care facilities, and that $85 million would be the only grants proposed in the budget for Hill-Burton.

All other Hill-Burton activities would be financed by guaranteed, subsidized loans. The budget includes $20 million for interest subsidies in 1972. The total program level, including State and local matching, that would be financed in 1972 from the $85 million in grants would be about $255 million.

In addition to that, there would be about $1 billion worth of construction activity financed by guaranteed loans, one-half of which, $500 million, would be new loans made in 1972.

In other words, even though the appropriation shows a decline in that program, the construction levels financed and supported by the program will be quite substantial in 1972. The issue here, of course, is the issue of direct Federal grants versus guaranteed subsidized loans. The budget in this area-and we will see it show up in other construction areas continues to push us toward off-the-budget financing, that is, guaranteed loans.

DISEASE CONTROL

Disease control is the communicable disease center in Atlanta, where the program is remaining essentially level.

DIRECT PATIENT CARE

The direct patient care activities show about a level program, but there is something in there that I know is already of interest to this committee.

In that activity are two significant health care programs. They are the public health service hospital system which shows a net decrease of $14 million in 1972 and the Indian health program which shows an increase, and the two net out to an increase of about $1 million.

We will be talking a great deal more about the public health service hospitals, though, I am sure in the days ahead.

The other programs include the national center for health statistics, scientific activities offices, and several other smaller programs. scientific activities overseas, and several other smaller programs. vious years, and I will be going into greater detail on those in a

moment.

THE EDUCATION BUDGET

This is the most significant increase in the education budget I believe in the history of HEW. As we get into it you will see it concentrates on a number of things. It puts very strong emphasis on additional student assistance at the higher education level.

It continues to stress experimentation and reform in education, and it would continue to stress special assistance and incentives for com-. pensatory education for both the physically and socially disadvantaged.

The title I program would remain at the 1972 appropriation level of $1.5 billion.

I might mention something I should have mentioned at the outset. All of the 1971 figures represent the final appropriation as approved by Congress, short of about $18 million at NIH, and I think there is another $64 million or so of activity that would be deferred until later years. But essentially the President is planning to spend the full appropriations made by the Congress.

I think that is further evidence of the fact HEW is continuing to receive strong support from the Administration.

EMERGENCY SCHOOL ASSISTANCE

Emergency school assistance would be a budgeted level of $1 billion in 1972. The $500 million figure in 1971 anticipates a $425 million supplemental appropriation to carry out the legislative proposal which was recently resubmitted to the Congress; $75 million has already been appropriated against that $500 million.

Those two figures combined would fulfill the Presidential commitment to spend $1.5 billion for special assistance to desegregating the schools.

The title IV civil rights program which doesn't appear before this committee but comes before the State, Justice and Commerce Committee, would be phased into the $1.5 billion in that the activities financed by the two programs are essentially the same. We would, in effect, merge the two.

SCHOOL ASSISTANCE FOR FEDERALLY AFFECTED AREAS

Impacted area aid is an old favorite of this subcommittee and the House.

Mr. FLOOD. Yes; we have heard of it.

Mr. CARDWELL. Our proposal this year follows exactly the language as carried in the final appropriations for 1971. However, with a lesser amount of money a significant change takes place.

The way it works is "A" children, those children whose parents both live and work on Federal property, would receive a hundred percent of entitlement in those cases where such children represent 25 percent or more of the total enrollment. Other "A" children would be funded at 90 percent of entitlement.

That was a device developed by this subcommittee last year. The 1971 and 1972 treatment would be exactly the same.

The balance of the appropriation requested goes to the "B" children, those children whose parents work on Federal property but live in communities and pay property taxes. Distributing the remainder among that group would give them about 45 percent of their entitlement under the basic law whereas the 1971 appropriation gave them about 70 percent.

There is one other aspect of impacted aid proposals. The President's proposal for special revenue sharing, which will be covered by a separate message, calls for this program to be folded into the elementary and secondary special revenue sharing package with some special pass-through device to distribute the money on a more equitable basis. I hope this is something we will be able to give you more information on as the hearings proceed.

VOCATIONAL AND ADULT EDUCATION PROGRAMS

State grants to vocational education show a net decrease of $6 million, but there is a very significant change in this year's budget in that area.

Many of you will remember the 1968 amendments provided several special authorities, one of which was additional support for homemaking and economics, a category of special needs grants, and additional authority for research in the area of vocational education.

What this budget does is make an increase of about $62 million in the basic grants to States, on the theory that those basic grants administered at the State level actually can be used for all of those special purposes, and the budget decreases the other activities accordingly.

It also decreases all special funds for vocational education research and assumes that research activities in vocational education will be financed under the general research authority of the Office of Education.

Bilingual education and library resources in elementary and secondary schools would stay level.

Strengthening State departments of education, in keeping with the President's desires that we strengthen the capacity of the States to carry out these programs, would be increased by $3 million.

EQUIPMENT AND MINOR REMODELING PROGRAM

One old favorite of the Congress, the equipment and minor remodeling program, would be phased out in its entirety, but we know this is going to be a tough one to sell. It keeps bouncing back at us. I think it is interesting that the last three administrations, be they Republican or Democrat, have made that proposal on the ground this program has long since outlived its usefulness.

Mr. MILLER. You might add that program can be funded under a number of other authorities. The States have discretion to purchase as much equipment as they want to.

Mr. CARDWELL. This is the story, of course, this subcommittee has heard before. Those programs, of course, are title I, vocational education, impact aid and so on.

The new emergency school assistance program would also cover equipment and all told, we believe that Federal support available to State and locals for equipment has been increasing every year so we are proposing to drop that particular program.

HIGHER EDUCATION PROGRAMS-STUDENT ASSISTANCE

The student assistance activity probably represents the most complicated part of this budget and I would recommend to you a careful examination of it when the Commissioner of Education comes before you. It is a very significant change in the approach to Federal student assistance.

Let me see if I can describe it for you and you can ask him the tough questions.

The most significant aspect of the proposal is to merge, insofar as the distribution of funds is concerned, the two existing programs of educational opportunity grants and work-study grants for the poor.

Those programs would be merged insofar as appropriations are concerned and significantly increased.

There is another objective being sought in the 1972 budget and that is to put these two programs on an advance funded basis. The way the programs work now the educational opportunity grants are on a fiscal year basis and the work-study grants are on a school year basis.

The way we would do that is that we would take a part of this $328 million, $239 million of it, and grant it for the school year beginning 1972-73, and then we take $336 million of the 1972 moneys and make them available for the school year 1971-72, and that means that the school year beginning next fall would be funded at a level of about $575 million.

The program would, as it has in previous years, stress insured loans for student aid but we would try to make up-incidentally this is all going to be covered in the new legislative proposal-for what has