requirement do not appear to allow for those kinds of changes. as secretary, would you consider refining the maintenance of effort regulations so that if a school district is actually trying to produce better outcomes for special needs students, they can do so even if it ends up lowering the cost? >> yeah, appreciate that. you know, certainly the principle -- i think we'd agree the principle of maintenance of effort as a way of protecting the services that students with disabilities are receiving and ensuring that school districts meet those needs is clearly the right principle. i certainly would like our team to talk with yours about these specific cases and to look at c as we talked about, i think particularly in some of our rural areas around the country, these issues are particularly pertinent, and it's particularly challenging. and one of the things that we

tried to do in new york was to leverage shared regional service providers to try to ensure that districts were able to get the students the services they needed in a sustainable way. but certainly, i want to make sure our teams connect on that and talk through that because we certainly want to be in the position of supporting districts and serving students with disabilities as well as possible. >> thank you. and my final comment is that i hope you will have a listening session in a rural area. we talked about that in my office, as opposed to just large urban areas like l.a. and d.c. >> yes. absolutely. >> thank you. >> thank you, senator collins. senator casey. >> thank you, mr. chairman. dr. king, welcome. thank you for your testimony and your willingness to serve, and we appreciate that commitment. we want to commend and salute

your family, as well, because when you serve, they serve with you, in one way or another. we appreciate the commitment your family's made to this high level of public service. i wanted to start with an issue we've discussed and about which we have a disagreement, and that's the student loan servicing reallocation question, where i have a disagreement with the department. and i think it could have an adverse impact on borrowers, and we don't agree, but i hope we can continue to engage on that and come to a resolution that's satisfactory. so, i hope you'll be open to further engagement on that. i wanted to start, though, with an issue which we don't hear an awful lot about. it has, as you know a very technical name, significant disproportionality which i guess the simplest way to describe it is children of color

overrepresented in special education for a whole variety of reasons. i'm pleased that the department has released a draft rule to address this issue. we know that this is a huge problem across the country. data that i know you're aware of that covers about a 12-year time frame, data gathered by the office of special education programs, indicated among otherh things that, for example, african-american students were 50% more likely and hispanic students were 40% more likely to be identified as a student with a learning disability. similarly, african-american students were 70% more likely than american-indian and alaska native children were 120% more likely to be identified as a student with an emotional disturbance. all of that, of course, results

in those students being suspended at much higher rates than other students. so, we know that this issue of so-called overrepresentation is a widespread problem. we know that in 2013 the gao found that only 2% to 3% of districts nationwide were reporting overidentifying students of color special education. so, that's obviously a failure of our system when only 2% or 3% of districts are tracking this and identifying the problem. so, we know that hundreds, literally hundreds, of districts across the country with these disparities go unidentified. the children don't get the help they need and are misidentified early on in life. in essence, among other horrific problems, feeds -- the problem, i should say, feeds the school-to-prison pipeline.

all of that by way of backdrop. every bit of it i think you know. can you walk us through some of the recommendations of the gao report? >> yeah, so one of the things that the gao report asks us to do is to look at the methodology that states were using to make these determinations around disproportionality. and so, what we've done in the proposed rule is suggested that states develop a risk ratio methodology that will help them figure out which are the districts where there is this disproportionality. then evaluating why that disproportionality is happening and then addressing resources to intervene. and one of the things that we've tried to stress about this proposed rule is it's not intended to necessarily reduce the number of students identified as having disabilities. it's about ensuring that students are getting the right services. and if -- in some cases it's that students, african-american

students, latino students, particularly african-american and latino male students, are in some places disproportionately assigned to more time outside of the regular classroom even for the same disability issue that other students aren't assigned out of the classroom. or, we see students disproportionately suspended from school or assigned to an alternative placement. and so, we want to see this as an opportunity to get states and districts to take a second look at why that is happening, and that's the goal of this rule. we think it's an important step. we're certainly eager to get public comment on it and to ensure that the final rule addresses the public comment. >> we appreciate that. because i know -- i say this as a former state auditor general, where we would have audit findings and make a long series of recommendations, then you wonder if the state agency would be responsive. in this case, you're taking a gao report, addressing a serious problem, and actually putting

into place rules to improve it and to help our kids, so we appreciate your work on this, and we appreciate the department's work. >> thank you. >> thank you. >> thanks, senator casey. senator roberts. >> mr. chairman, thank you. dr. king, welcome to the committee, and congratulations on your confirmation. it's good to see your family. and i just happen to notice that your two daughters, i have two daughters about that age, some years ago, similar countenance. i want to thank them for their patience, number one. and number two, i happened to observe, like my daughters, their countenance. i would urge you, sir, to get up at 5:00 in the morning so you can get home at 6:00. you have no idea how many young men are going to be knocking on your door. i also have a big stick that i could loan you. so, come to my office on that courtesy call we missed, and i'll give you that stick.

>> absolutely. >> i know that we have differences on common core. i don't want to get into that. but it is part of existing legislation and law. and i want to be absolutely clear. the language says, no officer or employee of the federal government, including the secretary, shall attempt to influence, condition, incentivize or coerce state adoption of the common core state standards or any other academic standards common to a significant number of states or assessments tied to such standards. i know that we, again, may have differences, but nevertheless, will you give us your commitment that you will respect the intent as well as the explicit and binding letter of that prohibition? >> absolutely. >> thank you. that's all i need. >> okay. >> you were going to come into my office last week and then it didn't work out. i want to let you know that i held a roundtable discussion in kansas at washington university.

12 college presidents, 12 college and university, and 12 business stakeholders to discuss higher education and workforce development. we heard from the higher education leaders about the impact of federal programs, policies and regulations. and since the chairman and senator whitehouse and senator enzi and others and senator collins here just a moment ago mentioned regulations, i want to share this handy chart from one of the participants, johnson county community college, who have the most students of any university and/or college in the state of kansas, even ku, k-state or wichita state. 34 topic areas of federal regulation. they have it in bubbles here. i would hope we could burst the bubbles. i'm not going -- well, yeah, i am, too. taxes, academic programs, environment, admissions, auxiliary services, financial aid.

disabilities, grants, campus safety. insurance, health care, governance, immigration, privacy, athletics, sexual misconduct, research, accreditation, unions, wages, information technology, program integrity, i'm running out of breath. copyright, trademarks, contracts and procurement, diversity, accounting, ethics and lobby. here's the deal. every one of these regulations have to be adhered to and every -- with the cost/benefit here. the cost is exceeding the benefit, and we have an awful lot of people here now that are in charge of these regs and trying to fill these regs out. this is not unique just to this community college, but it is the same i suspect nationwide, but i know in kansas, as well. my -- my plea to you is that all of these people have jobs to do. you can't hire 34 people to do all of this that have expertise

in this area to keep up with the paperwork and the regs. just like sheldon whitehouse said, he said, teachers want to be free to teach. and they want to be able to teach with regards to the time. as opposed to filling out paperwork. and so, my question to you is, can you help us and be a partner in this effort? all of us have obligations with this. we know that, in the education community. but, my goodness, if you total all this up and the money spent and the hours spent, like the chairman has indicated, we have to do a better job. my -- i just urge you to be a partner in this effort so we can adhere to what we want to accomplish, but, quite frankly, i think a lot of this could be done on the local level. now you have 32 seconds, sorry. >> i'm committed to working with you on this issue and certainly committed to working with the committee and committee staff to try to identify places where we can make smart improvements, to make the system more efficient

for higher ed institutions. i will say, we are making some progress on recommendations at higher ed institutions made in the past. for example, one recommendation was around prior prior, use of tax information from the prior prior year as part of the fasfa process. that will be implemented starting next -- next fall on october 1. we've also been asked to move the fasfa date up. fasfa will be available on october 1, so we are making some progress and certainly willing to work with you to identify other places. >> i appreciate that. my time has expired. i'm from dodge city, kansas. senator collins underscored the need to look at rural areas. we think we have some very fine higher institutions of learning and so we have some special problems there, as well. and please get in touch with my office, and we'll look forward to a good visit. thank you. >> absolutely. >> thank you, senator roberts. senator murray has to leave, so i'm going to ask her to make her

closing comments. then we'll go to senator murkowski. senator warren i think has additional questions, so you can be first in the second round, and then i will close -- >> okay. >> -- close the hearing. senator murray. >> i just simply wanted to thank dr. king for being here today. this is such an important time for students of all ages and with all the challenges and opportunities and you've heard them across the board here, it's really important that we have strong leadership at the department of education. and, mr. chairman, i'm really confident that dr. king is a strong nominee to transition from acting secretary to taking the position of secretary of education. i look forward to supporting him, and i want to submit for the record statements from 18 groups in support of his nomination and thank him very much for all he is doing. >> thank you. >> thank you, senator murray. senator murkowski. >> thank you, mr. chairman. and, dr. king, welcome. congratulations on your nomination.

i'm sorry that our schedules didn't work so that we could visit. hopefully we'll still have that opportunity to do so at some point in time. both my colleague from maine and my colleague from kansas have mentioned the rural component of education. and as you know, coming from a state that's one-fifth the size of the country with about 732,000 people, we got a lot of rural. we got a lot of spaces, and we have a lot of very small schools. i had an opportunity just last week to take five of my senate colleagues to a place in southwest alaska, bethel, large regional community, primarily alaska natives, but we went further beyond bethel to the community of oscarville, 80 people, 17 kids in the school, 2 teachers. challenges in delivering education in a very rural, very remote area, where broadband is an issue. quite honestly, basic water and sanitation is an issue.

so, the question to you here this afternoon is, is actually pretty general in terms of how we -- how we address those in our very rural communities. how we ensure that these children in your words are -- there are children who stand too far behind their peers. and these are rural students and these are native american students. so, again, alaska really fills that bill. you've also indicated as one of your priorities to do more to ensure a diverse pipeline of future educators. one of the things we're struggling with in alaska is how we get more alaska native children to believe that being a teacher can be a noble calling for them. can you give me a little assurance about how you view some of these challenges in

educating our rural children and native american children alaska native? >> absolutely. you know, i was state chief in new york, and even though when folks hear new york, they think of new york city. we have 700 districts spread all throughout the state and many of the districts are small, rural districts up in the north country near the canadian border or out in western new york. and i spent a lot of time on rural issues. could see how districts were struggling with declining enrollment, the difficulty of providing art, music, a.p. classes, finding a physics teacher. districts that were struggling to try and preserve the sense of community around school in the face of declining opportunity. so, i think it's very important that we focus on rural education. i'm proud that we have competitive priority in many of our grant programs focus on rural areas. we've got about 20% of our current innovation grants that are focused in rural communities, and we're seeing

some very good results for many of those projects. one of the things i worked on in new york was a virtual a.p. initiative to try to ensure that maybe folks couldn't hire an a.p. teacher but they could share one across a set of districts and a region. and through blended learning make those classes available to students, so we want to make sure that rural educators are very much a part of the conversations at the federal level, at the state level and at the local level in implementation of every student succeeds act. we're trying to get resources and opportunity, president's connect ed initiative has really focused on trying to improve issues of bandwidth in rural communities. we want to continue that work together with the fcc. on the issue of native students, i'm very worried about the stagnant performance of native students. if you look at our high school graduation rate, which just reached a record high, and we saw increases for every

subgroup except for native american students, which was flat. i think there's more that we can do to support native communities in trying to infuse native language and native culture into the school program to raise students' aspirations. we've got a native youth community projects program, the president's proposed an increase in funding for that. we're seeing some promising results from those grantees, and i would love to work together with you to do more on native issues. >> i'd like to do that, and i particularly appreciate the fact that you've mentioned the native languages. that's something senator franken and i have worked on and have included within essa. very quickly, this relates to data and privacy of data. i think we all understand that we want to be making data informed decisions about effectiveness of programs, but many parents are coming to me

with very sincere concerns about the privacy of the data that is collected, especially given the department's inability to maintain the security of the postsecondary student aid databases. what's your message to those parents and the students and legislators that are concerned about the data collection and thus the privacy associated with it? >> data privacy, data security are our top priorities for the department. as i mentioned earlier, we're doing a lot of work to strengthen our cybersecurity posture so we can continue to keep higher education data, in particular, but all of the personal identifiable information that we have at the department safe and secure. states need to be focused on the same thing as do districts. the president has made proposals around additional data security measures we think that we could take together, focus on ensuring that students are not subjected to marketing through the tools that they may be using in school.

i think as a country we've got to continue to work to make sure that we protect data privacy and oftentimes, as you know, parents and teachers may be unaware of how much information is being collected by an application that they've downloaded from the web. so we've got to make sure that we put in place strong legal protections, but also, provide good guidance. we've got a frpa office that tries to give good guidance to districts and states around issues of data privacy and data security. >> know that's an issue i would like to work with you on. thank you, mr. chairman. >> senator warren? >> thank you, mr. chairman, i appreciate you giving me a chance to have a second round of questions here. i appreciate, dr. king, that you've got a lot to deal with at the department of education. but i want to raise one more issue before we quit for the day, and that is another ongoing problem at the department of education. the students who were cheated by corinthian college. you know, before corinthian

college collapsed, this for-profit college sucked down billions and billions of dollars in federal student loan aid. by roping in students with false and misleading information and then saddling them with debt that was just going to be impossible to repay. it was outright fraud. and in response, the department made a lot of promises to corinthians' victims. last april, the department promised to give, and i'm quoting here, give corinthian students the relief they are entitled to under federal law. two months later, the department announced that it would, quote, find ways to fast track relief based on legal findings for large groups of students, and that there would be, quote, no need for students to make any individual showing that they were affected by the school's fraud. the department also estimated last summer that about 40,000 former corinthian students would

be eligible for this so-called fast-track relief. now, that's out of hundreds of thousands of total corinthian students that the department acknowledged could be eligible for relief. it is now eight months later and just 1,300 of those 40,000 fast-track students have received relief. and i want to know what the plan is here to actually deliver on the promises the department has made. it seems to me, dr. king, that the department is moving painfully slowly, while students who got cheated are struggling under debts that they were conned into taking on. time is running out for these students. so, what i'd like to know is how do you plan to live up to the department's promises and actually ensure that each and every student who was defrauded

receives debt relief now, not years from now, but now? >> yeah. i appreciate the question. so, a few things to know. the special master, joe smith, is working diligently with a team, and we're adding capacity to that team to try to respond to the existing claims. >> but can i stop you right there, though, dr. king, because this is part of what's bothering me? i don't understand why this takes so long. this isn't hard what we're trying to do here. you know, students are waiting. their credit is getting worse and worse. the interest is accumulating on these loans. the process needs to move faster. and i don't get why it doesn't move faster. you know they've been defrauded. >> we're trying to make it move faster. i can say a promising note is that $115 million has gone to students either through borrowed defense or through close school discharge. we are trying to group claims so that we can respond to them as quickly as possible.

we are in the process of negotiated rulemaking on new borrowed defense rules going forward that will make it easier for the department to efficiently group claims. >> that's going to be 2017. >> so, the challenge has been that the legal requirement, as you know, is for a demonstration that there was a clear violation of state law. we have students who are in a variety of states, and so, we are working through those. on campuses where we have a clear finding, and this has been true i believe in the healed and everest cases, where we have a clear finding of state level state law violation we've been able to group claims or in the process of grouping claims. but you're right. we need to make the process move faster, and we intend to. >> i just really want to push on this. we potentially have hundreds of thousands of students who have been cheated here. you've promised fast track to 40,000. that was three-quarters of a years ago nearly, two-thirds of

a year ago, and we've only gotten about 1,300 people through it. you know, i just want to remind us that congress gave the secretary of education broad authority to cancel the loans of students who attend colleges that broke the law. and so, i hope if you are confirmed that you will use that authority to ensure that the students get every dime of relief that they deserve without making them jump through a bunch of unnecessary hoops. they've already been hit hard enough. and this is the time for the department of education to step up and be on their side. >> yes. i'm committed to try to protect the interest of borrowers and also to do what we can through the enforcement unit and gainful employment regulations to make sure that we do not have a repeat of corinthians to the extent we can avoid that. >> and that's powerfully important. thank you, dr. king. and thank you very much for your willingness to serve and sitting

through two round of questions on this stuff. these are important issues. >> absolutely. >> thanks, mr. chairman. >> thank you, senator warren. dr. king, i have just a few questions and then we'll wrap up the -- wrap up the hearing. senator roberts asked you questions about academic standards, and you gave an answer so i don't think i need to ask that. but there's a pattern in this legislation which is pretty unusual, which -- and it comes from the fact that those of us who voted for it and in the senate 85-15, in the house, the president signed it. felt like the department was overreaching, and so there are some literal specific prohibitions in the law about what you -- the secretary should not do to re-emphasize our i asked dr. evers, the

-- up with of those is on challenging academic standards. i asked dr. evers, the superintendent of instruction for wisconsin on tuesday, i said do you read the new law to say that if wisconsin wants to have common core, which it does, i believe, that it may? if it does not want to have common core, that it may not, that if it wants part of common core or more than common core it can do that, it simply has to have challenging academic standards that are related to the -- to the entrance requirements for the public -- for the public institutions. that's the way he read that. let me ask you about teacher evaluation. under the waivers that the department granted to 42 states,

the department took the position that if you want a waiver from the provisions of no child left behind, which -- and if you didn't get a waiver it, in effect, meant that almost all of your schools were labeled as failing, in order to get a waiver the department said we'd like to you do a few other things, sort of a mother may i process i described it.l0hr one of those was teacher evaluations. now i'm a big fan of teacher evaluation. in fact, i earned -- if the national education association could have given -- had a rate of lower than "f," i would have earned it 30 years ago when tennessee became the first state to pay teachers more for teaching well. i actually think that fighting fair wages for a grade of zero of education. but when i came to washington i

did not think that we should be telling states how to evaluate teachers. yet, to get a waiver there were some very specific definitions about what a teacher evaluation system should be. in fact, three states, iowa was one, washington was another, california was another had their wavers either rejected or revoked because the secretary didn't believe their teacher evaluation system met his standards. now the new law allows but does not require states and districts to use funds, mostly title two funds, to support teacher and principal evaluations based upon multiple measures but it prohibits the secretary or any officer of the federal government from mandating, directing, controlling any school evaluation system or specific measure of educator effectiveness or quality.

now to simplify, do you agree that that means that the secretary of education does not now need to approve the teacher evaluation system in a state? >> yes. and i think the law is clear that teacher evaluation systems are to be designed by states and districts. >> do you agree, however, that finding fair ways to evaluate teachers is immensely important to the future of our system of public education and that it would be a good idea for the secretary to look for ways to encourage it and honor those who do it well and to make states aware that they could use the $2.5 billion or so that's in the title ii money for that purpose and that we have the teacher incentive fund which has about $230 million in it to help local school districts who wish to find new ways to do that to do it? >> absolutely.

i think that teacher and school leader incentive fund creates an opportunity for important local innovation and evidence gathering around effective models of evaluation. i also think the equity plans that states are working on to ensure equitable access to effective teaching is going to foster a set of innovations and evidence that states can share. we have an opportunity to lift up best practice. >> one of the things we heard most about was testing, and when we started out writing the new law i suggested that maybe we get rid of the 17 federal test requirements because we had such a blow back on the testing, but the more i listened and the more we heard from teachers and principals and states, the more it became clear to us, those of us on the committee, that it wasn't the 17 federal tests that were the problem, it was the state tests and that, in fact, the 17 federal tests, which aren't really federal tests,

they're required by the federal government but they're state-designed tests from years 3 through 12. they probably don't take more than two hours or so per test over that period of time to be done were important and that those results needed to be -- those tests needed to be given. we need to know the results. they needed to be disaggregated so people would know what was happening. so the solution we came to and the problem we found was that it was the federal test based accountability system, which is fancy language for saying because the federal government decided what to do about the results of the test and attached so many consequences to just those tests, that that was incentivizing states to give a lot of tests to prepare for those 17 federally required tests. so the thrust of this legislation is to say keep the tests, report it so we know how the children are doing, but

restore to states and communities and classroom teachers the decisions for what to do about the tests. and in that -- in other words, the states would come up with the accountability system. now there are some requirements about what the accountability system should have in it, state tests, graduation rates, a few other things, but it also says the secretary is prohibited from prescribing the weight of any measure or indicator used to identify or meaningfully differentiate schools in the accountability system. do you intend to follow that provision and the intent behind it? >> certainly as we move forward we intend to follow the letter of the law. i think you ire right that we have seen over the last ten years because of the narrow focus on no child left behind we have seen a proliferation of tests both at the state level

and at the district level. i think the new law gives us an opportunity for a reset on that and for state and local conversations about right sizing the amount of assessment. >> if i'm not mistaken you've already issued a guidance to suggest to states what might amount to over testing but it's not a mandate. it's a suggestion. am i correct on that? >> we've given them guidance on how they can use funds at the state and federal level to use the assessments and figure out if they're unnecessary, redundant, low quality. should be replaced by performance-based assessments. >> the spirit is, here's how you might do that, not how you must do that. >> that's right. >> i applaud that, which is why i bring it up, because i think that's the spirit of the law as well as the letter of the law. same with identifying and fixing low performing schools. this was important to a lot of people. senator murphy mentioned that. it was important to the president that there be a provision in the bill, and so it's there. but what's also there is that

the secretary's prohibited from telling states how to fix so-called low performing schools. beforehand with the waivers there were six different ways to do that. i remember putting in the legislation a few years ago that a seventh way would be that the state could come up with its own version of how to fix the low performing school. next thing i knew within about a year the department had issued a regulation defining how the state could do it, which was contrary to the purpose, but in the same spirit, do you agree that while it's important that states identify and -- schools that are in need of improvement and that there are a number of steps to take and that's -- that's just quite a long -- there are a number of things to do, that in the end the secretary is prohibited from prescribing the specific methodology used by states to differentiate or identify

schools and any specific school supporter improvement strategy that the state or local education agencies establish and implement to intervene, support, improve schools, improve student outcomes? >> we certainly -- as we move forward with state flexibility around design of their accountability systems and design of their interventions, we'll adhere to the letter of the law. we think that states and local flexibility is a good thing. again, i do think it is important that there are parameters around inequity focus and where those interventions are not helping to close achievement gaps, we all have to remain vigilant that states intensify or change those interventions to make sure they get to closing achievement gaps. and better outcomes. >> yeah, there will probably be some gray areas as they come up, but we had a spirited debate on that both in the committee and on the floor of the senate. senator murphy, for example, offered an amendment that would have had, you know, more

stricter guardrails i think would be one way to say it, more federal supervision of what the states were doing in a variety of areas in the accountability system. that amendment lost. it only got 43 votes. it didn't past. just as i offered an amendment to give states the ability to take all the federal money and let it follow the children to the school of their choice called scholarships for kids. that got about 43 votes. that didn't pass. i don't expect you to implement a school choice or voucher program because it didn't take make it into the law. and we hope you will respect the consensus we came to. let me move on and conclude with a couple of questions about higher education. this is really an area where i think as we discussed when you and i visited earlier this week, you and the administration have an opportunity. as you know, my attitude towards you or any of the other president's cabinet members in our jurisdiction is that once

you're confirmed, i want to do my best to create an environment in which you can succeed because if you succeed, then our country and our children and our schools succeed. that also applies to our colleges and universities and this committee's done a lot of important work on two areas. one is making it simpler and easier to apply for student aid and to pay back student loans. that's one. and another is to cut through the jungle of red tape that interferes with the way that -- to senator robert's point, the way the schools and our 6,000 universities are managed. we have lots of bipartisan agreement on that and one area is the so-called fast act that senator bennett and i and booker and king and isaacson and burr all support. we want to reduce the number of

questions on the federal student aid application form. the president thinks that's a good idea and has said so. you have -- your department has already begun to identify some questions that are superfluous. we, senator bennett and i, wanted to take 108 questions that 20 million families fill out to 2. we may not get down to two but we'll get closer than 108. then you've already taken steps to allow the common sense proposal of students who fill out the form to use the tax forms they've already filled out rather than the ones they haven't filled out and to do it at an earlier time. that's also a bipartisan proposal. we have bipartisan proposals and the president has talked about this, to streamline student loan repayment options. there are nine ways to do that now. many students don't know how generous the repayment

provisions are. we think more will take advantage of that. we have bipartisan support for a year round pell grant even though we have some disagreement over how to pay for it. and in addition to that, we have a report, which i like to call the mu cull ski report but we'll call it the kerwin/zeppos report that the chancellor of maryland and the chancellor of vanderbilt put together over the last three years to identify 59 specific burdensome regulations or requirements, a couple of which i've already mentioned. chancellor kerwin and chancellor zeppos met with secretary duncan and talked with him about a dozen of those 59 the department itself could do, and you're already taking steps in a couple of cases. the four senators i just mentioned are working.

we probably have 27 more. we may get up to 35 or 6 that we agree on that we could pass which would reduce the onerous paperwork that has built up over eight reauthorizations of higher education. so my question is, will you work with us over the next ten months if confirmed to take those specific proposals from the kerwin/zeppos higher education report, the jungle of red tape report, and if you can implement them try to implement them? and will you work with us on the bipartisan legislation i just described on student aid simplification for both application and the repayment to see if the department itself can do some of that or if not to let us know what sort of legislation we need to pass this year so students can take advantage of that? >> yes. i'd like to work with you on both things. certainly to try and identify places where the department can

reduce burdensome regulations that aren't delivering were students. we should do that. certainly would love to work together on a bipartisan reauthorization of the higher education act. the one thing i would like to add to the list that you shared and know this is a view we share, some way to shift the incentives in the higher education sector towards a focus on completion. i do worry that we know that many of the students who are struggling to pay back their debt are students who start but don't finish. they have some courses. they don't have a degree. they can't get the good job that would come with the good degree, therefore they can't pay back the debt. if we can get institutions paying more attention to completion rather than enrollment, that's another opportunity for progress on higher education. >> you're exactly right on that. the default rates are especially high for students who don't complete their degree so i -- that's an excellent suggestion. i'll be glad to work with you on that.

there are other good ideas that we have from both sides of the aisle here to discourage over borrowing. there are some provisions, and these may be an area where you can take executive action that's already authorized that seemed to limit what colleges are able to do to counsel students to say, well, if you go into the theater instead of into biomedical engineering you might have a little more -- a little harder time getting a job and paying it back over a period of time. and i would just make the observation, i heard senator warren's comments on the corinthian tragic situation for those students. my general philosophical attitude is a little different. you know, if i would buy a car that's a lemon, i sue the car company, not the bank. and i know that the federal law

does have a provision about forgiving loans where there's a fraud. it hadn't been used much until recently, and i think it needs to be used carefully because we have from the taxpayer's point of view 35 or so billion dollars of pell grants every year to low income students that do not have to be paid back. we make $100 billion of loans every year to students that we expect to be paid back and we have a very generous provision that says for many students in public service that you don't have to pay it while you're in those jobs or you don't have to pay more than your 10% or 15% of your disposable income and if it's not all paid back after 20 years it's forgiven, so i would counsel you to follow the law carefully on those claims of fraud that require forgiveness, and i'd like to continue discussion with you about any expansion of that authority when the time comes.

dr. king, those are all the questions i have. there may be some questions that members of the committee submit to you. i would encourage you to answer them as promptly as you can. the hearing record will remain open until march the 1st. members may submit additional information for the record within that time if they would like. thanks to everyone, especially dr. king's family and him for being here today. the next meeting of the committee will occur at 10:00 a.m. on wednesday, march the 9th, to consider the second in a markup of bipartisan innovation legislation, that's biomedical innovation legislation, and to consider the markup of dr. king's nomination to be the united states secretary of education. committee will stand adjourned.

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[ no audio ] every weekend on american history tv on c-span3, feature programs that tell the american story. some of the highlights for this weekend include, saturday ya at 2:00 p.m. eastern. the 90th black history lunch with remarks by the national park service director. >> first tool is commitment. and that's laced with passion. i think of the 1992 olympics. some of you might remember that. i don't remember who won. i don't remember anything else but derek redman. remember on this first lap, he

snapped his hamstring? he got up and began to hobble around the track. they came to help him and he waved them off. a man broke through the stands. it was his father and put his hand over his shoulder. they asked, why didn't you stop? he said, because i came to barcelona to finish a race. and not just to start one. >> at 8:00 p.m. on lectures in history, professor brian craig miller talks about confederate veterans during reconstruction and how many southern organizations founded to aid veterans instead put their money towards large war monuments and pro-confederate propaganda. sunday at 5:00, veteran and author steven d.wiehe discussing his participation in desert shield and storm and describes the war-time pressures. >> we began digging frantically. we were just a few miles from

the border from where these iraqis were going to come across. so we went up and we just started digging as fast as we could. about this far underneath the ground was shale. rock. and so, the sinking feeling came across is, we're digging our positions six inches in the ground to withstand an iraqi onslaught. >> then the race for the 2004 democratic presidential nomination between massachusetts senator john kerry and north carolina senator john edwards. for the complete american history tv weekend schedule, go to c-span.org. so many of my former books were horizontal studies, many countries across a whole region,

the ends of the earth covering a minimum of six countries. here i look at one country in depth. and i use it to explore great themes. i think great themes. the holocaust, the cold war, the challenge of putin. remember, romania and moldova have a longer border with ukraine than poland has. so to study romania is to study the legacy of empires. >> sunday night on q & a, robert kaplan, author of in europe's shadow, two cold wars and a 30 year journey through romania and beyond, he talks about the history of romania. >> it was endemically a corruption country because it endemically had weak institut n institutions that were very -- everything was based on bribe and double dealing. and what this shows is this is

nothing new, what's happening is that the romanian population has grown up and become far more sophisticated and is demanding clean government. it's its number one demand. >> sunday at 8:00 eastern on q & a. you are watching c-span3. next, space exploration advocates talk about the importance of u.s. leadership in space. then, a house appropriations hearing on the housing and urban development department's 2017 budget request. that's followed by a senate hearing on the energy department's budget request. later, it's prime minister's questions in the british house of commons. on the next washington journal, we will take a look at the february jobs report. also, eleanor clift with the daily beast talks about campaign 2016 and what's next for hillary

clinton and bernie sanders as the two try to out compete one another for delegates in the remaining democratic primaries. and alex marlow discusses the conservative political action conference this week in maryland and the media's role in covering the presidential race. washington journal, live every day at 7:00 a.m. eastern on c-span. march is women's history month. we're honoring it with a discussion with presidential historian richard norton smith. he sits down with c-span's ceo susan swayne to discuss "first ladies." focusing on the unique partnerships and ambitions of the first ladies. that's saturday at 7:00 p.m. eastern on c-span. the future of space exploration was the focus of a

discussion at the national press club in washington, d.c. today. we heard from members of the coalition that released a joint report called, ensuring u.s. leadership in space. this is just under an hour. welcome to our news maker this morning. i'm the chairman of the news maker committee here at the national press club. we're delighted to have you here. i'm also delighted to say that, david hogue who is here in the front row, not only a journalist

but just became the deputy chair of our committee. glad to have you here. this is a very special news maker today. during the year we've been looking at issues that we think will become issues not only for the next -- during the presidential campaign and certainly for the next administration, and perhaps a critical issue in that area is space, space exploration has been the great human adventure of modern times and during the next administration we'll be celebrating the 50th anniversary of when we landed on the moon. and what happens from 50 years beyond that. i think our speakers today are kind of discussing that and discuss how the u.s. stays the leader in space. we'll allow time for questions. besides the reporters i want to welcome those watching us live

on c-span and a large number of reporters on the line who are calling in from the united states. so i'm going to keep the introductions of our speakers relatively brief and following their remarks we'll open it up to questions for probably about a half hour. so, first, our first speaker is going to be elliot pulham, who is the ceo of the space foundation and be followed by dr. sandra magnus who is formerly a space shuttle astronaut and currently executive director of american institute of aeronautics and will be followed by stallmer. i'll be back when we get to the q and a period but i think i'll let elliot take it from here.

>> well thank you and thank everyone for being here this morning. it's great to see friends who are familiar and some new friends. this is a day that we've been looking forward to for quite a while, this coalition of groups to put together this recommendation and it's all about ensuring the u.s. leadership in space continues. we all know we're in the middle of an election year. you can't ignore it. you can't escape it. and we thought it would be a good time to have a platform of information out there that all candidates could refer to, learç from, and take to heart as they plan their campaigns and those who were successful plan their policies, administrations going forward. the space industry is something that is just terribly important to the united states for a number of reasons. it is an instrument of technology development that has given us the technology base that we enjoy today. it's helped us to be a technology leader in the world. it provides the advantages that we need to keep the nation

secure in a military and defense sense. it provides opportunities for students wanting to advance their careers, wanting to learn more about what's out there in the great unknown and it is also the essential infrastructure of our time. most people don't think of it that way but all of the communication that's happening right now through our friends at c-span, our friends on the phone lines and so forth, all these networks are interconnected. and everything that runs the world for the united states is essentially on the backbone of the space systems that were put in place. and so we wanted to be sure that there was appreciation for the great importance of space as we go forward into these next several months. and to do that we did something rather unprecedented and that is to gather a group of our organizations in a way that hadn't been done before. the idea for doing this paper, by the way, comes from a very

surprising place, i think, from most of you. it actually came in a board meeting at space foundation from p.j. o'rourke. many of you know p.j. and i'm proud to have him on our board of directors. he said, you know these people have a really short attention span and we really ought to put something together that's short and concise and i think if p.j. would have had his way we would have a one sentence paper saying space is good, keep investing. period. paragraph. however with all the number of organizations that we do have involved, we wanted to be more specific than that, we wanted to lay out greater rationale than that and it's one of the great achievements if you look at the dozens of organizations that are involved in this project, all of us took to heart that this needed to represent the entire space community. and so all of us went back to our very large boards of

directors and all of these organizations and their board members and members had a chance to have their inputs into this document. so what we have is a rather unprecedented consensus of the space community in the united states from academia to corporate to government office. it's a splendid energetic community. we have crusty old aerospace ceos, we have upstart young whipper snappers entrepreneurs and everything in between and despite the competitive tensions and so forth, we've all managed to come together and put together this document which we're now in the process of sharing with the presidential campaigns and we'll continue to share this as we go forward and move this out into campaigns of people who are running for the house and the senate and for governors offices and so forth

to try to have a good base of understanding on a national level just how important space is to us. there have been, as there always are in these things, some people who have really, really shouldered a big burden as you can imagine trying to coordinate input from that many places. my colleagues here, i want to thank sandy and eric for the leadership of their organizations as well as frank slaser here in the front row for aia's leadership as well as jim kirkpatrick who i don't see in the room. he's been a stalwart as well and especially my team, gillian ñ brendan curry with the suave double breasted suit standing in the back of the room for making this all happen. we think that the paper speaks for itself. it is a paper that addresses in just 4 pages pretty much every

influence of space touches. thank you for your interest in the project, for you being here today. look forward to having your questions and with that to talk more about the content. i would like to turn it over to sandy. >> thank you, elliot. i'm delighted to be here. we've been working hard on this for many, many months getting a product like this hasn't been easy, we had a lot of inputs from all over the industry and it's been really helpful. as elliot mentioned we wanted to come together to create a strong consensus across the industry about what we feel is important, because the way our political process works we have new ideas coming in every two, four, six years. and we really want the momentum that's been gathering in the space industry to continue. we feel we're like on a good track. there's some really exciting things going on. i'll kind of describe it the way i do with -- i talk to the population. it's sort of a big bubble.

nasa has been contributing a lot of knowledge and a lot of experience, a lot of operational knowledge over the last 50 years since we started launching in the '60s and that baseline level of knowledge is out there and available to college students. doing amazing things, just fundamental level that was impossible when i was in college. so because of this baseline level of knowledge and this fundamental understanding of what it's like to create technology, fly in space and operate in space it's enabling a larger population to wren gage. the way technology has developed over the last 50 years such as you think about what your smartphone can do and the five shuttle computers can do it's completely -- it's a complete leapfrog. that's also creating accessibility. then this entrepreneurial sector that understands the risk/rewards and thinks there's something there. so leveraging all the great

experience of the industry and nasa that's been leveraged for 50 years that's allowing nasa as a government agency to expand the bubble of exploration. that's what government's job is. to expand, create new industries, create economic advantages for people to come along and so now we have a situation where we were 50 years caught in lower orbit and that was intelligent of the bubble. the edge of the bubble is now expanding. as the bubble is expanding we're getting people engaged behind that expanding bubble in ways that isn't so connected directly with government funding. we're in this transition period and this is a very fragile transition. transition will take 10, 15 years, could take 20 years. we don't know. we need to continue on a momentous straight line target. we can't keep moving left to right, left to right.

we want this momentum to continue. i want to bring enterprises into the lower orbit. allowing companies, and entities and students and individuals to access space in a new way. this is good for everybody. this is an industry that's just exploding and we're very excited about it. i think what you see in this paper is the consensus of the industry that we want this bubble to continue, we want this bubble to expand, we think the investment is important for the country and we need to it be stable. we need to have a long term commitment. and with this paper we're hoping that we will kind of convey how important this momentum is to keep expanding in the direction that we have. so i would like to invite eric to the stage. i think he'll talk in more details but i just want to say we're finally bearing the fruits of our 50 years of labor and investment in our space program and we should continue that investment and continue onward and that's what we're very excited about. eric. >> thank you so much, sandy. tough act to follow coming from elliot and sandy and talking

about the organizations that we're doing. as we got together as elliot mentioned there are a range of different organizations and it really is quite the diagram of the overlap of what all of our organizations represent and the different interests. and coming together and bringing this paper together on all of our varied interests and having this general consensus that we believe, what all of us believe when we go to work every day that space is a great place to be involved in and great opportunity for so many and i couldn't think of a better industry to be in, not just now but into the future. that's what we're really talking about on the investments that we're making in space today, long term, you know, the investments not just what the federal government is doing but also, you know, the private-sector and the investments they are putting forth almost $3 billion in private-sector, angel investment alone in companies and ideas and ideas that ten years ago hadn't even thought about. so it's extremely exciting.

as we discussed earlier, you know, space always had that place, where not a lot of people said, i'm just adamantly opposed to the space and development and everything like that. it's always garnered great consensus on both sides of the aisle. no matter what candidate shapes out, and that's certainly an interesting question as we go through this process of picking a candidate we want to make sure among all the other issues they have to deal with space is at the forefront of ideas they are focusing on because the way we see it, all of us collectively as we see, space is really the gateway to the 21st century. the innovation, technology being developed, it's propelling an industry that there's really no boundaries for what we can do and it's very exciting. it's exciting for me, you know, with an organization that is

looking at these new ideas, asking the question of why not instead of why. and doing, breaking through on technological barriers that haven't been touched and also over the last 50 years as sandy was mentioning the bubble that we had this, you know, space program, the tremendous accomplishments, some people felt left out and that we could do more, especially on the anniversary of the lunar landing coming up the 50th anniversary that we should be doing more. it's exciting to see a lot of companies across the board working on these fantastic innovative ideas and projects and it's great to work with all the associations that we work with because it brought forth the interest that we all have and from different perspectives and different corners of the industry. so it's very exciting. we tried to cover as much as we could. i don't know we left much out. we want to energize the youth, the industry and certainly we

want to energize the decision makers that really can have an impact on what we do in the space industry and keep the path forward and keep the path upward and with that i turn it over to jamie to take questions. thank you. >> so we're going to go to our q and a part of the news conference now and i've done a lot of news makers. i never made it a family affair. my son william is on break from college today so he's going to pass around the microphone so what i would like to do is for the reporters in the room if you have a question raise your hand and then i'll ask you to identify your name and your news organization and then we'll go to some of the questions from the phone as well. so, yes, down here. >> lots of white papers written about space policy over the

years. what are you doing to get this to the candidates particularly the presidential candidates who said very little about space policy in the campaign so far and get them to at least take more of a position on what they would do as president in the area of civil, commercial, military space policy? >> so, as i mentioned in my remarks, we really do want this in front of the candidates and so one of the strengths of having a dozen different organizations working together is that there's no one organization here that can reach all the candidates. but among us we can. and so we have -- we have already begun the process of socializing this with the campaigns. each of us have different contacts so we figured out how to work those and i think the last candidate that we're having trouble getting to was the very last candidate, i won't name the

person, should be receiving a copy today. and so we'll continue to follow up with their staff as well to keep this alive but it's an interesting question, jeff, because, you know, to some extent, the purpose of this is not to have space become a big presidential issue. i would be perfectly happy if nobody on the campaign trail said anything stupid about space. we love everyone to understand that it's important, that it's assumed this is part of being american and being a candidate for the highest office in the land is that you embrace the space program because it is quintessentially american. >> kind of to follow up on that. space has become kind of a joke in presidential politics at least once before that i can recall. and i notice in your presentation, elliot, you didn't mention the presidential

candidates, congressional and governors. how do you avoid this serious issue being drawn into the more -- what's the term -- clown car debate that's going on? >> this is for any particular panelist? >> for anybody. >> well, as elliot mentioned the reason why we got together we wanted to create a very, very strong consensus about what was going on in the industry, such that it became a non-issue. that because space typically doesn't come to the top of national politic when is you have presidential campaigns one way to take it off the table but stress its importance is to have a broad industry coalition. this is what's important. we have these great things going on. and, therefore, it sort of continues on its own momentum as

it were, right? because the bus is leaving the station and let's not mess with it. since it's already typically, unfortunately, not a national issue, we chose to turn that into an advantage to make sure that the momentum continues and we don't end up with discussions that take us off into left field or right field especially when there are so many things on the horizon that i want to keep moving forward with. >> you know, just to add on to jeff's question. too often when space is an issue it's a regional issue. what does it mean for jobs in florida. i know frank's organization has some fantastic statistics that can tell you space touches all 50 states and it's not just, you know, whether you have a nasa center there or whether you're launching or building. it really touches all 50 states. it touches the universities. it touches the students.

it touches the innovative fabric of our country. it's not just this one program or this specific program and as elliot said someone coming out when a whacky idea. it's what's going on right now and what do we see in the future and not just as i said thinking regionally. it's a national space program. that's not limited to government programs it's across the board programs. that's how i want to address this. >> other questions for the room? yes. >> what do you see as the biggest threats -- i'm sorry. i'm with aerospace space magazine. what do you see as the biggest threats to ensuring the country's leadership in space that you talked about earlier?

>> so, threats come in a lot of different forms and i would say that malaise is probably the chief threat that we're trying address here, we don't fall in some sort of malaise that allows us to stop investing in our space programs. there are, of course, threats from around the world to u.s. leadership in space, but i would tell you that most of those are also tremendous opportunities. one of the great aspects of space leadership is what i guess political scientists would call soft power, the ability to -- the ability to create an atmosphere where other countries around the world want to work with you and they want to cooperate with you and they want to learn from you. and so i think that it's also a great opportunity for defusing some of the threats that might be out there. so, conquering any malaise, allowing ourselves to be driven forward by the optimists and the

visionaries and not by just people who are bitter and, you know, being strong enough in our space leadership to be confident that we can use it in ways that benefit us tremendously as a nation but can also help with peace, with political understanding, with humanitarian relief and other things around the world, which i think also raises our stock as a nation and we can be leaders in those areas. >> yes, sir, in the back. >> what do you think are some of the reasons for that malaise that you just referenced? >> actually, i think that the malaise is starting to take on a secondary role to the interest and enthusiasm.

you know, you talk about -- one of the things that my friend talks about is being trapped in lower orbit for 25 years going around and around and expand the orbit as sandy and eric were describing we're expanding that bubble. that helps to address malaise. the other thing that i see and this is way out there, socially if you look what's going on with this new generation of kids coming up. they are essentially the first generation to grow up and through all their lifetime having had access to all the information in the world on the internet. and they are excited about what they can do with the knowledge they have. they feel they don't have barriers. they feel they should be able to do anything they want to do. and i think the recent call for applications for astronauts at nasa is a really interesting new barometer.

we had 18,300 something applications, the largest group of applicants for nasa astronauts in the history of the space agency. i think as long as we don't mess this up, again let's not undo anything that doesn't need undoing. i think that the trajectory is there. and we just want to keep it going. >> i would just like to second that and comment more on complacency. we landed on the moon and that sort of cemented in our heads we were leaders but there's a lot going on around the world and at the national level making sure that our leaders in government and decision makers are paying attention to that and we don't establish this complacency since we did this great thing once that will automatically guarantee we'll be in the lead. there are great activities in space going on around the world and people in the industry here in the united states understand

that and there's a lot of the energy that elliot is talking about. at the national level we need to pay attention and make sure we're investing the appropriate amount in research and development across the board and not sort of resting on our laurels and there's a lot of good momentum out there and we don't want to disrupt that. >> you know in the area where you mentioned what are some of the threats. we see some of the greatest threats is the uncertainty and what we really would like to see from the government is the government be there to help not hurt. whether it means stable budgets for programs in lower orbit or beyond lower orbit next exploration as well as regulatory issues where the government has been in the past with some legislation they have passed. they are trying to work with industry. we want to see that consistent. a lot of people plan ahead, you know. industries and companies plan

ahead on what some of these programs are. when there's that uncertainty on the programs, that can be challenging, especially on the policies and if i want to shift from policies that we, had you know, immediately with a new administration, radically shift it, it can be disruptive. i think -- knowing budget certainties -- nasa isn't the only game in town but a big game in town but they should be equipped with their budget as well as the faa who is at the tip of the spear in helping the commercial space grow. i want to work with the government and this partnership with the government and not be too disruptive. >> i want to encourage some of our reporters here on the phone to ask questions. do any of them want to ask right now? i know because of the marvellous amount of technology i know actually how many of them are on the phone.

yes. go ahead with your question. >> okay. good. >> could you identify yourself, please. >> hello. okay. i'm from space.com. all right. anyway, what i wanted to sort of curious about, this is a sum up question of some sort, but i'm trying to get a read on what you think this sort of fundamental role of something like an agency like nasa is relative to private space industry because i'm thinking, you know -- excuse me -- you said you wanted for example stable budgets for nasa to do exploration, i guess but also, you know, you want the regulatory framework to encourage the growth of the space industry. so i'm trying to get a read on

what you sort of see nasa doing going forward and i would be curious how you propose making sure nasa's budget stays stable as you see this acting as a more consistent agency role. i'm sort of curious as to how you go about that. if you have your druthers what would you like see from the presidential candidates. one thing that's plagued nasa is whatever administration is in office or congress over a two year period. >> who would like to -- >> so, you're exactly right in that nasa has been hampered by the whims of administration changes or quite frankly things that happened in congress too. it's not just an executive branch issue it's a legislative branch issue too. what we're hoping for is stability of purpose that allows

us to project out over, let's say a decade and, okay, this is what we're going to do. we're going stick to our guns. we'll do this despite whether it's a republican or a democrat or an executive or a legislative branch. this is our plan. we'll execute the plan. we'll do budgets yearly to support the plan. having said that i realize that's a pipe dream. that's something we should strive for because you never know until you try and this is an effort to try to achieve that kind of sense of the industry that this momentum is important and we want to continue this. such that we're sort of dampening the whim factor if you will. as far as the role of nasa, i mentioned earlier in this expanding bubble paradigm that the reason why we can do the things we're doing today is because nasa has been investing -- the government has been investing for 50 years in developing the know how and technology it's so widespread the risk/reward equation is somewhat understood that private

enterprise is trying to do things that are new and innovative and exciting and maybe not dependent on government funding and that's all good because that's what government funding should do. it should create new ideas and opportunities for people. government should do the investments that keep expanding that knowledge bubble, that operational bubble, the technology that you need to go further. industry can't invest in all of the technology they have to make a profit, right? government doesn't have to make a profit. return on investment for government investment is to bring industry along and to infuse new technologies across the country so people can take that and do innovative things with that. that's the role of government and will continue to be the role of government. if it's done correctly what you're doing is allowing this experience to accumulate across

the industry and this technology fuse across the industry. so people with great ideas and really creative minds and known invest can come do things kind of behind, if you will because ideally 15 years from now and i'm just making a number up the government bubble will moon, mars, asteroid and lower orbit people engaged in activities that nasa may not be engaged with any more and that's a perfectly good paradigm. you want to keep investing to expand the bubble and bring people and industry behind you. that's all appropriate. eric, do you want to add to that? >> just briefly. the partnership with nasa and other government agencies with the commercial sector, it's really critical. as sandy said the investments that nasa has made over the past 40, 50 years and to transfer that technology over to the commercial sector so we're not re-inventing the wheel and we're able to push boundaries and not take steps backwards.

so i think that's a really critical relationship that government and the commercial sector need to have to leverage each other's strengths and understand the strengths and weaknesses and how we can push the envelope forward in the technology realm. >> before we go to any more questions either in the room or over the phone i wonder if one of our panelists might be able to explain where this white paper that your circulating, people watching on c-span or listening in might be able to find on the internet. is there a website people can go to? >> sure, thanks, jamie. each of the organizations that's involved will be posted to their website and as we go about our business in the coming months we'll all be armed with this, we'll have a copy in our pocket and out trying to carry the gospel of the space industry to anyone who will hear the message. go to my website, sandy's, eric's, you'll find it.

>> other questions in the room or on the phone? yes, sir. >> what sort of the future of this coalition of organization. will they continue to work together at least through november to disseminate this paper or any long term plans to continue cooperating? >> i think that we have really learned a lot from each other and about each other through this process. as sandy mention this is many months of hard work and involved not just, you know, five people at the heads of the five leading organizations involved, people in all of these organizations. and i don't know that we're going to build a political coalition and run stallmer for president next year, which would

probably be a bad idea, but i think that it has opened lines of communication so that we will be communicating and collaborating more than we have had. we already had collaborations and they tend to be project specific but the fact we were able to reach a broad consensus on a broad set of issues tells me we'll be doing a lot more in the future. >> before we go to other questions i would like to ask you a question myself. in this document that you're circulating in the room really the last point has to do with trade policy. and whereas i find a lot of issues related to space as you describe this bipartisan or nonpartisan trade is a hot button issue and in your paper you discuss -- you discuss having trade barriers to make it

more possible to sell more american products abroad, et cetera. but isn't it really a double edged sword? doesn't it also open the door to more outsourcing of work that has historically been done in the united states and hasn't outsourcing of space program work to russia been an issue for us? >> so, what's actually happening is the outsource -- the outsource is happening anyway. companies that are u.s. based companies set up laboratories in other places around the world in order to develop technology that they then can use in systems that they are selling around the world. for example, because of some of the restrictions and things like that. what we end up doing is handicapping ourselves and encourage other people to develop technologies that we could develop here. so i think clearly you have to be aware of the balance, but to

some extent where i think we're hurting ourselves by not acknowledging that there is technology development going on around the world and we need to be engaged in that worldwide effort because some of the laboratories that our companies have around the world are already doing technology that they can sell abroad. so, it is a tricky question but we certainly don't want to handicap ourselves unnecessarily either. eric, do you want to add anything? >> i'll step in there. really one of the things that often happens to us is through all the best intention we get unintended consequences. we did go through a period about 20 years ago where there was this vast tightening of export controls on u.s. made equipment and so since our allies could not buy from us, they instead developed their own industries and since we could not sell to them they found out how to buy from each other.

there was a time not all that long ago, i want to say about 17, 18 years ago when 75% of the launch capability in the world was built in colorado. 0% is now built in colorado. not, i want to say 15 years ago 75% of the commercial satellites built in the world were built in the united states. today that's less than 25%. so we need to recognize the unintended consequences of things we set up that we thought were going to protect us that ended up hurting us where other countries now have their own technology, they don't need to buy from us. a lot of people would like to buy from us. so if it's something that's widely available in the world why wouldn't you want an american company selling it? >> yes, in the back, please. >> yes. this is not a question, more of a comment. i'm the executive director of the aerospace states association

and i just like everyone to know that we have circulated this paper to every state governor and lieutenant governor as an association of elected officials we support this wholeheartedly, and we applaud the industry for all its work and for the group that represents them here today for all your hard work to get the message out of how important the space program is to america and to every state. thank you. >> other questions from the room or over the phone? >> something you mentioned was, i think it was eric speaking at that point that one of the things that was unintended consequences, some of it was export tightening. i get you want to be selling

stuff that's widely available. i'm curious how you square that with some of the issues regarding restricting technology sales to the chinese. the last huge issue just ten years ago over whether or not they were copying satellite designs and the like or, you know, there's some countries that you would be upset if they had a launch capability. so, you know, i'm sort of curious how you reconcile those two things. you're talking about indigenous technology. it will happen. >> that's a great question and it's often a challenging question. to echo what elliot said. we went through 20 years of second marshal plan for europe with the amount of business that was literally handed over to the europeans to help develop. it's not a bad thing, it's a competitive thing and they capitalized on it. we do want to capitalize on the

u.s. industrial base. we think it's critical. we want to see more and more launches coming from the u.s. we understand there's quality foreign competitors from europe and elsewhere. we embrace that. we want to see and hope the capacity in the industry is so great it will open up new markets. again i'm partial to see a lot of this happen and develop in the u.s. i would like to see our companies that we all represent be able to export our products and services around the globe and we see that. the world is shrinking. it's a global market and the u.s. has fantastic products and services that we should -- we are and should be selling more of abroad. so the issue with china and some of the other countries, you know, those get into a much deeper national security issues and you need to tread gently on some of those issues but be aware that they have

national space capabilities much like us and we'll need to work with them and foster the dialogue to help, help the industry and help keep space as peaceful as it has been and not any outside actors. >> we have time for one or two more questions. do we have another question on the phone? >> we do. we have a question from the christian science monitor. please proceed. >> thank you very much. following up on the unintended consequences i wonder where you folks see striking a balance between wanting other countries to be using our launch services and take advantage of our technology. it sort of strikes me and developing their own. it strikes me one of the unintended consequences of the unintended consequences is these countries developing capabilities to the point where when we're talk about, perhaps, you know, international cooperation beyond mars or the

moon, they've got something more to bring to the table other than just money. they've also got sort of the tech end and we've seen this both in unmanned space exploration as well as things like the international space station and now with orion. where is that balance between wanting to maintain a robust, if you will sort of technology export for space, you know, from the u.s., with helping these countries actually develop their own capabilities that they can, you know, then have something to really substantial contribute to international when that's needed. >> peter, it's elliot. good to hear your voice again. the current nasa program is a good baseline to look at in this. we have a requirement for a launch vehicle that really can only be met by sls so we have a

domestic effort going there. we have a requirement for astronaut safety in a deep space environment that we feel nasa is the leading expert at so nasa is managing the orion effort. if you look at the other parts of the system, i was in germany not too many months ago where the first test article for the service module for orion is being built and being built, part of it are being built in italy, parts in germany they are being integrated in germany and then they will come here. so one of the thc2pr to recognize is that other people have technology that we should want to get our hands on as well and people can bring more than just money to the equation. so we should want to be able to sell what we're really good at. want to able to free to buy so we don't have to make it ourselves things that other people are good at. and we should integrate those.

peter, you and i talked about the idea about a lunar village on the moon and the expertise that they have with public-private partnerships in europe that's more successful sometimes than the expertise we have in the united states. so there's a lot of expertise and it's not all in technology. some of it is in politics. some of it is in fundraising. some of it is in finance. some of it is how to build these unique partnerships. the barriers certainly -- some barriers for true national security concerns. but they should not be erected so high we can't do common sense work together. >> also to your question, i don't think it's up to the united states to tell other countries what technologies they should be developing. they have to think just like we have to think strategically about what are our technologies for either national security purposes or this is the expertise we want to develop, other countries also need to

figure out what technologies they want to develop and bring to the table. canada is focused on robotics and made a strategic decision we'll be the guys that do robotics. they bring that technology to the table and offer that as their way to integrate into whatever project we're doing. i think that's sort of every country's right and privilege to figure out how they want to engage and what technologies they feel are important for their population and national purpose. that's the other half of that equation. >> i think we have a couple more questioners calling in. >> we have a question from marsha smith. please proceed. >> thanks so much. you mentioned you had gotten this to all but one of the campaigns already. can you tell us what reaction you've gotten from them? >> at this point the staff who

have received these have expressed gratitude and interest and we'll be carrying it forward as their campaigns move along. honestly i think where we are in the campaign process, these types of serious policy issues are probably only now becoming addressed, so we'll keep in touch with them and continue to work with them. we're free to answer questions and hopefully keep it in front of them just enough so that everybody is smart about space policy going forward. >> one more on the phone. >> and we have a question from the line of patrick host. please proceed. >> hey, guys. so i was reading this and it says restore american access to space. the u.s. must regain the ability to launch its own astronauts

into space and bring an end to the practice of buying astronaut seats on soyuz. makes perfect sense. but then in the next breath it says fully fund and vigorously pursue sls. sls is a joke. there's no legitimate game plan for this. nasa won't say when em 1 is. there's no game plan. it exists to basically satisfy powerful influential lawmakers, key contractors and constituents. sls might not even fly, might not last until the next administration. doesn't fully funding sls hamper u.s. leadership in space? >> well thank you for the question. i think that if you go back to what we discussed earlier about the appropriate role of government investment, it's the idea that the government needs

to expand the bubble and i think that is the expansion of the bubble, that system and what we're trying to do with that and so i don't think we necessarily agree with the assumption that bubble, that system and what we're trying to do with that and so i don't think we necessarily agree with the assumption that it's not helping the whole program because you need to continue to push the boundaries of what you're doing, you need to bring the technologies to bear that can push us out further and then that knowledge then rolls out into the general industry and the technology transfer and people learn from it. so i'm not sure i will accept your hypothesis. but thank you for the question. >> frank, i think you have another question. william, hand him the microphone, please. >> thank you. i just wonder if you have plans at this point to follow through as candidates become elected officials, as they move through their transitions both at the

federal level and the state level. are your going work with transition teams to keep these policies in the forefront or at least up there as they formulate their policies for their terms. >> yeah, thanks, frank. the answer is yes. and part of doing that, it has already started in term of meeting with other people on the hill in congressional offices. and having them take up this torch so that it's not just limited to the presidential candidates but something that becomes widely circulated and understood on the hill. frankly in terms of our game plan we have lots of aggravate ideas going forward for how we don't push this information out there and how we continue to follow up with people. it's difficult to start executing on a lot of it until we know the staffers are.

in some cases we do and already having conversations and in some cases just hasn't become clear yet because it's not high enough on the candidates' radar. we'll stay in contact with the campaigns as best we can and, you know, hopefully you'll be hearing about this in the general election as well. >> i'm sorry. we had discussed trying to do at least monthly through the prime election in november. some sort of activity that revolves around this, whether it's at some of our individual events or as op-eds, which hopefully you'll see out there. so i think we want to keep the ball rolling. we want to keep this issue continue to be a nonissue as it were and and just keep the information out there that we think this is, you know, important momentum we've generated in the industry and we really don't want to see it fail. we were working on plans to who can do what each month as we move forward. beyond that we haven't gotten that far, but certainly anything to continue the momentum will motivate us to keep working

together. >> i would just say, you know, we're not just other organizations. we're also good colleagues and friends. and you well know and the washington circle, frank, names start percolating on who's advising and who's helping, and we certainly want to be in front of those names and faces, and that many are friends and colleagues as well. we'll still continue this discussion deep into november and beyond as the transition begins, the leadership. >> well, i think we're about to end. i just want to say that if anyone's interested in becoming a member of the press club or if you ear interested in more information on our newsmakers, we'll have several coming up in march and april where our speakers lunches. please visit our website, which is press.org. and with that, i want to thank our speakers for being here. i want to thank our audience, and i want to thank our audience on c-span. thank you very much. >> thank you.

our road to the white house continues sunday from columbus, ohio, where republican presidential candidate john kasich will be joined on the campaign trail by actor and former california governor arnold schwarzenegger. we'll take you there live on c-span. book tv has 48 hours of nonfiction books and authors every weekend and here's some of the programs to watch for this weekend. on saturday night at 10:00 eastern. >> the first sentence of the book is the history of american conservativism is a story of

disappointment and betrayal. >> afterwards with syndicated columnist e.j. deon. in his book, why the right went wrong. conservativism from goldwater to the tea party and beyond. he's interviewed by juan williams, co-host of fox news channel's "the five." coming up sunday, in depth, live, with author and investigative journalist jane mare. her most recent book is dark money, the hidden history of the billionaires behind the rise of the radical right. join in the conversation. we'll be taking your phone calls, tweets and e-mails from noon to 3:00 p.m. eastern. watch book tv all weekend, every weekend, on c-span 2, television for serious readers. housing and urban development secretary talked about his department's 2017 budget rekwecht quest at a hous appropriations subcommittee this week. he took questions on affordable

housing, homelessness, long and short term grant programs and internet access for low-income americans. this is two hours.

>> the subcommittee will come to order. before we get started, i want to take the time to recognize our minority clerk, kate hallahan. today is kate's last hearing. [ applause ] i'm not sure if they're applauding -- yeah.

[ laughter ] kate, i'm not sure if they're applauding because you're leaving. i'm not sure what to say. but she has now, again, after 29 years of federal service, i will tell you personally, i have thoroughly enjoyed working with kate. she's incredibly knowledgeable on transportation issues. her dedication to this committee and to the members of this committee has been unwavering. i have -- again, i consider her a friend, and kate, you will be deeply, deeply missed. now we should be able to applaud, right? [ applause ] and i do also want to congratulate joe carlisle. he'll be taking over as minority staff director. we all obviously know him. he's been a valued member of this team, with deep understanding of this bill and so, joe, congratulations.

all of us look forward to continue working with you and i know you have big shoes to fill, but we know you're ready. so with that, kate, love you and miss you already. mr. chairman. >> let me add to that. she has been a stalwart worker in this cause for a good while. and we are going to miss her. in the next chapter of your life, good luck. god speed to you. >> absolutely. thank you. [ inaudible ] >> why don't we do something very briefly. why don't i yield to the ranking member and then to miss lowey very briefly. >> i'll have sming something in my statement, mr. chairman. >> all right. >> well, i had something in the statement, but i think it's so important, i'd rather begin at this point, because i have known kate

hallahan for a very long time. in fact, my middle daughter was deputy of the department of transportation years ago, and she told me all about kate. 29 years -- 29 years of government service. she is dynamic. she is hard-working. she is dedicated. and she has spent an incredible portion of that career dedicating herself to this subcommittee. i always say, kate, you're the answer woman. you ask her a question, she knows the answer. and if she doesn't, boy, she gets it for you quickly. how fortunate we have all been to have the counsel of kate and, kate, i just wish you good luck, and i know we will all stay in touch. we will all miss you, and i know

you will continue to succeed in whatever you decide to do, even if it's just enjoying the day in the sunshine. [ laughter ] so, thank you so very much, kate. we love you, we appreciate you, and we support you in everything you want to do in your future. thank you. >> thank you, miss lowey. mr. secretary, thank you for your indulgence and to each and every member of the subcommittee, because it's a bittersweet day for all of us in the subcommittee. today we welcome secretary julian castro from the department of housing and urban development to discuss the 2017 budget request. they're requesting $49 billion in new resources in fiscal year 2017, about 3.5% above 2016. this is not a dramatic increase.

there are, however, so many accounting gimmicks in the budget as a whole that it makes it difficult to frankly take any of it very seriously. we don't need to look further than frankly other agencies funded by this subcommittee to demonstrate that point. as we saw on the previous hearing, the department of transportation's budget uses gimmicks to cheat the budget by nearly $10 billion. however, the appropriations committee must abide by the agreement. so the administration is only frankly cheating itself out of the opportunity to communicate its priorities. the appropriations committee must pass bills within the discretionary caps that we have all agreed to in last year's

budget deal. and we cannot depend on accounting gimmicks to do so. so even in the hud request itself, we find evidence of the administration gaming the system and breaking promises made just last year. like d.o.t., harp proposes billions of dollars in extra spending by classifying new programs as mandatory. spending is spending, regardless of how it's categorized. just because you call it mandatory doesn't mean that it won't increase our national debt. even more frustrating, however, is the lack of specifics. mr. secretary, your request makes a commitment of over $11 billion in new programs, for which you provide no details, no legislative language, and really not much more than frankly lofty talking points and wishful thinking. so don't get me wrong, i represent low income and urban areas and i totally support the spirit of hud's mission and the desire to always try to do more. my mayors and city councils and community leaders and constituents all rely on hud programs. but that's why it's so important that hud is real, gets real about its resource challenges, to help us, to help the

subcommittee identify which programs must be made priority in this next year. in addition to targeting the right priorities, it's so critical that hud be a good stewart of its resources, as nearly all of what hud oversees helps the most vulnerable and deals with the most vulnerable. yet i continue to receive reports. i continue to receive reports that hud has tremendous difficulty with basic management. the number and seriousness of negative inspector general reports is frankly astonishing. poor financial controls, possible anti-deficiency act violations, lacks program oversight, major risks to i.t. systems, major gaps in cyber security -- the list goes on and on and on. now, you see, i want to work

with the administration to make hud the high-quality, high-functioning organization that it must be to oversee these important programs. if the department remains this dysfunctional, frankly, what hope is there that we can tackle homelessness, that we can tackle economic stagnation and all other major challenges that are part of hud's mission? i look forward to working with you, mr. secretary, and i think we enjoy a great relationship and great communication. so i look forward to working with you as we make the hard choices necessary to meet our nations housing and economic development needs. all while being accountable to the taxpayer and respectful of last year's bipartisan budget agreement that, again, we are bound by. now, before we go to your opening statement, mr. secretary, i would now like to recognize the ranking member of the subcommittee, the gentleman from north carolina, mr. price,

for his opening statement. mr. price, you are recognized, sir. >> thank you, mr. chairman. and i want to join you in welcoming our secretary of housing and urban development, julian castro. glad to have you with the subcommittee. now, i also want to say a few words about our retiring democratic clerk, kate hallahan. we really hate to see her go, as the remarks of other members have indicated. you've heard about her past 29 years in public service. i think of kate as the model of what public service is about. she started on the hill in the office of representative al swift of washington state, worked at the department of transportation and at the senate appropriations committee before she joined us and settled down for a while in 2006. kate simply has an expertise in

transportation policy that's unmatched. she also knows the hill very well, and the appropriations process very well. she is -- and she knows everybody. everybody knows and likes kate and admires her and respects her. she has that network of personal contacts which let her be very effective and find out the answer to any question that anybody raises just very, very quickly and effectively. she's tireless, she's determined. she's creative, finding ways to get the job done, even against formidable odds, as they often are formidable. she does it all with terrific good humor, and a cooperative engaging manner. so i'm really sorry to see kate go. we all are. we wish her well. she's earned this retirement. still, we're going to miss her. so, congratulations, and god speed. now, turning to the request

before us, the fiscal 2017 hud budget request, provides $38 billion in resources, that's $628 million reduction from las year's level. the lower level comes from higher anticipated receipts, although i think that receipt number is likely to change once cbs scores the request. as was true with the department of transportation, the constraints of the budget agreement, which only partially corrects the distortions of sequestration, mean that it's likely the bill we put forward will not sufficiently address the known needs of housing in our communities. an estimated 3 out of 4 eligible low-income households do not receive federal rental assistance because of funding limitations. and it's well known that most public housing authorities are overwhelmed with multi-year wait lists for access to subsidized housing. so the resources available to this subcommittee make it virtually certain that we can only address the most pressing needs, rather than thinking

boldly about the future of housing in this country. underscoring this reality, more than 3/4 of this budget request is dedicated simply towards maintaining current tenants in housing. and this budget, simply keeping pace with our existing obligations is a challenging task. we know we have a maintenance backlog of over $25 billion. that's 25 billion in our nation's public housing stock. unfortunately, in this era of fiscal fundamentalism, providing the budget resources to eliminate this backlog is impossible. even the more manageable goal of simply keeping up with the annual accrual needs, about 3 billion for the public capital housing fund each year, that remains out of reach. our states are struggling to provide housing and opportunities for people with disabilities. yet this budget would provide no additional resources to build

new housing for this extremely vulnerable segment of the population. similarly, we've build no new section 202 rental housing for the elderly for years. this budget wouldn't change that. even after the disaster in flint, which exposed the dangers of underinvestment in our infrastructure and the persistent threat of lead in many communities, this budget requests flat funding for lead hazard reduction facilities. that despite the clear need for more resources. in fact, in fiscal 2014, the department could only fund about half the applicants seeking to remove the presence of lead from their local housing stock. i hope this budget reflects that congress intends to deal with this issue, rather than a belief that we do not need increased resources to address this health hazard. simply put, this budget request lays bear the difficulty of housing

priorities. especially when the majority continues to insist on misguided and arbitrary constraints on discretionary spending. meanwhile, and this is the irony -- meanwhile, mandatory spending and tax expenditures, which are the primary drivers of our long-term deficit, remain unaddressed. now, there are a few bright spots, and i'll close with those, despite these concerns. the choice neighborhoods initiative, for example. a program that revitalizes and transforms communities, by modernizing aging public housing, that receives a modest increase. and there are new resources for homeless families with children. and to confront the challenges of housing in indian country. the request includes targeted increases in programs for native americans to improve living conditions and provide economic opportunity. and the budget request proposes to update the statutory formula for the housing opportunities for people with aids, to ensure that our limited federal resources are allocated to

jurisdictions with the most need. i'm hopeful hud will continue to work closely with me and members of the authorizing committee to ensure that an updated formula is passed into law during this congress. so, mr. secretary, i look forward to hearing your testimony today, working with you on all of these important programs. thank you, mr. chairman. >> thank you very much, mr. price. it's always a privilege to be able to recognize the chairman of the full committee, the gentleman from kentucky. >> thank you, thank you for the introduction. mr. secretary, welcome to the kate show. [ laughter ] we're delighted to have you with us to talk about your budget request, which as the chairman has said is $48.9 billion in discretionary funds, which is a $1.6 billion increase over current levels. but additionally, as has been said, you requested $11 billion in funding for new programs, on the mandatory side of the

ledger. the amount alone is shocking. but the fact that the administration is proposing new mandatory programs, with no specific information or details as to where it goes. that's especially disturbing. unfortunately, this has been a troublesome and recurring theme across the budget and i've conveyed a similar message to your departmental colleagues in the past two weeks. in december, we came to a bipartisan agreement with the white house on spending caps for the fiscal year, and we simply can't afford and cannot and will not tolerate efforts to circumvent those caps by putting these funds on automatic pilot

in the mandatory column, over which we have no control. although it required many difficult decisions, congress followed the law and stayed within the caps for the 2016 omnibus bill. i hope the message is clear, that this committee is committed to staying within those caps for fiscal 2017. if these programs are truly priorities for the administration, we'll need to find a way to make it work within the agreed upon framework. we look forward to working with you in that regard. in eastern kentucky, in my district, we've been working on a regional community development initiative, known as shaping our appalachian region, s.o.a.r, to help my area, that's been hit hard with a loss of over 10,000 mining jobs, since the president took office. one program that provides a true

benefit to struggling regions like mine, is the community development block grant program. incredibly popular and effective, because it provides flexibility to address unique community development needs from town to town, county to county. and these dollars are often leveraged over many times to projects that otherwise would never get off the ground. in my rural district, small communities have used these funds to help create jobs, through the expansion and retention of businesses. because of the significant impact this program has in my region and across the country, i was disappointed to see the cuts proposed in the administration's budget proposal. i would be remiss if i didn't mention my concern over the self-help home ownership opportunity program.

for the past few years, the administration has recommended moving shop, and congress has repeatedly kept it as its own line item. this year again, you propose moving it under home. this program allows low-income home buyers to contribute significant amounts of their own sweat equity toward the construction or rehab of their homes. this allows many low-income families, the otherwise out of reach opportunity to own their own home and provide their children with a safe and sanitary place to live and play and grow. the huge impact this program has across the country justifies it remaining an independent program. so mr. secretary, we look forward to working through the budget process with you these next few months.

we want to be helpful. we appreciate the service that you're giving your country. and we look forward to working with you. i yield. >> thank you, mr. chairman. also, we are privileged to recognize a ranking member of the full committee, miss lowey. >> and thank you, mr. chairman. i want to join my colleagues in welcoming you, secretary castro. thank you for joining us today. mr. secretary, hud's budget request does include some bright spots, including 20.8 billion for tenant based rental assistance, a 6.2% increase over fy 2016. $200 million for the choice neighborhoods initiative, a 75 million or 60% increase over fy 2016. and $88 million for a new program that would fund 10,000 new vouchers for homeless families with children.

these increases are essential to these programs, to keep pace with actual need. however, i was disappointed by not only a 1% decrease in hud's overall budget of $328 million decrease from fy 2016, but also some significant cuts to programs that our constituents depend on, like a $200 million cut to the community development block grant program. the request also flat-funds the home program at $950 million, as well as the lead hazard control and healthy homes programs, at $110 million. with $83 million for lead hazard control grants, and $25 million for the healthy homes program respectively. this funding, as you heard from my colleague and the ranking member, is just not adequate or sufficient to meet our country's actual housing needs.

lead hazard control has made huge strides in eliminating household toxins that affect our communities, resulting in lower lead poisoning rates and better educational and behavioral outcomes for children. work remains to remove lead from the homes of millions of families. now is not the time to flat-fund it. many communities throughout the country lack adequate, safe, affordable housing for all income levels. the housing sector must play a big role in strengthening and growing the middle class, empowering hard-working families and providing economic opportunity for all americans. i look forward to working with you, secretary castro, and to listening to your testimony today. thank you, mr. chairman. >> thank you very much, miss lowey.

mr. secretary, your full written testimony will be included in the record and so with that, you are recognized for five minutes. thank you again for being here. >> thank you very much, chairman diaz-balart, to the ranking member price, to chairman rogers, ranking member lowey, and members of the subcommittee. thank you for inviting me to discuss hud's proposed budget for fiscal year 2017. our request honors the president's commitment to provide more americans with the chance to secure quality and affordable housing. and to use housing as a platform that sparks greater opportunity in people's lives. this proposal comes at a time of tremendous momentum for the american economy. the unemployment rate has been cut in half since 2009. over the past 71 months, businesses have added 14 million

jobs, the longest streak of private sector job growth in our nation's history. now we must ensure that this progress reaches every corner of our nation. and expanding housing opportunity is a vital part of this mission. today, one quarter of american renters spend more than half their incomes on housing and for every dollar that goes toward a rent payment, one is taken from a family's grocery budget, a child's education, or a couple's retirement savings. that's what the president's budget calls for increasing hud's funding to $48.9 billion. $1.9 billion over the enacted level for fiscal year 2016. 85% of our budget would go solely toward renewing rental assistance for nearly 5.5 million households. but we've also taken strong steps to maximize our remaining resources. investments that would support our nation's most underserved communities and empower more hard-working americans to lift themselves into the middle

class. six years ago, the president set forth a bold vision to end homelessness in america. and since then, we've made great strides. the best example of this, a 36% decline in veteran homelessness, between 2010 and 2015. i want to thank the members of this committee for funding hud bash over the years and with your support, we can fully achieve the president's vision and help the next generation to escape the cycle of homelessness. are the most effective solutions for families with children experiencing homelessness, so we've asked for historic $11 billion investment in mandatory spending over the next 10 years that would use these tools to assist approximately 550,000 families. we've requested $20.9 billion

for our housing choice voucher program. an increase of $1.2 billion from the enacted level from fiscal year 2016. this would provide 2.2 million low income families with a chance to move into neighborhoods with better schools, safer streets and more jobs and stay there for the long term. but hud's mission also extends beyond housing mobility. too many communities remain segregated by race and by income and too many americans see their futures limited by the zip code where they were born. and hud's proposed budget reflects our duty to revitalize underserved communities. our program has already leveraged nearly $2 billion for crucial repairs in housing and other hud assisted property. we've asked congress for $50 million to make targeted investments in 25,000 new units and eliminate the remaining caps on the number of units eligible for conversion.

which improves infrastructure, rehabilitates housing and creates jobs for folks with modest means. and $200 billion for folks in choice neighborhoods which helps to transform areas of concentrated proverty by creating quality mixed income housing and sparking neighborhood small business growth. finally, the president knows that many native american communities face significant barriers to opportunity. this budget requests to improve housing and development on tribal lands including 20 million for native youth programs like community centers, health clinics and head start facilities. the proez p president's budget reflects his determination to promote inclusive opportunity for all americans. i look forward to every american can live in a home that offers them pride, progress and hope.

thank you. >> thank you very much, mr. secretary. we will proceed with five-minute rounds. recognizing members in order of seniority as they were seated at the beginning of the hearing. please be mindful of your time and allow secretary castro the time to answer it within that five-minute period. >> mr. secretary, as i alluded to in my opening statement, the hud office had to express a disclaimer on hud's financial statements. billions of dollars improperly accounted for at cpd and tens of billions in other problems at jeanie may. it would be bad enough if it was one year but it's terrifying a financial institution as important as hud can't get a clean bill of health from its

auditors two years in a row. please, as simply as you can, can you just explain what's going on with hud's financials? >> the audit you're talking about is one we take very seriously. let me begin by saying we have a close working relationship with our inspector general. we meet on a regular basis and this is of course one of the items that we have been working on together. you're correct that we had a disclaimer in 2014 and in 2015. i'm pleased to tell you that ginnie mae has been working. it has filled key leadership positions. it has revamped several of its processes. improved the way that it does business.

i also want to assure you that i have made it very clear to all of my staff that we take the recommendations of the inspector general seriously. in fact, i know that ya'll are going to have an opportunity to meet with the inspector general soon and he and i meet on a regular basis. it's fair to say that there are very few instances at hud, whether it's this audit or others, where we are out of sync with the inspector general. and in those instances where there is a difference of opinion, there's a concrete reason for it. so in 2014, we had 11 material weaknesses in our audit. in 2015, we brought that down to nine material weaknesses. we believe in 2016 we'll be able to bring that down further. we're making progress and we'll continue to work with the inspector general, with gao and others to improve our systems and ensure the awe disimproves

as well. >> hud is operating without a permanent cfo. any idea on when you think that might be -- that critical position might be filled by somebody who can, you know, again address these issues? >> you bring up an issue we have been working on. this is something our deputy secretary herself has been attentive to. and we very much are working towards filling that position. we believe it's important. i don't want to give a time line right now in the sense of -- we believe in the next several months but hopefully sooner that position will be filled. it's something we work on. >> the first in, first out, fifo accounting is one of the biggest reasons for the audit

disclaimer. it appears hud is violating requirements because of this faulty accounting. the ig believes these accounting mistakes meet the definition of a violation. which would mean you're frankly spending money you don't have. have you been able to investigate? have you investigated the aig's findings to determine whether hud's breach is in fact -- of the home statute is in fact an anti-deficiency act violation? >> you know, we over the last year in fact have reported from the past 14 se rat anti-deficiency violations that hud had engaged in in the past. in an effort to get beyond those, we've improved our processes. in fact, i think it's fair to say that today in 2016, the challenge at the end of the year

is often -- at the end of the fiscal year is often trying to ensure that money that has been appropriated is spent because of the anti-deficiency act situations that were encountered in the past, many of our program areas are shy about spending towards the end of the fiscal year. we're improving our processes so we both hit our mark but do not commit a violation. i'd be glad to get your more information on the specific one you're talking about. >> appreciate that, mr. secretary. again, sticking to the time limit, mr. price, you're recogni recognized, sir. >> thank you, mr. chairman. mr. secretary, let me ask you about -- oh, i'm sorry, yes. i'm reminded that our ranking member of the full committee has another engagement. i'm to yield to her. before i run my mouth any further. >> it is a good thing for you to remember. >> we have a partnership here. and i know the chairman and i

need roller states these days, there's about five or six hearings a day, but you're very gracious. thank you so much. and thank you, again, for your testimony, mr. secretary. mr. secretary, the criminal incompetent that resulted in tens of thousands of american citizens in flint consuming led contaminated water is shocking. historically, lead paint has been the most widespread source of lead exposure. much of the success we've had in reducing, spoe ining exposure t been in a partnership. each providing expertise and resources. however, of the past few years, funding for the lead has a control and healthy homes programs has been flat funded at $110 million with $83 million for lead hazard control grants

and 25 million for the healthy homes program respectively. down from $140 million just five years ago. and we know the job has not been done. with millions of american homes still containing lead based paint, i'm concerned your budget just does not address the serious need. are the resources that have been provided in this bill such fishant to fund the need for this program? for instance, how many grant applicants are turned away due to the lack of funding? how does the department pry prioritize who receives these grants? and what other sources of funds are available to remove lead paint from homes? >> thank you very much for your focus on this miss lowey. what happened in flint was a

shame. at the same time, we know this administration has marshalled a lot of resources to try and do what we can to address the needs of the residents of flint. hud, in fact, is involved in that response and has had somebody as part of the strong communities program on the ground in flint for over a year. but let me just address more specifically your questions. i wish that i could say that the resources that hud has received in the past met all the needs. as you heard earlier in testimony i believe that we're able to serve about half of the eligible applicants in the program, the lead hazard control program. in fiscal year 2015, there were 47 eligible applications. about $141 million of requests that went unfunded. so you're correct that the need outstripped the resources that we have. there are other resources aside

from this grant that are -- that can be used to address lead issues. one of those, for instance, is cdbg, community development block grants can be used. i wish i could give you the impression that these resources can meet that need. they cannot. it's true that we've had to make tough choices in the budget. as i mentioned in my testimony, 85% of our budget rekwechts is just -- is reupping the folks we are already serving. what that has done over time is put more and more of a crunch on everything else. what it's been cdbg or lead hazard control grants. we continually look for more ways to make these resources go further, for instance, whether through reaching out to philanthropic organizations or

providing technical assistance to local and state communities. you also asked about the process itself. being, it's a competitive process. so in terms of prioritizing, we look for those communities that have the greatest need and also put together compelling plans on how they would address lead based paint in that community. >> now, you have about 56 -- maybe we should talk about the healthy homes program another time because you've been so gracious to give me the time and i thank you and thank you, mr. account is, i appreciate it, i look forward to working together. >> thank you, miss lowey, again, for being so consideration with your time, it's greatly appreciated. general rogers.

>> i don't thing he got k he go finish -- >> i'll take the time that miss lowey would have, that's fine. >> found that there are more than 25,000 high-income earners living in public housing. these overincome families are taking up very valuable spaces, while over 500,000 qualified families are stuck on a waiting list. estimated that taxpayers will shell out over $100 million a year to keep these people in public housing that are not qualified, thatter there making more money than allowed. what's being done to check that? >> yes, thank you, chairman rogers for the question. of course, this did receive a lot of attention and i want to let you know very plainly this is a concern we share. i'm pleased to report we're working hand-in-hand with the

inspector general to address this issue, and so we've done three things. first on september 3rd of last year, we sent a letter to all public housing authorities strongly encouraging them to adopt policies that would transition out, extremely over-income individuals like some of the ones highlighted in the inspector general's report. on september 8th, just a few days later, we published the fiscal year 2015 flat rent notice which is going to result in a rent increase for most families playing flat rent and may lead them to choose market rate housing, give them that extra incentive to move on. and on february 3rd of this year, we published an advance notice of rules making. to strengthen oversight of overincome tenancy in income housing and ensure people residing in public housing continue to need housing assistance from hud after

admission. and this may be the most important part of our response. this advanced notice of proposed rule making gives us the opportunity to seek feedback and to ensure we go forward with a rule that will address the concerns the inspector general raised. if i may, the last thing i would just briefly say is that while i do agree that these housing authorities need to be tougher, especially in the cases that were highlighted in the report, i think through conversations with the hill, with i think staffs of different congressional representatives, also as reflected in chairman's bill. sometimes get barely over that limit. they become self-sufficient. you also want to encourage folks to work their way up so they can

get up and out. and so we need to encourage them to work harder and increase their pay so they can move out, but not cut them off the second that they do that. and disincentivize them from actually getting a pay raise and becoming self-sufficient. there is some nuance in here and i think that's reflected in the legislation being considered and the conversations we have. we hope that will be reflected as well in the final rule. >> is the 25,000 a fair figure? >> the inspector general did find just over 25,000. out of 1.1 public housing units, yes. >> but you have no argument with the number? >> we don't have any argument with that number. what i would point out though is the vast majority of those were

barely over the income limit. and some of them fall out of the income limit and back into the income limit. and this is i think what we need to address successfully in crafting a rule and we welcome the feedback of members of this committee and also have been enjoyed working with others who have asked, including chairman luchameyer and his staff. >> what's the -- >> for which part? >> the new rule you're talking about. >> we anticipate that -- we've done the advanced notice of proposed rule making and so the next step will be a notice of proposed rule making later in 2016 and i anticipate that in 2017 we would have a final. >> well, i understand your point about not cutting them off the next minute, but that income rule is there for a very real

reason. and there's 500,000 qualified families according to the inspector general waiting to move in that are qualified under the income level. so it's not fair to them. you agree? >> no, you and i -- we don't have a disagreement there and that's why as you can see from these steps we've moved forthrightly on this to address it. >> thank you. >> mr. price, you're recognized, sir. >> thank you, mr. chairman. mr. secretary, let's turn to the choice neighborhoods initiative. this is a program that transforms aging public housing developments into vibrant communities. it's a unique program in the hud portfolio in terms of its reach and scope. builds on the success of the hope 6 program which i know firsthand made a dramatic impact, particularly in raleigh, our capital city in north carolina. congress has provided fund for

choice neighborhoods since fiscal 2010. of course been proud to support it but want to ask you to rue flect on how we can improve this program, what kind of a success we've had so far. i wonder if you would cite particularly successes, either now or for the record. are there particular cities, communities, that demonstrate how choice neighborhoods can work and how, in your view, it should work? secondly, how -- how close are we coming to meeting the demand for this program, the meritorious applications that would make good use of these funds? how many applications apply for each round of implementation grants? how many were awarded? what's the level of meritorious applications not awarded? can you give us just some sense of what kind of demand you're dealing with? also with the implementation grants. the grants that actually carry

out the transformation we're talking about, what kind of success have you had and have grantees had in leveraging outside funding to supplement this? that was the hallmark of many hud programs of course. and wonder how it works here. and finally if you can address the smaller grants, of course they're much more numerous, the planning grants, much smaller, much more numerous, talk about how that's working, what kind of outcomes you've seen there. some presumably lead to implementation grants but all cannot. there's no way all those planning grants could lead to a full implementation grant, so what do they lead to? what kind of evidence you have about the kind of leverage the planning grants give? and what have we seen there in terms of the ability? even if a community doesn't get a limitation grant, the

availability to carry forward with the planning grant and nonetheless carry forward for serious work? >> thank you for your past support and your vocal support of choice neighborhoods. the value of choice neighborhoods really is that it's place-based work and it's breaking through silos. so as you know, building on hope six, this says it's not just about housing, it's all about housing and transforming a neighborhood. what can you do on housing and transportation, housing and education, housing and the availability of fresh food? housing and the environmental conditions around the housing? a couple of good examples of this, i visited neighborhoods in boston. i believe the name was roxbury, roxbury heights, but i'll check that. they were one of the first choice neighborhood grant

recipie recipients. they revamped their public housing. close to the public housing site, they also have an incubator that works on incubating small food-related businesses. folks who sell and package food are able to take up space there and grow their business. it's helping to improve that neighborhood in boston. a second example is the woodland neighborhood in chicago which is not too far from the university of chicago. they've partnered with the university of chicago for instance to help provide some safety, police protection. they've included recreational activities for young people and also opportunities for seniors it they've done it in a way which is great because again it's not just about providing housing but improving quality of

life. you asked about leveraging of other dollars. maybe the best example of this is that in new orleans for instance, in the first phase of the buildout of the choice neighborhood, implementation grant that they got for the housing, tend of tat the end of only 16% of those funds came from that choice neighborhood grant. so obviously they were able to leverage other financing to get that housing done. the planning grants, which traditionally have been $500,000 planning grants, are important. and a number of those planning grantees have become implementation grantees. although as you say, not all of them. but they have been a good base from which those communities have either successfully gotten implementation grants. a good example of this was san antonio, my hometown. or they've been able to leverage philanthropic support or other

programs. >> thank you, mr. secretary. mr. joyce, you're recognized, sir. >> thank you, mr. chairman. good afternoon, mr. secretary. >> good afternoon. >> prior to my arrival here, i was a prosecuting attorney for 25 years in jog county. responsibility to represent the county and the townships in how we adapted to local zoning. i have great concern with you permanently furthering fair housing rule or affh rule. using your authority like a hammer. robbing communities of their rightful say in zoning laws. this has caused great concern throughout my district and is what i believe one of the grossest current examples of government overreach. examining this rule and how in the eyes of your department is equipped. which area of the budget does your department plan to utilize researching, gathering the

opinions of local stakeholders? >> are you referring to the work that we already done or the work that's going to be done as part of each community's assessment of fair housing as it's rolled out now? >> yes, going forward, where in the budget do you have that plan to take into consideration these concerns? >> as you probably know, phas are able to use operating funds. there may be local or state resources that they're able to use. so there are a number of potential funding streams that they could use. >> okay. how is your department's research process structured so that its data establishes an accurate and thorough level of knowledge of each of the local community's wants and needs? and who ultimately will execute the programming from the federal level? >> thanks a lot for that question. this is an important one. this is being done -- the process has been done jointly. this has really been a

collaboration across hud to make sure we get it right, because historically within hud there has been this tension between our fair housing office sometimes and our community planning and development. in other words, cpd giving out thecpd giving out the grants and fair housing sometimes having to clamp down because of noncompliance with the fair housing act. so in order to get this right, we went out and got i didn't want input from local communities, that was part of the process. you asked about the data, for instance. the tools that we're going to give them. that was a collaborative process. on december 31st of last year, our tool effectively went out to these communities that are the 22 communities that are in the first round of respondents for affh. it's the latest data. it's more specific than they've ever had. it's more comprehensive than they've ever had. i just want to point out, congressman, you asked a question that i think a lot of

people are asking. >> sure. >> and there is this impression among some folks that hud is going to be very prescriptive. we can't tell a local jurisdiction you have to adopt this zoning law, planning law, or land use restriction. that is not what affh is about. it's about giving these communities the data that they need to make prudent decisions about how they invest these federal taxpayer dollars. and how they also live up to the fair housing act requirements. but we're not telling them specifically you have to do this here or else. we cannot do that under the law. >> to be specific, though, can you give me an example of where this research process has already been employed and touch on its level of accuracy? >> yes. actually there was a pilot program that touched on -- i want to say it was about 30

communities, that was a kind of precursor to affh, where communities drew up these plans with data and stated their own aspirations along fair housing lines and also how they connect the dots of housing and transit and general quality of life. and so we have a good set of about 30 communities that went through this that was a benefit to those communities. there was also a benefit to hud in getting to see that process and understand how we can provide good data to these communities and then let them lead the effort to come up with their plan. we do not intend to come up with a plan for them. this is going to be a locally driven effort to come up with these plans. >> thank you. i see i've competed my time, mr. chairman, so i will pass it back to you. >> thank you very much, sir. mr. quigley, you're recognized, sir. >> thank you, mr. chairman. good afternoon, mr. secretary. i'll go back to lead, lead

paint, in my hometown of chicago. as you are aware, we have a lot of incidents relating to section 8 housing and lead-based exposure. since 2012, around 178 children that we know of that have experienced elevated blood lead levels. two thoughts on that. i believe under the current department regulations, the lead-based paint standard or public housing is four times the cdc recommended level. are we working to adjust that through rulemaking or some other process? >> you're correct, and we are working with omb on that. we don't have anything to announce now. but that is something that is on our radar screen and we're working toward. let me just say as well that since fiscal year 2013, that every notice of funding availability for lead assistance

grants has recommended the cdc definition of elevated blood lead levels. so in the work that's being done out there, much of that reflects the cdc definition, even though you're correct, that right now there is a discrepancy between the cdc definition and hud. and we would like to bring that into conformance. >> i appreciate that. i understand the housing agencies are required to inspect the premises before people move in, something like a year after that as well. but as far as i understand, that's about the only way they're determining whether there may be lead-based paint issues. is there something else we can do to determine the level of risk out there? >> well, certainly the communities that are part of our lead hazard control grants are those that have identity issues in their public housing or other housing. so they're affirmatively

addressing these issues and remediating them, along with our funding, it helps to improve the overall health of that household. we're always looking for ways that we can be more effective in the future. so we would love to follow up with you on that. >> yes, i would like to work with your folks in chicago as well. second point, as you know, lgbt youth have an extraordinarily high rate of housing instability and homelessness, more than the general population. and transgender americans are the hardest hit, with one in five transgender americans experiencing homelessness. on behalf of the lgbt quality caucus, we want to thank you and support you for your proposed rule dealing with this issue. it's a crucial step forward in ensuring transgender people seeking emergency housing and shelter are able to find the protection they need. how do you plan to implement this rule?

are there specific issues you're going to have to address? >> well, first, thanks for the recognition on the effort. we believe that this is important. as you know, beginning in 2012, with our equal access rule, we started to address concrete issues that present themselves to the lgbt community when they seek housing and shelter. this rule addresses the responsibility of shelters and single-sex facilities. that is in process right now. and this is something that we're working to get done during this administration. and once it's rolled out, it's also clear that it's going to take i believe quite a bit of partnership with local communities and providers to ensure that this rule is implemented smoothly. i believe that just as the rest of the equal access rule has been, that we can do that.

>> and i think some of this is going to be your help in working with communities and shelters on education and some training and understanding specific issues here and how to help people who are at their most vulnerable point. >> no, i agree. >> thank you so much for your service. >> thank you, mr. quigley. mr. yoder, you're recognized, sir. >> thank you, mr. chairman. mr. secretary, welcome back to the committee. i note you were in kansas city earlier this year. i represent kansas city, kansas, amongst other places. you were there to talk about connect home. i appreciate you coming to our area. i wanted to talk to you a little bit about that program. you know, google fiber came to kansas city and provided a real opportunity, we were one of the first communities in the country to have this high speed internet. one of the challenges that quickly arose is that we have a digital divide. we have citizens, low income families that have no access to the internet in significant

portions. so i guess i just wanted to hear from you, how big is this a challenge across the country? it's certainly a challenge in my community. how much of this is a priority for your agency? and what can we do in terms of public-private partnerships to really resolve some of these discrepancies? this is one of those areas that ought to be bipartisan in particular because this is a bottleneck on access to opportunity. and if we're serious about giving people the tools to succeed in this country, giving them the levers to rise out of poverty, if they don't have access to the internet, it makes it that much more challenging for them. i wanted to turn that over to you and hear your thoughts on those questions. >> i appreciate the opportunity to speak to something that i agree with you, i believe ought to be bipartisan, as other issues have been before this committee. we're very proud of it. number one, this is a great example of a public-private partnership. all but $50,000 of this effort is being invested by the private

sector, internet service providers, and nonprofits. connect home is an effort to connect up residents of public housing in 28 communities, 27 urban communities and one tribal community, the choctaw nation in oklahoma, to the internet, because the fast majority of them are not connected now. google fiber are great participants in this. the idea is we believe that folks of modest means need 21st century tools in order to compete in this 21st century global economy. if we expect them to become self-sufficient. so this effort will connect up to 200,000 children. and we're actively now working toward expanding that. in this budget we requested, because remember, right now it's only been $50,000 plus the staff

time that's been devoted to this, we're requesting $5 million toward connect home. for those instances where just with a little bit of a public investment we might be able to get a community hoodiked up, because we think those dollars can go very, very far. the fact is almost all of this has been private sector so far. at the end of the day, i believe this is going to mean that we avoid more intergenerational poverty in communities in the united states, so that those kids especially that do get an internet connection, they're more likely to do their homework and apply for college and working age folks who can apply for a job. you're going to improve their upward mobility through this internet connection. >> i appreciate your leadership there. and i appreciate you coming to my community and highlighting that as an important investment for helping children rise out of poverty. i want to turn your attention to your proposal to support the

administrative support fee on the fha lenders again. and i'm pleased to see it has a sunset clause this year. i have a few questions about how it's to be implemented. congress has rejected this proposal. so i'm not necessarily pleased to see it back. but i do have some questions about how you suggest it would be implemented. first of all, it says it would be charged on a prospective basis. your budget also says mortgages insured under that title under the previous fiscal year. is this prospective or rhett owe active? >> it's prospective from when it's enacted. but the fee will be assessed at one point in the year, at the end of the year. i don't think i've seen the text you're looking at. i believe that's what's been described. it's going to be on transactions going forward. it's not going to be going backward. >> it states the fee would be calculated based on mortgages

that were insured under this title during the previous fiscal year. >> that's right. if we started it tomorrow, the fee would be assessed after that one year. and it's talking about going backward to capture everything after it was enacted. >> also under your proposal it says small lenders i think would get hit with a pretty hefty fee because of the complexity of the formula. will you base the fees on prior years of business? wouldn't it be better to assess the fee on the mortgage at the time it's made? lastly, your request is for $30 million. you also say the fee could be as much as four basis points. fha is projected to be a quarter million dollars over the three-year life of this provision. what are you going to do with this money, is it the right number? which is it? >> we've actual said between 2 and 4 basis points now, as a recognition of this figure that

you cited. and so we're also aware of the usda's approach. it's a little bit of a different approach. and we did give thought to that. we actually believe that this -- and one of the reasons we pursued this is because we thought it might be more manageable to smaller lenders. as for what it would fund, this $30 million would fund investment in our i.t. and ensuring that our risk management is as strong as possible. so, you know, we're confident that this will help us be a stronger organization at fha, that it would directly relate to the ability to work with lenders effectively and help them understand how they stand in comparison to their peers. and this is i think the third year that we're asking for this. but during this time, we very much have reached out to the

industry and worked with them in terms of taking suggestions. that's why you see the change, that it's prospective, that it's limited to three years, that it has a sliding scale of what it could be in terms of the basis points. all of that is in response to feedback that we've gotten. >> thank you, mr. secretary. >> let me ask you about -- first of all, welcome, mr. secretary, good seeing you again. let me ask you about colonias, those are the third world condition places that we have along the border. no water, no sewage. housing is something that's needed. sometimes they don't even have electricity. it's in the united states. we added some language through the help of the chairman and the ranking member, to make sure that the colonias were eligible

for the home ownership opportunity program. could you tell us what your plan is for the colonias, number one? then after that, if you could talk about your upward mobility project also. i think that's the cdgb money administered by hud and hss, and see what your work is, what your vision is on that also. so it's the upward mobility and then colonias. >> okay. thank you, representative. good to see a fellow texan. >> yes, sir. >> we have in this budget, we're making a request that we made last year. we really do believe that this would help serve our colonias better. as you know, there are a couple of thousand of them over four states, new mexico, texas, arizona, and california. current there's a 10% cgdb

set-aside in those four states. what we're asking for in the fiscal year 2017 budget is that we take it up to 15% but that it still be at the discretion of those states. this year it's only given the torsi authorization, let's say the states of new mexico, arizona, california, if they so desire, they can go up to that. >> that's right. right now, three of the states, only california. the rest is not. the rest of them are already maxed out at 10%. this would give them authority to go up to is15%. as you mentioned, these are the neediest communities by far in these states, with conditions that require a tremendous amount of attention in terms of

infrastructure, in terms of housing, and so forth. and we believe that this is a modest but important measure that would help improve the quality of life there. as to your other question, this is the second year we're proposing an upward mobility initiative. so the idea behind this is to give our cgdb grantees and home grantees as much upward flexibility as possible. it would allow up to ten communities, states or localities, to combine four sources of funding. cdbg and home from hud, as well as social service block grants and community service block grants from hhs, as a pilot project going forward, allow them to combine those funds for the allowable uses, and basically be able to get a bigger bang for the buck. on top of that, we're requesting $300 million in mandatory

appropriation for investments in communities that would allow that flexibility. so further proactive investments along those lines. and i believe that this is one way that we're trying to fill this gap that was spoken of in terms of the cbdg, that it would be an excellent way to see what some of these communities can do, when we further give them flexibility and have a good impact. >> all right. thank you very much. >> thank you. mr. young, you're recognized, sir. >> thank you, mr. chairman. welcome, secretary. i want to talk about a but des moines register" op ed that was in the paper last summer. there were a few issues you've probably heard about regarding waste and fraud and abuse. it published a story about a $5

million government loan in return for $40,000 in kickbacks. he was never disciplined about allowed to retire. another hud employee was kept on the payroll for 19 months after charges of threatening to kill and accessing hud computers to obtain information on his victims. we share the same goal of ensuring that funding for hud is spent on the most vulnerable in our communities, who are in really difficult situations, and as the editorial states, and we'll get you a copy of this, quote, every tax dollar lost to waste, fraud, abuse, and incompetence, is a dollar not spent providing shelter for the poor and those who need it. can you comment on what steps hud is taking to address these types of serious personnel problems, prevent them in the future, and increase accountantibility for taxpayers? in other words, how does this happen and how do we get to keeping our eye on this and

making sure this doesn't happen again? >> i appreciate the opportunity to address that. i had not seen that editorial but look forward to taking a look at it. number one, we're second a culture of accountability at hud. one of the first things that i did within i believe it was the first month that i was there, it may have been the first a couple of weeks, was to send out a joint letter with the inspector general that went out to all employees, encouraging them to collaborate with the inspector general on any types of reviews or investigations that are happening, and make sure that we have a positive working relationship so that we can root out more issues like this. secondly, we have increased our training for employees, including ethics training, so that employees understand the standard that we expect them to hold themselves to and that we

will hold them to. third, as i mentioned earlier in my testimony, we are in step with our inspector general on the overwhelming majority of recommendations that he has made and we're taking implementation of those recommendations seriously. fourth, we're trying to improve our hiring process so that we get the best and brightest from the beginning. i would say these instances you point out are an aberration. the vast majority of hud employees are honest, hard working people. but we also believe that we want to always improve as an organization. one of the things we're trying to do is improve hiring. we recently partnered, for instance, with toyota who came in and worked with our hiring folks to improve the hiring plan process. and we continue to work through the hiring process in general so that we can get the best folks available out there. and we're working with our

employees to gauge them and provide an organization that listens to them i think more effectively, so that they feel more engaged, and the good ones are likely to stay on longer because of that. our employee viewpoint survey scores went up significantly this year. hud was the most improved mid-size agency. we're doing all of those things and others to try and create a hud that is stronger, that is more responsive, and is more likely to avoid some of the individual instances that you pointed out. >> i certainly appreciate that. and i don't mean to infer that -- we only hear the bad things that happen out there on the news. so many positive things are happening as well with your employees. thank you for instituting the ethics training and the personnel programs. finally, i want to comment on the veterans affairs supportive housing. you mentioned that early on in your testimony, about a 36% decline in veterans

homelessness. that's great. can you talk about how you come up with that data and track that issue? and then i notice in your budget request, you're really asking only for $7 million for vash, and that's for tribal justification only. my concern with that is, is that an inference that we don't have a veterans homelessness problem? >> let me answer that part first. that's an important question, of course. it is not. number one, other resources that we're dedicating serve veterans as well. so for instance, when we request, as we are in this budget, additional resources for housing choice vouchers for permanent supportive housing, for rapid rehousing, all of those impact veterans. the lack of a request this year for vash is a recognition that we believe with regard to vash vouchers, that we have the resources we need to address the challenge of veteran

homelessness there, as vash vouchers can. we are proud to begin tribal hud vash. we awarded the first receivers allocations in december of 2015. we see a continuing need there. and let me just again thank the committee on both sides of the aisle, because i tell folks in public all the time that this really is an instance where i think things wording out the way that they should on behalf of veterans. the resources have been appropriated. hud and the va have been working with local communities to get these vouchers on the street. and i have to say, the teams that work on this are probably the most active and passionate teams on either -- in either agency, for obvious reasons. >> mr. secretary, on that note, i'm going to have to -- we'll look forward to continue to

drive down that number. >> we'll have further conversations. thank you, mr. chairman. >> thank you, mr. young. mr. secretary, the fifo issue is a major time. we kind of talked about this before. it makes it impossible for you to deliver audible financials. even worse, it's causing hud to violent federal law. can i have a firm commitment from you that this accounting problem will be corrected in time for your 2016 audit? >> i can tell you that we are working with the gao on this issue right now. as well as with the ig. you're right, it is an accounting issue. we don't believe we're violating the ada on it. but i can pledge to you that we will work diligently with the gao and the ig on this to resolve it. >> and again, mr. secretary, you know, i want to work with you. this is a hugely important issue. so, you know, let's just make sure that we focus on that.

i'm obviously willing to work with you to be helpful. >> will do. >> to be helpful. you are requesting -- let me go to the administrative fee area. you're requesting $2.1 billion for administrative fees. a $427 million increase, which is a 26% increase above last year. now, we all understand the importance of supporting public housing authorities so they can efficiently run their programs. but does it really make sense to ask for such a -- i mean, it's huge increase to the administrative account. >> this is an issue that i believe goes to how we can ensure that we have a housing choice voucher program that is more efficient, that is

stronger, serves all of those voucher holders better. the fact is that over the last several years we've only dedicated between let's say 70 and 80% of the admin fee that ought to have been dedicated, appropriated to housing authorities what changed is that we undertook an admin fee study to understand what was the appropriate level that we ought to be investing for the administration of these vouchers. and based on that, we have made this request, to increase the admin fee. this is important for housing authorities because over the years, they've been asked to do more and more with less and less. we believe this is the right level of funding to ensure this is a well-run program. it's a very big program, and an important one, and we wanted to

make sure they have the resources to get it right, to avoid problems in the future. >> hud has had a fair amount of success in leasing up units. phas have been able to leaguse nearly all of the available units in the purchavoucher prog the past two years. i don't want to punish you for your success, but the question -- it begs the question, if you're meeting your leasing milestones, why the need for more administrative overhead? >> i would just say the resources out there for administration are stretched very thin with housing authorities. we've done a dependable job in many instances of trying to stretch those resources as far as possible. he also understand this kind of expense is probably not the first thing that folks think about. but it is tremendously important that we adequately resource these housing authorities so

that they can continue to do a good job and get even better in the informatiadministration of program. >> my understanding is you have not yet implemented your new fee structure. wouldn't it make sense to hold the line on spending for this account until you've actually finalized the new administrative fee formula? >> we believe we do know the best approach based on the administrative fee study. so that gives us confidence that we understand the level of the propose racial, where this ought to be. that's reflected in the request. >> finally, what are some efficiencies that the phas, i don't know why that's hard for me to say, could implement so that they can keep their overhead expenses down? >> you know, there are a number of them, actually, across the board. some of them are addressed in chairman luke meyer's housing opportunity through modernization 3700 legislation. basically they center around

different things. for instance, giving flexibility with regard to inspections and income verification, especially for smaller housing authorities, so that they're not as administratively burdened. they can do things other than have to routinely check on the same information year after year, that oftentimes for many of the residents has stayed the same. if you have, for instance, a senior resident who is on fixed income, and that's demonstrated on record to the housing authority, there's really not a reason that they ought to be verified every single year. that can go to once every two or three years. those are the types of things that we're working, we want to work with housing authorities on in order to reduce their administrative burden. >> thank you very much. mr. secretary, the ranking number. >> mr. bryce, you're recognized, sir. >> thank you, mr. chairman. mr. secretary, before moving on

to other questions, i want to briefly return to the initial question about choice neighborhoods, because it was a rather complicated question, and certain aspects of it didn't get answered. you might want to respond for the record on some of this. but i'm eager to get on the record, one way or another, the answer to the question i asked about the level of demand here, the kind of ratio of meritorious proposals that -- implementation grants we're talking about, the ratio of meritorious proposals to what you're able to fund given your appropriation in recent years. >> yes. so most recently there were 33 implementation applicants for five implementation grants that were awarded. >> what time period does that cover? >> well, the grants that were last awarded a few months ago. so this would cover the last fiscal year's grants, which was

i believe fiscal year 2014-2015, just a couple of months ago. also you asked about planning grants. we awarded seven planning grants. we had 51 applicants for those grants. >> all right. so that's fairly typical of recent cycles, i assume, that ratio. >> it is. these are -- choice neighborhoods is very popular out there. there is a lot more need than we're able to dedicate resources too. and that's one of the reasons that we're requesting a significant increase this year from the $125 million that was appropriated last year to $200 million. >> let me just quickly register a question about this new category of grants that you're proposing, the so-called planning and action grants.

that aims at smaller projects. i wonder what kind of projects you're looking at there. i think i'll ask you to do this for the record, because in asking the question i'm somewhat concerned about proliferating too much small and modestly sized grants in a way that begins to eat away at the limited funding we have for implementation grants. after all, the implementation grants, the larger grants, the more comprehensive projects, are what choice neighborhoods is all about. so i'm going to ask you to elaborate for the record how these smaller grants, especially this new category, what kind of volume you're anticipating there and what the budget impact would be. >> we would be glad to. as you know, this is the first time -- this is a new category and we are excited about them. we'll be glad to elaborate on the record, why that is and how many we anticipate making and so

forth. >> yes. and of course the impact on the main item, which is the implementation grants. housing for the disabled and elderly. i raised this in my opening statement. you know, mr. secretary, many states are struggling to comply with the olmsted decision in terms of housing for the disabled. we need to do a lot more to integrate people with disabilities into their communities. this mismatch is widespread between the housing available, the housing required to meet this goal. there's also a dearth of housing for the elderly, the kind of need that the 202 program has historically addressed. there's a shortage of available unit, ten people waiting often for each unit. yet this budget request seeks no funding for people with disabilities or the elderly, 202, 811. in years past the request has included new resources.

i wonder why the request is not more ambitious. and then, just on disabled housing in particular, how can had you had leverage other programs like home, programs, to create units to further homestead to compliance? or the mainstream voucher program in tennent-based section 8. are there other ways to get at this issue besides the conventional 811 program? >> there are other ways. we are making a significant request of housing choice vouchers. and for instance, in the 12-month period from january 2015 to january 2016, in our hcv program, 22% of new admissions to the hcvp program were nonelderly disabled families with no children. 7% were nonelderly disabled

families with children. and another 7% were elderly disabled families with no children. so in total, 36% of hcv admissions were disabled families. and i point that out just to say that we were serving individuals who are disabled in several different ways. you're right, 811 and 202 have not been funded for new units. we did have a request last year, as you probably remember, for 700 new units of 811. each year as we make our budget requests we do have to make these challenging choices. it is something that is a priority and that we believe that we can make progress on in these different ways. with regard to elderly housing, i think it's the sail there. we're looking forward to utilizing that fiscal year 2014

appropriation to get a better understanding from our research project on 202 housing of the link between housing and health and how we can create savings and ensure that communities are doing everything they can to provide investment in housing and in support of services up front, and save money for medicare and medicaid later. hud is working with hhs to provide technical assistance to states that are looking for ways to utilize medicaid dollars to provide to elderly and disabled residents. so there are different ways we're approaching this challenge. of course, you know, i don't disagree with you that this is very important and that new units have not been funded. >> thank you, mr. secretary. >> we'll do what we can. >> thank you, sir.

mr. joyce. >> thank you, mr. chairman. mr. secretary, back to this ffh example you gave to me prior to our getting cut off, you mentioned that there were some prior research that went into it. could you give the subcommittee an exact example of where it is you're using the research and data you gleaned from your backgrounds into making -- acting in concert with the community and the outcome of the fahh? >> i'll be glad to follow up with you. i don't have those in front of me. i know we did engage in that. i'm very proud of the team from our policy and research group, as well as fair housing and cpd. because this had come up in the 1990s and it had not gotten past the finish line, it was not

successful, from the very beginning they were attentive to local communities in trying to understand how we could make this feasible to them and put them in the driver's seat. we'll be glad to share with you on the record these different instances of plans that were put together in communities. >> thank you. and would you consider, are you familiar with the chicago, dubuque, iowa information you were working on? would you consider from chicago to across the border to dubuque, iowa, to be successful? >> i'm not familiar with that particular example. i would love to learn more about it. to us, the point is that there are a couple of things that we know. number one, we know that these decisions, whether they're land use decisions or other policy decisions, are best made at the local level. and so we want to respect that. secondly, we also know that

communities and we share an interest in them making the best use of federal taxpayer dollars. and then third, we do see affh as part of the unfinished business of the fair housing act. i want to be straightforward with you. there is a component of ensuring that they live up to the obligation of the fair housing act. but we don't want to do it in a heavy-handed way. we want to collaborate with them and let them make the decisions. in those cases where we have flagrant violations of the fair housing act, communities that are just completely unwilling to work on these things, then there will be enforcement. but i see that as a last resort, not as a first way to come through the door. >> sure. >> and so we have -- our folks have given a tremendous amount of thought to how you could put local communities in the driver's seat so they can make smart decisions about what ought to be invested and how in their

community. >> i'm really interested in understanding how moving people across state lines is somehow bettering the communities. the other problem we have, obviously, is foreclosures, and vacant properties which we know are areas that become drug houses, centers for drug activity in neighborhoods. these abandoned properties are a huge problem, obviously, in many communities. do you have a plan to complement the agency' initiatives and refurbish these communities? >> this is a challenge in a lot of communities, especially coming out of the housing crisis, as we have. as you remember, we had nsp funding a few years ago that was very helpful to communities in this regard. of course that is not a stream of revenue anymore, investment. but we encourage communities to use some traditional funding like cdbg, for instance, that has the flexibility so they can

address the issues of foreclosed-upon properties. in fha we work in several different ways to help folks avoid foreseeable. -- foreclosure. we've tried to get those resources into the hands of communities to avoid foreclosures. they're several steps we're taking. in addition to that, let me just say we're very proud of the housing counseling that hud has done, that hud has funded. we're requesting $47 billion, which is what was appropriated last year. part of that is foreclosure counseling, to help avoid foreclosures. we're trying to address this in multiple ways. >> and i appreciate that. we're looking at those houses that, will gone. and for lack of a better term, they're bad bones.

they need to be taken down. that's why hhs1'í and the hamp money that we got together. i was wondering if you're working in concert with secretary lu to get that money in communities that need it the most. >> to the extent that these communities request some sort of technical assistance, our folks of course are in communication with treasury. there are individuals communities that we've been working on together, sure. >> that would be gate. thank you very much. >> thank you, mr. chairman. mr. secretary, let me ask you to look at the hud vash, the federal rental assistance, or the va. in laredo, laredo only receives about 15 of those vouchers. i know that there is a point in time survey that's done.

but there's something happening where we still have a lot of veterans still homeless in laredo. i understand the survey and what they use that for. to the point where, you know, even some of the veterans that have relatives in nova laredo so they can forward being ovafford there. i think it's a shame to go over the river to mexico to get housing. could i ask your folks to work with us a little closely on this particular issue? i would be happy to show you this big story that got written locally, i think it's a two- or three-part series about veterans. and it's just one of those issues. i know there's never enough money, i understand that. but i would ask you all to, if you can assign one of your -- robbie greenblum or one of the folks from san antonio to work

with me. i would ask you to just work with us on this, because -- i know the city manager is here in the audience with us. and it's an issue that we've been trying to figure out and we can't seem to get over this survey point in time. so i would ask you to just work -- i know you're very passionate about this issue and want to work with your office. >> absolutely. we are very proud because of everyone working together that we've seen a 36% reduction in the veteran homelessness over the last few years. at the same time we know that, number one, we can't stop pushing and driving that number down. secondly, we need to reach all communities. so for instance, from the fiscal year 2016 funding that we received, we're creating another category for smaller communities to get hud vash, to more pro actively work to get hud vash

into smaller communities. we think that will help fill the gap for smaller communities. i had the opportunity to meet with one of your councilmembers. this was one of the issues they took up. we look forward to following up. >> thank you, mr. secretary. yes, we do want to follow up. it's an ongoing -- you know, it's just shameful that they have to go to another country to get housing on that. so i look forward to working with you. i also want to extend the invitation again to -- i think we had talked about you going down to laredo. we'll find a time that works and have you go down to laredo. the city of laredo would be willing to host you. i know we the chairman down there and he saw the transportation needs we have, the largest inland port in the united states is in laredo. we would love to host you down

there sometime. as you know, you were the senior international a couple of years ago, which is a big celebration where they recognize somebody from the u.s. and somebody from mexico. the secretary was the senior international. thank you for your work. >> no doubt laredo is frankly a very special place. it really is. a very special place. mr. secretary, let me go to one more area. again, i thank you for being here and for being forthcoming. i want to talk briefly about moving to work. for the fy 2016 bill, we gave authority to establish 100 more moving to work agencies. and our foremost goal, though, is to see what works well, and then expand those areas across hud programs.

however, gao and hud's ig have noted repeatedly that hud does not have performance measures in place to gave the effectiveness of mtw agencies. worse, we have seen some agencies use mtw flexibilities and serving people in need. what is your time frame for those mtws and what criteria for selecting the participants will be used? >> it's a great question. number one, the 39 mtw agencies that we have now have done a number of creative things over the years that i believe demonstrate the value of mtw. you're correct that ensuring that we have better ways to

measure the outcomes that have been achieved because of mtw ought to be a priority and it is a priority, because of the new authority that we have, we'll increase the number of mtw agencies by a hundred. that gives us the opportunity in this new contract the chance to include more performance metrics. and i believe be able to measure the value of mtw in unprecedented ways. as to your question of how we're going to implement this, the legislation requires us to establish an advisory committee. and so we have begun work, going forward, to get an advisory committee together. we expect over the next a couple of months to do that, to make recommendations on what this expansion of mtw should look like. the legislation gave us a number of years to accomplish. this will phase in.

we don't anticipate that it will happen all at once. it will be in manageable phases. i can't say right now whether that will be ten or 15 in the first round. the advisory committee will help us determine that. to your point of being able to measure the outcomes better, i am completely in agreement with you that this new approach ought to include more of that, because right now, frankly, i do think that there's a dearth of that information. >> do you anticipate that this expansion will have an actual cost, the cost in terms of hud's staff time to review, to reflect, to monitor these new agencies, mtw agencies? >> there will be a cost associated with it. in future budget requests, we believe that it would be appropriate to provide the salary and expense increases

necessary in our public and indian housing program area, to keep up with the additional monitoring and collaboration with these mtw agencies. right now i can't tell you with specificity how many people we're having to deal with this issue for affh as we ramp up in the fair housing office. for instance, our affh engagement. i do think there are going to be some costs associated with it. no numbers yet. a >> and again, you touched about the issue of, you know, measuring performance. and, you know, do you -- any idea how you intend to measure performance so that the best practices can be documented and hopefully repeated elsewhere? >> yes, to my mind, and certainly the folks who are working on this in our public

and indian housing, the flexibility we're allowing these mtw agencies is meant to have better outcomes in terms of self sufficiency, for instance, of the residents of public housing. so the kinds of performance metrics or outcomes that i would like to see measured are, compare a non-mtw agency to an mtw agency and tell me what is the average length of time that a public housing resident lives in public housing, how long is a family there in one versus the other, how have you been able to use your flexibility to create suv-sufficiency faster. you know, let's look at the educational achievement of residents in mtw agencies versus non-mtw agencies or income levels in one versus the other. these bottom line outcome

assessments that will show us whether -- you know, in a more specific way, i think, whether the flexibility that we've allowed is paying off in the life outcomes of the people that we're serving. to me, that's what's most important. >> thank you, mr. secretary. i appreciate that. mr. price. >> thank you, mr. chairman. let me move to public housing and in particular the repairing and maintaining our public housing stock. congress bears primary responsibility for that, for chronically underfunding this account. i start out by saying that. however, i'm concerned that hud didn't ask for any increase in the public housing capital fund in the fiscal '17 request. i wonder why that's so, what it indicates. i wonder if you could discuss

the rationale behind that decision to provide essentially flat funding when it's clear we're falling farther and farther and farther behind. and then secondly, i wonder if you could reflect on the impetus that lies behind moving to work, for example, which you've just been discussing, or the rental assistance demonstration program, the r.a.d. program, or for that matter choice neighborhoods and other demonstrations programs. to what extent are these programs drawing on discontent or the shortfall of adequate funding for the public housing capital fund? are we seeing here ways of compensating for that? clearly we have a problem with

that essential capital fund appropriation. so i guess i'm asking you very broadly what are the strategies for dealing with it and to what extent are they or are they not reflected in the budget before us. >> you're right, representative price, that over the years, the funding has not been there to keep up with the public housing capital needs. and we do have over a $25 billion backlog in public housing capital needs. so what you've seen is that we've had to become creative and the rental assistance demonstration project, r.a.d., represents one way we've done that, with the private sector analysis that we got about a year and a half ago showed that of the first 57 deals of r.a.d., for every one dollar, federal dollar that was invested there, there were 19 non-federal dollars that it leveraged.

so r.a.d. has been successful in leveraging private dollars and some philanthropic dollars, i believe. with regard to the capital housing needs that we have, you're correct that this request this year i believe is a $35 million reduction from what was enacted last year. and in part that's because we do see more activity on the r.a.d. side. we've converted 30,000 units. we already have the applications for 185,000. we have a waiting list of 11,000 units now. we're asking congress to remove the cap because we believe that the demand is there and that there are a lot of units that can be renovated. if we would lift that cap, we can do some of this work successfully.

but we're also requesting some flexibility so that public housing authorities can use 30% of their operating and capital money interchangeably, so that if there are some dire capital needs that they feel have to be addressed now, that they do have some flexibility to do that. this is of course the kind of flexibility that exists for mtw agencies. and in the past we've made a broader request for flexibility. but we feel that the 30% flexibility request makes dvb.w, and that it could be used to for some of these needs. >> thank you. that's helpful. i just observe, though, that the answer you gave regarding the public housing capital fund, just like the answer you gave earlier on section 202 rental housing for the elderly, and on section 811 housing for the disabled, all of that just

underscores the limitations we're operating under. and this is even with a budget agreement. this is getting off of this and he train statisequestration lev adequately in terms of the needs we're addressing. i hope for a good allocation this year as we write the bills. i of course hope and expect that we will have our usually collaborative process across party lines. but i just am stunned by the magnitude of this task, and just how much we're having to devote of this budget to simply staying in place. so we have a lot of work to do. we of course look forward to you as a full partner in this effort. >> thank you, mr. price. further questions? mr. secretary, this has been

very helpful. let me once again thank you and also your staff for your participating and your participation today and for answering our questions. the committee staff will be in contact with your budget office regarding questions for the record. and we'll have a number of questions to submit, and i would imagine i'll have some and i imagine that other members will have questions as well. if you would please work with omb to return the information for the record to the subcommittee within 30 days from friday, we would then be able to publish the transcripts of today's hearing and make informed decisions when crafting the fiscal year 2017 bill. and again, we look forward to working with you. we appreciated you being totally accessible. and the subcommittee looks forward to working with you as we put this bill together for this year.

tomorrow we will see the administrator of the federal aviation administration. i look forward to that. mr. price, any final comments? with that, mr. secretary, again, our secretary, our gratitude and with that, we will now close this hearing. thank you. >> thank you so much.

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>> march is women's history month and we're honoring it with a special discussion with richard norton smith and susan swane, to discuss their book first ladies. focusing on the unique partnerships and ambitions of the first ladies. that's saturday at 7:00 p.m. eastern on c-span. >> this weekend the c-span city's tour hosted by our time warner cable partners, takes you to anaheim, california. on book tv. >> the idea actually came from my editor at oc weekly at the time, i wasn't offended by the idea of asking mexicans, i didn't want to do it at first, because i didn't think anyone would care. in journalism, you want stories

people care about. i thought the idea, who's going to want to read an advice column about mexicans. just seemed silly. but we needed to fill a space and he said it's only going to be one time, a satirical column, people went nuts for it. some people loved it, some people hated it, but more importantly, people were caring. and where it was supposed to be a joke, i said, ask me, i'm the mexican. people called me and started sending me questions like crazy immediately. >> and on american history tv -- >> john froling and his partner go up to san francisco, which is where a lot of the german immigrants are located and are actually able to -- i find it very shocking, but are able to convince 50 people of whom nobody was a farmer, and only

one person had any background in wine-making, to give up their businesses and come to anaheim. so their first action after they form what's known as the los angeles vineyard society was to hire george hanson to be their superintendent. and his job was to bring the irrigation here, lay out the town site, and plant actually hundreds of thousands of grapevines before the families would actually even come down here. >> watch the c-span cities tour, saturday at noon eastern on c-span 2's book tv. sunday afternoon at 2:00 on c-span3. the c-span cities tour, working with our capable affiliates and visiting cities across the country. earlier today, energy secretary moniz was on capitol hill. to brief lawmakers on his 2017

budget request that calls for $32.5 billion. this is just over two hours and 15 minutes.

>> dwrge, this committee will come to order. this is the second of our three budget hearings before our committee. our final hearing on budget will examine the forest service budget scheduled for next tuesday. secretary, it's good to have you before the committee. i want to again thank you for traveling to alaska and to oscarville with myself and ranking member and four other members of the committee. it was a great field hearing, but we really appreciate that you took the time to see the need, the opportunity, and also the progress that we're making on energy innovation in rural alaska. the buzz is still going around the tundra there about the visit that was had.

and the interest that was given to the region. so, we appreciate what you have done there. we also appreciate the effort that you make to work with us, looking forward to your testimony today. no surprise to you, but i have been critical of much of the president's overall budget request, including his proposed $10.25 barrel tax for oil that would hurt families, businesses and our broader economy. the president's budget features tax hikes, increases and other policies that)v will only maker primary energy industries, oil, natural gas and coal, less productive. despite totaling $4.1 trillion, the president's budget also cuts the base funding for the low-income home energy assistance program, which helps thousands of alaskan families stay warm in the cold months. these are a few of my general criticisms of the president's budget request. the reason we have hearings like this is so we can take a closer look, see if there are things we

might be able to work together on within specific areas. to your credit, secretary moniz, the budget for the department of energy has plenty that i think fits into that category. so i thank you for that. but i also think that it is a tribute to your leadership and to your efforts to improve your department's performance in a cooperative as well as a bipartisan manner. as you know, sometimes we don't always agree but you have always given me the courtesy of an outreach and conversation, and i appreciate that. as i mentioned, this is not the budget for the department of energy that i would write. it only partially adheres to the balanced energy policy that most of us agree on with significant increases for efficiency and -- vehicle and renewable technologies, but a cut proposed for fossil r & d, and the work that we should be doing to help

methane hydrates. i have some questions about spending that the budget proposes. but here's the good news. even in the instances where, again, we may initially disagree, i know that you're going to work with us to find some common ground. when it comes to the importance of innovation in america's future, particularly america's energy future, i know you and i are on the same page even if our numbers don't necessarily align. i think the ultimate goal is there. thank you. appreciate the opportunity to work with you and we look forward to your presentation. with that, senator campo? >> thank you, madame chair. thank you to the secretary for being here at today's hearing. i am very pleased to see that this year's 2017 budget request continues to push for

investments necessary for building the future of our economy through science and clean energy. the budget requests greater funding and 10% increase for doe in fiscal year 2017 is appreciated. total budget request is $2.9 billion more than enacted in 2016. successful investments that doe under your leadership. we thank you for that. in particular investments in science and energy have grown 15% over the last five years, acknowledging the crucial role that innovation plays in enhancing our energy security, mitigating and adapting to climate change, boosting manufacturing competitiveness and creating jobs. this budget takes a big step forward in fulfilling the u.s. pledge to double federal clean energy research and development over investment over the next five years as part of mission innovation. in november 2015, president obama and other global leaders announced the creation emission innovation.

this initiative is made up of 20 countries that have committed to doubling the research and development funding over five years in an effort to spur clean energy innovation. budget request details of the proposal would increase federal investment from $6.4 billion in fiscal year 2016 to $12 billion in fiscal year 2021. it makes the administration's commitment clear, providing $7.7 billion for fiscal year '17 and funding of clean energy r & d across 12 agencies is roughly 20% above fiscal year 2016. but what is also key to this effort and success is partnerships with the private sector. at the same time the administration announced mission innovation, private sector initiative of innovation was also announced and the breakthrough energy coalition led by bill gates is made up of 29 investors from ten countries that have committed to significant increases in the amounts of capital in what will be focused on early stage

innovation, clean energy technologies. these partnerships will help entrepreneurs translate investments in fundamental science, applied research and development ranging from everything in smart buildings to energy storage, to grid modernization, to the new kinds of products and services that help boost america's competitiveness. along these lines i want to mention proposal including the doe budget to establish clean innovation partnerships around the country. it's a new proposal, secretary moniz, and we have discussed this, you and i, along with our colleagues about the potential advantages of this. the goal of these partnerships is to accelerate the pace of clean energy innovation and address clean energy challenges, specifically to energy resource, customer needs, innovation capabilities and regions around the country. just to be clear, this isn't about new physical infrastructure. this is about partnerships. this is about regional initiatives that help us move faster.

i would like to say it's almost as if it is distributed innovation. we have expertise in universities and research centers across the nation. i know for us in the pacific northwest, the fact that the faa built a center of excellence on composite manufacturing, took advantage of the industry that was there in aerospace, the research that was done at the university of washington and the research capabilities of the federal government allowed us to move faster in something that was game changing aerospace manufacturing to building lighter and more fuel-efficient planes. that's the kind of innovation we would like to see in other key sectors. i just want to say a few words about the doe science budget as the office was sciences is the single largest sponsor of basic research and the physical sciences supporting over 24,000 investigators at over 300 u.s. academic and doe laboratories, it also plays an important, sometimes under-appreciated role in climate science as it relates

to developing expertise, computing capabilities and data necessary to understand the carbon cycle and the fiscal year budget request of $5.67 billion, which is 325 above the 2016 level. this investment, i believe, allows doe to do the basic research in physical science, operate cutting edge user abilities while advancing technology and innovation. this funding supports the energy frontier centers, the bioenergy research centers and advanced computing research. i also am pleased to see the request for energy efficiency renewable increase by 40%. building efficiency for fiscal year 2017, having a bump is particularly important. because they're really emphasizing new technologies, patrol technologies and everything that will make the

building's system itself smarter. why is this so important? we spent $400 billion each year to power our homes and commercial buildings in the united states. that is more than 40% of our nation's total energy bill and it basically comprises 40% of the nation's carbon pollution. so getting smarter about the intelligence of the physical structures that are consuming energy is a very good investment for our nation. leveraging the new smart buildings technology could help us cut energy use in buildings by another 20% while the global markets for these technologies is extremely lucrative opportunity for the united states, somewhere between $7 and $17 billion. so the united states being a leader here could help pay off significantly. there is an area of the budget i am concerned about. and the president's proposal on the hanford budget. i was relieved to see that the proposed budget will allow for

continued progress on the construction of waste treatment immobilization plant and continue the stewardship of the tank farms. but my colleagues continue to have this focus of what is a national priority. the hanford clean-up project is still one of the largest clean-up projects in the entire world. i know a lot of my colleagues are familiar with the budget as it relates to clean-up projects around the country, and we've had some success in areas, but nothing compares to the task at hand at hanford. it is estimated to cost us, the u.s. government, another $107 billion to finish this clean-up. so this is a massive task and undertaking, so proper funding also enables that we will continue to make sure that worker safety is a top priority. these people are doing an

incredible job, doing the clean-up, which is a monumental task, but also doing it in a safe and secure manner. i know secretary muniz, you know the complex challenges of cleaning up at hanford and how much is left yet to tackle. i'm concerned about the implications of the current budget on the clean-up effort. the department of energy richland office has done an incredible job of decontaminating and demolishing and removing waste. and basically remediating the river corridor. so, to date, 324 of the 332 buildings have been decontaminated and demolished and 115 million tons of hazardous waste has been moved away from the colombia river. i invite any of my colleagues to

visit both the history of our nation as well as the clean-up effort. we welcome them. 574 of the 580 waste sites along the river have been remediated and all the regulatory milestones have been completed on time and ahead of schedule. but i'm afraid that the rich land office has been somewhat of a victim of its own success. especially judging from the $190 million proposed cut to fy 2017. the tricities community and i visit this as a significant risk to the public. the funding shortfall endangers the progress made and also risks ground water contamination. the completion of 618 waste site remediation of building 324, which is highly contaminated, and only a few, just a few yards away from the columbia river. these projects are important. and technically demanding. so the notion that we're dealing

with ground water remediation, so close to the columbia river, for the focus of the tricities, we want to do more, and not worry about cutback from success. technically challenging clean-up work. we know how important it is for to us continue to move forward. so i look forward to having that discussion with you during the q & a and just want to also say that i'm concerned with the proposed $130 million overall cut to some of the non-proliferation programs. your work on the iran nuclear agreement was a great milestone, but it's clear the department of energy will continue to play a leading roll in the safeguard technologies that support global materiel strategy and certain support the grid modernization increase and thank you for the focus on energy storage. so thank you, madam chair, and i look forward to hearing the

secretary's comments. >> thank you, madam chair. >> i'm going to offer apologies on behalf of committee members. i know there's a lot going on this morning. started our hearing a little bit earlier to try to accommodate it, but if you see people popping in and out it's not because of lack of interest in the department of energy. it's just a lot of conflicting priorities. thank you for being here and if you would please proceed. >> well, thank you, chairman mikulski and ranking member cantwell and members of the committee. actually, it's good to see many of you from our trip a few weeks ago in alaska which was really excellent and i found extremely educational. so, thank you for that field hearing. turning to the budget, as was already said, the budget request for fy-'17 is for $32.5 billion in discretionary and mandatory funding. an increase of 10%.

from the fy-'16 appropriation. first i do want to emphasize that the request for the annual appropriations is $30.2 billion which is a 2% increase over fy-'16 appropriations and, in fact, 2% also applies to the national security programs and to the domestic programs at the department. this 2% increase is supplemented by a request totaling 2.3 billion in new mandatory spending authority. that mandatory spending proposal includes $750 million for three different r&d activities which i'd be happy to discuss, of course, and $674 million for uranium enrichment d & d, the latter from the usec fund. the $1.6 billion -- i do want to emphasize that $1.6 billion usec fund is an existing not new mandatory spending account and

our proposal is in keeping of the spirit of the still current authorization that revenues from the beneficiaries of past uranium enrichment services, rather than taxpayers at large, be used to pay the cost of d & d of the now shuttered facilities. and indeed in 2000 congress recognized the applicability of the usec fund to support portsmouth and paducah d & d. and the usec fund is only one of three funds totaling nearly $5 billion that exists that are applicable to this cleanup problem of uranium enrichment d & d and finally i do want at least in passing to acknowledge which is very important that underpinning all of our priorities is stewardship of the department as a science and technology powerhouse for the country with an unparalleled network of 17 national laboratories. and i can assure you, and there have been recent reports, that we are working very hard.

we have been for several years, to strengthen the strategic relationship between the department and our national laboratory network. i also just want to mention that we continue with the strong emphasis on cross-cutting r&d initiatives. these have been extremely successful in our view and our major focus -- the biggest increases in this budget in the crosscut is for grid modernization and for the energy/water nexus and, of course, we also continue a very important crosscut in terms of advanced computation particularly the movement to exit scale computing in the next decade to do everything from nuclear weapons to energy technologies to cancer solutions. the supporting budget details for each of these is provided in an extensive statement for the record which i request to be inserted into the record, and i will just turn in the remaining time to some comments on mission innovation and why it merits your support.

senator cantwell already gave quite a bit of detail about mission innovation in which 20 countries, including, of course, the united states, seeks to double our energy r&d over a five-year period. i want to emphasize those countries represent over 80%, approximately 85%, of global public energy r&d, so this is a big leveraging opportunity in terms of raising the level of global energy r&d. we believe mission innovation is long overdue. in 2010 the american energy innovation council composed of ceos of some of our major companies from multiple sectors recommended that the government triple investment in clean energy r&d. they made three key points. one, the innovation is the essence of america's strength. two, public investment is critical to generating the discoveries and inventions that form the basis of disruptive energy technologies and, third,

the costs of our d & d, are tiny when compared to the benefits. the pledge to seek to double the level of government investment is ambitious but needed. as you know, bill gates a leader of the aeic has recently met with a number of members and making public statements reiterating the importance of increasing budget-sponsored -- increasing government-sponsored energy r & d. the objective of mission innovation is to greatly expand the suite of investable opportunities in clean energy technology and certainly with the growth we are already seeing in the -- in global clean energy technology markets and in the united states as well, and the expectation that that will accelerate in the wake of the commitment by essentially every country in the world to meet -- to meet their nationally determined contributions means this is indeed an enormous opportunity for american innovation and american -- and the american economy.

the scope i want to emphasize the scope of mission innovation does span the innovation cycle from the earliest stages of invention through initial demonstration, with a focus, a weighting, towards the earlier stages of r&d. it also spans all clean energy supply-and-demand technologies and the infrastructure that enables those technologies to contribute. as already stated, mission innovation is complemented by the breakthrough energy coalition spearheaded, again, by bill gates. i just want to emphasize here another leveraging opportunity. billions of dollars of global private capital coming to the table with exceptional risk tolerance, exceptional patience for return on their investment, and a willingness for the leading technologies to go end to end all the way to deployment. so, we think this is a tremendous opportunity for our country. i just want to make a couple of

words, if i may, on clean energy innovation -- on regional clean energy innovation partnerships. again, in our field hearing in alaska we certainly saw how different parts of the country have very, very different regional needs. these i want to emphasize would be not-for-profit consortia to -- competitively selected to manage a regional clean energy r & d portfolio, and they would not bee performers, they would e managers of this portfolio, addressing regional needs through presumably, mainly at least through regional institutions. this approach tracks recommendations from the national research council's rising to the challenge, which noted that, quote, until very recently u.s. federal agencies have done little to support state and regional innovation cluster initiatives. and they recommended and, again, quote, that regional innovation cluster initiatives by state and local organizations should be assessed and where appropriate

provided with greater funding and expanded geographically. so, i think these initiatives, both this initiative, is very much in line with what has been a long-standing desire expressed by the private sector and the research community. the mission innovation budget we should emphasize does also, of course, support increased investments in successful ongoing innovation programs, many involving national labs, but such as rpe, energy frontier research centers in the science office, advanced manufacturing centers, bioenergy centers, advanced transportation, advanced nuclear reactor technologies, advanced carbon capture technologies to name a few. with that, madam chair, i would conclude my summary. thank the subcommittee for its interest and support in our programs and look forward to our discussion. >> thank you, mr. secretary, and i appreciate you highlighting some of the things that we've

been working on several years ago when we introduced the energy 2020 and brought up for discussion at that point the energy/water nexus and the priority. and so it's good to see the department taking that and running with it as you have mentioned, also highlighting that the public/private partnerships that mr. gates is leading up, the opportunity that many of us on this committee have had to sit down with him as well as you for further discussion. so, we appreciate that. i want to go a little more parochial and do my first round of questions focused on alaska-specific initiatives, and, again, thank you for coming to bethel. thank you for your commitment to try to make a difference out in places where there is no -- is no energy grid so to speak. you mentioned at our field hearing that you recognize that the d.o.e. office of indian energy was understaffed and that

you were intending to add new staff members to the alaska office. can you give me any update when we might expect to see additional staff put in place there? >> yes. well, we have the job description posted for the first of those -- first of those positions, and i'm certainly looking to get at least two positions filled in the next, say, half year. but we'd like to get people there as soon as we can. and we have to go through a process obviously of advertising and competing. we'd also hope and, frankly, you could help, make sure that we have an excellent applicant pool from alaska itself. because local knowledge can only -- could only help be most effective. >> well, we want to work with you on that because we, too, thinks that needs to be a priority. there are those who lived and worked and raised their families in the region and know some of the challenges but also how we can overcome it. >> and may i add?

>> the evident innovation that's been displayed already in the state. >> absolutely. absolutely. thank you for recognizing that. i want to ask more specific to the issue of microgrids themselves, and you heard from our alaskan expert gwen haldman there at the university of alaska center for energy and power. recognizing that we have these islanded systems, then, in alaska, what are your views on the department possibly changing the definition of microgrids to recognize that these systems in rural alaska that are independent and not part of anybody else's grid are also a form of microgrid? because we've come up with some definitional challenges here. >> i will look in to whether there is a precise definitional issue in the department, but i can assure you, we are and will looking at both grid-connected

microgrids and complete off-grid microgrids. in fact, we are funding the alaska microgrid partnership with three remote communities there. we have also have our national labs working on a design support tool for microgrids that will be, you know, work with the alaska -- of course, we all know and fairbanks in particular, there's a very strong energy research center. so, we are working on isolated microgrids. indeed the -- as you use the word island, and, in fact, two years ago we produced a document on island energy systems that we are -- that is drawn from experience in hawaii. it's being applied in the caribbean and many of the same physical features in effect occur in alaska. >> well, let's work on that one, because if there is something we need to correct, we'd like to do

that with you. >> okay. >> as we were saying hello here before the committee began, we discussed very briefly the d.o.e. award that went to the village of egiagit and what they are doing within their river system to generate marine hydrokinetic energy. it's really quite exciting, and i appreciate the department stepping up and helping to facilitate that. the office of water and power, though, appears to be emphasizing wave power research and demonstration projects over current projects, over tidal power technologies. is that somehow purposeful? when you look at the budget, that's one of the conclusions that you're left to draw. and we think that given what we

have with the kuska qualm and the youk an, you saw the kuska quam river when you were there, and it's frozen solid there. being able to harness our rivers as well as 13,000 miles of coastline is something we're very interested in. but am i incorrect somehow in my observation that the emphasis seems to be on wave power research? >> well, we do have programs across all of the hydrokinetic and wave power. i will look more closely at that in terms of the balance of tidal to be honest. >> look at the funding because that's what got our attention. >> but may i just add, the alaska project with the turbine and i will not attempt to pronounce the name of the village, but i think it's been a tremendous success. it was already pulled out and reoptimized which gave a tremendously better performance. in its second year it significantly cut diesel fuel

use there and now with this new grant it will be taking advantage of that designing something which could be placed in a number of -- of course, a number of other locations as well. >> it is really exciting. thank you for recognizing that. >> yeah. >> senator cantwell had to go off to another committee, so let's turn to senator henrik. >> thank you, very much, madam chair. secretary moniz, i'm very pleased to see your continued focus on getting w.h.i.p. reopened and i want to thank you for the focus that d.o.e. has put on safety throughout that entire process. i just want to ask you, are you on schedule and are there any budget or schedule issues that should concern me at this point? >> senator, we believe we are on schedule for safely restarting operations late -- >> december? >> -- later this year, exactly, yes. and the budget request for fy-'17 is on track for our program, right. >> fantastic. >> we will, as you know, down

the road need more capital funding for the full ventilation system for full-scale operations at the beginning of the next decade. >> we look forward to working with you on that. switching to los alamos real quick, i was hoping you could talk a little bit about why we don't have a current consent order in place with the state to be able to guide budgeting and spending issues as well as just what priority updating that consent order has with the department of energy. >> no, it's very important. and that is under very active negotiation with the state, and we are hoping that in the reasonably near future that will be completed at least -- at least for comment and that we will then be in a position to adjust appropriately our long-range cleanup plan. >> great.

as you know, i've for a long time been a champion of efforts to improve tech transfer from our labs as an engine of domestic economic development. i'm really pleased with the small business voucher initiative from your office of technology transitions, and also the recent technology commercialization fund. however, i understand that there may be some issues with the cost-sharing requirement? and i wanted to see if you could talk a little bit about what those issues are and what we can do to help solve some of that. >> well, first, may i say -- and i appreciate your interest and that of a few other members in terms of the tech transfer business, and i would just say that there was quite a few initiatives, including establishing the ott, the fund. we've also established within that office an energy investment center. we just hired an excellent person in january to head that. so, i think -- i think it's

certainly been elevated in the -- in the visibility. >> and we appreciate that very much. i think a lot of people are excited about those efforts. >> good. with regard to the fund, yeah, i think our interpretation is that we need kind of 50/50 cost sharing there. but certainly more flexibility is -- i mean, would always frankly be welcome. i mean, we as you know in various of our programs there are some cases sometimes in which 20% cost sharing is called for versus 50%, so that's certainly something we'd be happy to work with you on that. >> i look forward to that. and if there are specifically authorization issues -- >> yes. >> -- language issues that we can work with you, we're happy to do that. obviously d.o.e.'s battery storage hub is now in its fourth year. and i -- you know, if you look at the storage market broadly in this country, i think i saw a headline this morning that said it grew something, like, 243% last year. obviously starting from a very

small place, but growing incredibly quickly. this is going to be a critical link in the evolution of the grid from sort of the centralized grid that my dad knew as a lineman to the distributed structure that we see more and more around the country. are there advanced battery chemistries beyond the lithium ion chemistry that we're all familiar with that are under development that might meet future cost and energy goals? what are you seeing within that program that's exciting -- that's exciting to you? >> well, i think the -- first of all the jcs are a hub i think has been doing very, very well. and as you say, actually they -- in their first five-year period will end at the end of 2017, so we will soon be getting into the kind of reviews to talk about potential extension. the hub is working both on grid

scale and on transportation batteries. on the transportation side, the principal activity is on lithium sulfur, and they've made some excellent progress. by the way, and the goals are basically five times the energy density at one-fifth the cost. and by the way, as you said, i want to emphasize that this is one of the areas -- and there are others. i love driverless vehicles as an interesting thing. but the point is, in these cases, including storage, they're coming at us much faster than people thought, and i think it's not always recognized. so, on the grid side, the main activity is on some of the flow batteries, where you use liquids instead of solid electrodes. another chemistry being looked at is magnesium, and the idea -- sorry for the technical word, but it's theire valence

opportunity, which can greatly increase the energy density. so, it's a variety of issues that jcs are -- i do want to emphasize that in addition to that hub, of course, i think -- i'm not sure. i think we have about $225 million in various programs addressing energy storage. it's a game changer, and the costs have come down, let's say, for vehicle batteries by 70% in the last six or seven years. again, i think people are not internalizing all of this. and you're seeing more and more storage introduced on the grid, for example. you're seeing novel uses of, let's say, used vehicle batteries coming in for voltage support in grids. so, a lot is happening. and when that penetrates to the consumer end, i think we will see another -- another big shift. >> thank you, secretary. >> thank you. senator brasso? >> thank you, madam chairman. mr. secretary, good to see you again. i just noticed on friday "the wall street journal" had a front page story and it was entitled "europe energy escape valve, u.s. gas."

so the escape valve for europe is u.s. gas. the gulf coast exports are expected to loosen russia's grip on the market, is the subheadline. we talked about this. the article discusses the first shipment of liquefied natural gas from the continental united states that took place last wednesday. it explains that exports of u.s. liquefied natural gas will give countries like lithuania, poland, bulgaria, greater political independence from russia. it's more than just about gas, it's about freedom. the article goes on to cite that deutsche bank estimates the u.s. could catch up with russia as europe's biggest gas supplier within a decade. with each nation controlling about a fifth of the market. it's not going to be easy. russia controls about a third of europe's market right now, and it may wage a price war, i read, to maintain its share of the market. iran is also interested in

exporting lng to europe. senator cantwell mentioned your role in the negotiations with iran in january. "the wall street journal" also ran a story front page of the business section, "iran seeks ways to ship out gas as sanctions ease." so, that article explains that iran may be able to export lng to europe within two years. i'm concerned that europe may develop a dependency on iranian gas as it tries to reduce its imports from russian gas. that's why i believe it's critical that we continue to make u.s. liquefied natural gas available on the world market. so, the question is, will you commit to acting promptly on lng export applications for the remainder of this administration? >> yes, we have and we will. if i may add a comment -- >> please? >> -- because i completely share your interest and the importance of natural gas diverse supply

for europe. first of all, i would question that two years. i think not very likely, to be honest. but i want to emphasize that in addition to u.s. lng, southern corridor, bringing caspian gas is well under way. we have supported that, and frankly, directly been helping some of the conversations there. but also we're very encouraged at the prospects of eastern mediterranean gas, cyprus, israel, et cetera and there's an interesting question of turkey, egypt going on. as an aside, i'll be in israel beginning of april and be able to discuss the gas development there as well. >> the two-year idea came because the sanctions against iran had stopped the construction of their lng facilities. they have huge resources of natural gas and the thought was in terms of the just renewing the construction that they could actually within two years get things going. but along the line that you've been talking about in terms of other sources, i'd like to turn to the nordstream 2 pipeline

which is one of those potential sources. this project would run from russia under the baltic sea directly to germany and the nordstream 2 would follow the original path way and significantly boost russia's gas exports to germany. so, russia playing an additional role. ten european countries mostly from eastern europe are asking the european union to block this project. they believe it would undermine sanctions on russia, increase russia's political leverage over eastern europe. it's estimated this pipeline would cost ukraine about $2 billion annually in natural gas transit fees that they would lose. last week richard morningstar former u.s. ambassador to the european union said it's a bad idea, the nordstream 2, if you -- and went on to say, if you want to kill europe's lng

strategy, go ahead and kill nordstream 2. to date germany's chance lore angela merkel has kind of defended the project. we discussed this issue last october in the committee. since then i heard very little from top-ranking administration officials. does the administration have a plan to stop this project? and if so, what is it? >> well, clearly, this is in the end is a european decision. i would note that the european commission has certainly emphasized the diversity of supply, and this project would do nothing to increase diversity of supply. it may even, as you said, may even strengthen -- >> add more dependence on russia? >> correct. it certainly is a geopolitical tool as well in terms of eastern europe and ukraine, so we remain active in discussions. but clearly, it's a european decision. and there is considerable public disagreements within europe. >> okay. well, let me be clear. i think president obama should do everything he can to kill

this nordstream 2, i just wonder if the president has discussed this with chancellor merkel. >> well, i'm not free to discuss what those conversations are. >> thank you, madam chairman. >> thank you. >> thank you, madam chair. mr. secretary, i'm pleased to see that the administration has increased funding for our shared priorities of energy efficiency, renewable energy, storage and research. i want to turn to something that you and i have discussed in the past, the tribal indian energy loan guarantee program. this program was authorized by the energy policy act of 2005 to help tribes overcome challenges in securing financing for energy projects. but it has never received federal funding. this program would allow d.o.e.

to guarantee loans issued to an indian tribe for energy development, developing these energy resources would bring high-quality jobs to indian country, which indian country desperately needs. that's why i support this program. as do many members of this committee on both sides of the aisle. and i was -- last year you had put in your budget about $11 million for that, which would have leveraged about $90 million in projects. i was very disappointed to see that the program's not included in this the president's budget request. i am going to do everything to make sure that congress appropriates funding in this bill, because it has a lot of allies. secretary moniz, i know that this is an issue that you care about. we've talked about it in this committee.

would you also press senate appropriators to fund this program? >> as you say, i am certainly very, very supportive of the indian energy program. i think it's important. and i would note that the -- a piece of the current energy bill in the senate i think is a step forward by providing for the tribes and alaska native corporations access to the section 17 -- title 17 loan program. so, i think that's a good start. i would note that it would be even more powerful if it also included at least modest access to the credit subsidy part of the energy efficiency and renewable title 17 loan program. >> 17.03 program? >> 17.03 program.

>> i was going to ask you about that, but thank you. let me move on to the transformer reserve. in 2013 we saw a gunman attack a substation in northern california and severely damage 17 transformers. fortunately, this incident did not cause major outages. however, this attack made it clear that our grid is vulnerable to massive disruptions from physical attacks and even cyberattacks or extreme weather. mr. secretary, what is the current capacity for utilities in terms of having a reserve of transformers that could be used in emergency to respond to a coordinated attack on our grid? >> well, some of the -- of the large ious have taken some steps in this direction. but if you look across the country as a whole, i would say we are still quite vulnerable.

we are now doing a significant study of this, and we will report that back to the congress. and depending upon its outcomes, of course, we may talk about it some federal role in establishing a more complete coverage. we might also talk about that and, frankly, we have talked about it as potentially a north american strategy particularly with our very strong integration with the canadian grid. >> i do know that we have a study, but i filed an amendment to the energy bill to authorize d.o.e. to create a reserve, to create a strategic transformer reserve. this authorization was included in the energy bill that passed out of the house. it was my understanding that the edison electric institute and some others have expressed some concerns that a federal reserve would be duplicative and could interfere with the industry's current voluntary sharing programs. do you think that the industry's

voluntary sharing program goes far enough? >> well, i think that's a part of the study that will come out. but as i said, i mentioned the independent -- the investor-owned utilities, which ei represents, but we do have many other structures for electricity delivery in this country. and i don't want to prejudge the outcome of the study, but i think that that diversity of utility structures will probably end up suggesting the need for some reserve, yeah. >> when will the study be completed? >> it's due in december, but we had started it actually earlier than the congressional directive to do it within one year, so we may be able to get it there earlier. >> thank you very much, mr. secretary. thank you, madam chair. thank you, senator franken. senator danes, you are up next.

>> used to be in the supply chain business. this is called just in time right here. secretary moniz, good to see you again. i very much enjoyed our time in alaska. enjoyed talking about gravitational waves, the 27th dimension, and getting insights into your amazing mind in terms of nuclear physics. >> and your insights into social media. >> it was a great snapchat trip. on that visit one of the aspects that we focused on was the energy challenges certainly facing alaska native villages and the office of indian energy. this office was created by congress in 2005 and has the statutory authority to facilitate energy development in indian country. i recognize your budget asks for nearly $23 million above the enacted $60 million for fy-'16 and i'll be submitting some questions for the record on this account. your budget proposes $600

million in fy-'17 including $240 million of which is available from repurposing funding from clean coal projects. $32 million below the enacted level. at the same time the budget proposes $2.9 billion in energy efficiency, renewable energy which is $829 million above fy-'16. the global demand for coal will increase in the coming years. you look at the pie charts of coal consumption, the u.s. consumes about 10% of the world's coal. the rest of the world consumes the other 90%. so, as we think about global stewardship, environmental stewardship, i believe the united states should be leaders in clean coal technologies. and i'm concerned your budget proposal does not reflect that sentiment. i spent five years working in mainland china for procter & gamble and saw firsthand the challenges they face environmentally over there.

and i'm just concerned that if we don't continue to lead and invest in clean technology, clean fossil fuel technology, we may abdicate that leadership perhaps to china or to india or somewhere else or perhaps nobody takes those reins and leads with it. so, i think taking away money from one of the few larger-scale clean coal technology programs and repurposing it for other projects is troubling. and this is at a time when the administration to the epa power plan is threatening to take away affordable power from the grid such as the case of the coal strip plant in my home state of montana. so, the question is, why are we undercutting projects that are applying clean coal and carbon capture technologies at a commercial scale? >> well, let me make a few points, senator daines. first of all, i might note, i think just today there was an article that china announced

that its coal production -- its coal use went down by 3% in one year. they probably have peaked in terms of use. and they're closing another 1,000 coal mines in china, so that's an interesting development. >> just on that point, other data suggests that china is building a new coal-fired plant every ten days for the next ten years. and as we look at the global forecast between now and 2040 for coal consumption -- and, of course, these are all forecasts and you take them based on assumptions. but the global coal use looks to increase by most respectable forecasts between 10% and 15% from where we are at today in 2040. so, the trend line globally is still going up for coal. >> no, i agree. but china as by far the largest coal user, it is significant, i think, that they have come down several percent in one year and may have peaked. i'm not saying they have, but they may have been peaked. as far as building, they're doing a lot of shutting older,

inefficient plants, replacing them with more modern plants, of course, addressing their very, very serious pollution problems. in terms of our domestic program, first of all, i do want to emphasize that there are many aspects of support for coal going forward that are not simply in the fossil energy budget. i'm not going to go through all of them, but includes in particular -- i do want to emphasize -- that probably $5 billion both production tax credits and investment tax credits proposed for carbon capture and sequestration. so, that's a pretty big we hope incentive towards deploying new projects. with regard to the fossil energy support, we -- we did not undercut any projects. we have -- we have three project -- three large projects that are either already

operating, one for three years, a carbon capture projects, and some that are coming on in 2016. we'll have three. we did do the repurposing of projects that even though we gave extensions of time could not meet the criteria, could not meet any financial close, so those -- those funds being repurposed to actually develop new -- what we hope will be very competitive technologies. for example, going to things like ten megawatt pilot projects for new technologies like chemical looping and oxycombustion which could be important for the future. another point is that apart from those explicitly carbon capture projects, r&d and/or tax incentive, the -- we also have going on things that are -- you

know, they're not called coal. but they are very directly relevant to, for example, higher efficiency coal plants. one is we have a substantial increase for our pilot program on supercritical carbon dioxide cycles which would give much higher efficiency for any thermal plant, and it's led by fossil because of coal basically, and secondly, things like in the office of science, and in fact, we propose a new cross-cut initiative in this budget for advanced materials in extreme environments. that would include going to the very high temperatures and pressures for going to ultra, ultra super critical cold lands. so, there's quite a bit in there. >> thanks for the insights. i'm out of time. the projections coal use globally will be higher in the next 20, 30 years than it is today by most forecasts and i hope the united states could continue to lead in clean coal technology. i think as leaders here we will

be the best guardians overall of global stewardship, and i'd like to see the continued investments here certainly in clean coal technology. >> and i think that this portfolio of investments is one that i think will accomplish the goal. >> thanks, secretary moniz. >> senator cantwell? >> thank you, madam chair. and, mr. secretary, thank you, again, for working so diligently on this budget proposal. as you can imagine -- well, i have many questions. but i have four specific -- i have four questions and they're all related to hanford as you can imagine. greatly important subject for our entire nation, but particularly important in the state of washington as we are integrally involved in making sure that the tri-party agreement and other things are lived up to. so, i have a question about the buildings i mentioned the 324 and the 61810 and the fact that the budget decrease -- i think i said practically to every energy secretary that i have had the opportunity of working with

since i've been in the senate, i firmly believe the energy secretary should be for life or until hanford is cleaned up. because as i mentioned -- >> that would extend beyond life. >> i hope not. i think the issue is, is that, you know, with such a large budget need, i think from time to time people come in with ideas and notions of how to they think cut corners, save dollars, and i have seen so many different proposals that have gone by the wayside where people try to implement something. it doesn't work. and then come back a few years later and fold on that only to cost us billions. so, one of the things i wanted to, on this river corridor project, these -- they are making good progress, but why not continue to make progress given that this radioactive plume is so close in proximity to the river and that we want to make sure that there is, you

know, important, you know, hanford-wide service account which ensures proper maintenance of the infrastructure and to make sure that we continue to move ahead. so, that's one question. second, i want to understand what we're going to do in the next year on additional public meetings for focusing on defense waste cleanup. that's an initiative that, you know, separating the commercial and defense waste and moving forward on that proposal is something that i think is very important for us to continue to do. and i know that there were cuts to the community support budget. this is something that's very important to the people in the -- in the tri-cities. last year there was a decision made to decouple defense waste and commercial waste. and then there was a process of holding meetings to define what consent agreements mean, and i've noticed that this proposed budget cuts the community and

regulatory support. so, this is important to places like benton and franklin and grant counties so they can focus on having, you know, comments in this process. and lastly, i also see that the historic -- you know, the hanford national historic park budget does not reflect a contribution from the department of energy, and i'm concerned about that and want to make sure that doi and d.o.e. are going to work together to move forward on that. but my main question is, will you take a second look at this cleanup priority for the river corridor in looking at that budget cut and looking at that how challenged we are on the -- the site itself and its proximity and look what we can do to remedy that cut. >> well, thank you. and i think i have the four questions. well, first of all, of course, we are -- be very happy to sit

down and kind of work through what the constraints and the opportunities are and the budget. obviously, we are working with an overall constrained budget in which we try to optimize for the highest priorities. and frankly, the area across the country, which -- but includes hanford for sure, that is the -- in many ways we consider to be the highest risk is tank waste, you know, addressing that, and so we certainly have a very high priority at three sites for tank waste. now, on the river corridor specifically or the fy-'17 budget for richland, first of all, i very much appreciate your acknowledgement that there's been a lot of progress along the corridor.