a major portion of the services to many of the people they will serve. We urge, therefore, that the new title IV contain a section authorizing grants to States and other voluntary nonprofit groups for the construction, expansion, alteration, equipment, and initial staffing of workshops, centers, and other rehabilitation facilities, using the same project approach and the same matching provisions that are in the present law.

We feel it is questionable whether the mortgage insurance and interest subsidy plan in H.R. 8395 would be helpful. To the extent that it might be used as an excuse not to budget for construction grant funds, it could be harmful. As a device to help encourage the construction and expansion of rehabilitation facilities, we do not see it being used widely. For one thing, the bill would limit the amount of any mortgage to $250,000 which is far short of the cost of building most rehabilitation facilities today. Thus, we are not enuthusiastic about the possibilities in this proposal.

Mr. Chairman, in addition to the above, the proposed new title IV should include provisions for the following programs which already are functioning under the present act:

1. Rehabilitation facility improvement grants. It can be seen from the subsequent review of past improvement of Goodwill Industries which follow in our testimony, that this source of aid has been most successful. We urge that it be continued in the same form with an adequate authorization to cover increased needs in the future. The amendment to the Wagner-O'Day Act, adding the "severely disabled" to the blind for government products and services, will provide much needed work for both transitional and extended services in workshops. Expansion funds are required to tool up for this program. The House committee stated, in approving the Wagner-O'Day amendment:

The Committee on Government Operations expects that the Department of Health, Education, and Welfare will utilize its resources to a greater degree, especially the Department's Rehabilitation Services Administration, to assist the Committee.

This will require an adequate authorization under the vocational rehabilitation amendments of 1972.

2. Technical assistance to rehabilitation facilities. In this connection, we hope the committee will specifically authorize an annual appropriation for this small but highly valuable service to workshops and other facilities, so that it will not be subject to the vagaries of the salaries and expense appropriation for the Federal agency.

3. Continued authorization for, and use of, the national policy and performance council. With respect to the latter council, we suggest that language be included in the bill to require that the council meet not less than once annually with the Secretary of Labor, or his representatives, for consideration of problems and solutions in operation of the wage and hour law as it pertains to the functioning of workshops for the handicapped. We hope this council can be used to an even greater extent to advise the Secretary of the Department of Health, Education, and Welfare on all matters which relate to rehabilitation facilities and, more specifically, workshops.

4. For the purposes of this new title IV, we propose an annual authorization of appropriations of not less than $60 million for fiscal 1973, $70 million for fiscal 1974, and $80 million for fiscal 1975. We suggest an additional authorization be set for the new work supple

ment payment program with an initial amount for the first year of $50 million.

The Vocational Rehabilitation Act has been a major force in expanding the rehabilitation services of Goodwill Industries.

We believe the committee would benefit from a short summary of the Goodwill experience under this act as it considers the various recommendations for its extension.

Goodwill Industries will soon be 75 years old. Beginning in Boston, Mass., at the turn of the century, work services were provided for the poor and needy, long before the Government had any part in this type of service. The word "welfare" in the early years meant something different from its generally accepted definition today. There were those who were disabled among these needy persons. A number of years later, after World War I, the number of disabled increased, and again after World War II came another increase. So that now 75 percent of those served by all Goodwill Industries are physically or mentally disabled, most all of whom are dependent on family, or public assistance for their support before they come to Goodwill.

During recent years, there has been a steady increase in the severity of disability of persons served by Goodwill Industries. For example, during 1970 a total of 32 percent had psychotic, psycho-neurotic, mental retardation, or other mental disorders; 45 percent had visual, hearing, orthopedic, and other physical handicaps. The remaining 25 percent nondisabled were handicapped by reason of lack of education, social or unemployment.

The Vocational Rehabilitation Act, as amended in 1954, provided the much-needed assistance to many local Goodwill Industries to upgrade their rehabilitation services. The amendments in 1965 recognized the value of work services by providing for construction, workshop improvement, technical assistance, special training projects, and the creation of the National Policy and Performance Council to develop standards for workshops. This legislation marked a major advance in the expansion and improvement of not only Goodwill services, but of many other workshops throughout the country. Although the appropriations provided under these amendments have been inadequate to meet the needs for services to the severely disabled, an important forward thrust has been begun.

It is important to emphasize that Goodwill Induistries and other workshops provide at least two types of services to the disabled. One is extended employment which is urgently needed for the most severely disabled who are unable to produce at a level required to hold a regular job. The second type is of a transitional nature. A large percentage, even in spite of severe disabilities, are able, with these preparatory services, which include evaluation, work adjustment, and training, to move out of the workshop into regular employment. In these days of increasing levels of unemployment, this goal becomes more difficult. It costs more to provide this preparatory service especially for the severely disabled. But nowhere does a Federal tax dollar produce a greater return, whether judged in terms of happiness or economic gain, for both the disabled individual and society. Specific examples of the cost effectiveness of this program are submitted in five cases (see exhibits A1-A5). They provide a comparison of costs before rehabilitation, during rehabilitation, and after rehabilitation

that illustrate a maximum gain from invested rehabilitation dollars. Looking at all of the 146 local Goodwill Industries, we find that a total of $14,341,144 was withheld in Federal taxes in a single year, 1970, for 48,967 persons receiving work related services-almost as much as the $17 million in direct Federal grants to 125 local Goodwills in 15 years.

During a 5-year period, 1965-70, since the 1965 amendments to the Vocational Rehabilitation Act, other accomplishments made possible in Goodwill Industries by this legislation should be noted.

1. A total of 21 new Goodwill Industries have been established. Without the Federal funds and matching money raised at the local community level, this would not have been possible. By 1970, this expansion had accounted for the creation of over 800 new work stations to be used for various types of work services. These 800 work stations were used to provide work services for 1,700 handicapped and disabled persons during a single year, 1970.

2. In the 5-year period, 1965-70, the use of all Goodwill Industries by the State vocational rehabilitation agencies had phenomenal growth. Measured in dollars paid for fees by the States (this comes out of section 2 funds under the act), the amount grew from $1,697,826 in 1965 to $8,248,502 in 1970. This is one way of measuring the extent to which Goodwill has become a major partner in "assisting the States in rehabilitating handicapped individuals so that they may prepare for and engage in gainful employment to the extent of their capabilities.

It is always good to look behind the figures. The relationship of the Indianapolis Goodwill Industries and the Indiana State Vocational Rehabilitation Agency is a good illustration. There has been a notable increase in the range of disabilities being served there through vocational rehabilitation. This has meant that the VR counselor finds himself with a significant number of clients who are more severely or multidisabled and more questionable as to their potential for successful rehabilitation. Consequently, these clients require greater professional expertise, time, and financial investment. Counselors therefore are looking to rehabilitation facilities to aid them in the medical, psychological, and vocational diagnosis of more severely disabled clients in order to determine if these clients have the capacity to make a satisfactory vocational adjustment and, if so, in what specific job area or areas. Časeload reviews in the Indianapolis area reveal that the general counselor utilizes rehabilitation facilities for one or more services for approximately 25-30 percent of his clients and specialized counselors (such as one who serves persons receiving social security disability benefits, and another one who handles all referrals from rehabilitation centers in the area) turn to such facilities with as high as 75 to 80 percent of their clientele.

To further substantiate the fact that vocational rehabilitation counselors are dealing with clients requiring longer term service due to their vocational liabilities, it should be noted that in 1970, 36 percent of clients completing work evaluation programs at the Indianapolis Goodwill Industries required extended vocational adjustment programs. In 1971, 60 percent of the VR clients at Goodwill were recommended for extended work adjustment programs following vocational evaluation.

The State director for Indiana, Walter Penrod, puts it this way:

The traditional model of the client-counselor relationship is no longer practical nor adequate in providing effective, comprehensive rehabilitation services to a larger number of handicapped persons presenting more severe and multiple Vocational problems. Counselors have found that rehabilitation facilities, such as Goodwill Industries of Indianapolis, are attempting and will need to broaden their functions to meet the needs of clients and the demands placed upon rehabilitation counselors faced with unrealistic increases in caseload size and complexity.

(3) The Federal seen money provided under the act has resulted in a major advance in direct and indirect public nongovernmental support of Goodwill Industries during the five-year period, 1965–70. The public has always supported Goodwill Industries in a most generous way through donations of clothing, household articles, and other property without which the work program at its present level would not exist. However, this is no longer enough if the severely handicapped are to be served. It now also takes donations in the form of dollars to pay for the added rehabilitation services. This added support in nongovernmental money grew from $4,777,430 in 1965, to $7,935,889 in 1970.

(4) While there has been spectacular growth in certain areas during the period 1965-70, the fact remains that the lack of appropriations under section 12 of the act for construction of facilities has seriously limited the growth in number of work stations throughout all Goodwill Industries. Many Goodwills in old buildings have needed to expand but could not because no funds were available. The notable exceptions have been in States where section 2 funds (Laird amendment) were available and in a very few instances where section 12 dollars were available.

Thus, while the 21 new Goodwills did increase the number of work stations by 800, the growth in the other 125 was limited to 1,397 work stations in the same period of time.

The demand ahead requires a much greater increase in the number of work stations, not only in Goodwill Industries, but in all other workshops in order to meet the need for both transitional work services and extended employment.

The recent action by Congress in amending the Wagner-O'Day Act to provide new sources of Government work for the "severely disabled" will require additional building space to house the required number of work stations. Section 12 not only must be continued, but assurances of adequate appropriations are required.

(5) Improved skill training is taking place in Goodwill Industries through the use of the special training projects under section 13 of the present act. These projects cover the cost of training in occupational skills, work evaluation, work testing, and weekly training allowances. New types of skill training more in keeping with today's needs have been added in the 16 Goodwill Industries which have these projects. The use of the training allowance in this program has been most successful. It has made possible training services for large numbers of severely disabled who otherwise could not have taken advantage of the service. A study (West Virginia Research and Training Center) of six projects, including one Goodwill Industries, revealed that 72 percent of the handicapped trainees in the projects could not have continued if the training allowance were terminated. During the learning period, trainees cannot earn enough in wages by reason of low productivity to provide a minimum cost of living. Low earn

ings during the preparatory period must be supplemented by additional funds if many are ever to leave the welfare rolls. The system of training allowance is a proven answer to the problem. It ought to be extended to others in workshops.

(6) No less important have been the advances made possible through research projects funded under the Vocational Rehabilitation Act. More than 20 local Goodwill Industries have successfully completed research projects during the past 15 years. They directly aided the expansion of services to the severely disabled. At the national level, Goodwill Industries of America has been engaged in research in two very vital areas-uniform accounting and volunteer services.

(a) The volunteers in rehabilitation project began in June 1970. Among its accomplishments to date is the publication of the report entitled, "The State of the Art of Volunteering in Rehabilitation Facilities." This report documents the extensive and important services to handicapped persons being provided through volunteer participation in rehabilitation. While much is being done, the study does reveal that there is a need for a considerable increase in the numbers of volunteers if handicapped people are to receive as much attention as so many other areas in the local community now receive. It is hoped that the second phase of this project provides guidelines for meeting tomorrow's challenge.

(b) A research project to develop a uniform standard accounting system for workshops and rehabilitation facilities was begun by Goodwill Industries of America, Inc., in 1968. This system is based on "A Uniform System for Voluntary and Governmental Health and Welfare Agencies" sponsored by the National Health Council and National Social Welfare Assembly. This Goodwill project is being funded under the Vocational Rehabilitation Act. It is now in its second phase, “The development of a uniform management information system to conserve funds used for purchase of service fees by measuring the cost effectiveness of agencies and comparing services rendered to disabled and disadvantaged people." This has been a major undertaking. The number and diversity of agencies make the implementation of such a uniform system difficult.

We now have over 100 local Goodwill Industries using the system. There are a growing number of other health and welfare agencies in the process of using the system as further defined under this vocational rehabilitation project. Many orientation conferences have been held throughout the country by the project staff. United Way is in the preliminary stages of putting the system into use among its affiliates. The most modern computer technology is being utilized in the project. We hope in future years to provide Congress and State legislatures with far more detailed information as a basis for judging priorities of needed appropriations.

Mr. Chairman, we in Goodwill Industries of America are deeply grateful to you and the committee for initiating these hearings to review a Federal program which has literally transformed the lives of millions of handicapped Americans. We will be most happy to work with you on any detailed exploration of the present law or of proposals for changes.

(The prepared statement of Mr. Frank Taylor with exhibits follows:)