Good morning Mr. Chairman and members of the Committee. I am Saul Ramirez, Deputy Secretary of the Department of Housing and Urban Development. I appreciate the opportunity to discuss with you HUD's innovative and successful Community Builders program.

I request that my oral and written testimony be included in their entirety in the record.

Mr. Chairman, I have three basic points to emphasize today.

First, the Community Builders program is absolutely necessary to carrying out HUD's mission and has been a remarkable success. Objective results from the field demonstrate the value that the Community Builders have added to our ability to carry out HUD's mission. Our customers, moreover, have expressed overwhelming support for the program, and it has helped to build HUD into a model for federal customer relations. And the program has been deemed a success by every independent group to review it, including the Public Strategies Group, Booz-Allen, Andersen Consulting, and, most recently, the respected independent accounting firm, Ernst and Young, LLP.

Second, the criticisms leveled by the Inspector General against the program particularly with respect to the hiring process for the Community Builder Fellows in 1998 and 1999 are baseless and fundamentally unfair. As I have done before, I look forward now to setting the record straight.

Finally, HUD's current hiring practices are entirely proper. Past hiring practices are no longer an issue, as Congress in the FY2000 VA/HUD/ Independent Agencies Appropriations Act directed us exactly how to proceed in hiring permanent Community Builders, and we are acting just as directed. Moreover, the process by which we are currently hiring is entirely appropriate.

Before I elaborate, I would like to tell you why my personal experience makes me convinced that Community Builders are absolutely necessary to HUD's work. I served as Mayor of Laredo, Texas from May 1990 to June 1997, and during that time I had extensive dealings with the Department. It never ceased to amaze me how many people I had to make contact with in order to access HUD's programs to address the needs of Laredo's citizens. I found little coordination between individuals who handled the different programs that address the continuum of housing and community needs, such as poverty, homelessness, affordable housing, neighborhood revitalization, economic development and job creation.

In my time at the Department, I have been very involved in HUD's bold, sweeping, and innovative 2020 Management Reform Plan, a plan designed and developed to address the Department's long-standing material weaknesses identified by many in Congress as well as the GAO and OIG. These improvements cover financial management and program operations, as well as program delivery and customer service. The Community Builder program is but one part of the comprehensive plan that is making HUD more responsive to community needs and more protective of the public trust. Mr. Chairman, I would like to take a moment to go over each of the four points I mentioned in greater detail.

The first and most important point I would like to emphasize today is that the Community Builders program is a clear success. In 1994, the National Academy of Public Administration (NAPA) reviewed HUD's performance at the direction of Congress. In a report entitled Reviewing HUD: A Long-Term Agenda for Effective Performance, NAPA recommended that HUD's revitalization efforts incorporate a holistic approach to serving communities rather than a program-focused approach. Another independent group of management experts, the Public Strategies Group, likewise examined HUD's reform efforts and warned against the "dysfunction" that can stem from "the commingling of both service and compliance functions within programmatic cylinders, requiring agency employees to assume dual roles at times seeking to offer assistance, facilitate and problem solve, and at other times to perform oversight and enforce compliance."

HUD took these recommendations and other past criticisms seriously when creating the Community Builder program as part of our overall Management Reform strategy. The program was designed around the six strategic objectives of HUD. These objectives are (1) fighting for fair housing; (2) increasing affordable housing and home ownership; (3) reducing homelessness; (4) empowering people and communities; (5) restoring the public trust; and (6) promoting jobs and economic opportunity.

In furtherance of HUD's strategic objectives, Community Builders are responsible for providing information to communities about HUD programs and community resources, promoting communication by and between community organizations, reaching out to community organizations and creating alliances between them, supporting HUD's various programs, determining and assessing community conditions and needs, providing community service planning, and coordinating between governmental units.

The Community Builders we have in place have been tremendously successful in achieving concrete results. They play an integral role in HUD's progress on all six departmental objectives and have filled a void in outreach services to the communities and customers that HUD serves. As Ernst & Young notes, Community Builders have made notable improvement in HUD's outreach capabilities and technical assistance.

On a structural level, the Community Builders program allows the entire agency to function better. We now have Community Builders (making up about 9% of the agency) who function as our community-resource representatives, and Public Trust Officers (about 91% of the agency) who ensure that HUD meets its obligations and responsibilities to the American people. These clearly defined roles and responsibilities mean we are better meeting our program goals and commitments for furthering the Department's strategic objectives. For the first time, HUD has freed up some 90% of the agency's staff to concentrate entirely on monitoring and running its programs.

How can we measure the success of the Community Builders program? In three ways: positive results from the field, the backing of independent analysis, and rave reviews from our customers.

Results from the Field: Program offices attribute their success to the Community Builders and depend on the Community Builders for the continued success of their individual program areas. The effect of the Community Builder's program is best measured through the accomplishment of our strategic goals in various program areas. Last year, we exceeded our goals in fair housing enforcement, increasing home-ownership among under-served populations, and providing comprehensive solutions to fighting homelessness, all with the help of the Community Builders.

For example, the Office of Single Family Housing had a record-breaking year, increasing insurance endorsements for under-served populations to 424,658 a 16% increase over the Business and Operating Plan (BOP) goal of 367,011. That office also had a record breaking year for endorsements of first-time home-buyers, reaching 745,671 an 18% increase over the BOP goal of 629,341. In plain terms, this means that more people in need are getting homes and both cases, the Office of Single Family Housing attributes much of its success to the outreach efforts of the Community Builders

The Office of Multifamily Housing also made a significant contribution to communities throughout the country by officially opening 204 new Neighborhood Network Centers, exceeding the FY99 BOP goal by 82%. The Office of Multifamily Housing attributes much of the success of its effort to the work of the Community Builders.

We have also seen results in terms of the ability of our Public Trust Officers to perform monitoring and compliance reviews. In FY99, HUD reached 104% of the BOP goal for performing mortgagee monitoring reviews and servicing/loss mitigation reviews of Title I, Title II, and 203 (k) lenders. In FY2000 we fully expect to exceed last year's goals and provide even stronger enforcement numbers. The separation of functions between the Community Builders and the Public Trust Officers can be credited for this accomplishment.

FY 2001 will be an even stronger year for accomplishing HUD's strategic Goals. This year we continue to establish a variety of goals designed to further our departmental mission and augment the benefits of the Community Builder program, but we cannot rest on our accomplishments. Through the use of our Community Builder program HUD has been able to exceed BOP goals in key program areas and set the bar higher as we look forward. These results could not be accomplished under the old system which vested compliance, outreach and marketing responsibilities in one person. They can only be accomplished through the freedom that agency staff now have to concentrate on their defined responsibilities.

Independent Analysis: If these concrete results are not enough to demonstrate the success of the program, we can also look to independent analysis. Ernst and Young has concluded that "the Community Builder program may serve as an innovative government model of improved customer service for government institutions at all levels."

Ernst and Young found specifically that:

• Community Builders are providing increased customer service and responsiveness to community needs and requests;
  
• Community Builders are expanding outreach to new and in some cases previously under-served partners;
  
• Community Builders are facilitating working partnerships, furthering the Department's mission;
  
• Community Builders are utilizing valuable private sector experience and skills to benefit the public sector; and
  
• Community Builders are furthering the Department's strategic objectives.

HUD's Satisfied Customers: Finally, it is clear that HUD's customers are extremely pleased with the increased customer service in their communities. When interviewed by Ernst & Young, an overwhelming majority (88%) stated that they were impressed with the Community Builders and would call upon them again. They cited the proactive effort of Community Builders in identifying opportunities and areas of need in the community. And our customers note that the Community Builders provide greater access to HUD by providing a single point of contact on HUD's multiple program areas.

Through the Community Builders HUD has successfully reached out to new community partners and has built relationships with organizations and communities that were previously under-served. A full 59% of customers interviewed by Ernst & Young were new partners of HUD. The Community Builders have gained the reputation of effective community outreach by bringing organizations and people together to form new partnerships and acting as liaisons between community organizations.

In 1999, Andersen Consulting surveyed our customers and found that "[i]n striking contrast to the image of a federal bureaucracy, HUD's staff is perceived by its customers as providing exemplary service and accurate information, and HUD staff also received high marks for timeliness of the information provided. The fact that HUD customers indicated high positive levels of customer service is even more impressive because of the high disposition of government customers to negative bias (since, unlike private companies, HUD must regulate its customers)."

Members of Congress and Mayors from across the country have applauded the work of our Community Builders. Let me highlight a few samples:

Here's what Mayor Dominic Pileggi of the City of Chester, Pennsylvania writes:

"I am a believer in a limited federal government. Nevertheless, the Community Builder program has been the single most effective innovation in a federal government program in my 6 years in City Government."

And Mayor John Norquist of Milwaukee said that:

"HUD had been virtually invisible in the community. However, that has changed since the appointment of the four fellows in the local HUD office. They have worked hard to create a HUD presence in the community and have been wildly successful. Their efforts to `go where no HUD has gone before' have resulted in HUD representation at venues specifically targeted toward under-served areas . . . . The Community Builder program is the model for empowering communities to achieve self-sufficiency."

And, in my home State of Texas, Mayor Bo Quiroga of Galveston said this about Community Builders in his area

"They have helped guide me and the committee I have formed to begin to transform a neighborhood that has been neglected for many, many years the Old Central/Central Park Neighborhood. We are about to launch a neighborhood effort that we hope will transform the neighborhood aesthetics, encourage self esteem, provide home ownership and encourage entrepreneurship opportunities . . . . I hope other cities are the recipients of the same personal attention we are receiving from the HUD Community Builder Program, and I encourage you to consider expansion of this program in the future because it works."

I can assure the committee and Mayor Quiroga that many cities across the nation are enjoying similar assistance from our Community Builders.

And the testimonials continue to pour in:

"The Community Builders initiative is exactly the kind of innovative thinking we need at HUD and exactly the way the federal government should be working as we move into the next Century." Mayor William Johnson, Rochester NY

"By developing the Community Builder and Public Trust Officer positions, which focus on community outreach and on compliance monitoring respectively, HUD has created a more efficient organizational structure. With staff collaborating in a more focused and defined manner, it makes for a more effective and responsive HUD. We have used this model in Austin to reorganize our own housing office." Mayor Kirk Watson, Austin, TX

"The Community Builders program is a new concept to those of us at the local government level. We have found the program and servicing community builders' staff to be a superb clearinghouse for a multitude of issues and information." Mayor Tommy Swaim, Jacksonville, AR

"Anyone working at the local level knows the value of having a friend at HUD who is watchful and knowledgeable of the big picture. Cities exist in a complex system and these people have been helpful at keeping us prepared and ready for the challenges we face." Mayor Roy Bernardi, Syracuse, NY

"Literally every dealing we've had with HUD since the inception of the Community Builder program has improved because of the `one-stop shopping' we can now use in seeking information and assistance." Mayor Anthony Masiello, Buffalo, NY

"Whether it be providing technical assistance with RFPs, connecting people and organizations to community resources, providing training and education on HUD programs to owners and managers, supporting preservation efforts, developing partnering relationships, supporting preservation efforts, developing partnering relationships, supporting industry projects such as Fair Housing Best Practices or Neighborhood Networks the Community Builders have proven themselves as both highly capable and committed individuals." Joseph Diehl, Executive Director, Affordable Housing Management Association.

Clearly, the people we work with on a daily basis in reaching America's communities are pleased with the work of our Community Builders, just as we are.

What does this mean for the American people? It means that HUD's reform has resulted in a better product for communities and greater monitoring mechanism for HUD's programmatic investments. The clearly defined roles and responsibilities translate to an improved, more efficient HUD, capable of meeting its program goals and commitments and furthering its strategic objectives. To consider reducing or eliminating this program, particularly as the effects of its success are just now being concretely felt would be deleterious to HUD's reform progress.

The second point I would like to make is that the IG's criticisms particularly about the hiring process for the Community Builder Fellows in 1998 and 1999 are baseless and fundamentally unfair. As I have testified previously, the Inspector General's audit of the Community Builders program is rife with inaccuracies.

• The IG's report mistakenly claims that Community Builders do not fit the criteria for hiring under Schedule A.

We believe that Schedule A hiring authority is designed, in part, for Fellowship programs like the Community Builder fellowship. I would like to emphasize that HUD's Office of General Counsel fully analyzed the applicability of Schedule A hiring authority to the Community Builders and concluded that "the Department may hire individuals from outside the Department to fill positions in the Community Builders program under the Schedule A authority of 5 CFR 213.3102 (r)." I would like to submit a copy of that memo for inclusion in the record. Oddly enough, one of the HUD attorneys who drafted the memorandum currently serves as the IG's associate counsel. I cannot understand why the OIG would contradict the legal opinion of its own lawyer.

• The IG report stated that there were irregularities in the hiring process for Community Builders and that the process was not well planned or implemented.

We believe that this claim is absolutely false. We believe that the hiring process complied with all relevant rules, laws, and regulations provided by the Office of Personnel Management (OPM). Our response to the IG report addresses this issue in detail. I am also providing you with memoranda from our General Counsel and from our DAS for Administration demonstrating that HUD acted appropriately in hiring Community Builder Fellows.

• The IG claimed that the pay grades for the Community Builders were unusually high. The facts show otherwise.

HUD career human resources officials followed OPM guidelines in assigning salary levels the same process used to assign salary levels for all government employees. Moreover, the Community Builder Fellows are of the highest caliber. Nearly all Community Builder Fellows are mid-career professionals with 10 or more years of experience in their chosen profession and their average age is 45. Many also have advanced degrees in fields such as law, public administration, and public policy. The implication that Community Builders are paid too much is false. Salaries for Community Builder range from GS 7 through GS 15, approximately $27,000 to $105,000, including locality pay.

I am submitting our response to the OIG report, which addresses the issue of hiring in detail. I am also submitting a memorandum from our General Counsel and DAS for Administration demonstrating that HUD acted appropriately in hiring Community Builder Fellows.

• The OIG report alleged that Community Builders merely do - and I quote - "public relations" and that their work is of "minimal value."

Again, the OIG is wrong and plainly distorts the record. As confirmed by Ernst and Young, Community Builders are helping the Department meet each of its strategic objectives, and the results I discussed above plainly show the difference the program is making.

Some of the clear examples of valuable work performed by Community Builders that E & Y found include:

• helping local communities in Nevada assess their economic development needs;
• forming a partnership between a Community Development Corporation, HUD and a local high school to assist with a crime mapping initiative;
• providing information so that a local government entity could access a new source of HUD funding for the first time;
• facilitating the participation of a local chapter of the United Way in the Department of Justice's weed and seed program;
• bringing together a group of tenants and their landlord to help resolve maintenance and safety issues;
• identifying alternative financing options for the Cherokee Nation Housing Authority;
• leading a collaborative effort that included the Federal Emergency Management Agency to respond to freezing weather that destroyed crops that were an important part of the local economy;
• helping a non-profit organization in Galveston, TX find funding for a training program for young inner city entrepreneurs;
• locating a disabled-accessible apartment for a woman with multiple sclerosis and providing her information regarding fair housing complaint procedures;
• providing technical assistance to a local non-profit housing development organization to help it become a designated Community Housing Development Organization;
• providing information and technical assistance to help preserve Washington State's Section 8 contracts;
• organizing first-time home buyer training for local lenders who were interested in targeting the community's under served minority first-time home buyer population;
• presenting information on HUD's housing programs, including eligibility requirements and rent calculations to an AIDS Task Force to help them educate their clients; and
• working with the Philadelphia Housing Authority to inform public and assisted housing residents about new "welfare-to-work" reform rules and regulations.

Now, if you believe that's public relations, that's fine. I think it's the relations the public expects us to have to be responsive and reliable. This work is exactly what the public should expect from HUD comprehensive services that are responsive to local needs.

• The OIG report alleges that Community Builders disseminate primarily political information.
  Once again, the OIG is wrong. Community Builders provide information to customers on HUD and its programs. The OIG report provides absolutely no valid, reliable evidence for this unfounded charge.

This is but a sampling of the errors and inaccuracies contained in the audit. That is why I urge this Committee to examine the facts carefully and draw your own conclusions. I know that if you look at the facts objectively, you will conclude that the program has been unfairly attacked and that the basis for these attacks is unsubstantiated, anecdotal stories that clearly demonstrate a misunderstanding of this program.

The last point to emphasize today is that the level of our current hiring and the process by which we are hiring permanent Community Builders is legal and appropriate. First, let me be absolutely clear: as we complete the hiring of our internal Community Builders, we are fully complying with the Fiscal Year 2000 Appropriations Act for the Department of Veterans Affairs and Housing and Urban Development, and Independent Agencies (Public Law 106-74). The Act resolves once and for all any issues concerning past hiring, and HUD is following its roadmap for all current and future hiring.

The language of the Act is perfectly clear: HUD was instructed not "to convert any external community builders to career employees" and was prohibited from employing "any external community builders" after September 1, 2000. We have in no way done the former and we have absolutely no intention of doing the latter.

HUD is hiring for current Community Builder positions through an openly competitive process. The applications are being processed using the Office of Personnel Management's Delegated Examining Unit (DEU) Operations Handbook as well as the merit staffing procedures outlined in HUD's Merit Staffing Policy. These positions are not being converted, they are being competitively filled.

Further, HUD has already acted to eliminate the external Community Builder program. All individuals hired as Community Builder Fellows were advised immediately after the Act passed that their positions would terminate on or before September 1, 2000.

Indeed, during negotiations about the Community Builders program last fall, the Conferees and the Administration, represented by the Office of Management and Budget, reached an agreement to preserve the overall Community Builders program. It was agreed that the Fellows aspect of the program would be eliminated, that the FTE slots freed up by that elimination would be filled with career civil servants, and that HUD would be prohibited from making any CB Fellow into a permanent civil servant without that person having to compete on an equal basis with all other applicants.

We frankly cannot see how the plain language would support an alternative interpretation. The suggestion that the law prohibits HUD from hiring any Community Builders is particularly incomprehensible, as the statute clearly singles out one category the Fellows leaving the other classes of Community Builders untouched.

Indeed, in terminating the Community Builders Fellows program, the Conference Report accompanying the Act clearly states that "functions now being performed by external Community Builders will be carried out by career civil servants, and that FTEs now occupied by external Community Builders will be filled instead by regular civil service employees." In other words, positions held by Community Builder Fellows would be competed for and filled by career civil servants, just as HUD is doing, not eliminated in their totality.

Indeed, the fact that the external Community Builder program was terminated while the total number of HUD employees remained at 9,300 suggests that no change as radical as cutting the number of Community Builders in half was contemplated by the Conference.

Thus, we are entirely within the plain language of the law in competitively hiring the permanent Community Builders.

Our current hiring process for Community Builders, moreover, follows all applicable requirements. We have sought and received extensive advice from the Office of Personnel Management (OPM) on a variety of issues. OPM advised that our plan met all relevant legal requirements and was both a proper and appropriate approach to hiring Community Builders.

Prior to implementing my Staffing Plan, the Human Resource Department sought and received guidance in the DEU Examining Operations. OPM referred HUD to their web site where instructive materials were both found and utilized. On December 10, 1999, OPM was provided with a copy of the FY2000 Staffing Plan which included the Community Builder positions.

In order to ensure that there are no questions concerning the development of grade determinations, our Human Resource Department referred the Community Builder's position descriptions to OPM for review. The position description delineates duties of the positions and the criteria for determining pay grade determinations. OPM advised that they were satisfied with HUD's explanations as to how the grades were set.

Lastly, HUD sought OPM's advice prior to writing a vacancy announcement and revised position description for the Community Builder program. OPM in return provided HUD with sample vacancy announcements, made suggestions for clarifying duties, and recommended that HUD develop supplemental evaluation statements. These samples were used to develop the Community Builder announcements, and evaluation statements were prepared for each position description.

We have taken all necessary steps to ensure that every aspect of our current hiring is perfectly appropriate.

Let me close by saying that we will not let positive reviews lull us into complacency nor negative attacks weaken our resolve to continue to improve this program. We are continually working to make the Community Builders program as successful as possible with one goal in mind to better serve American communities by working with them and responding to their needs.

We are proud of the work that our Community Builders have done and we have seen how absolutely vital they are to all of the work we do. I thank you for the opportunity you have given me to share these successes, and I look forward to answering any questions you may have.