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payments are begun by the Department of Labor. The requested funds will allow us to finance overtime or replacement personnel in essential service positions during the 45 day period when salary savings of the injured employee's position are not available for reapplication. Finally, the Public Law 93-246 increase to the employer's share of the health benefits program costs and approved hikes to carriers' rates in January 1976 require us to seek $380,000. The $149,000 supplemental appropriation requested for the transition quarter relates to these Workmen's Compensation and health benefits costs.

I urge Congressional approval of this request. Absorption of these unavoidable costs will be extremely disruptive of planned work. We are committed to a broad program of special commemorative activity for the Bicentennial now nearing fruition, including the opening of the National Air and Space Museum on July 4, 1976. Funds now available to us for this important work are firmly committed for the balance of the year.

Thank you very much for your interest and consideration. We would be pleased to answer any questions you may have.

SMITHSONIAN INSTITUTION

Salaries and Expenses

(Supplemental now requested, existing legislation)

For an additional amount for "Salaries and expenses", SI,000,000.

Program and Financing (in thousands of dollars)

Identification code 32-50-0100-1-1-503

1975 act. 1976 est. TQ est. 1977 est

These funds would provide for the increased costs of utilities and postage.

1,365,000 2,176,000

149, 000

Smithsonian Institution: Salaries and expenses $1,000,000 ?S^' RrR

Smithsonian Institution: Salaries and expenses 2,606,000 —430,000

884 Smithsonian Institution: Salaries and expenses .-

(Insert the following immediately after the 1976 appropriation language under this heading:) For an additional amount for "Salaries and expenses" for the period July 1, 1976, through September 30, 1976, $149,000. (Delete the sentence of explanation following the Program and Financing schedule and insert in neu thereof:) The requested 1976 funds would provide for the increased costs of utilities and postage. The transition quarter funds requested would meet the increased costs to the Federal Government of employee health benefits. 893 Smithsonian Institution: Salaries and expenses $928,000 -149,000

149,000

January 22, 197fi S MITHSONIAN INSTITUTION

Justification for a FY 1976 Supplemental Appropriation for Utilities, Postage, Workmen's Compensation, and Health Benefits Costs in the "Salaries and Expenses" Appropriation Account

Summary of the Request

is a request for a supplemental appropriation of $1,365,000 for FY 1976 in the Smithsonian Institution's Salaries and Expenses account to meet certain program costs not anticipated at the time the FY 1976 budget was formulated. Absorption of these added costs is not possible without a serious negative impact on program operations. Components of this request are:

Heating Steam, Electricity,

and Related Costs $720,0D0

Postage Costs 83,000

Telephone Costs 132,000

Workmen's Compensation Costs 50,000

Health Benefits Costs 380,000

Si,365,000

As a result of constant monitoring of and revision to cost projections, this request is $65,000 less than allowed by the Office of Management and Budget.

Heating Steam, Electricity, and Related Costs

An amount of $720,000 is required to fund higher FY 1976 utility (heating steam, gas, oil, and electricity) costs caused by rate and fuel surcharge increases since the FY 1976 budget was formulated and submitted to the Office of Management and Budget in September 1974 and the Congress in January 1975. No additional funds are sought in this request for additional consumption. Such needs (as for the new National Air and Space Museum and new facilities at the National Zoological Park) were anticipated in the regular FY 1976 budget.

The major portion of these additional uncontrollable cost increases, $571,000 of the $720,000 is associated with the program and financial responsibilities of the Office of Plant Services which serves museums, galleries, and other buildings on and near the Mall (with a public visitation of over 17 million persons in FY 1975) and certain storage, service, and collections preservation facilities elsewhere. Page 5 shows historical consumption and cost data. It also shows the special analysis used to determine the estimated inflationary rise in the Office of Plant Services costs for essential heating, airconditioning, and lighting in support of heavy public use, the protection of the valuable National Collections, and general program operations. As shown in the tables, the calculation of the requested supplemental is based on the full application of base resources.

The balance of the requested new funds for utilities costs, an amount of $149,000, is associated with the operations of those Smithsonian field activities which fund their own utilities and are experiencing similar higher rates on services and fuel supplies. These include the National Zoological Park, Radiation Biology Laboratory, Astrophysical Observatory, Chesapeake Bay Center, Cooper-Hewitt Museum, Anacostia Museum, and the Tropical Research Institute.

The development of these estimates drew upon past usage data, historical weather patterns, and best and latest available information on rates from utility companies. Substantial uncertainty does exist, however, in this area of budgeting. Utility rates

(and related surcharges) may change with little notice, occasionally retroactively. The weather may be warmer or colder during heating and airconditioning seasons. Changes to scheduled availability of new public facilities may affect consumptipn estimates. Consequently, should our cost estimates prove to be high as the fiscal year passes, we will reduce the estimate to Congress prior to the actual appropriation of funds or will return unrequired funds to the Treasury. Indeed, such a reduction has already occurred. Recent downward revisions to consumption, rates, and resulting cost estimates allow us to seek a supplemental appropriation $65,000 less than allowed by the Office of Management and Budget. We will continue to monitor developments.

Utility consumption conservation efforts continue in all our activities. Lighting levels have been reduced in work spaces and, wherever possible, in public areas. Heating and airconditioning levels have been reduced and raised respectively except in certain collections areas where changes would damage objects and specimens. Fans and other heavy consumers of electricity have been shut down during non-public hours. Major airconditioning systems are phased into operation to keep the peak demand rates to a minimum. As an additional major measure, the success of the low-cost computerized electrical power management system in the History and Technology Building has led to its current or planned installation in other buildings on the Mall. These systems reduce electrical power demands by selectively shutting down equipment before its operation can incur peak demand rates. For example, the power management system installed in the History and Technology Building reduced electrical use by 1.4 million KWH during the last five months of FY 1975 at an estimated savings of $45,000. The results of these self-help measures have been taken into consideration in presenting the supplemental appropriation request to Congress.

Postage Costs

An amount of $83,000 is sought for additional postage costs. About $478,000 are now available for this essential service used to respond to public inquiries, distribute publications and other educational materials, and conduct the Institution's official business. Non-appropriated funds are used for other Smithsonian activities, such as the mailing of the magazine, Smithsonian . Recently, the United States Postal Service was allowed to place substantial rate increases into effect. First class mail costs were increased 3 cents per ounce. The average rate increase for other classes is also 30 percent. The requested supplemental appropriation reflects approximately one-half year of additional costs based upon our estimated annual mailing volume for each class of mail.

Continuous reviews, samplings, and tight controls are placed on mail services and use. These controls include restrictions on air mail service, consolidations of mailings, and use of proper mail classes. Yet interest in the Smithsonian continues to grow as evidenced by frequent newspaper coverage of events and a large number of public inquiries seeking information on research, exhibition, education, and other activities or asking for objects to be identified by the curatorial staff. This public interaction is sure to grow during the Bicentennial celebration period. There will be no easing of control measures.

Telephone Costs

An amount of $132,000 is requested for telephone service costs. The Smithsonian uses both local commercial telephone systems and the Federal Telecommunications System (FTS). About $793,000 was programmed and budgeted to be available in FY 1976 to meet these costs. Rate and associated cost increases granted to the Chesapeake and Potomac Telephone Company in April 1975 (after the formulation of the FY 1976 budget) have added an estimated $132,000 in unplanned costs. This increase results from the revision in mileage charges. The impact can be seen using, as an example, a single telephone line in the Natural History Building. Before the rate increase, the monthly mileage cost

for this single line was $0.18. After the rate increase the monthly mileage charge jumps to $6.54. Over 1,600 telephone numbers (85 percent of the total) have been affected by this change to the mileage pricing structure.

Workmen's Compensation Costs

Additional funding of $50,000 is sought for additional costs associated with Workmen's Compensation. A new provision of the Federal Employees' Compensation Act, as amended by P.L. 93-416 approved September 7, 1974, permits workers injured on the job to remain on the payroll of their agency for 45 days before compensation payments are begun by the Office of Workmen's Compensation Programs. Certain occupations that the Smithsonian uses require 24-hour coverage of posts. Therefore, if an assigned employee is off, the post has to be assigned to a temporary employee or overtime must be paid to another employee to fill the vacancy. Positions that fall into this category are animal keepers, guards, policemen, and building mechanics. An amount of .$50,000 is sought to finance temporary replacement personnel or to fund overtime when an employee is injured on the job and not present for duty.

Health Benefits Costs

Further supplementary funding of $380,000 is associated with new costs associated with the employees' health benefits program. The Government's contribution to the health benefits program was increased from 50 to 60 percent in January 1975 in accordance with P.L. 93-246 approved January 31, 1974. This has resulted in additional costs of $265,000 because of the higher percentage of the contribution and because employees have transferred to higher option plans available at little additional expense to them. Furthermore, health carriers were allowed to increase the cost of plans by about 21 percent effective January 1976. The cumulative effect of these actions has added about $115,000 to our costs. In calendar year 1974 the Institution contributed $523,000 toward Federal employees' health benefits. In calendar year 1975 it is estimated this contribution will be ! : ;7S9,000 and in 1976 over $900,000. To finance the additional costs of health benefits, S3S0.0O0 is sought in this supplemental.

Absorptions

The Smithsonian is seeking full funding for the cost increases enumerated in this request. Base funding for essential utilities and communications must be brought up to meet costs. Good planning for and execution of program activities demand that these uncontrollable expenses be financed in an orderly way.

We continue to absorb heavy inflation in other essential areas of Smithsonian operations. Information from the Bureau of Labor Statistics indicates that the Consumer Price Index rose almost eight percent from September 1974 to September 1975. Further increase can be expected. The following examples of routine, but important, recurring types of expenses are provided to show representative experience with inflation:

Animal food--Costs of feeding a reasonably stable animal population have increased from $169,000 in FY 1973 to an estimated $245,000 in FY 1976.

Natural history collection storage cases--About 600 cases of varying sizes are purchased in the average year. In FY 1972 the price of these cases averaged $145.00 for a total cost of $87,000. Recently the price jumped to $148,000 or $247.00 average per case (a 70 percent increase).

Buildings maintenance and custodial supplies — Price inflation on commonly-used supplies and materials for building repair and maintenance and for custodial supplies (including restroom) has averaged 30 percent over the past year. Other items, such as copper wire, have increased in price by as much as 150 percent.

Printing of research reports and catalogues—Over 100 scholarly monographs, scientific reports, exhibits catalogues, and informational brochures are issued by the Smithsonian each year. Printing costs have gone up about 15 percent over the past 12 months (on top of a 12 percent increase the previous 12 months).

The commitments to an active exhibits program, opening of the National Air and Space Museum, the celebration of the Bicentennial of the American Revolution, and a growing number of visitors posing extra demands on buildings management and protection operations make it impossible to meet a further $935,000 of costs.

Analysis of Utilities Costs

for FY 1976 Supplemental Appropriation

Office of Plant Services

Historical Experience

Fiscal Year

1973 1974 1975

Conclusion: Controlled consumption -- Uncontrollable rates -- Much higher costs.

FY 1976 Estimate

Estimated Totals

for FY 1976 Totals if FY 1974

Rates Were Still

in Effect Costs Associated with

Rate Increases

Since FY 1976

Budget Formulated

Millions of lbs

Heating Steam Unit Cost /J. Average $ per 1000 lbs

Cost

$l,000s

Electricity

Unit Cost /2 Cor.t

Mil lions of KWH

Average $ per KWH

$1,0005

11 l±

5.37 1,266 69 0.038 2,614

/S

764 69 0.022 1,51{

2.12

502

Calculation of FY 1976 Appropriation Request Estimated Total Costs:

Steam

Electricity

Gas (Analysis not shown since small amount)

Funds Available:

FY 1974 Base (Actual Costs in FY 1974)

FY 1975 Supplemental (OPLANTS share of $390)

FY 1976 Uncontrollable appropriation

FY 1976 NASM appropriation

DEFICIT AND REQUESTED SUPPLEMENTAL

0.016 1,096

$1,266 2,614 44

$3,924

$1,833 363 538 619

$3,353

$571

/l

12

n

Average rate shown weighted to reflect varying levels of steam consumption at rates

then in effect. The chronology of rate increases has been: September 1973, $2.69;

January 1974, $3.25; July 1974 (announced November 1974 retroactive), $4.61; Febi

1975, $5.75; July 1975, $5.25; projected January 1976, $5.50.

Average charge including basic rates, demand charges, and fuel adjustment charges

(which increased from a total of $2,000 in FY 1973 to $181,000 in FY 1974 to $586,000

in FY 1975 despite lower consumption than FY 1973.

Estimate has taken into consideration the installation of electrical power management

equipment in Mall buildings.

Based on December 1975 higher rates and expected further such increases.

Rate in effect at time FY 1976 budget was formulated. Rate increases not announced

until November 1974 and February 1975 (see note 1).

EFFORTS TO CONSERVE ENERGY

Mr. Yates. You have an increase in utility costs of $720,000. Have you made any efforts to conserve energy ?

Mr. Blitzer. Yes; indeed we have, Mr. Chairman.

Mr. Yates. Would you describe for the record just what efforts you have made ?

Mr. Blitzer. I think Mr. Ault could probably do that in more detail.

Mr. Yates. Insert the information in the record.

[The information follows:]

146 a

Smithsonian Institution Energy Conservation Program

The Smithsonian Institution initiated a program of conservation of energy in 1973 before the letter from President Nixon urged all agencies to do so. We have intensified our efforts since then as evidenced by our receipt of an award from the Federal Energy Administration.

The individual actions we have taken to implement the program are listed below.

1. Cold season building temperatures in non-critical areas have been reduced to 20° Celsius (68° Fahrenheit). Warm building temperatures have been raised to 25° Celsius (78° Fahrenheit).

2. Room lighting intensities are limited to 40 foot-candles in offices and

10 foot-candles in corridors. Lamps are removed from fixtures to assure compliance.

3. Non-critical air handling units are turned off from 5 P.M. to 8 A.M. during the period September to April, and from 9 P.M. to 8 A.M. from May to August.

4. Building heating systems are shut down from midnight to 4 A.M. during cold months.

5. Outside lighting was reduced to the minimum intensity required for security.

6. The water fountain at the Hirshhorn Museum is shut down year round from

9 P.M. to 9 A.M. During the cold season the fountain at the National Museum of History and Technology is shut down from 6 P.M. to 9 A.M. and in the summer from

10 P.M. to 9 A.M.

7. The starting and stopping of large air cooling systems is accomplished on time cycles geared to avoid peak electrical energy demand periods.

8. During transition periods from summer to winter and winter to summer, maximum use is made, where possible, of outside air to minimize use of air conditioning systems.

9. Central refrigeration systems for chilling water for drinking are shut down entirely in cold weather months and from 8 P.M. and 6 A.M. during warm weather months.

10. A computer-controlled system for monitoring electrical energy demand and for reducing consumption has been in operation in the National Museum of History and Technology for 14 months. The system became operational in the National Museum of Natural History in March 1976 and will be operating in the Smithsonian and Arts and Industries Buildings by June 1976. The system will be installed in the National Air and Space Museum by autumn 1976. It has been determined that the requirement for constant humidity in the art museums, the Freer, Renwick, Hirshhorn, and the Fine Arts and Portrait Galleries, makes installation of the system impractical in these buildings. First year savings realized over cost of the rentals of the computer and installation of the system in the National Museum of History Technology were $21,300. It is anticipated that annual net savings will amount to no less than $160,000.

11. Fluorescent tubes which require only 35 watts per tube but provide almost as many lumens as the standard 40 watt tube are being installed in a relamping program.

12. During FY 1977 it is planned to rewire and reswitch many collections storage areas in the museums to reduce drastically the overall energy consumption while providing adequate lighting at the bin or filing cabinet being researched.

The effects of these actions have been taken into consideration in determining FY 1976 supplemental appropriation and FY 1977 appropriation requirements. Unanticipated rate increase actions, however, continue to negate savings. For example, on March 17, 1976, the Smithsonian was advised by the GSA that the cost of steam was raised from $5.25 to $6.25 retroactively to February 1, 1976. This will add $60,000-$75,000 of unanticipated costs for the balance of FY 1976.

Mr. Blitzer. May I say that the absolute consumption is being controlled. In 1975 the use of steam was lower than it had been in the 2 previous years and electricity use was lower than 1973. But, the cost is escalating constantly.

Mr. Yates. Were you not using energy as much or did you change your operations?

Mr. Blitzer. It is conservation measures plus the weather. We have to give some credit to mild weather.

ADEQUACY OF BUDGET REQUESTS

Mr. Yates. This is the 2nd year you have requested a supplemental appropriation for this purpose.

How do you know your fiscal year 1977 request is adequate? You don't, do you ?

Mr. Blitzer. Well, we hope that the amount we are requesting in this supplemental will be added to the base for the 1977 appropriation as shown in that budget request.

Mr. Yates. I see. Well, you will call that to our attention at the time of the hearing.

Mr. Blitzer. If there are unforeseen escalations of rates we may well be back, Mr. Chairman.

Mr. Yates. Suppose you don't receive these funds? Do you close your museums ?

Mr. Blitzer. We will pay our bills and then figure out where to get the money.

Mr. Yates. Could you obtain it from private sources ?

Mr. Blitzer. I can't imagine asking them to pay our electric bill.

SAVINGS FROM POWER MANAGEMENT SYSTEMS

Mr. Yates. You mentioned last year you expected savings of $200,-000 per year from installation of a computerized power management system.

Have the savings been realized ?

Mr. Blitzer. We have savings in electricity costs of about $45,000 in the first museum in which it has been operating, the Museum of History and Technology. The system is about to start in the Museum of Natural History. I assume that at that rate we would have those havings once it's fully operating.

absorption of costs

Mr. Yates. There are four other supplemental items: Postage, $83,000; telephone costs, $132,000; workmen's compensation, $50,000; and health benefits, $380,000.

I assume that you have given very serious consideration to absorbing these costs ?

Mr. Blitzer. Well, if the supplemental fails, certainly, yes.

Mr. Yates. Had you given consideration to that possibility before you made your request ?

Mr. Blitzer. We have considered some options. We work, as you know, Mr. Chairman, on tight margins all of the time, and in the

67-100 O - 76 - Pt. 2-32

Bicentennial year it really has become a kind of a nightmare to meet all of our commitments.

Mr. Yates. You have considered the possibility of absorption and believe it would hurt too much?

Mr. Blitzer. Yes; correct.

Mr. Yates. Did you want to say something, Mr. Jameson '.

Mr. Jameson. I think, Mr. Chairman, there are areas we can look at. First of all, I think we could look at expenses of programs not yet started. One would be summer visiting hours due to start the first of April.

Mr. Yates. Well, that is not a thing to consider during the Bicentennial year.

Mr. Jameson. It would be tough. Second, we would look at the Air and Space Museum and see if there are planned expenses for the opening of that building that might be curtailed.

Mr. Yates. You mean delay the opening?

Mr. Jameson. No, Mr. Chairman. We are going to open on the 4th of July in grand style, but we would have to look at expenditures between now and July 4, to see if there are any reducible areas. The last tiling we would have to do is what we did last year. When the Congress allowed all that the OMB allowed in last year's supplemental, we had to make up the difference and we went through the Institution and canvassed our 50 line items, the bureaus and offices we have in our budget we will be discussing on Thursday, to see where we could find some money.

Mr. Yates. Thank you very much.

.