the cost or the anticipated cost of those projects that have not yet been funded or not included in the 1980 program and which we would expect to slip into the 1981 program.

Would you like me to give you those items?

Senator STEVENS. We would like those for the record, on a project-byproject basis.

Captain WEIS. Thank you.

I will submit that for the record.

[The information follows:]

PROJECTS NECESSARY TO COMPLETE THE 5-YEAR PLAN

Senator STEVENS. Now, with regard to operations, the funding level now of $47 million, reduced roughly $3 million from the current account, that is applied to headquarters' budget, I understand, rather than the districts; is that right, Mr. Commissioner?

Mr. WINKEL. That $3 million cut applies to operation funds, but it is to those operations that are carried out under the authority of the headquarters, such as allocations of funds to civic action teams, allocations of funds to the College of Micronesia, allocation of funds for transportation and so forth.

Senator STEVENS. What is the impact of that on ongoing programs that are administered by headquarters now?

Mr. WINKEL. Well, it is our thought that the impact will be very slight if there is an impact at all, depending of course on the extent and timetable within which we are able to transfer functions and funds.

In other words, we would be transferring the $3 million to the districts during the course of the fiscal year and starting in this current fiscal year actually, in any case; so that it was a feeling, rather than applying the cut to the districts and therefore keeping the $3 million at headquarters and then later transferring it, it was more effectively handled by applying all of it to headquarters, so that it would not have to be distributed later to the districts.

EDUCATION PROGRAM

Senator STEVENS. How did the reductions get applied so severely to education? Again, I'm told that three programs that are needed will either be sharply reduced or eliminated, and that you have a very large

reduction in aid to nonpublic schools, dropping from $171,000 to $60,000; that your vocational rehabilitation program justification indicates that the program will be terminated by fiscal year 1980.

Now, why such a heavy impact on education in terms of allocation of those funds?

Mr. WINKEL. In the case of the vocational rehabilitation program, Mr. Chairman, the length of time specified for the program, and its first initiation, was expiring at the end of the current fiscal year.

Also, the manager of the program has subsequently left trust territory. The program would presumably have to be terminated within 1 to 2 fiscal years thereafter; and as part of a general program of terminating Federal programs upon expiration and so forth, the action was taken for those reasons.

And now to the Federal aid to the

Senator STEVENS. Nonpublic schools?

Did you consult with local officials as you made these cutbacks in education?

Mr. WINKEL. Consultation was through the Department of Education; and also, $1 million of this cut we were notified of very shortly prior to this requirement for the submission of the budget.

Whether there was detailed consultation with respect to these particular items or not, I'm not able to say under the circumstances that prevailed at the time.

Senator STEVENS. Am I to read between the lines, the $3 million cut came from OMB and not from the Interior; is that correct?

Mrs. VAN CLEVE. That is correct.

Senator STEVENS. Why don't you tell us what you did request from OMB for the education programs, for the record?

Mr. WINKEL. My recollection is that the request was

Senator STEVENS. I would like it broken down so we can see where the funds have gone. Would you please submit this for record? [The information follows:]

HEALTH SERVICES

Senator STEVENS. With regard to the health services operations, we have some questions, along with program and budgeting questions, that I'd like to submit to you.

But for now, I would like to see if we can call up the other witnesses who are here; and if it meets your approval, Mrs. Van Cleve and Mr. Winkel, I think we will just hear a panel from the whole Federated States group if they are here.

Is Mr. Setik here?

He's on our witness list-if that's right-to present testimony to this hearing concerning the budget for the Trust Territory of the Pacific Islands?

Whoever is here I would like to have come forward now, and I would ask the High Commissioner and the captain and Mrs. Van Cleve to step aside, temporarily at least.

ATTENDANCE AT HEARINGS

Mrs. VAN CLEVE. Mr. Chairman, may I make one brief comment? It has to do with the question that you raised this morning concerning the source of funds used to finance the travel of some of the visitors from the territories.

I think I spoke both too loosely and too quickly. During the interlude, I have established that most-and perhaps all-of the trust territory visitors who are here today are traveling on the basis of local revenues, locally appropriated by local legislatures.

We will provide the detailed information that you sought, but I did not want to leave the impression that I think I did this morning, that they were traveling on direct Federal funds.

Senator STEVENS. Well, that is very good. I am glad to have that on the record.

In fact, we welcome their interest. I sometimes think that the travel budget moneys can disappear awfully quickly if they are primarily used to come to witness Appropriation Committee hearings.

I'm not sure that it beats the late movie anyway.

Mr. WINKEL Especially at 9000 miles.

Senator STEVENS. I make that kind of trip every week. I know what you are talking about.

STATEMENTS OF:

FEDERATED STATES OF MICRONESIA

BAILEY OLTER, SENATE, INTERIM CONGRESS (PONAPE)
PETRUS TUN, SENATE, INTERIM CONGRESS (YAP)

HIROSI ISMAEL, SENATE, INTERIM CONGRESS (KOSRAE)
ACCOMPANIED BY:

DAN PERIN, ECONOMIST

RODNEY ADELMAN, BUDGET OFFICER, INTERIM CONGRESS

Senator STEVENS. Do you gentlemen want to come forward, please? Who is here to represent the Federated States of Micronesia?

Would you like to identify yourself, please, for the record? And I think any one of you could do that; it would help me and help the reporter, too.

Mr. OLTER. Yes, Mr. Chairman.

Sir, I am sorry to report that our Chairman, Mr. Raymond Setik, got sick last night and is now hospitalized here in Washington.

I am Bailey Olter. I will be acting in his place.

To my left is Senator Petrus Tun, from the State of Yap.

Senator Hirosi Ismael is not here.

We have our budget officer, Rodney Adelman, on my right, and our economist, Dan Perin.

Senator STEVENS. I didn't get your name on the end?

Mr. PERIN. Dan Perin.

Senator STEVENS. Thank you very much.

And you're from Yap, Senator?

Mr. TUN. That is correct, sir.

Senator STEVENS. I remember very fondly the trip that Senator Bellmon and I took out there one time. How would you like to proceed, gentleman?

Mr. OLTER. Thank you, Mr. Chairman. We appreciate the opportunity to appear again before your subcommittee.

Senator STEVENS. Could you pull that microphone up a little bit? Thank you.

Mr. OLTER. We would like to briefly offer our comments and recommendations. We would request that our statement be inserted in your record,

Senator STEVENS. Your statement will be printed in full. [The statement follows:]

STATEMENT OF BAILEY OLTER

Good Morning, Mr. Chairman. We appreciate the opportunity to appear before your Subcommittee on behalf of the people and the Interim Congress of the Federated States of Micronesia. We would like to offer our comments and recommendations on the Fiscal Year 1980 budget request for the Trust Territory of the Pacific Islands.

First, let me address the political climate in Micronesia. On July 12, 1978, the proposed Constitution of the Federated States of Micronesia (FSM) was ratified by the four central districts of Yap, Truk, Ponape, and Kosrae. This constitutional government will be implemented in the Federated States on May 10, 1979. Elections for the Congress of the FSM will be held on March 27, 1979, and a President and Vice President of the FSM will be elected on May 10, 1979. Also, by May 1, 1979, each of the four States will have installed popularly-elected Governors and Legislatures, under approved State Charters. These events constitute significant strides by the Micronesian people toward eventual self-government, consistent with the mandate of the United Nations Trusteeship Agreement and the expressed desires of the Micronesian people.

Second, let me briefly summarize the progress of the political status negotiations. Since our last appearance before your Subcommittee, two rounds of negotiations have been held in Saipan, the most recent in January of this year. The two remaining unresolved issues involve dispute resolution and financial assistance, however, several other problem areas remain. While progress has been made at each negotiating round, it appears unlikely that a final agreement can be reached in time for termination of the Trusteeship Agreement by 1981 as proposed by the administration.

Third, let me describe the state of the Micronesian economy. Most economic activity continues to be generated by the public sector. A large part of operations expenditures are directed to health, education, administration, and public works, with little attention to economic development. The population of Micronesia continues to increase at a rate exceeding 3.5 percent annually, but the administration pursues a policy of reducing public expenditures with a resulting decline in job opportunities. The Federated States unemployment rate is currently in excess of 20%. The overall economy is deteriorating, based on the ten-year decline in export income. The Federated States remain the least developed area in Micronesia. All these factors contribute to the growing social unrest in Micronesia, evidenced by one of the highest suicide rates for adolescents in the world.

Mr. Chairman, I would now like to comment specifically on the Fiscal Year 1980 budget request for the Trust Territory of the Pacific Islands before your Subcommittee. The High Commissioner presented his Fiscal Year 1980 budget request to the Congress of Micronesia's Joint Committee on Program and Budget Planning in August, 1978, for review and recomendations, pursuant to Department of Interior Order 2918. The Joint Committee's recommendations were presented to the High Commissioner in September, 1978, and are the basis for the proposals we now present to your Subcommittee. The proposals fall into three general categories: (a) changes that can be accommodated within the President's budget request of $99 million; (b) additional items requested by the Joint Committee that can be accommodated within the Fiscal Year 1980 authorization ceiling; and (c) additional items requested by the Joint Committee that can be accommodated by unappropriated prior-year authorizations or separate current authorizations,

The principal change requested by the Joint Committee to the President's $99 million budget request is to realign district funding levels for operations activities to provide a more equitable per capita distribution to each district. No district's funding level would be reduced below the original Fiscal Year 1980 High Commissioner's allowances provided during the budget process and those districts currently underfunded would receive increases. These inequities in operations funding for the districts have contributed to the unequal development among the districts, particularly noticeable in the Federated States of