Senator CRANSTON. Senator Stafford, do you have any remarks at this point?

Senator STAFFORD. I have no remarks at this point, except I am very glad to be here and serve on this very important subcommittee with you and the chairman, Mr. Jennings Randolph,

Senator CRANSTON. Our witnesses this morning are Mr. Stephen Kurzman, Assistant Secretary for Legislation, Department of Health, Education, and Welfare; accompanied by Mr. John D. Twiname, Administrator, Social and Rehabilitation Service; Commissioner Edward Newman, Rehabilitation Services Administration; and Richard E. Verville, Deputy Assistant Secretary for Congressional Liaison.

STATEMENT OF STEPHEN KURZMAN, ASSISTANT SECRETARY FOR LEGISLATION, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, ACCOMPANIED BY JOHN D. TWINAME, ADMINISTRATOR, SOCIAL AND REHABILITATION SERVICE; EDWARD NEWMAN, COMMISSIONER, REHABILITATION SERVICES ADMINISTRATION; AND RICHARD E. VERVILLE, DEPUTY ASSISTANT SECRETARY FOR CONGRESSIONAL LIAISON

Mr. KURZMAN. Mr. Chairman and members of the subcommittee, it is a great pleasure to appear before this newly constituted Subcommittee on the Handicapped, many of whose members have long been pioneers of vocational rehabilitation legislation, to discuss the important new measures to extend and amend the Vocational Rehabilitation Act pending before you today. These include S. 3368, the administration's proposal, which was introduced by Senator Taft; H.R. 8395, the bill recently passed by the House of Representatives; and S. 3158, introduced by Senator Williams.

Before addressing these proposals specifically, I would like to take a moment at the outset to describe the administration's goals for the Vocational rehabilitation (VR) program and our plans for improving the Nation's vocational rehabilitation efforts under both the Vocational Rehabilitation Act and H.R. 1.

The vocational rehabilitation program is one which this administration views with a great deal of pride. In 1953, under the Eisenhower administration, the program was identified as one that could provide needed services to a broad segment of the disabled population.

Accordingly, new legislative initiatives for innovation, special projects, training, and increased Federal financial participation were developed and enacted. Over the intervening years, this legislation provided the foundation for the growth of vocational rehabilitation as an important element in aiding disabled people who would otherwise be institutionalized or dependent on others to achieve selfsufficiency through employment.

This administration is fully dedicated to strengthening the longstanding national commitment to vocational rehabilitation. In fulfilling this commitment, we have set two principal goals for the vocational rehabilitation program; first, preventing and reducing dependency and, second, reforming the institutions which deliver vocational

rehabilitation services. Both of these goals are central not only to the vocational rehabilitation program, but also to the Department's overall strategy for meeting human needs.

Whatever the cause of dependency-mental illness, retardation, drug abuse, alcoholism, traumatic injury, or social disadvantage-our main goal is helping individuals achieve a dignified, self-sufficient, and productive way of life through employment. Efforts to prevent dependency respond to the deepest instincts of a society which affirms the ultimate worth and dignity of each individual. As one of the founders of the National Association for Retarded Children once said, "We learn-many of us perhaps only subconsciously-that if our way of life is to survive, every individual-must be counted an individual and accorded his place in the sun."

Moreover, resources invested today in preventing or reducing dependency can yield major long-term economies in the application of society's resources. One disabled individual may, during a lifetime, receive anywhere from $30,000 to $100,000 in public assistance payments. But if he were not dependent and had an average annual income of $8,000, the same individual in a family of four would pay taxes totaling $42,000 over his lifetime. Thus, when a handicapped person is helped to become a contributing member of society, he is transformed from a charge on the public into a productive person able to contribute through his taxes to helping others.

In addition to preventing and reducing dependency, the Department also seeks to enhance the capacity of State and local institutions to serve the public. Consequently, we seek to provide State and local VR agencies with the management tools necessary to respond effectively to the changing needs of their clients and to new target groups.

With the administration's two principal goals of decreasing dependency and reforming institutions in mind, I would now like to explain our efforts under the existing Vocational Rehabilitation Act and our plans for the implementation of H.R. 1 as that legislation was passed by the House in June 1971.

This administration has continued the growth of the vocational rehabilitation program and the development of new initiatives begun in the Eisenhower administration. For example, when the administration took office in fiscal year 1969, the basic service program authorized by section 2 of the Vocational Rehabilitation Act was funded at $346 million. The President's budget request for section 2 in fiscal year 1973 would increase funding to $610 million.

Despite the growth of the program, we have still had to make choices and set priorities. We have decided to emphasize VR assistance to those who need services most, such as the severely disabled and disabled public assistance recipients.

For example, the administration set for itself the target of reaching and serving all trainable public assistance recipients, some 300,000 in number. During this fiscal year, the program served 203,000 disabled recipients, 58,000 of whom were rehabilitated and placed in jobs. Our goal is to be achieved over 2 years with half of the unserved, but eligible, public assistance recipients included in the program in fiscal year 1973, and the remaining half in fiscal year 1974. Thus, over the 2 years, the level of disadvantaged individuals served will rise by 100.000 to a total of 300,000. Our program is also expanding to meet our objectives

of serving other needy categories of disabled, such as the severely disabled.

In addition, we are in the process of developing a "weighted case closure system" which will give greater weight to the closing of more difficult cases than to successes achieved with relatively easier ones. Implementation of such a system should result in a greater effort to serve those with the greatest need for assistance, often the more severely disabled persons.

In another initiative under existing law, the Department has undertaken a major new effort to direct the latest engineering concepts to the benefit of the disabled. Under this program, the Department is establishing a national system of Rehabilitation Engineering Centers, where engineers will work with physicians to apply the most modern technology in treating the disabled. The centers will concentrate on problem areas where unique technological capabilities have been demonstrated, such as electrode implantation to stimulate paralyzed muscles. The activities at these centers implement the commitment made by President Nixon in his 1972 state of the Union message to apply to domestic purposes the technological knowledge developed in defense and space efforts.

The administration's existing commitment to vocational rehabilitation is not expressed only through the Vocational Rehabilitation Act (VR). The vocational rehabilitation program would be significantly expanded under the provisions of H.R. 1, the welfare reform measure supported by the administration and now pending before the Senate Finance Committee in executive session.

Under H.R. 1, the State VR agencies would become responsible for determining and certifying the degree of vocational incapacity suffered by individuals applying for public assistance benefits, judgments which they have no responsibility for making under existing law. The State VR agency would also evaluate the work potential of handicapped public assistance applicants and provide them with the rehabilitation services necessary to return them to productive employment. The vocational rehabilitation program would receive 100 percent reimbursement from the Federal welfare agency for these services.

When H.R. 1 is enacted, we anticipate that vocational rehabilitation services for a substantial number of public assistance recipients will be paid for not from VR funds, as is now the case, but from public assistance funds. The result will be the freeing of a significant amount of section 2 funds to serve other handicapped persons. We expect that this will particularly benefit the handicapped to whom a high priority is attached, particularly the economically disadvantaged and the severely disabled.

Mr. Chairman, I would now like to turn to the bills to extend the Vocational Rehabilitation Act which are before your committee for consideration.

In keeping with the strategy I outlined earlier, the Administration's proposed amendments, S. 3368, were developed to meet two main objectives: (a) expanding the scope of the program in an effort to lessen dependency further and (b) providing the management tools necessary for the program to respond better to the needs of its clients, the handicapped.

To strengthen our efforts to decrease dependency, the administration's amendments would:

Expand section 4 of the current act to authorize programs for the low achieving deaf and for persons with spinal cord injuries;

Increase the training allowance received by VR clients while they are being trained for employment through special projects in rahabilitation facilities;

Extend the program to American Samoa and the Trust Territories and authorize minimum allotments for the Virgin Islands, Puerto Rico, and Guam.

The administration's proposed amendments would also authorize a number of significant changes to improve the capacity of the program to respond to the needs of the handicapped.

The amendments would:

Provide for the reallotment to needy States of section 2 funds unused by other States;

Provide for advance funding, thus enabling States to plan more effectively for the spending of VR funds in the forthcoming fiscal year;

Allow State VR agencies to participate in joint funding and administration with other State and local public agencies;

Expand the funds available for Federal evaluation of programs from 1 percent of the funds appropriated for vocational rehabilitation or $1 million, whichever is lesser, to 1 percent of appropriated funds or $3 million, whichever is lesser;

Give consumers and this is an important point-a major role in the administration of the VR program by requiring that each State VR plan provide assurance that the views of persons receiving vocational rehabilitation services be taken into account in developing policy relating to the administration of the program; and

Improve VR program management by changing the base for the allocation of funds. In contrast to the allocation procedure used for most Federal programs, State allotments for section 2 of the present VR act are made on the basis of the authorization for that section, rather than on the basis of the actual appropriations. This method of calculating State allotments has outlived its usefulness in our judg ment. Statutory authorization levels were originally intended to aid the States to plan realistically for their vocational rehabilitation programs by indicating the level of Federal funding which could be made available in future years. However, the VR program is now a major program assured of adequate Federal funding. Consequently, States no longer need authorization levels for planning purposes. Now States may, with complete assurance, base their vocational rehabilitation planning on the assumption that they will receive no fewer Federal dollars in the future than they are now receiving. In addition, our advance funding proposal would enable States to plan a full year ahead for spending under the VR program.

I would now like to discuss the provisions of H.R. 8395, the bill passed by the House of Representatives in March of this year. H.R. 8395 is similar to the administration bill in providing for the following:

Reallotment of unused State funds;
Advance funding;

Joint funding with other State and local agencies;

Consumer participation;

Increased training allowances for workers in special rehabilitation projects;

Inclusion of American Samoa and the Trust Territories in the State program;

Extension of minimum allotment provision to Puerto Rico.

In addition, the House-passed bill contains two other provisions consistent with the administration's proposals to increase the capacity of State VR agencies to respond to the needs of the handicapped. First, it authorizes States to consolidate the plans for the vocational rehabilitation programs and the developmental disabilities program and transfer funds among programs included in the consolidated plan. Second, H.R. 8395 also enables the States to provide for local administration. of the VR program by authorizing them to designate units of general purpose local government to supervise the administration of the vocational rehabilitation plan at the local level.

H.R. 8395 has attempted to deal with another provision included in the administration bill which we feel is more effectively addressed by our bill. H.R. 8395 provides separate authority to establish national centers for persons with spinal cord injuries and comprehensive centers for deaf youths and adults. As I noted earlier, S. 3368 would authorize these activities under a single authority, section 4 of the present law.

H.R. 8395 also contains three authorities which we oppose because we believe them to be unnecessary. Title IV of the bill authorizes a National Information and Resource Center for the Handicapped and a National Commission on Transportation and Housing for the Handicapped. We believe that we now have adequate authority to undertake these activities and, in fact, are presently gathering and disseminating the information referred to in title IV. Title IV also authorizes mortgage insurance for new rehabilitation facilities and interest subsidies for nonprofit rehabilitation facilities. Ample authority for the construction of rehabilitation facilities already exists in present law, specifically in sections 5 and 12 of the Vocational Rehabilitation Act. The act further provides that up to 10 percent of a State's allotment may be used by the State to construct rehabilitation facilities.

I would like to comment now on section 415 of H.R. 8395. Section 415 would authorize project grants for the provision of services to individuals suffering from end stage renal disease. Services are presently being provided to such individuals under section 2 of the existing VR act and under title XIX of the Social Security Act (medicaid). We believe that additional programs to finance services to these individuals services which are basically medical, not vocational-would more appropriately be dealt with in programs to finance health care generally. Accordingly, the administration has proposed significant coverage of the cost of such catastrophic illness in our health care financing bill, S. 1623, the National Health Insurance Partnership Act. Our plan would require employees and their families insurance against the costs of such illnesses as part of comprehensive health care coverage. We must, therefore, oppose enactment of section 415.