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U.S. INFORMATION AGENCY

STATEMENT OF JOHN E. REINHARDT, DIRECTOR

ACCOMPANIED BY STANLEY M. SILVERMAN, AGENCY BUDGET OFFICER

BUDGET ESTIMATE

Senator HOLLINGS. The subcommittee will now consider the budget estimate of the U.S. Information Agency. The Agency's operations are covered by four separate appropriations totaling $276,598,000 for fiscal year 1978, an increase of $12,690,000 over the amount for 1977.

We are pleased to have the new Director, Ambassador John E. Reinhardt, to testify with regard to this request. He is accompanied by Mr. Stan Silverman.

Ambassador Reinhardt, we are glad to see you on board now. We want to hear what you can tell us about the U.S. Information Agency.

You have your statement here. We will include it in its entirety in the record. You can present it or highlight it as you wish.

Mr. REINHARDT. I will follow any suggestion that you want on this. Senator HOLLINGS. You can summarize it for us, then.

PREPARED STATEMENT

Mr. REINHARDT. I will then, because of the time, summarize the statement from notes I have here. I hope that the complete statement will be made a part of the record.

Senator HOLLINGS. It will be included.

[The statement follows:]

(441)

STATEMENT OF JOHN E. REINHARDT

Mr. Chairman and Members of the Committee:

I appreciate the opportunity to appear before you today to discuss the fiscal year 1978 budget request for the United States

Information Agency.

As you know I assumed my duties at the Agency less than a month ago. I have reviewed the appropriations estimates prepared by my predecessor and have approved them, as I shall explain. I have also begun to look closely at our programs overseas and at our supporting elements in the United States. It is quite probable that I shall make changes as I seek general improvement. At this point, however, I have made no assessment of budgetary implications of possible organizational or program changes.

The budget request for the Agency totals $276,598,000 for fiscal year 1978, an increase of $12.7 million over the budget authority enacted for 1977. Inflationary cost increases and other built-in salary and cost changes account for almost all

of this increase.

For fiscal year 1978 we are asking for 8,712 positions, a net decrease of 85 from 1977. In the last ten years Agency staffing has been reduced by 2,279 positions, a decrease of over 20%.

Salaries and Expenses

The request for Salaries and Expenses is for $262,229,000 in the dollar account and $7,057,000 in foreign currency.

In our dollar Salaries and Expenses appropriation, we are requesting a net increase of $13,904,000 over the 1977 appropriation level. Of the total increase, $13,852,000 is necessary to meet the continually rising costs of operations. Specifically, these items are:

-- Foreign national employee wage increases overseas requiring an additional $5,391,900;

--Increases in fuel, utilities, rents and other operating

costs totaling $5,989,000;

--Cost increases in administrative support from other agencies

adding $3,081,200;

--Within-grade salary increases, the full-year effects of

the October, 1976, Federal pay raise and other net built-in pay adjustments necessitating $1,085,500; and

--Local costs of our program in Tunisia transferred to the dollar account with the removal of that country from the excess currency list at the end of 1977, $540,000.

These built-in increases are partially offset by net reductions of $2,235,600, resulting primarily from savings related to the cessation of operations at the Okinawa Relay Station, the move of Arabic broadcasting from Rhodes to Washington and other nonrecurring costs.

The net increase noted above is requested to sustain throughout 1978 the program levels that will be in effect at the end of the current fiscal year. We are also seeking an increase of $52,000 for representation expenses overseas and in the United States to offset continuing cost increases and to reduce further the use of personal funds. Recent increases in these allowances have been most helpful. However, our officers still must make significant use of their own re

sources.

During fiscal year 1977, the Agency shifted funds to meet changing priorities. In Africa, we opened a new post in Gaborone, Botswana, and one in Durban, South Africa; developed and produced a special exhibit on technology transfer for use in several African capitals; initiated broadcasting in Hausa; increased our broadcasts in Portuguese to Africa; and augmented informational and cultural support for a number of smaller State Department missions at the Department's request. In West Europe, we have decreased our overall foreign national staff and consolidated a number of program operations in order to reduce fixed costs. To meet new needs we have

increased our program support in Italy and Portugal and enhanced our capability to treat economic and energy issues. We are improving our operational base in the area. We have initiated efforts to upgrade the system used to record audience contacts, to improve our information centers and libraries throughout the area and to install a system of rapid transmission, storage and retrieval of the Agency's wireless file.

We have continued to increase our activities in the

Middle East as conditions permit.

Restoration of our cultural

center in Alexandria, Egypt, is underway, and programs in Bahrain and Syria have become fully operational. We remain alert to other opportunities in the area.

A major 1977 fund shift was involved in the absorption of the total cost of the October, 1976, Federal pay raise and wage-board rate increases. In addition, selected support activities were strengthened. Among the latter was the procurement and installation of additional equipment to serve the Agency's printing needs.

The resources required to fund these adjustments were derived primarily from reduced requirements resulting from improved exchange rates; wage and price increases that were less than originally budgeted; and selected program reductions. The principal program savings were developed from periodical activities in Japan, the Voice of America's Vietnamese broadcasts and Agency operations in Lebanon.

A number of program subjects received particular stress in our recent efforts to portray American society and values and to explain government policies. For some time the American Revolution Bicentennial has been a major theme for USIS posts abroad, strongly supported by our film, television, exhibit, radio and print media. Most specific Bicentennial programming will be concluded this year.

The election campaign, Presidential transition and the new administration's policies, actions and personalities have

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