of public health problems common to a number of States, and in meeting problems of special national significance or concern.

The portion of such sums which shall be available for each of such three types of grants shall be specified in the Act appropriating such sums.

"(b) (1) From the sums available for any fiscal year for grants to States to assist them in meeting the costs of their public health services, each State shall be entitled to an allotment of an amount which bears the same ratio to such sums as the product of (1) the population of the State and (2) the square of its allotment percentage (as determined under subsection (h)) bears to the sum of the corresponding products for all the States. The allotment to any State under the preceding sentence for any fiscal year which is less than $55,000 (or such other amount as may be specified as a minimum allotment in the Act appropriating such sums for such year) shall be increased to that amount, the total of the increases thereby required being derived by proportionately reducing the allotments to each of the remaining States under the preceding sentence, but with such adjustments as may be necessary to prevent the allotment of any of such remaining States from being thereby reduced to less than that amount.

"(2) From each State's allotment under this subsection for any fiscal year, the Surgeon General shall pay to such State an amount equal to its Federal share (as determined under subsection (j)) of the cost of public health services under the plan of such State, approved under subsection (e), including the cost of training of personnel for State and local health work and including the cost of administration of the State plan.

"(c) (1) From the sums available for any fiscal year for grants to States to assist them in initiating projects for the extension and improvement of their public health services, each State shall be entitled to an allotment of an amount bearing the same ratio to such sums as the population of such State bears to the population of all the States. The allotment to any State under the preceding sentence for a fiscal year which is less than $25,000 (or such other amount as may be specified as a minimum allotment in the Act appropriating such sums for such year) shall be increased to that amount, the total of the increases thereby required being derived by proportionately reducing the allotments to each of the remaining States under the preceding sentence, but with such adjustments as may be necessary to prevent the allotment of any of such remaining States from being thereby reduced to less than that amount.

"(2) From each State's allotment under this subsection for any fiscal year, the Surgeon General shall pay to such State a portion of the cost of approved projects for the extension and improvement of public health services (including their administration and the training of personnel for State and local health work) under the State plan. The Surgeon General shall approve any project for purposes of this subsection only if the State plan approved under subsection (e) includes such project or is modified to include it and only if he finds the project constitutes an extension or improvement of public health services under the State plan or will contribute materially to such an extension or improvement. “(3) Payments under this subsection with respect to any project may be made for a period of not to exceed six years beginning with the commencement of the first fiscal year for which any payment is made with respect to such project from an allotment under this subsection. To the extent permitted by the State's allotment under this subsection, such payments with respect to any project shall be equal to 75 per centum of the cost of such project for the first biennium in such period, 50 per centum of such cost for the second biennium in such period, and 25 per centum of such cost for the last biennium in such period; except that, at the request of the State, such payments may be less than such percentage of the cost of such project.

"(4) No payment may be made from an allotment under this subsection with respect to any cost with respect to which any payment is made under subsection (b).

"(d) (1) From the sums available therefor for any fiscal year, the Surgeon General shall make grants to States and public and other nonprofit organizations and agencies for paying part of the cost of combating unusually severe public health problems in specific geographical areas, of carrying out special projects which hold unique promise of making a substantial contribution to the solution public health problems common to a number of States, and of meeting public health problems of special national significance or concern.

"(2) Payments under this subsection may be made in advance or by way of reimbursement for services performed and purchases made, as may be determined by the Surgeon General; and shall be made on such conditions as the Surgeon General finds necessary to carry out the purposes of this subsection.

"(3) For the purposes of this subsection Guam shall be deemed to be a 'State', "(e) The Surgeon General shall approve any State plan (including, with respect to mental health, the plan of the State mental health authority) which is submitted by the State health authoriy and which meets such requirements as the Surgeon General may prescribe by regulation.

"(f) All regulations and amendments thereto with respect to grants to States under subsection (b) and (c) of this section shall be made after consultation with a conference of the State health authorities and, in the case of regulations or amendments which relate to or in any way affect such grants for work in the field of mental health, the State mental health authorities. Insofar as practicable, the Surgeon General shall obtain the agreement, prior to the issuance of any such regulations or amendments, of the State health authorities and, in the case of regulations or amendments which relate to or in any way affect such grants for work in the field of mental health, the State mental health authorities. "(g) Whenever the Surgeon General, after reasonable notice and opportunity for hearing to the State health authority (or, where appropriate, the mental health authority of the State) finds that

"(1) the State plan approved, under this section has been so changed that it no longer complies with any requirement prescribed by regulation as a condition of approval of the plan; or

"(2) in the administration of the plan there is a failure to comply substantially with any such requirement,

the Surgeon General shall notify the State health authority that no further payments will be made to the State under subsection (b) or (c) of this section (or, in his discretion that further payments will not be made to the State for projects under or parts of the State plan affected by such failure) until he is satisfied that there will no longer be such failure. Until he is so satisfied the Surgeon General shall make no further payments to such State under subsection (b) or (c) (or shall limit payments to projects under or parts of the State plan in which there is no such failure).

"(h) (1) The allotment percentage for any State shall be 100 per centum less that percentage which bears the same ratio to 50 per centum as the per capita income of such State bears to the per capita income of the continental United States (excluding Alaska), except that (A) the allotment percentage shall in no case be more than 75 per centum or less than 33% per centum, and (B) the allotment percentage for Hawaii shall be 50 per centum, and the allotment percentage for Alaska, Puerto Rico, and the Virgin Islands shall be 75 per centum.

"(2) The allotment percentages shall be promulgated by the Surgeon General between July 1 and August 31 of each even-numbered year, on the basis of the average of the per capita incomes of the States and of the continental United States for the three most recent consecutive years for which satisfactory data are available from the Department of Commerce. Such promulgation shall be conclusive for each of the two fiscal years in the period beginning July 1 next succeeding such promulgation: Provided, That the Surgeon General shall promulgate such percentages as soon as possible after the enactment of the Public Health Grant-in-Aid Amendments of 1954, which promulgation shall be conclusive for the two fiscal years ending June 30, 1957.

"(i) The population of the several States shall be determined on the basis of the latest figures furnished by the Department of Commerce.

"(j) The 'Federal share' for any State shall be equal to the State's allotment percentage, except that the Federal share for States with allotment percentages of more than 66% per centum shall be 66% per centum, and the Federal share for Alaska shall be 50 per centum.

"(k) The method of computing and paying amounts pursuant to subsection (b) or (c) shall be as follows:

"(1) The Surgeon General shall, prior to the beginning of each calendar quarter or other period prescribed by him, estimate the amount to be paid to each State under the provisions of such subsection for such period, such estimate to be based on such records of the State and information furnished by it, and such other investigation, as the Surgeon General may find necessary.

"(2) The Surgeon General shall pay to the State, from the allotment available therefor, the amount so estimated by him for any period, reduced or increased, as the case may be, by any sum (not previously adjusted under this paragraph) by which he finds that his estimate of the amount to be paid the State for any prior period under such section was greater or less than the amount which should have been paid to the State for such prior period under such section. Such payments shall be made prior to audit or settlement by the General

46293-54-pt. 1-17

Accounting Office and shall be made through the disbursing facilities of the Treasury Department, and shall be made in such installments as the Surgeon General may determine.

"(3) The Surgeon General, at the request of the State health authority (or. in the case of mental health, of the State mental health authority) is authorized to reduce a payment to a State by the amount of the pay, allowances, traveling expenses and other costs related to the detail of an officer or employee of the Public Health Service to the State, to one of its political subdivisions, or to a public or other nonprofit organization or agency in the State, when such detail is made for the convenience of and at the request of the State. The amount by which such payments are reduced for such purposes shall be available for the payment of such costs by the Surgeon General.

"(1) To assist further in the extension and improvement of public health services, the Surgeon General is authorized to train personnel for State and local health work, to detail personnel to Guam and American Samoa, and to extend training, investigation, demonstration, and consultative services to Guam, American Samoa, and the Trust Territory of the Pacific Islands."

SEC. 3. In order to afford the States which, immediately prior to July 1, 1955, were carrying on public health programs under State plans approved under section 314 of the Public Health Service Act (including plans for cancer control), reasonable opportunity to adjust the financing of their programs to the new allotment provisions of such section, as amended by this Act, such provisions as applied to such States are hereby modified as follows: if the total of the allotments of any State (as computed under subsections (b) and (c) of section 314 of the Public Health Service Act as amended by this Act) for the fiscal year ending June 30, 1956, would be less than 90 per centum (or, in case the aggregate appropriations available for allotment under such subsections for such year are reduced below the aggregate appropriations which were available for allotments to the States for payments with respect to the cost of services under approved State plans during the preceding year, less than 90 per centum minus the percentage by which such appropriations are reduced) of the amount allotted to such State for payments with respect to the cost of services under its approved State plans during the fiscal year ending June 30, 1955, such State's allotment under subsection (b) shall be increased to the extent such total is less than 90 per centum (or 90 per centum minus such percentage reduction in appropriations) of such amount. The Surgeon General shall in accordance with regulations (1) provide for reductions in the allotments of the remaining States under such subsections to the extent required to effect the increases provided in the preceding sentence, such reductions to be based on the extent to which the allotments of such remaining States are greater than 90 per centum (or 90 percentum minus any percentage reduction in appropriations) of their allotments for the preceding year, and (2) provide for equivalent adjustments in the allotments of States under subsections for the fiscal year ending June 30, 1957, and any successive fiscal year in which any State's combined allotments under such subsections would otherwise be less than 90 per centum (or 90 per centum minus any percentage reduction in appropriations) of its allotments for the preceding year.

SEC. 4. This Act shall become effective July 1, 1955.

Hon. H. ALEXANDER SMITH,

DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE.

Chairman, Committee on Labor and Public Welfare,

United States Senate, Washington 25, D. C.

DEAR MR. CHAIRMAN: The purpose of this letter is to request that your committee consider favorably an amendment which we propose be made to S. 2778, a bill to amend the Public Health Service Act to promote and assist in the extension and improvement of public health services, to provide for a more effective use of available Federal funds, and for other purposes. This bill, as you know, would amend section 314 of the Public Health Service Act to incorporate the President's recommendations with respect to grants-in-aid to the States for public health services.

The purpose of the proposed amendment is to afford a State an opportunity for judicial review of action by the Surgeon General of the Public Health Service pursuant to subsection (g) of section 314 of the Public Health Service Act, as amended by the bill, withholding payments to such State because its State plan

has been so changed that it no longer complies with Federal requirements or because, in the administration of the plan, there is a failure to comply substantially with such requirements.

Our proposed amendment would add a new subsection at the end of the proposed new section 314 of the Public Health Service Act (following line 2 on p. 11 of S. 2778) to read as follows:

"(m) (1) If any State is dissatisfied with the Surgeon General's action under subsection (g) of this section, such State may appeal to the United States Court of Appeals for the circuit in which such State is located. The summons and notice of appeal may be served at any place in the United States. Surgeon General shall forthwith certify and file in the court the transcript of the proceedings and the record on which he based his action.

The

"(2) The findings of fact by the Surgeon General, unless substantially contrary to the weight of the evidence, shall be conclusive; but the court, for good cause shown, may remand the case to the Surgeon General to make further evidence, and the Surgeon General may thereupon make new or modified findings of fact and may modify his previous action, and shall certify to the court the transcript and record of the further proceedings. Such new or modified findings of fact shall likewise be conclusive unless substantially contrary to the weight of the evidence.

"(3) The court shall have jurisdiction to affirm the action of the Surgeon General or to set is aside, in whole or in part. The judgment of the court shall be subject to review by the Supreme Court of the United States upon certiorari or certification as provided in title 28, United States Code, section 1254."

The amendment we propose would, in effect, incorporate in this bill the judicial review provisions now contained in title VI of the Public Health Service Act (relating to hospital survey and construction) and repeated in S. 2758 and H. R. 8149, the bills amending that title, which are now pending before your committee.

For the reasons set forth in the President's health message of January 18, this Department endorses S. 2778, preferably with the amendment proposed above, and recommends its enactment by the Congress.

The Bureau of the Budget advises that it perceives no objection to the submission of this report to your committee, and that enactment of S. 2778 would be in accord with the program of the President.

Sincerely yours,

OVETA CULP HOBBY, Secretary.

EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET,

Washington 25, D. C., February 23, 1954.

Hon. H. ALEXANDER SMITH,

Chairman, Committee on Labor and Public Welfare,

United States Senate, Washington 25, D. C.

MY DEAR MR. CHAIRMAN: This will acknowledge your letter of January 23, 1954, requesting the Bureau of the Budget to comment on S. 2778, to amend the Public Health Service Act to promote and assist in the extension and improvement of public health services, to provide for a more effective use of available Federal funds, and for other purposes.

This measure, if enacted, will eliminate present statutory rigidities inherent in the existing Federal health grant programs and provide sufficient flexibility to cope with changing public health problems as they arise. Moreover, the bill is designed to accomplish the objectives which the President stated in his special health message to the Congress of January 18, 1954, by providing a new simplified formula for making funds available to States for health purposes. This formula embraces the three criteria named by the President; viz, first, that the States be aided in inverse proportion to their financial capacity; second, that States also be helped, in proportion to their population, to extend and improve health services supported by grants-in-aid; and third, that a portion of Federal financial assistance be set aside for support of unique projects of regional or national significance giving promise of better ways to improve the health of our people.

I am authorized to advise you that enactment of S. 2778 would be in accord with the program of the President. In this connection, I wish also to advise that the Department of Health, Education, and Welfare will present for the considera

tion of the committee provisions for judicial review patterned after the HillBurton Hospital Survey and Construction Act.

Sincerely yours,

DONALD R. BELCHER,
Assistant Director.

Senator GOLDWATER. For the information of the committee may I say it is my understanding that this bill is only one of several, as I said before, that pertain to this subject. I think you, Mrs. Hobby, and your entire staff are due a great debt of thanks from the Congress and also from the governors of the several States for recognizing the differences between these formulae we have used in the past and attempting to bring them together under one workable formula. FURTHER STATEMENT OF OVETA CULP HOBBY, SECRETARY OF HEALTH, EDUCATION, AND WELFARE, ACCOMPANIED BY NELSON ROCKEFELLER, UNDER SECRETARY OF HEALTH, EDUCATION, AND WELFARE; DR. LEONARD A. SCHEELE, SURGEON GENERAL OF THE PUBLIC HEALTH SERVICE; DR. JACK HALDEMAN, PUBLIC HEALTH SERVICE; AND SAM KIMBLE, PUBLIC HEALTH SERVICE

Secretary HOBBY. Thank you, sir.

Senator GOLDWATER. I had the pleasure earlier, as you recall, of seeing this presentation, and I cannot help but feel it will be recognized as a great contribution by the States.

I want to take this opportunity to extend the committee's commendation to you and through you to your staff.

Secretary HOBBY. Thank you, sir.

Senator GOLDWATER. You may proceed, as you have been doing so beautifully and so well, in any way that you see fit.

Secretary HOBBY. Thank you.

Mr. Chairman, before proceeding with my prepared statement I would like to indicate for the record that Mr. Nelson Rockefeller, Under Secretary of Health, Education, and Welfare, will participate in the presentation of our testimony. Also present, to assist in answering technical questions, are Dr. Leonard A. Scheele, Surgeon General of the Public Health Service, and Dr. Jack Haldeman and Mr. Sam Kimble, also from the Public Health Service.

Mr. Chairman and members of the committee. When I last appeared before your subcommittee, on March 17, it was to testify on behalf of a bill to broaden the provisions of the Hospital Survey and Construction Act. The bill under consideration today, S. 2778, is designed to simplify and improve the administration of six other grant-in-aid programs administered pursuant to the provisions of the Public Health Service Act. This bill is concerned with grants to assist the States in providing public health services to their people. It does not affect, in any way, either the hospital survey and construction program or the research grant programs administered by the Public Health Service through its National Institutes of Health.

Together with 3 other Senate bills, S. 2778 represents a concerted effort to improve the structure and administration of 14 major grantin-aid programs administered by the Department of Health, Education, and Welfare. A comparable bill relating to vocational rehabilitation has been referred to this committee, and hearings with respect