IMPORIANI 34 NOIICE_IO_ALL_READERS! Our mailing list for NAT-CENT NEWS continues to grow, and we are pleased that so many readers find this newsletter interesting and informative. However, there may be readers who have changed their addresses during the past year, or who no longer wish to receive it, and we would like to keep our mailing list up-to-date. If you wish to continue receiving NAT-CENT NEWS, please tear off and return the lower half of this page, or send a card stating that you wish to remain on our list. If we do not hear from you by May 31, we will automatically remove your name from our mailing list. NAT-CENT NEWS NATIONAL CENTER FOR DEAF-BLIND YOUTHS 105 FIFTH AVENUE, NEW HYDE PARK, N.Y. 11040 YES, I WOULD LIKE TO CONTINUE RECEIVING NAME ADDRESS Senator CRANSTON. Our next witness is Charles Roberts, executive vice president, International Association of Rehabilitation Facilities. STATEMENT OF CHARLES ROBERTS, EXECUTIVE VICE PRESIDENT, INTERNATIONAL ASSOCIATION OF REHABILITATION FACILITIES, ACCOMPANIED BY JOSEPH FLEMING, COUNSEL, AND ROBERT HALL, PRESIDENT Mr. ROBERTS. I have with me today Mr. Joseph Fleming, counsel; and president of our association, Mr. Robert Hall, from Madison, Wis. Senator CRANSTON. We welcome you. We only got your statement about 11:15 this morning, so we are not prepared with questions based on it. I would appreciate it very much if you would summraize briefly your statement. We are running out of time, and we will submit the questions to you in writing. Mr. ROBERTS. I was prepared to do that and happy to do so. I have a few remarks relative to the association and its background. The association is the principal voluntary membership of all types of rehabilitation facilities. We have about 600 institutional members in all States; and about 10 percent of our members are in California, incidentally. These rehabilitation facilities provide diverse services such as medical rehabilitation, vocational evaluation and traning, psychosocial services, and sheltered workshop employment. The clients they serve include the physically handicapped; those with mental and emotional disabilities; the culturally disadvantaged; and such special populations such as public offenders, alcoholics, and drug abusers. Basically, we support the thrust of H.R. 8395 and the State-Federal vocational rehabilitation program which it intends to authorize. We speak, therefore, in strong support of H.R. 8395, but will stress several aspects dealing with facility construction and improvement, concerning which we have drafted several amendments. These amendments and explanatory material were sent to the committee staff in April. We are very much in favor of the concept of advanced funding. We also support title 2, which will provide vocational evaluation, work adjustment services; and would like, as a matter of record, to express grave concern that this has existed in the present act for 3 years, but never been funded. We think it is ironic that this administration has expressed the need for rehabilitation services to welfare recipients, and yet they have never seen fit to fund this section of the act. We strongly endorse title 3 of H.R. 8395 because it would authorize grants to support services to the severely handicapped. We think the most important feature of title 3 is its authority to provide needed rehabilitation services to those who are disabled-so severely disabled that a vocational goal has not been possible. Mr. Chairman, while we are strongly in support of the rest of this legislation, and particularly those items I have referenced, we would like to address ourselves particularly to sections under title 4 of the bill and to which we have given detailed study. First of all, we are strongly in support of grant funds for facility construction and improvement. We consider that in view of the marginal financial position of nonprofit rehabilitation facilities, such grant funds are highly preferable to those sections of H.R. 8395 which provide for mortgage insurance and interest grants on loans for construction. However, we are well aware that there has been no money recommended under the current administration for facility construction grants and see the need for some option for construction funds. In the amendments we have proposed and submitted previously to the staff, we have suggested that the provision of construction grants and the provision of mortgage insurance and interest grants could be used in combination. One of our proposed amendments would make it clear that these two provisions could be used jointly. There is ample justification for facility construction and improvement, ample documented need. The Department of HEW itself has published a survey entitled "Rehabilitation Facility Needs in the 1970's," and this survey was conducted not by the facility movement, but by the State rehabilitation agencies themselves. They have documented a need for over 1,800 new rehabilitation facilities, including almost 600 new sheltered workshops; and they estimate costs required for this at $282 million. They have also documented a need that about 1,100 existing facilities need to be improved and have their services upgraded, better staffed, better equipment and technical consultation to improve their methods. There was one piece of new legislation which originated in the Senate last year, passed Congress, and which makes it even more essential that construction funds and facilities improvement grants be provided. In 1971, Congress passed legislation to amend the Wagner-O'Day Act which would give Government contract bidding priority on goods and services to workshops serving other than the blind. But without the means for workshops to update their present capabilities, these workshops cannot extend their services to more disabled. With the view toward making programs under title 4 more effective and responsive, we have suggested several simple but significant amendments to title 4 of H.R. 8395. We have submitted these to your staff, but I would like to summarize for your purposes just the brief intent of these amendments. Section 402 of the proposed Rehabilitation Act authorizes appropriation for construction and equipment grants to facilities. As best as we can determine, there was an oversight made when the bill was originally drafted in the House because they authorized a lower amount than has been authorized in the current Rehabilitation Act. We have checked with the committee in the House. We have checked with others who helped in developing and drafting the bill in the House, and they assure us that it was an oversight. At the present time, section 12 is construction; section 13 is improvement grants. Each has an authorized level of $30 million. Senator CRANSTON. I am sure we will look into that. Mr. ROBERTS. The two added together come up to $60 million, and we feel that the bill being proposed here should at least authorize those levels; and we are recommending that the present authorization level be continued, $60 million for the next year, and moving upward to $70 million, and $80 million the following 2 years. The second thing we are suggesting in the way of amendment is that technical assistance to facilitate be shifted from section 403, where it is now located under administration, to section 408, the facility improvement. The reason for our requesting this shift is that the provision of technical assistance for consultation to facilities is a program function, not an administrative function, and we feel that it is necessary to provide a separate authorization for technical assistance, and that this will facilitate and identify appropriations at a later time. We are recommending an amendment to section 408 for facility improvement grants, so that these grants could be made to entities, comprised of or representing rehabilitation facilities. At the present time, grants may only be given to an individual facility, and the 1971 Wagner-O'Day amendments which we referred to earlier extend the special priority of contracts to workshops. This will make it necessary for many workshops to enter into joint ventures or pooling agreements, in a variety of new arrangements, to develop contract capacity; and we feel that the addition of our proposed language would permit facility improvement grants to be made where appropriate to such entities. We would also like to address ourselves particularly to two new provisions of the act which have never been included in rehabilitation legislation before. The act provides, in section 406, for mortgage insurance; and in section 407, for interest subsidy grants. We would like to support these basically and suggest they are essential, but we would like to suggest some minor amendments of language changes that would make them more workable. At the present time, construction of facilities in section 405 includes acquisition, expansion, remodeling, and renovation. But in section 406 for mortgage insurance, they limit it to new construction only. This we feel seems to restrict mortgage insurance to the construction of new buildings. We are recommending in one of our amendments deleting the word "new." We feel it would have the effect of authorizing the Secretary to insure mortgages which could be used to acquire or to expand or to remodel or renovate existing buildings. The president of our association operates one of these kinds of workshops in the State of Wisconsin, and I would like to ask him to comment briefly on how he sees the need to add this amendment to the present provision, if I might. Mr. HALL. I think it is an extremely important innovation that would make available to facilities the ability to deal with the banks directly in terms of borrowing funds. The president of my board of directors is a bank president; and when I asked him about this provision and what it would mean, he said the chances are that we would be able to get a 1- to 2-percent lower interest rate with guaranteed mortgage than without it. Our particular facility in Madison, Wis., serves approximately 400 to 450 clients each year. We have been over the past 10 years in the habit of attempting to purchase buildings rather than to lease. We have at this point a fairly substantial equity in the buildings that we have. We are now at maximum capacity and are looking forward to the possible purchase of a new building that would house us for several years to come. If we were able to get this kind of mortgage insurance, our equity would permit us to get into this building, and we would be able then without going to the community to be able to raise the funds, be able to get into the building. It has become increasingly difficult to raise funds in the community for capital projects. A couple of other things about this particular amendment. We find in our facility that we are getting more into machine operations away from a hand kind of labor, which in turn pays better wages to clients. I know you have heard some testimony along this line, and we find that these machines take more room than the tables do. We just bought a new packaging machine a few months ago, and the space that this packaging machine takes could be utilized by four tables, each table seating four clients, so we would have 12 clients working in that area without the machine; but without the machine, we have three clients working with it. As we get into these types of things, and there has been some discussion of Wagner-O'Day, and there is going to have to be some kind of machine operations involved in these contracts, it is going to take up more room and facilities are going to gear up for this kind of thing, they are going to have to have available to them the funds to expand. I would certainly like to stress the need for this type of mortgage insurance to be available to renovate and to expand, rather than just for new construction. Many facilities are in buildings that are not really adequate. The State agencies are beginning to require that rehabilitation facilities become accredited, similar to hospitals, similar to schools. We are much in favor of this. During the next few years, the facilities that are going to do business with the State agencies are going to have to meet standards, and many of the facilities frankly will not be able to meet the standards in existing buildings. It is unfortunate, but that is the situation. Again I think we need stress the fact that this should be expanded to existing buildings, rather than just to limit it to new construction. Mr. ROBERTS. We suggest elimination of the mortgage limit of $250,000 and authorization of mortgage insurance for 100 percent of project cost. The elimination of the program ceiling is recommended not only because $250,000 is much too restrictive when gaged by the magnitude of many rehabilitation operations and the cost of land, buildings, and equipment, but also because such a limitation does not appear to serve any useful purpose. Any facility seeking mortgage insurance will be required to demonstrate capacity to repay the mortgage loan to be insured and will be required to pay a premium for that insurance. If the intent is to insure that small facilities are protected, it is suggested that this might more appropriately be covered in section 407, by placing a limit on the interest grants which can be made to any given facility. The provision of 100% mortgage insurance is recommended because public and nonprofit entities do not need the incentive of equity participation to insure continued commitment to the project. There is precedent for such action in the Housing Act which authorizes 100% mortgage insurance for nonprofit sponsors. 6. We suggest addition of language to indicate that grant and loan programs can be used together in financing a project and to guarantee that they do not duplicate one another. 7. We think two other areas of Section 408, Rehabilitation Facility Improvement, require minor, yet essential change. (a) Weekly allowances to individuals receiving rehabilitation training are listed at levels below that of current MDTA programs. We recommend that these allowances be authorized at MDTA levels. |