens, and we're going to call fema. and fema's going to be writing some checks. that's the worst approach in the sense of dealing with this issue. we can do this in a much better way. i know, mr. chairman, you invited individual mike williams sr. who is an iditarod musher but also an incredible native leader who was going to be on the panel today but i know he could not attend and if i could just ask for the committee to insert his comments and his testimony into the record, if that's okay.

>> without objection. >> let me just end and just say, mr. chairman, as the chair of the subcommittee on emergency management that deals with disaster relief, emergency preparedness, first responders, mitigation, and this committee, we've had several hearings on these issues and sat here with an insurance folks that talk about how they're adjusting their risk analysis, how they're making sure that they're now seeing more severe weather patterns and they're not here to, you know, they weren't here to debate the science, but they were here to debate was, risk is greater. patterns are changing. the more compacted, and they're much more severe, so therefore the risk analysis goes in to play, and therefore rates go up. i know this as an owner of commercial property. i know my rates haven't been flat the last ten years because they're analyzing the risk. and i get that. but there is a risk that everyone is paying today for the lack of action in regards to mitigating these situations. so i think, and i want to again

say to the chairman, thank you for holding this hearing. it's a hard issue to grapple with, because there are political views on climate change. but that's not the issue. the issue is, it is happening. we can argue over it all we want. but, in my state, we see it every single day. we have disaster after disaster. we have huge costs that are associated with it. and even though we're far away, 5,000 miles away, small villages, we literally there are buildings and houses are falling into the ocean. this is not a hypothetical situation or theory. it's real. so i really appreciate the work you're doing here. and i hope the committee continues to talk about this. i know, and i agree, that we can't bear all the costs. that's just reality. but how we manage it from everything from our building codes all the way up to what we do here on the federal level is critical to understand how we're going to manage this so we don't have these costs borne by the private sector, individuals or

the government. so i look forward to this and thank you very much. >> we're just glad that you could join us, senator johnson and me. thanks so much for coming for your comments. when -- along when senator begich was speaking i was reminded of all people senator mick enzi from wyoming, as my colleagues know, i oftentimes cite him, he may be later here today. he has his 80/20 rule that is one of his guiding principles in terms of how to get things done and the 80/20 rule is basically, we agree on 80% of the stuff. here in congress. we disagree maybe on 20%. let's just focus on the 80% that we agree on. and we'll set the other 20% aside until another day. and today i think we're going to focus on the 80% that we can agree on. and to help try to path for just the congress but for our country. the one of the people who's not here yet will probably be here in a little bit is senator from arkansas mark pryor. they have a saying in arkansas, whenever you see a friend, and

mark pryor said this to me about a million times, they'll say, hey, man, and your name is heymann. and i was just hoping mark would get here so he could introduce you. and say hey man. david heyman we're happy to see you assistant secretary for the department of homeland security. mr. heymann has the office for implementing policies, planning programs and strategies. caitlin durkovich, assistant secretary for infrastructure protection at the department of homeland security, and this role she leads the departments aefforts to strengthen the public/private partnerships and coordinate programs to protect the nation's critical infrastructure, assess and mitigate risk, build resilience, and strengthen incident response, and recoveries. nice to see you again, welcome. and last but not least mark gaffigan. and mark is the managing director of the u.s. government

accountability office's natural resources environmental team. the natural resources environmental team is responsible for gao's assessments of federal efforts to manage our nation's land and water resources, protect the environment, ensure food safety, manage agricultural programs, ensure a reliable and environmentally sound energy policy, meet our nation's science challenges, and address the u.s., and international nuclear security and cleanup. that's a lot. that's a lot to do for one person. each of you have about five minutes, five minutes to read your opening statement. if you run a little bit over that that's okay. go way over that we'll have to rein you in. your written statement will be included in the record, and with that we're going to recognize mr. hayman, also known as hey, man. welcome. >> thank you. the quick aside, senator pryor has said that to me for now over 30 years. as i serve d as his vice president when he was a student

government leader in my high school. his political career has skyrocketed because of my service to him. thank you chairman carper -- >> this story just kieps getting better. >> thank you chairman carper, senator johnson and distinguished members of the committee. my best wishes to senator coburn and his family. it's my pleasure to be here this morning to discuss the impact of extreme weather and what the department of homeland security is doing to improve the preparedness and resilience of our communities, and nation. this represents one of the most significant areas where we can all agree, i think, investment today will help us save billions in the future. over the past decade, an unprecedented number of weather related disasters, hurricanes, floods, droughts, wildfires, crop freezes and winter storms have hit the united states. leaving devastated communities and billions of dollars of damage in their wake. in 2011, we experienced 14 natural catastrophes exceeding a

billion dollars in cost each. that's a record number. we had a record 98 presidentially declared disasters. in 2012 we faced hurricane sandy. the largest atlantic hurricane on record and the second costliest to the nation, damaging or destroying more than 300,000 homes in new york, 72,000 in new jersey, and costing billions in damage. according to the world's largest risk insurer, weather related catastrophes over the past three decades have hit north america much harder than the rest of the world. total economic losses in the united states totalled approximately $1.15 trillion over the last 30 years. without a concerted effort, national resilience effort, the trend is likely to continue. the department of homeland security is responsible for providing the coordinated comprehensive federal response in the event of a terrorist attack, natural disaster, or other large-scale emergency while working with state and federal local tribal territorial

and private sector partners so that we can ensure swift and effective recovery. offer the past several years we have made a significant shift in our thinking and in our practice of preparing for mitigating against and responding to disasters. and i can summarize that in one word. resilience. resilience is the ability to anticipate, prepare for, and adapt to changing conditions, stand and respond to and rapidly recover from disruptions. in may of 2009 president obama took a significant step towards fasscilitating and institutionalizing national resilience when he merged the homeland security council and national security council into a single structure. and created a resilience directorate with the national security council. this directorate managing resilience policy and operates alongside the counterterrorism director. this action established resilience as a homeland security pillar and priority, which was called out for the first time in the president's national security strategy. dhs affirmed this prioritization

in his qhsr, quadrennial homeland security view in 2010, promoting insurance of resilience to disasters as one of the department's core missions, and responsibilities. but the question is, how do you create and foster resilience. establishing the concept of resilience is an essential first step but it is only one piece of pro-actively preparing for potential disasters and readily responding to a situation as it occurs. across the department, from fema, to mppd to science and technology, we work with a wide array of government, private and nonprofit faith-based organizations to build and foster resilience. not as a concept, but as an applied reality. fema is leading implementation of the national preparedness system. my colleague here today will discuss our critical infrastructure, security and resilience programs, and in my office, the office of policy, we

coordinate resilience initiatives and policy across the department and are working to create the framework that fosters resilience and gives a coherent baseline. i'd like to share one example of some of the important work that we've been doing. we're creating a program called resilience star based on the energy star concept which you probably are familiar with for appliances in your own home. in this case, it will help ensure that homes will be built to voluntarily standard, stronger standards that will incur far less damage by disasters, protecting lives, livelihoods and helping communities respond to and recover to disasters, much more quickly. ultimately, dhs aims to extend the resilience star program beyond homes and facilities and into critical infrastructure. helping to recapitalize the built environment across america in the long-term. one home, one building, one bridge at a time. our investments in resilience will pay significant dividends for the country. it is efficient and it is cost effective.

homeland security is simply not about government action rather it is also about collective strength of the entire country. it's a shared responsibility requires the participation of individuals, communities, the private sector, as well as state, local and the federal government to be truly effective. the department's ready.gov website serves as a resource for citizens and businesses and communities, so that they can stay informed and take appropriate prepared measures. this is as i said a shared responsibility. it requires that we all work together to marshal all the resources to withstand whatever threats and hazards we may face. it is truly the actions of each of us that in the end will ensure the safety and security for all of us. i look forward to your questions. thank you. >> chairman, thank you very, very much. mrs. durkovich, please proceed. >> thank you, chairman carper, senator johnson, and distinguished members of the committee. i, too, extend my thoughts and prayers to senator coburn and his family. it is a pleasure to appear

before you today to discuss the department's efforts to enhance the resilience of the nation's critical infrastructure to extreme weather. our daily life, economic vitality and national security depend on critical infrastructure. infrastructure provides essential services and functions, but it is easily taken for granted. often, it is only when an incident occurs in service is disrupted that attention is drawn to the importance of the infrastructure itself. threats to our critical infrastructure are wide ranging. including aging and failing components, cyber threats, acts of terrorism, and climate change and extreme weather. the consequences of these threats to the public and private sectors can be seen in the events over the last decade. hurricanes katrina and sandy, the tornadoes in the midwest, wildfires, and flooding across the western states, the california drought, the extreme cold in the northwest, all demonstrate how weather can disrupt the availability of lifeline functions in other critical services. just as terrorist attacks

threaten our communities, extreme weather disrupts the security of our nation. extreme weather strains our resources, diverts attention from counterterrorism efforts, serves as a threat multiplier that aggravates stressors both at home and abroad, and destabilizes the lifeline sectors on which we rely. higher temperatures and more intense storms can cause inefficient infrastructure operations and damage and disruptions that can result in cascading effects across our communities. hurricane sandy is a vivid example of the potentially devastating impacts extreme weather can have on critical infrastructure, and demonstrates how interdependencies between infrastructure systems can magnify impacts and delay restoration. additionally, the increasing role of cyber and communication networks creates new vulnerabilities and opportunities for disruption. two years ago, high temperatures and high demand tripped a transformer and transmission line in yuma, arizona, starting a chain of events that shut down

the san inevery nuclear power plant, disabilitying automaticing switching assistance leading to a large-scale power outage across the entire san diego distribution system. strides have been made to address vulnerabilities that lead to such outages but additional progress is needed to protect our interrelated systems. ed nation must take a long-term perspective in account for evolving threats and hazards including those caused by extreme weather that are linked to changes in climate. especially with regards to building resilience for critical infrastructure. built infrastructure has a ten-year design build phase in a life span of 50 years or more. and is expected to operate under stressor conditions that sometimes we can't even imagine. as a result, it is a prudent investment to incorporate resilient into asset and system design, promote mitigation and built infrastructure and to empower owners and operators with decision making tools rather than to rebuild or redesign infrastructure after incidents occur.

to achieve infrastructure resilience owners and operators must be able to minimize the disruption to essential services provided to our communities. regardless of the hazard or threat. and when a disruption occurs, ensure essential services and functions are brought back to full operations as quickly as possible. one year ago today, president obama issued presidential policy directive 21. critical infrastructure security and resilience an executive order 13636 improving critical infrastructure cyber security. ppd 21 directed dhs to develop an update to the national infrastructure protection plan, or the nip which was released in 2013. the nip 2012 envisions a nation in which physical and cyber critical infrastructure remains secure and resilient. essential services and products continue to be delivered in the face of incidents, and communities and businesses adaptd to changing conditions and rapidly recover from poe tepgs disruptions. the office of infrastructure protection is leveraging our

core capabilities, such as information sharing, capacity development, vulnerability assessments, and situational awareness to support owners and operators' efforts to strengthen resilience to extreme weather. as part of the hurricane sandy rebuilding task force, ip and other federal partners work to develop the infrastructure resilience guidelines which are sound investment principles to guide federal infrastructure investment as we modernize and adapt infrastructure. simple things, such as consistent application of comprehensive science-based data, and a regional cross jurisdictional focus or selecting projects. additionally, i co-chair the new infrastructure resilience work group with the department of energy under the white house council on climate preparedness and resilience. through this working group, we are coordinating interagency efforts on climate preparedness and resilience for the nation's infrastructure. the working group is studying infrastructure's most vulnerable to climate impacts throughout the united states, and identifying risk based mitigation in adaptions --

adoption strategies. this will inform and aid the critical infrastructure community with planning and decision making regarding climate preparedness and resilience. ip also works with state and local partners through the regional resiliency assessment program to examine a particular industry, region or municipality's dependence on key lifeline sectors and to mitigate the hazards that could disrupt these complex ecosystems. this year we are partnering with the state of maine to produce the first climate change adaptation plan for the portland metropolitan area. in closing, by increasing the resilience of our critical infrastructure in our communities we are better prepared as a nation to the myriad of threats and hazards we face. leveraging the partnership framework we have established over the past ten years, ip will continue to work with owners and operators of critical infrastructure to understand the impact of extreme weather, and to take steps to enhance resilience. thank you very much, and i look forward to answering your questions. mrs. durkovich, thank you so much for your time.

stick around we'll have some questions. mr. gaffigan, very nice to see you. please proceed. >> senator carper good to see you again, senator johnson. thank you for inviting me here. let me also extend the best wishes to senator coburn and his family. i had the fortune to attend one of senator coburn's first hearings when he was on the hill and we told us afterwards he was going to do some oversight and i think he's followed through on that. so i'm very sorry he's not able to join us today. zbleez announced he's going to step down at the end of the year, and while he has some health he said that has nothing to do with those just a personal decision he and his family have made. but i have said to him, well, you're still on the payroll for another, you know, 10 1/2 months, so i know you wanted to finish strong. and we're going to make sure that you do. and he's determined to. so plenty more oversight to come. >> yeah. great. i want to make three points. first there's a lot at stake. we've all talked about some of

the numbers, in your opening statement, there are significant costs from extreme weather. but not only to the federal government, but also to the state, local, tribal governments, businesses, farmers, individuals, in short, everyone. second, there is uncertainty about the specific risks we might face from extreme weather, and how we can adapt to those changes, and manage those risks. complicating this uncertainty is that the risks faced and the appropriate adaptation is going to be particular to the situations and the locations of those facings risk. to borrow from the phrase all politics is local. all adaptation is local. third thing, given the challenge going forward for everyone facing these risks, the challenge is to strive for the best, most updated information available to help inform specific preparation, resilience, adaptation, so that the investment and preparation and resilience is most effective. and as we've explained, funds

are tight. so let me illustrate what's at stake and sort of challenges in four areas that are particular to the federal government. first, the federal government has a great deal at stake, as an insurer of property and crops. in 2012 the flood insurance program had property coverage of over $1.2 trillion, while crop insurance covered $120 billion in crops. that's a four-fold increase in the crop insurance program since 2003. however the flood insurance program has a debt $24 billion, as you pointed out. and the nation's crop insurance annual costs have more than doubled from $3.4 billion in 2001 to $7.6 billion in 2012. back in march of 2007, gao did a study and found that both of these programs' exposure to weather related losses had grown substantially and that fema and usda had done little to develop the information necessary to understand what those risks were. they've since developed a

report, now those reports, usda released their report in 2009. the flood insurance program released their report in 2013. they recognize the potential risks, they recognize the uncertainty, but it's still unclear what actions these programs are going to take. in the future. and that will have a lot to say for the financial solvency of these programs going forward. but also in 2012 congress passed the bigger water flood insurance reform act which among many things required the use of information on coastal erosion areas, future change in sea levels, and intensity of hurricanes to update its flood maps. implementation of this will be key in making changes to that program. second, the federal government is a significant provider of disaster aid. the number of federal disaster declarations increased from 65 in 2004 to a peak of 98 in 2011, and has been mentioned fema's provided over $80 billion during those years. after superstorm sandy, congress provided about $60 billion in

budget authority for disaster assistance. the federal government could do a couple things. it could start by fully budgeting for these costs to address the fiscal exposure that is largely outside of the budget process, and fema could also develop an updated formula. the formula hasn't been updated since 1986, to determine the capacity of jurisdictions to respond to those disasters. third the federal government is the owner and operator of significant infrastructure, dod alone has over half a million buildings, facilities, throughout the world, including some in vulnerable coastal areas. in addition, the federal government manages about 30% of the nation's lands. forests, wildlife, these natural resources face threats from extreme weather. dod has recognized the risks to its facilities and to trying to assess the potential impacts and consider what adaptation may be necessary at facilities in many different environments. regarding federal lands, federal resource agencies are also

trying to incorporate climate related information at the local level to decide what to do best. fourth, the federal government is both an investment partner in public infrastructure, and a potential provider of technical assistance. the federal government invests billions annually in public infrastructure projects. for example cbo estimates that total public spending on transportation and water infrastructure is about $300 billion annually with about 25% of that coming from the federal government. and the rest from state and local governments. our work has found incorporating considerations about climate into the planning of this infrastructure that may be in place for 50 to 100 years can help avoid the need for assistance in the future, if the infrastructure -- so the infrastructure can withstand extreme weather. however, responsibility for planning and priorityizing these projects is primarily at the state and local level. and they may not have the information or expertise they need to incorporate climate considerations into their site-specific local projects.

thus the federal government is in a position to be a provider of technical assistance, helping state and local officials identify and use the best available information that is specific to their circumstances, while also enhancing access to experts who can help translate that information down at the local level. that concludes my opening statement. i welcome your questions, thank you. >> thanks so much, mark. and for the work that -- anybody here on your team? anybody from the audience from gao? >> gentleman right behind me, yes. and there's plenty more back in the building. >> on behalf of dr. coburn and myself how much we value the work that you do, and appreciate the opportunity to partner with you. >> thank you, sir. >> i want to first talk a little bit more, talk a little bit more about the flood insurance program. dr. johnson -- well senator johnson and i both -- dr. coburn -- voted against the flood insurance corrections bill that passed the senate not very

long ago just earlier this month. late last month. and i go back in time to 1990 i was a house member on the banking committee and believe it or not i think with a guy named tom ridge, who was the raking republican on the subcommittee that i chaired then and one of our focuses of the national flood insurance program because we were concerned that the program was under water and all these years later, well, it still. and the kind of changes we're seeing in weather it's getting to be more under water. and we adopted some changes to the legislation, in the last year or two, the -- and the costs as they come to bear on people who live in areas that are prone to flooding, are in some cases very steep, there's concerns about the flood mapping and so forth, that people were not in areas where they used to have flooding, now they do. and so the question is, what do we do, if anything, in response to those conditions, those changing conditions?

and to try to be humane but also to realize that it's a lot of money at stake here. and this is -- we've got to -- i think doing nothing is not an option. i -- so the house -- the senate's passed a bill it's over in the house and we're not sure what if anything the house is going to do but i my guess is that there will be an opportunity here to find a principled compromise. that actually makes progress toward reducing this unfunded liability, and is not cruel or heartless with respect to people whose homes, businesses, are at risk. the i know how closely you've been following what the senate has done in the state of play but if any of you, mr. gaffigan, if any of you have any advice for us as to how to proceed and what might be some of the elements of the principle compromise i'd welcome hearing those, and my guess is that we're going to have the opportunity later this year to work more closely with you, to

say, and with the administration, the administration, president's not crazy about this bill, but the senate has passed as you know, there's an opportunity for, for the administration to weigh in and be part of the solution. any thoughts you have with us on that? >> just very quickly and again the flood insurance is not necessarily in my portfolio. i have a lot of things, but not that one. but i will say that, you know, i think it's a tradeoff between the affordability of the program and the individuals who have to pay the premiums. i mean at the end of the day, someone has got to pay for this and it's a question of the balance between the taxpayer, and the individual businesses, homeowners, those who own the flood insurance. i think some of the things talked about in building in consideration of what the risks are going forward. trying to build in some resiliency going forward in that program would help minimize the risk so that we're not we're not having to pay the higher premiums, because we don't anticipate the higher risk down the road. i think that's where the area of compromise is probably best sought. >> okay.

mrs. durkovich, mr. heyman anything you want to make sure on that before we go to another question? if you have something you want to say, go ahead. i don't think your mike is on. >> sorry. fema has actually been working with both house and senate on this, this is obviously a concern that we hear about, and i know that there are possibly going to be amendments down the road. right now our authority is only to complete a study on affordability. we have no authority-no authority to address the affordability of flood insurance. but we are happy to work with you to help try to think this through. >> all right, thanks. i'm going to come back to mark gaffigan, this deals with prioritizing risks, and i think in your testimony you may have mentioned three or four areas where the government could limit its fiscal exposure when it comes to climate change, and to extreme weather events. and within those three or four

areas, which stands out to you for the maybe the biggest fiscal concern? >> -- >> let me just add to that as kind of a p.s.? are there high risk areas that cannot be addressed by the executive -- maybe higher priority for my colleagues and me here in the congress? >> well you mentioned the flood insurance program. that is one in terms of fiscal risk and i think it's hard to pick one that's more significant than the others and i just touched upon four areas. there are a lot of other potential impacts that the federal government. we think the disaster assistance program, the aid program, $60 billion for one storm is the amount that congress authorized for superstorm sandy. that stands out. right now, as an owner of infrastructure, the agencies are trying to assess what's at risk. dod has some serious concerns, they have at least 30 major facilities that are in coastal areas vulnerable to flood. they have to have dry docks

making sure those do not expose so i think it's hard to pick a most important out of all those. >> all right. a question for mr. heyman or ms. durkovich or both but and mr. gaffigan's testimony he mentioned as i recall that infrastructure decision makers haven't necessarily incorporated potential climate change impacts in planning for roads, in planning for bridges, in planning for waste management systems, because they face challenges identifying and obtaining available climate change information best suited for locations and for their projects. could one or both of you take a minute or two and just talk a little bit about how your agency is addressing this concern, in particular, we'd like to hear how your agency is coordinating with other agencies to make sure that local planners have the best data possible, especially related to superstorm sandy,

rebuilding efforts. >> thank you very much for that question. in our unique role within the office of infrastructure protection, we both have the ability to convene and coordinate with owners and operators, but with other members of the federal interagency. let me speak to the latter point first. and two topics related to that. first is i was in front of you a few months ago talking about federal fasscility security and happen to chair a group called the interagency security committee that works with 53 different departments and agencies to set standards related to federal building safety and security. climate change is an issue that this interagency security committee is addressing, and is working to incorporate it into its design basis threat

scenarios, which are over three dozen scenarios that federal buildings think about when incorporating protective and mitigation measures to again ensure that the safety and security of those facilities. so this is a group of physical security officers who are looking at how we address climate change when it comes to the over 300,000 federal facilities that are in the area. we are dependent, though, as a federal interagency on other lifeline sectors. and in -- in the office of infrastructure protection, we have the ability to convene our 16 sectors and partners both on the government side, but also in the private sector side to talk about what they are doing to raise awareness, to look at best practices, to identify best practices, practices to understand where the gaps are and to look at the

comparative advantage that the federal government has and to think through what are some of the capabilities that we can bring to bear to help this effort. and then just to speak briefly to the work that we're doing with the infrastructure resilience working group. this is, again, a unique opportunity to look across the federal interagency and look at the programs that are available to state and local communities, to the owner/operator community and to, again, understand what's working, where the gaps are, where we need to remove those barriers so that we can enable planning, that we can bring consistent, comprehensive data to our partners so they can begin to incorporate it into our planning. a lot going on on this front that i think we can continue to harness. >> i yield to senator johnson. do you want to add anything to that? >> sure. thank you. as part of the national preparedness plan, we work very closely with states and

communities to assess their -- help them assess their -- the threats and hazards and risks that they face. this is called the thyra, threat, hazard identification risk assessment. every state is required to do this. fema has a policy of making the best available data available so that is to say whatever is -- so the top line scientific data that's available, fema tries to facilitate to the best of their ability. two years ago there were only 15 states that had climate action plans. today there's 36 that have climate action plans. they're incorporating the best data and their risk assessment to develop an action plan to better prepare their communities. >> thanks. thanks so much. senator johnson. >> thank you, mr. chairman. i'm a big fan of a fellow named

bjorn lombard. he issues his report, i think it was called the copenhagen project. i believe he's talked about climate change. he's talked about where we should spend our dollars. my first set of questions go toward prioritization. how do we do that? are we doing it effectively? can we be killing two birds with one stone? i'll start with you, ms. durkovich. you talked about cyber security, which brings to mind power grids, which brings to mind the attack at the metcalf transmission station in i believe san jose, california. there are a number of things that could affect our infrastructure. you know, obviously natural disasters, weather disasters as well as, you know, manmade terrorist attacks as well. are we trying to combine these

and take a look at that from the standpoint of prioritization of trying to mitigate problems? >> our role within the office of infrastructure protection is to help owners and operators understand the range of threats and hazards they face and as they look across their enterprise to manage risk, to provide them with information, with tools, with best practices so they can be both efficient and effective in application of how they go about managing this. part of the reason that we have moved to a more all hazards focus within the department of homeland security and across the homeland security enterprise is that we find as you work to adapt preventive measures and mitigatetive measures to a range of threats and hazards, they are

applicable not only to just one particular hazard but to many hazards. and so we worked very closely with the owner and operator community to think through this. let me touch briefly, for example, on the substation issue. so as we think about security but also incorporate climate change and extreme weather into that conversation, as owners and operators are looking to invest in upgrades and to modernize that infrastructure, as they make improvements related to security, we can also have conversations with them about whether these assets and these facilities are in flood prone areas, are in areas that are suggesti susceptible to sea rise so as they start to make the multi-million dollar investments, we're thinking about them in parallel and integrative fashion and ensuring that the money that is invested in these enhancements and these

mitigation measures is used effectively. but, again, our role is really to help them understand the range of threats and risks and to consider measures and options that allow an efficient and effective application of resources. >> mr. heyman, in terms of prioritization, are there lists being prepared? i mean, we talk about it, we talk about prioritization, but is there any product that's actually ever produced? >> there is. so the -- if you -- the national preparedness system has about five parts to it. one is to identify the risks that are available. two is to get a sense of where the gaps are looking at communities based upon what capabilities are required for preparedness, then to do the resources assessment and ultimately resourcing followed by training and exercising and you do that cycle again. at the end of that exercise

there is a list of capabilities that are prioritized for communities for states. those states then apply for grants to fema based upon those -- that gap analysis, and that becomes the basis for the next year's preparedness planning and evaluation and so that's a regular cycle that's done. we had the national preparedness report is an annual report and it was last released, it was last year. let me just talk a little bit about prioritization as a concept because i think that everyone has said that mitigation is critically important, and i think that's right. there was a study done a few years ago by the multi-hazard mitigation council which said $1 worth of mitigation up front led you back to $4 back in terms of

return on your investment and similarly, the louisiana state university hurricane center evaluated what kind of benefit mitigation would have done in katrina and they came back with a figure of $8 billion would have been saved. how do we do that? one way of doing that, because the federal government doesn't own and operate -- it doesn't own the residential housing or businesses out there is to try to incentivize and encourage raising standards as it pertains to the built environment, and the program i mentioned, which we're piloting in the residential environment this year, provides a basis for trying to look at how we can do that on a broader scale across the infrastructure so that people are motivated and incentivized either through self-preservation because their house will be the one standing

or through other incentives, mortgage reductions or perhaps premium reductions in insurance. so we're looking at that and i think it's something this nation should take a serious look at. >> you're using the word i wanted to get to next, which is incentivize. where are those incentives best? where does it best come from? where do they best come from, private insurance market where you have basically a million different decisions being made or from some centralized entity like the federal government trying to do a one-size-fits-all approach? >> there's a number of different actors in this world. you know, when you go to buy a house, there are the builders. they're going to build it to code plus standards. how do you get them engaged in that? as we're going ahead with the pilot, what we're seeing is a lot of builders are interested in this because they see a

market advantage and so there as a benefit to being labeled, for example, resilient star. there are the insurance industry who is interested in this because it saves them a whole lot of money on the back end with possible claims for damage if you're looking at the life cycle of a house every 40 years and residential owners may see a benefit -- let me just stop. wouldn't the insurance industry have a vested interest to develop these standards and if they develop themselves in the private sector wouldn't it be more effective than a government-run solution? >> so insurers have looked at this. in fact, we are partnering with the insurance industry to develop this pilot project.

i think for various reasons, because there's so many fractions insurance markets, a number of different state players, i think one of the benefits the federal government can bring is a national perspective which is not something any individual insurance company can do. >> can i just ask one more question? because i have a great deal of concern. if the federal government is the 800 pound gorilla and everybody in the private sector is looking to the federal government to bail them out, is that a real disincentive to do the resilien resiliency, do the mitigation efforts? if we have a big fwlolood, a bi hurricane, the fed will come in there and cover our losses and then some. to what extent are we witnessing that throughout the country? >> you're not unfortunately witnessing that in many places. you have communities that are devastated, people have packed up their bags and left. you're losing your tax base and your ability to attract individuals to come to your

community and the federal government can't help when people move their feet. this is one of the issues where local governments, urban communities will probably take a good look at it. there are resilient communities, people may want to be there because in the long run they're safe, more secure and frankly the funds you would have to repay can be paid to other priorities and public safety and education. >> that's the point, isn't it, we need to raise the price for individuals that are building in very risky environments? correct? we don't want to incentive advise people to build in areas that are going to flood. >> that's why it's important to have the best available data, so people are cognizant of the area they're building, moving to. fema has tried to get that as a

basis for getting data out and when we work with communities to do their threat and hazard identification risk assessment, that's all -- with your eyes wide open looking at what the risks are and asking if there's a way we can partner together to reduce those risks. >> thank you. thank you, mr. chairman. >> i wish we had time for another round of questions. i just learned that a series of votes starts at 11:30. i want to make sure we have ample time to hear from our second panel. i just want to follow up on what senator johnson was saying. we've had some demonstrations on star programs, energy star that we're aware of, and let's just make sure that we use those as laboratories of democracy. we can lobby work that may be just as important as some that were attempted and didn't work out. like senator johnson, how do we

get people to use the belhavior that we're modeling. they talk about the role of government and the role of private sector. and he used to use the analogy and say the role of government is to steer the boat. t the role of everybody else is to row the boat. there's a good role for both and hopefully we can find the good balance. i just want to say to each of you, thanks for the work you do. thanks for the folks who work with you and to say especially with flood insurance we'll work with you to try to find a useful compromise. my father would say if you looked at it from above, you would look at it and use some common sense. hopefully we'll do that. so with that, you're excused and we thank you for joining us and

we look forward to some questions. there will be follow-up questions. we hope you'll respond to those in a prompt way. thank you so much. thank you.

collin o'mara, all the way from i want to say san jose, california. did you used to live in san jose?