Mr. JORDAN. The deductions from first month's salaries and promotions should be placed in a special fund to pay annuities for services rendered prior to the enactment of the law. This would relieve the Government of the expense originally contemplated for annuities for such past services. The CHAIRMAN. Is that your theory, that in order to supply a fund for the past services the first month's salary of the beginner shall go to the fund for the retirement of those already in the service? Mr. JORDAN. Yes, sir. STATEMENT OF MR. NEILSON FALLS, WAR DEPARTMENT. Mr. FALLS. I think that any bill formulated upon the lines of the Brown bill or the Keep Commission bill would be satisfactory to our committee. Of course you have our bill to fall back upon, if it is necessary. There is just one thought, and that is the humanitarian view. I could almost preach a sermon to you gentlemen on the humanitarian side. That is something that must appeal to you all. The public service demands action. We are perfectly willing to go out, I for one, upon the very smallest basis of annuity. We feel that our work is almost done, and we know that younger men can do the work better and the situation in the Government service will greatly improve as soon as there is something for them to work up to. Thereupon the committee adjourned to meet to-morrow, Saturday March 21, 1908, at 11 o'clock a. m. COMMITTEE ON REFORM IN THE CIVIL SERVICE, Saturday, March 21, 1908. Committee called to order at 11 o'clock a. m., Hon. Frederick H. Gillett in the chair. The CHAIRMAN. We have met this morning to hear the officers. of the United States Civil Service Retirement Association, and I think probably this will be our last hearing. We will hear Mr. Neagle first. STATEMENT OF MR. PICKENS NEAGLE, PRESIDENT OF THE UNITED STATES CIVIL SERVICE RETIREMENT ASSOCIATION, OF WASHINGTON, D. C. The CHAIRMAN. Mr. Neagle, you are the president of your association? Mr. NEAGLE. Yes, sir. I think it advisable, in order to facilitate matters and also to spare the time of the committee somewhat, that I should read what I have to say rather than undertake to state it orally. Representing the United States Civil Service Retirement Association, I may say that the association is not in the attitude of opposing any fair and reasonable measure that will provide a sure and lasting means of retiring the civil service employees at their own expense. It has not sought the enactment of a law that would impose upon the Government any part of the cost at any time of the retirement of such employees, but is, in fact, committed by its organic law-that is to say, its constitution-to the purpose of aiding to devise a means of retirement without cost to the Government. It views with favor, however, the plan now under consideration by the committee by which the Government is to facilitate the establishment of a scheme of retirement by bearing the burden of caring for those that are now superannuated and by bearing a constantly diminishing part of the cost of retirement of those who will become superannuated from time to time before their own contributions for that purpose will become sufficient. This plan seems to the association to be the best one presented and appears to be the only one that is founded on justice and the right principle, and not at all unreasonable, because the Government would derive from the operation of the plan both an immediate benefit commensurate with the cost to it and a continuing benefit without giving an equivalent in return. The committee has probably received about all the desirable information, facts, and figures relating to this subject that it is practicable to obtain, and I have nothing of that kind to offer in addition to what was submitted to the committee yesterday at my request and in my unavoidable absence by representatives of the Retirement Association, but I desire to make some deductions from the information already in the committee's possession and to emphasize some points that seem to me to have direct bearing and great weight upon the considerations that favor the general principles embodied in both the bills, H. R. 17969 and H. R. 18982, now before the committee. As to the matter of cost to the Government: The report, dated February 18, 1908, of the Committee on Department Methods, with which its proposed bill (now H. R. 17969) was submitted to the President, states that the possible loss to the Government through the superannuation of its employees is estimated by the National Civil Service Reform League to be about $400,000 in the Departments at Washington and about $800,000 outside of Washington, or in the whole classified service about $1,200,000. This amount is said to be a fraction of 1 per cent of the Government's annual pay roll, and it may be accepted as not at all overdrawn from the data it was based on, because the Reform League at that time, last November, was opposed to the plan, then formulated somewhat as it now stands, of the Committee on Department Methods, and was desirous of showing that the evil sought to be remedied thereby was a comparatively minor one. The CHAIRMAN. Do you know what data that was based upon? Mr. NEAGLE. That embodied in Census Bulletin No. 12. Mr. MANN. Who says that $1,200,000 is 1 per cent of the Government pay roll? Mr. NEAGLE. The National Civil Service Reform League. Mr. MANN. Are they just as far off on other things as they are on that? Mr. NEAGLE. Upon some things they are; yes, sir. Mr. MANN. That is as wide of the mark as it could well be. Mr. NEAGLE. That was the estimate they made, and I understand that at the time they made it they had no accurate information as to what was the actual amount of the pay roll. I think that information has been available for the public only a very short time. Mr. EDWARDS. You do not represent the National Civil Service Reform League? Mr. NEAGLE. No, sir. The CHAIRMAN. Do you know what the annual pay roll of the Government is? Mr. NEAGLE. Somewhere about $114,000,000, I think. It was stated yesterday in one of the papers submitted by our association. Mr. STARR. Mr. North, the Director of the Census, has fixed the amount in a special report at $114,000,000. Mr. MANN. But the pay roll of the Post-Office Department alone would amount to that, and I think more. Mr. EDWARDS. Do you know what the annual pay roll is, Mr. Mann? Mr. MANN. I should suppose it was in the neighborhood of $300,000,000. Mr. NEAGLE. But not in the classified civil service. Mr. MANN. Not all in the classified civil service; no. Mr. HARDY. What would be the amount of the post-office pay roll in the classified service? Mr. MANN. I think probably over $75,000,000 of it is in the classified service. Mr. HARDY. The entire postal service is about $180,000,000, is it not? Mr. MANN. I think this next year it will be about $224,000,000. Mr. NEAGLE. The pay roll is a very difficult matter to figure out, but I think we would be safe in accepting the statement of the Director of the Census that it is about $114,000,000 for the classified service. Mr. MANN. I do not think you would be safe in accepting it if it is contrary to the facts. Mr. NEAGLE. Of course, but we have no better way of ascertaining the facts. Mr. MANN. But we should make a proper effort to get a fair idea of what it is. Mr. NEAGLE. I did not intend to set up a different idea from what the committee already knows. I was only attempting to illustrate the effect of the information that we have in hand. It should be borne in mind that under existing conditions a drain from this cause is continuous, occurring every year and provided for every year by appropriations of public money. It should also be remembered that the civil-service force is growing constantly both by reason of increasing numbers required in many of the Departments and offices already existing and by the establishment from time to time of new bureaus and offices and sometimes whole Departments. And with this growth comes the proportion of superannuation. It is also true, I dare say, that within twenty-five or thirty years superannuation in the service will begin to increase rapidly and will become much more extensive than it now is because by that time the great bulk of the appointees under the civil-service law of 1883 will begin to reach the age of superannuation. Supposing that the above-stated annual loss to the Government should continue for sixty-seven years without increase, the total loss from superannuation in that time would be $82,400,000. But there is an increase in superannuation, as I have pointed out, and I think a fair estimate justifies adding to said sum 5 per cent thereof, or $4,120,000, to cover the loss by such increase of superannuation, arising from the causes I have stated. This would make a total of $86,520,000 the Govern ment stands to lose in sixty-seven years. But the estimate of $1,200,000 made by the Civil-Service Reform League as the annual loss is based, as stated by it, upon the reports of the various heads of Departments as embodied in Census Bulletin No. 12, and I venture the assertion that those heads of Departments, in view of their having ignored the law requiring them to disencumber the service of useless material, give every old employee the benefit of the doubt as to his superannuation. For this reason I think it not at all unlikely that the loss to the Government considerably exceeds the estimate above made and would in reality reach $90,000,000 in sixty-seven years. Mr. MANN. Would it bother you if I would ask you a question there? Mr. NEAGLE. No, sir.. Mr. MANN. Do you base your figures upon the loss to the Government entirely upon those over the age of 70 years? Mr. NEAGLE. No, sir; I was referring to incapacity. Mr. MANN. I understand. Do you make your estimate as to superannuation or incapacity wholly regardless of age? Mr. NEAGLE. No, sir; but we take age as the principal cause. Mr. NEAGLE. Yes, sir. Mr. MANN. That is, if you find a man incapacitated you call him superannuated regardless of whether he is 50, 60, 70, or 80 years of age? Mr. NEAGLE. Yes; but we do not provide for retirement for him on that ground. Mr. MANN. You provide for retirement for him on another basis? Mr. NEAGLE. Yes, sir. Mr. MANN. So that you are not estimating the loss to the Government now upon the same basis that you estimate the cost to the Government under the bill? Mr. NEAGLE. It is very nearly the same; the difference is slight. Mr. MANN. How nearly? Mr. NEAGLE. If I had a copy of the report of the Committee on Department Methods I could show you better. Mr. MANN. I have a copy here, but that will not give any information on the subject. The CHAIRMAN. The only difference there would be, that I can see, is that if men were incapacitated under 65 years of age, the bill does not apply to them. Mr. NEAGLE. It applies to all others. Mr. MANN. The bill takes fixed ages of course. Mr. Neagle is talking about the cost to the Government by way of superannuation, and I want to ascertain whether his figures as to the cost to the Government were based on the same set of facts that we have presented to us as to the cost under this bill. Mr. NEAGLE. The figures that I have taken are under the heading of: "Maximum amount of annual appropriation by the Federal Government necessary to provide a monthly annuity to each person in its classified civil service July 1, 1903, upon attaining the retirement age of seventy years (the amount of annuity to be 1.5 per cent of the employee's salary July 1, 1903, for each year of service completed prior to that date)." Mr. MANN. You do not presume to say that your figures as to the present loss to the Government by reason of superannuation are based upon estimates as to those over 70 years of age only? Mr. NEAGLE. Not absolutely, but the difference is slight. There is no way of ascertaining the difference that I know of. Mr. MANN. How do you ascertain the figures as to what it costs the Government? Mr. NEAGLE. These figures are given as approximate. Mr. MANN. But how are your estimates approximate unless you have some basis to go on? Mr. NEAGLE. The loss of the difference between the figures given by the Committee on Departmental Methods and those given by the heads of Departments in the census bulletin is probably not greater than a very small fraction of 1 per cent, and that is derived from the figures shown in the Census Bulletin No. 12. Mr. MANN. Then all the information you have on the subject comes from Census Bulletin No. 12? Mr. NEAGLE. Yes, sir. The CHAIRMAN. Let me see if I understand you. I understand you to mean that there would be hardly any incapacity in the men under 70? Mr. NEAGLE. Practically negligible. The CHAIRMAN. How do you get at that? Mr. NEAGLE. From the information given in Census Bulletin No. 12, where they give tables showing the ages and the conditions, and by deductions from those. The CHAIRMAN. In Bulletin No. 12 do they give statistics as to incapacity? Mr. NEAGLE. The reports of the Departments are embodied in that book. The CHAIRMAN. On that subject? Mr. NEAGLE. Yes. Mr. MANN. If it be the fact that the present cost to the Government by way of superannuation, as you say, is negligible below the age of 70, why do you propose to retire people at the age of 60 or 65? Mr. DOUGLAS. Is not that a different class? Mr. NEAGLE. Those classes are included in the retirement provision because of the difference in character of service. Mr. MANN. I understood you to reply in answer to a question of the chairman that the present cost to the Government by superannuation was practically negligible as to the persons below the age of 70. Mr. NEAGLE. Yes; as shown by the figures on which we are working. Mr. MANN. Then why do you propose to retire people at the age of 60 to 65? Mr. NEAGLE. Because the service would be benefited by getting them out of the way and by getting other people in. Mr. MANN. And yet you think that the present figures that you are estimating upon, which would make the cost negligible as to those people, are incorrect? Mr. NEAGLE. The reports of the Departments err in that respect. I think that the heads of Departments in making those reports were lenient. |