It is my pleasure to appear before you to present the President's fiscal year 2001 budget request for Gallaudet University.

Gallaudet University provides specialized programs and services to students who are deaf. The Department helps ensure that the University provides services and programs in compliance with the requirements of its authorizing legislation and that these activities meet the needs of the students for whom they are intended.

I would like to take a few minutes to summarize the budget request and to comment on several key issues. Then Dr. Jordan will provide specific testimony in support of the budget request for the University.

Budget Request

The budget request for Gallaudet University is $87.65 million. The Department is pleased to be able to provide support for this important program and for the children and adults who are deaf who benefit from Gallaudet's programs and services.

Operations and Initiatives

The Department's request of $87.65 million for Gallaudet University is an increase of $1.67 million or 1.9 percent more than the fiscal year 2000 appropriation level. This increase for operations would help offset the effect of inflation. The fiscal year 2001 request also would retain $2.5 million that was included in the fiscal year 2000 appropriation for one-time costs associated with construction projects for the Model Secondary School for the Deaf (MSSD). This $2.5 million would be added to the University's operations base for deferred maintenance activities. The combination of the proposed increase in funding of $1.67 million above the 2000 appropriation level and the $2.5 million for deferred maintenance retained from fiscal year 2000 will provide a $4.17 million, or 5 percent, increase for Gallaudet operations.

Deferred Maintenance

The problem of deferred maintenance has been an increasing concern in higher education over the past couple of decades. The National Association of College and University Business Officers (NACUBO) published a study in 1996 that estimated that the accumulated value of needed repairs on U.S. campuses had reached as much as $26 billion as of 1995. NACUBO expressed concern that many institutions lacked the resources to attack this growing problem and that it has been threatening their fiscal health. In addition, in fiscal year 1996, new accounting and auditing standards for private higher education institutions were promulgated by the Financial Accounting Standards Board (FASB) that addressed the issue of deferred maintenance. The new standards require all private institutions of higher education to record depreciation of their buildings and capital equipment as expenses and require expenses for plant operations to be distributed to the other functional categories of expense. Since the depreciation expense must be shown on Gallaudet's statement of activities, in order for the expenses and revenues to balance, the University must either raise additional revenue to compensate or spend less of its current revenues. In addition, if the University fails to increase its investment in its plant, there will be a decline in the value of the University's net assets. Many of the buildings on the Gallaudet campus are old and in need of repair and renovation. To assist the University in this effort, our budget request includes $2.5 million to be utilized for deferred maintenance costs. We believe these funds will provide a substantial, ongoing resource to assist the University and the Laurent Clerc Center to maintain their facilities and will reduce the need for special funding for construction projects in the future.

Program Initiatives

The Department continues to be concerned about providing funding through the annual appropriation to establish permanent centers to carry out activities that are more appropriately supported through time-limited competitive awards. We believe that support for research, training, and technical assistance activities such as Gallaudet's proposals for a Center for the Promotion of Accessible Technology and a Cochlear Implant Center at the Laurent Clerc National Deaf Education Center should be provided through competitive grants. We recognize that, due to the nature of its other activities, Gallaudet will have some involvement in these issues. We also have great respect for the research Gallaudet has performed in the past and continues to perform, and the University is the recipient of numerous research, training, and technical assistance grants from the Department and other Federal agencies. However, we believe that the Federal Government should retain primary responsibility for determining the best course of action to address issues such as these. As such, we do not support establishing separate centers at Gallaudet for these purposes.

Endowment Grant

As in previous years, our request would provide Gallaudet the flexibility to use current-year program funds for its endowment grant program. The University would have the discretion to determine whether and how much of the appropriation to use for matching purposes. Our request continues to include $1 million, which was incorporated into the operations base in 1996 for endowment purposes. Gallaudet has informed us that it expects to match the $1 million at the fiscal year 2001 budget request level. The Department believes that the endowment grant program helps promote the financial independence of Gallaudet University and provides a permanent and increasing source of funds for special projects.

Major Activities

The Department continues to work closely with Gallaudet University to monitor and update its Annual Program Performance Plan and Report to comply with the requirements of the Government Performance and Results Act of 1993 (GPRA). The integrated performance plan and report that has been submitted to Congress for the University includes the key performance measures the Department believes are appropriate for inclusion in the GPRA plan. In addition, there is a more extensive plan that we refer to as a "master plan" for Gallaudet. This plan contains other measures not included in the annual performance plan submitted to Congress that will be used by the University to oversee internal operations and by the Department for monitoring purposes.

A major objective of Gallaudet University is to optimize the number of students completing programs of study at the University and the Model Secondary School for the Deaf (MSSD). In fiscal year 1999, the University's undergraduate retention rate was 73 percent and the Model Secondary School and Kendall School rate was 92 percent. Gallaudet plans to continue its concentration on retention in fiscal year 2001, and specifically its focus on undergraduate students in order to meet the retention target of 77 percent. The graduation rate for undergraduate programs increased in fiscal year 1999, with a rate of 42 percent. However, the Model Secondary School graduation rate for 1999 was 5 percent lower than for 1998. The University attributes this to a change in policy whereby several seniors who would have otherwise graduated in past years are returning for a fifth year at MSSD. MSSD implemented a new "fifth year option" for seniors who were not ready to graduate. This action was the result of a decision to make MSSD graduation requirements more rigorous. In future years, when calculating graduation rates, MSSD will incorporate a two-year window, students graduating in the fourth and fifth years, at which time the University expects that the graduation rate will again be consistent with the stated target of 94 percent.

We are pleased with the efforts Gallaudet has made in working with the Department to develop and track appropriate performance measures for the University.

In fiscal year 2001, the Department plans to continue to work closely with Gallaudet University to ensure that Federal funds are being used efficiently and effectively to expand educational opportunities for individuals who are deaf or hard of hearing.

My colleagues and I will be happy to respond to any questions you may have.

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