Mr. Chairman and Members of the Committee:

Thank you for the opportunity to discuss President Bush’s fiscal year 2005 budget proposal for the Corporation for National and Community Service, as well as the financial and management improvements that our agency has made during the past year. I am delighted that our Chief Financial Officer, Michelle Guillermin, is on hand to help me answer your questions.

Steve Goldsmith, our Board Chairman, regrets that he is unable to join us this morning. However, I have submitted with my written testimony a letter from Mr. Goldsmith in which he provides information about recent steps taken by the Board of Directors to improve its oversight of the agency.

To begin, I want to thank this Committee for the extra attention that you and your staffs have devoted to the Corporation over the past year. I also want to express my deepest gratitude and appreciation for your leadership in helping us make things right at the Corporation, including your support of the President’s 2004 budget request. This year’s appropriation will enable us to support the President’s goal of a record 75,000 AmeriCorps members and will also allow us to engage approximately 1.8 million students in service to their communities through service-learning programs supported by Learn and Serve America. Those opportunities are critically important to foster a culture of citizenship, service, and responsibility in our nation.

As you know, last year’s budget hearing came in the midst of a tumultuous year for the Corporation, with serious questions raised by members of this Committee and others about our financial management. Twelve months later, I am pleased to report that a new level of fiscal and operational integrity marks the way the Corporation operates, thanks in part to your leadership, as well as to a number of other factors, including:

• Financial and grants management policies implemented by our CFO and Board of Directors;
• The Strengthen AmeriCorps Program Act, which for the first time sets into law a fiscally prudent method of determining how to record obligations in the National Service Trust;
• An increased oversight role by our Board of Directors, including final grant approval; and
• Significant progress in implementing three management priorities I have stressed since coming to the Corporation in mid-December. They are:

1. Restoring trust and credibility among all our stakeholders;
2. Managing to accountability; and
3. Keeping the focus on the customer.

Through attention to these priorities, we have been able to reform the grant-making process, our operational management, our budgeting and forecasting capabilities, the Alternative Personnel System, and our technology and data management systems. And, through rulemaking, we are well on our way to reforming the AmeriCorps program.

As a result, the Corporation today is in a far stronger position than we were a year ago. Recent reports by the GAO, our Inspector General, and the independent auditing firm Cotton and Company, despite citing a few remaining management weaknesses, have all found that:

• We are in compliance with the requirements of the Strengthen AmeriCorps Program Act;
• We are following fundamentally sound business and accounting practices; and
• Our ongoing management reforms are effectively addressing the identified weaknesses.

In addition, two recent developments – an Executive Order on National and Community Service, which President Bush signed in February, and the beginning of the AmeriCorps rulemaking process on such issues as sustainability of grantees and federal share of costs – promise to accelerate the reform process. The goals of both the Executive Order and rulemaking are to make our programs more efficient, effective, and accountable. From what I have heard in public meetings on rulemaking in Columbus, Seattle, Boston, Dallas, and here in Washington, I am confident that we can arrive at fair and equitable solutions to these difficult problems and make our programs more consistent, stable, and predictable.

As we reform our programs, the Corporation is striving to ensure that national service works more intentionally to broaden, deepen, and strengthen the ability of our nation’s 63 million traditional volunteers to contribute to their communities – and of America to capture this strength. One important role, as noted in the Executive Order, is to serve as an engine of volunteer mobilization, and we are finding ways for an increasing number of AmeriCorps members to devote more of their time to helping charities recruit, train, and manage volunteers.

In addition, the President’s 2005 budget includes several targeted investments in programs and initiatives that are designed to leverage volunteers and private dollars, increase outreach to new groups, and ensure that the Corporation can provide our grantees with effective assistance and monitoring. Some, like Challenge Grants, accomplish more than one of these objectives, and all are described in detail in my written testimony.

Because of the challenges faced by the Corporation last year, it has been necessary to focus most of this testimony on the financial and management reforms that we have made over the past year. As we strive to strengthen our management, though, we should never lose sight of the main mission of our programs: to engage people of all ages and backgrounds in meaningful service that meets critical local needs, strengthens community organizations, changes participants’ lives, and promotes the ethic of good citizenship.

Mr. Chairman, this concludes my remarks. Ms. Guillermin and I would be happy to answer any questions you might have.

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