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would have spent perhaps $25,000 a year per man and they might very easily decide that they didn't want to go to Vietnam or somewhere else.
So, I think this would have some rewarding features, even though it might be a deterrent.
Mr. MURPHY. Thank you very much.
Mr. HATHAWAY. Thank you, Mr. Chairman. Thank you, Mr, Keith, for your statement.
First of all, who do you envision administering the provisions of your bill, checking on the money and whether the graduate is still in the service?
Mr. KEITH. I would think it would be the responsibility of the State schools. I would imagine that the alumni association has records that would be helpful.
We have here as a witness today Capt. Tom Burke, one of my constituents, who has been a very active alumnus of the Massachusetts Maritime Academy, and I believe is a vice president of the National Association of Maritime Academies, who will speak to this point in some detail tomorrow.
Mr. HATHAWAY. I have received letters from several academies indicating to me that it would be an administrative headache.
Mr. KEITH. You may recall from your days in the service that there was always a lot of paperwork that most of us didn't particularly like, but it is necessary sometimes, and I would say that it is going to be worth it to us if we get something in return for it, if we get a larger commitment.
I might add that it is my understanding that the Bureau of the Budget has indicated their disapproval of this legislation, on the grounds that it is more expensive, I imagine.
We have increased our subsidy, our Federal subsidy, whether it was to the student or to the institution, rather substantially in other areas. It seems to me we are going to get something back here. We have no recourse now for the $600. Perhaps we are going to change it to $1,000, but under my bill we are going to get some guarantee that they will either serve or that we will get the money back.
So, I would say that that is a criticism that doesn't stand up—not the one you have just levied. The paperwork is something we have to live with, and I imagine they have a course in administration at the State academies for which this would be good on-the-job training.
Mr. HATHAWAY. I gather it isn't so much paperwork. It is just the difficulty of keeping track of all the graduates, finding out whether they are still in the service. Then if they don't make the payments on their loan they have to go out and get the guy somewhere and maybe take him to court.
Mr. Keith. I think you will find it may be difficult, but these men are in an industry that is well organized and maintains very close contacts with the maritime academies, to make certain that the instruction will suit the purposes of the industry that is going to receive the graduate. I think you will find that there is very good control. I think you would be surprised at the knowledge Tom Burke has as to where all the recent graduates of Massachusetts Maritime are.
Mr. HATHAWAY. Let me ask you one final question. Is your bill in lieu of, or in addition to the bill I have submitted ? I presume it could be an addition.
Mr. KEITH. Inasmuch as you are on the other side of the aisle I would say my bill would be supplementing yours.
Mr. HATHAWAY. I could envision we could use both.
Mr. MURPHY. The next witness the committee calls is Robert Blackwell, Deputy Administrator, Maritime Administration. STATEMENT OF ROBERT BLACKWELL, DEPUTY ADMINISTRATOR,
MARITIME ADMINISTRATION; ACCOMPANIED BY ARTHUR W. FRIEDBERG
Mr. BLACKWELL. Mr. Chairman, I am accompanied today by Arthur Friedberg, the chief of the Office of Maritime Manpower of the Maritime Administration.
Mr. Chairman and members of the subcommittee, I appreciate the opportunity to appear before your subcommittee to present the views of the Maritime Administration of the Department of Commerce, and of the Department, on H.R. 8328.
H.R. 8328 would amend section 6 of the Maritime Academy Act of 1958, by increasing the maximum annual student subsistence allowance from $600 to $1,000, but requiring that the State maritime schools enter into a written agreement with each student for the repayment of such funds to the United States over a period of 10 years.
This obligation would be canceled in the event of death or permanent and total disability of the student receiving the grant.
The bill also provides that service as a licensed officer in the U.S. merchant marine, or as an officer in the Armed Forces, for a specified period would effect reduction of such obligation. The reduction would be one-fourth of the total for each 8 months served as a licensed officer in the merchant marine or for each 12 months served as an officer in the Armed Forces of the United States.
Allowing for vacations as merchant marine officer, this would permit cancellation of the obligation for 4 years of service.
The bill would also amend section 216 of the Merchant Marine Act, 1936, so that funds paid by or on account of students at the U.S. Merchant Marine Academy, King's Point, would constitute an advance of $1,000 per year. Repayment conditions and provisions would be identified to those applicable to the State maritime schools.
Finally, the bill would amend section 12 of the act of March 4, 1915, so as to permit the attachment or arrestment of the wages of a master, officer or seaman for the repayment of such advances.
We are opposed to enactment of the bill for these reasons.
More than 96 percent of the students who graduated from King? Point in 1966, 1967, and 1968 have gone to sea as merchant marine officers. When jobs are available, the graduates of King's Point go to sea. We do not have figures with respect to the State maritime schools, but we think the experience with King's Point would be representative of their experience as well. The bill therefore is not necessary.
It is, indeed, accomplishing the purpose now, the present system.
All students entering King's Point are required to be midshipmen in the Naval Reserve. All qualified graduates are commissioned in the Naval Reserve upon graduation, and at that time they either go on active duty or are placed in the Inactive Reserve.
Since 1965, the Navy has had a training and service agreement for inactive duty merchant marine appointees. These appointees are the graduates of King's Point and the State maritime schools. This agreement provides that the graduate will sail for 3 years in the merchant marine or serve on active duty in the Navy to retain his commission. The 3 years' service is from the time of graduation and consists of 6 months for each year.
The Navy polices this commitment and finds that over 90 percent of the men are fulfilling their commitment. Those who do not, lose their commission and become subject to the draft.
The increase of the subsistence allowance from $600 to $1,000 per year in our view, is unnecessary to obtain students at the State schools. Enrollment at the State maritime schools from 1960 to the present has increased as follows: At the California Maritime Academy, from 221 to 240; at the Maine Maritime Academy, from 265 to 472, at the Massachusetts Maritime Academy, from 190 to 194; at the New York State Maritime Academy, from 507 to 636; and at the Texas Maritime Academy, which was established in 1963, from 21 in 1963 to 110 in 1969.
Another consideration in connection with the repayment proposal is that the maritime industry is cyclical in nature. There are times when graduates of the schools cannot obtain jobs. During such periods, if the bill is enacted, the graduates would either have to pay back the advances made to them or sit around the hiring halls of the unions indefinitely. We think this would be unfair to them.
For the reasons I have alluded to, the Maritime Administration opposes the bill.
With the Chair's permission, I will read the Maritime Administration's proposed testimony on H.R. 8785, if you wish.
Mr. Murphy. Please proceed.
Mr. BLACKWELL. Again, Mr. Chairman, I appreciate the opportunity to appear before your subcommittee to present the views of the Maritime Administration of the Department of Commerce and of the Department on H.R. 8785.
Sections 4 and 6(a) of the Maritime Academy Act of 1958 authorize the Secretary of Commerce to enter into agreements with not more than one maritime academy or college in each State to pay to such academy or college not more than $75,000 per year to be used for its maintenance and support, and not more than $600 per student per year, for uniforms, textbooks, and subsistence. These amounts have essentially remained unchanged since 1958. In fact, they have remained unchanged.
H.R. 8785 would amend sections 4 and 6(a) to increase the $75,000 maximum to $250,000 and change the $600 maximum to a $600 minimum.
The change in the amount of the total Federal funds per student paid the various State maritime schools (including maintenance of the school ship) under the 1958 act, and the change in the average cost per student incurred by such schools froin 1960 to the present are as follows:
For the State Merchant Marine Academy at California, in 1960, Federal funds per student were $1,114. In 1969, Federal funds per student increased to $1,429.
The average cost per student in 1960 at the California Maritime Academy was $2,697 in 1960, and in 1969 that amount was $4,632.
In Maine, in 1960, $946 of Federal funds were paid per student. In 1969, the amount was $1,032. The average cost per student at that academy in 1960 was $3,183, and in 1969, the average cost per student at that academy was $3,296.
In the Massachusetts Maritime Academy in 1960, Federal funds per student were $1,251, which grew in 1969 to $1,415 per student.
At the same time in 1960, the average cost per student at Massachusetts was $2,768, and in 1969 that amount was increased to $4,464.
At the New York State Maritime Academy in 1960, Federal funds per student amounted to $764, which grew in 1969 to $851.
In 1960 at New York State Maritime Academy, the average cost per each student was $3,077, which increased in 1969 to $4,508.
At the Texas Maritime Academy, which I indicated earlier was not instituted until 1963, the Federal funds per student then were $4,133. The Federal funds per student in 1969 decreased to $2,720.
In 1960 the cost of maintaining a student at the Texas Maritime Academy was $9,502, which was reduced in 1969 to $6,638.
The Texas figures seem odd, Mr. Chairman. I think they are different because of the very high startup costs, particularly the high cost of securing a vessel for that school, which was prorated over a relatively small number of students.
Consequently, in 1963, you find a rather high cost per student as well as a high Federal payment, which in subsequent years has declined.
I might say that in the Federal funds per student, the enrollment has increased in the period 1960 to 1969 in excess of 350 cadets for the State maritime schools.
Consequently, even though the Federal payment has been higher per student generally since 1960 in each year, the single important fact, I think, is that that is higher despite the fact that there has been increased enrollment at the State schools in the last 10 years.
The Maritime Administration and the Department of Commerce appreciate that the costs per student are rising throughout the country because of inflationary factors. We do not recommend an increase in the Federal payment to the schools now because of the present tight budget situation that the present administration finds itself in.
At this time, we do not favor changing the $600 maximum for subsistence to a $600 minimum. As I stated earlier in my testimony on H.R. 8328, an increase in allowances is unnecessary to obtain students for the schools, particularly that in view of the facts that while the payments for subsistence have remained relatively fixed, the enrollment of the State maritime schools has increased in excess of 350 in the last 10 years.
That concludes my prepared statement, Mr. Chairman. Mr. MURPHY. Thank you very much, Mr. Blackwell, for a very informative statement on both these bills.
Do you think there should be a limitation on the number of State academies, so that we don't have a proliferation?
Mr. BLACKWELL. The enabling legislation, which is the act of 1958, provides for Government support and assistance to State maritime schools, one from each State and territory of the United States.
Quite obviously, if each State decided to have a merchant marine academy, it would be inordinately expensive, not only for the States and the territories themselves, but for the Federal Government, which has to pick up a substantial portion of the tab.
In addition to that, we would be training such significant numbers of licensed officers in both the deck and engineering categories that I suspect we could service the world fleet in addition to our own.
We do try to exercise some degree of discretion in trying to impose standards for State academies and in trying to insure that Federal moneys are prudently and wisely spent.
As you may know, sir, there is a movement in Michigan to establish à State school for the State of Michigan, whose essential purpose would be to provide deck and engine officers for the Great Lakes.
We have cooperated in every way with the State of Michigan and the university involved with that endeavor because there seems to be a unique problem in providing the type of licensed personnel that are needed in the Great Lakes shipping.
Here, again, these factors have not gone into my statement in terms of the cost to the Government. This would be, while the school obviously would start with a very small class, again the Government would be required to make its payment of $75,000 per year and provide for a payment of $600 per year.
I would like to add that while the maximum payment is $600 per year, the Maritime Administration has in fact been considering that as à minimum. We have been indeed paying these young men $600 a year.
About a year ago, because the enrollment figures increased beyond our expectations, we were only able to pay these young men $500 a year, but to indicate the good faith of the Maritime Administrative and the fact that we do recognize the problems of these students, we testified- I personally testified-before a Senate Supplemental Appropriations Committee, and we were able to get $228.000 additional which we transferred from a ship construction fund which was not going to be used, to this subsistence fund to
these young men. Mr. MURPHY. The not less than $600 figures would almost appear to be an open ended appropriation, then. Some guideline ought to be established.
Mr. BLACKWELL. We recognize the problem the State schools have in funding over a reasonable period of time, and we think it would certainly be more acceptable to the administration to have a fixed figure rather than either a maximum or a minimum, which the States could count on.
They know they would get this, and they could use this for planning purposes.
Today, if enrollment increases precipitously at some school and the funds that the Maritime Administration seeks from its appropriations are insufficient to pay each student $600, then we have to prorate that amount over the number of students available as we did last year, which came to 500, or pay some and not others, which would be discriminatory in our view.
Mr. MURPHY. In H.R. 8785, the bill expands the payment in section 4 from $75,000 to $250,000, and yet the limit of $25,000 if the school does not meet the requirement of section 5-d remains the same.