SENATOR CRANSTON
WRITTEN QUESTION # 4

Q:

Mr. Arnett, the October 1972 amendments to
the Economic Opportunity Act added a new
section 228 which I authored, authorizing
an annual expenditure of $7.5 million for
Consumer Action and Cooperative Programs.
No funds were spent under this authority
in FY 1973. I think it is evident that no
other agency deals with the unique problems
of poor consumers, such as availability of
credit, higher cost and poor quality of goods
and services, and the inability of the poor
person to enforce his rights through an
expensive and often slow judicial system.
Do you plan to develop and carry out a
program in the coming year that will address
itself to the problems of the poor consumer?

A:

The $7.5 million for section 228 to which you
refer is the Authorization level. Since only
$790.2 million was actually appropriated in
FY 1973, which only covered the existing programs,
it was not possible for OEO to make any new
starts. In spite of this, some Consumer Action
type programs were funded under section 232 of
EOA. As to FY 1974, organizational and funding
uncertainties have made it difficult to

formulate a firm program of consumer protection,
but discussions are being held on OEO's role in
this activity.

SENATOR CRANSTON
WRITTEN QUESTION # 5

Q: Mr. Arnett, there are some 250 low-income credit unions started with the help of OEO, with over 100,000 members and $11 million in savings, that desperately need help if they are to survive and grow to become meaningful resources for their communities. Have you planned or do you plan any program of support for these credit unions that will help them achieve self-sufficiency?

A:

The same thing is true in regard to OEO's
Credit Union Programs as is true with the
Consumer Programs in terms of funding levels.
In Fiscal 1973 we did provide credit union
funding through Section 221 of the Act where
local Community Action Agencies gave them
high priority. The number and amount of
credit union funding was therefore geared
to the importance attached to them locally
by the CAAS.

OFFICE OF ECONOMIC

OPPORTUNITY

August 3, 1973

EXECUTIVE OFFICE OF THE PRESIDENT
WASHINGTON, D.C. 20506

Honorable Alan Cranston
United States Senate
Washington, D.C.

Dear Senator Cranston:

This further responds to your inquiries regarding
the matter of non-Federal share.

First, as Director, I will view Section 623 as both
a publication and notice requirement. Henceforth,
OEO regulations will not be valid unless there has
been publication in the Federal Register at least
30 days before the effective date.

I am advised, however, that the Department of Justice
is making the legal argument on appeal that Section 623
only requires publication and that failure to publish
does not invalidate the Agency's action. The Court
of Appeals will decide this issue and I take no position
on the legal merits.

Second, I was faced with the results of the unusual
circumstances for the period January 30 to June 26.
In the interest of administrative integrity, I affirmed
the authority of subordinate officials to make grants.
I could not individually review each and every grant
made, so I authorized a general approval of prior
grant actions signed by OEO officials. By this action,
grants to state economic opportunity offices of fiscal
year 1973 funds were allowed to stand without any
matching share from non-Federal sources.

Third, I have not made a decision on non-Federal share
for state economic opportunity offices for FY '74 but
I am inclined to reinstate the requirement. In any
event, any change to the regulation on the matter of
non-Federal share will be published in the Federal
Register.

And lastly, as I noted at the hearing, implicit waivers of regulations will have no place in my administration.

Senator KENNEDY. We have two final witnesses. Our next witness will be Charles Braithwait, president of the National Association of Community Action Agency Executive Directors.

STATEMENT OF CHARLES BRAITHWAIT, PRESIDENT, NATIONAL ASSOCIATION OF COMMUNITY ACTION AGENCY EXECUTIVE DIRECTORS

Mr. BRAITHWAIT. I appreciate the opportunity of being here. I am Charles Braithwait, president of the National Association of Community Action Agency Executive Directors. Our organization represents more than 900 community action agencies throughout the United States.

The National CAP Directors Association must go on record as having serious reservation to the confirmation of Mr. Alvin Arnett as OEO Director until it clearly has been established that he will abide by the mandates of Congress and the courts and that he is willing to support the concepts of Community Action.

We are also requesting this committee to examine carefully Mr. Arnett's degree of sensitivity to the problem of the poor before acting on his nomination.

As you know, community action agencies have been in a serious struggle for survival over the past five and a half months. Every conceivable effort was made by this administration through the previous Director to terminate OEO and its community action component. The actions of Howard Phillips and his wrecking crew seriously damaged the effectiveness of community action agencies, which directly benefit more than 11 million poor people in this country.

Fortunately, action by the Federal courts and the willingness of Congress and members of this committee to begin reestablishing congressional authority have temporarily stalled the continuation of these illegal activities.

Mr. Arnett was appointed by Howard Phillips and supported his plans for the dismemberment of OEO and the termination of support for community action programs. We hope the committee has assured itself that these activities will not be continued.

Already, delegation agreements have been signed which would transfer large segments of ŎEO programs to other agencies. The agreements contain no safeguards for the continuation of these programs in the same manner and at the same funding levels as in previous years.

No provisions are contained in these agreements for continued participation by the poor in the operation of these programs. No attempt has been made to obtain CAA involvement in these or previously delegated programs as was, and is, stipulated in former delegation agreements. These agreements were ignored when Phillips became Director of OEO.

My understanding this morning is that the OEO local headquarters union has filed suit in regard to these transfers themselves. It seems to me to be somewhat premature, in fact there are many problems that are not yet resolved. Specifically that Judge Jones' ruling in regard to Mr. Arnett was for the administration of ongoing activities and specifically to fund programs at the end of the year that

have been held up. To me because he has not been confirmed-it seems transfer with its far-reaching implications is somewhat pre

mature.

There is no indication that Mr. Arnett will serve as an advocate for community action agencies in their efforts to serve the poor, when dealing with other Federal agencies or when carrying out congressional mandates for the support of CAA.

In his appearance before a Senate appropriations subcommittee yesterday, at which he requested no funds for OEO or community action, Mr. Arnett indicated that he personally believes community action programs "have a place." Yet without Federal support and direction it will be impossible for CCA's to survive.

Local communities have neither the fiscal resources nor the organizational structure, and by tradition, have not had the commitment, to carry on the purposes of community action. In the determination of local priorities, programs which benefit the poor are too often sacrificed for other community projects which are not structured to tackle the specific problems faced by the poor.

The Congress in 1964 saw poverty as a national problem, which must be administered from a national focus and policy. A national effort serves as a means to link community action and other poverty programs together in devising effective methods to serve the poor.

A national effort also facilitates the provision of support services and technical assistance to local community action programs. Training, counseling, dissemination of information and innovative concepts, and the availability of staff to CAA's in need of assistance are only a few examples of services which should be provided on the national level. The next Director of OEO should be committed to a national effort and should have an obligation to reestablish and strengthen services to local CAA's.

We also are requesting this committee to examine Mr. Arnett's sensitivity to the problems which affect the poor. Statements made by Mr. Arnett while he was at the Appalachian Regional Commission and upon his appointment by Howard Phillips to OEO reveal that he had had little experience in dealing with the special needs of the poor.

To promulgate such concepts as the relocation of miners in Appalachia to "people reserves" shuttling them to work "like a work crew on a train" without asking their opinion of such a depopulation plan exemplifies our concern.

Similarly, Mr. Arnett's statement that "the poor will not miss a stroke" if OEO is abolished indicates an ignorance of the actual concepts of community action programs.

I have full faith that this committee will exert its constitutional authority in rejecting this nomination if it obtains reasonable evidence of any illegal or inappropriate activities by the nominee with respect to any of the matters referred to in this testimony.

Beyond that, I would hope that this committee would move to obtain specific assurances and commitments from the nominee before acting on his confirmation. We feel that such commitments should include the following points in order to help prevent any further thwarting of congressional intent :

Continued funding of existing CAA's at at least the same funding