OPENING STATEMENT BY DR. J. KENNETH LITTLE, DEPUTY COMMISSIONER OF EDUCATION

In the closing days of the 83d Congress, Public Law 731 was enacted to extend for 2 more years the program of school-construction assistance authorized by title III of Public Law 815 (as amended by Public Law 246). Funds were not appropriated to initiate the new program since the regular appropriation bill had been acted upon by the Congress prior to the passage of Public Law 731.

Under this program, school districts may submit applications for school-construction assistance covering the 2-year period June 1954-56. Eligibility of districts is determined for each of three categories of federally connected pupils on the basis of the estimated 2-year increase in enrollments of such pupils. Payments on approved projects are limited by the funds required to provide minimum school facilities for pupils in excess of the normal capacity of existing school facilities in the applicant school districts.

In order to launch the extended program as expeditiously as possible, December 1, 1954, was established by regulation as the first cutoff date for the submittal of applications by local school districts. As of that date, some 544 school districts had made application for funds. Approval of applications and reservation of funds for projects must await the appropriation of funds.

Tentative estimates of requirements for the extended program of assistance amount to $94 million. The supplemental request now before the committee amounts to $70 million to initiate the program ($48.5 million by direct appropriation, with proposed appropriation language to authorize the use of unobligated balances available from previous appropriations estimated to amount to approximately $21.5 million). The requested funds for 1955 will be used only for projects which were submitted on or before the December 1, 1954, cutoff date.

LETTER OF COMMISSIONER

Chairman HAYDEN. Dr. Little?

Dr. LITTLE. Mr. Chairman, I think you have a letter from Commissioner Brownell, explaining his inability to be here this morning because of the hearings in the House of Representatives on the schoolconstruction bill. I am here for him.

(The letter referred to follows:)

DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE,

OFFICE OF EDUCATION,

SENATE COMMITTEE ON APPROPRIATIONS,

Washington, D. C., March 1955.

United States Senate.

MR. CHAIRMAN and MEMBERS OF THE COMMITTEE ON APPROPRIATIONS: I regret very much that I am unable to present at the hearing on the supplemental budget the requests from the Office of Education. My inability stems from the fact that I am in the midst of presenting testimony on school construction bills before the Committee on Labor and Education of the House of Representatives. Their hearing was scheduled prior to my receiving notice of the supplementary budget hearing before your committee.

I am asking that you permit Dr. J. Kenneth Little, Deputy Commissioner of Education, to serve in my place at this hearing.

Sincerely yours,

S. M. BROWNELL, Commissioner of Education.

LEGAL PROVISION

Dr. LITTLE. I have a 1-page statement I would like to present. The request before the committee for $20 million to supplement the regular appropriation for payments to school districts in fiscal year 1955 is necessitated by the provisions of Public Law 732 of the 83d Congress.

This sum of $20 million when added to the regular appropriation of $55 million is estimated to be sufficient to pay 100 percent of all entitlements to all school districts eligible for the funds in the fiscal year 1955. The cutoff date for receipt of applications is March 31,

1955.

The effect of Public Law 732 was to suspend for 1 fiscal year, 1955, the effective date of the "3 percent absorption provision." This provision which would have reduced the entitlements of most school districts in fiscal year 1955 is now scheduled to take effect in fiscal year 1956.

Under the terms of Public Law 874, as amended, the Commissioner of Education is required to prorate available funds among all eligible school districts when the appropriations are estimated to be insufficient to pay all eligible claims at 100 percent. Accordingly, in processing applications from the school districts on 1955 entitlements, payments have been initiated at 65 percent entitlement. The requested funds are estimated to be sufficient to meet 100 percent of the entitlements of the school districts in this fiscal year.

It is anticipated that many of the school districts will have difficulty meeting their school budget expenses for the remainder of this fiscal year unless the supplemental funds are appropriated.

Senator ROBERTSON. May I ask a question?

Is it not a fact that States like Virginia, for instance, that share in this program, because of their many military installations in the State, have made no provision to absorb an additional 3 percent of the children of Federal workers for this fiscal year, and if you did not pay what you had promised them to pay, after Congress voted to postpone the absorption for another year, you would be breaking faith with all the schools involved?

Dr. LITTLE. I think that is correct, Senator.

Chairman HAYDEN. Are there any further questions?

If not, we thank you.

The next item is "Grants to States for public assistance."

SOCIAL SECURITY ADMINISTRATION

BUREAU OF PUBLIC ASSISTANCE

STATEMENTS OF JAY L. RONEY, DIRECTOR, BUREAU OF PUBLIC ASSISTANCE; AND JAMES F. KELLY, BUDGET OFFICER, HEW

GRANTS TO STATES FOR PUBLIC ASSISTANCE

Chairman HAYDEN. We have a supplemental estimate for "Grants to States for public assistance" in the amount of $238 million, allowed in full by the House. As the House report pointed out, these costs are established by mathematical formula in the basic social security legislation and thus are not subject to administrative control. We allowed the full budget estimate in the 1955 bill, but at the time the so-called McFarland amendment was due to expire on September 30, 1954. The Congress later extended this amendment which added a substantial amount to the requirements.

We will insert in the record the estimate and the justification therefor.

(The estimate and justification referred to follow :)

APPROPRIATION ESTIMATE

"GRANTS TO STATES FOR PUBLIC ASSISTANCE

"For an additional amount for 'Grants to States for public assistance,' $238,000,000."

The 1955 appropriation anticipated the expiration on September 30, 1954, of the 1952 amendments to the Social Security Act. Expiration would have resulted in a reduction in the Federal share of benefit payments. However, the 1952 amendments were extended by Public Law 761, approved September 1, 1954, and, in addition, the decrease in the old-age assistance caseload was not as great as had been anticipated. The decreases that did occur were more than offset by increases in the caseloads of the other programs as well as increased benfit payments. The proposed supplemental appropriation is needed to provide funds to meet these costs.

PURPOSE AND NEED FOR SUPPLEMENTAL FUNDS

For the fiscal year 1955, the Congress approved an appropriation of $1,200 million for grants to States for old-age assistance, aid to dependent children, aid to the blind, and aid to the permanently and totally disabled under titles I, IV, X, and XIV, respectively, of the Social Security Act. To meet requirements of States for this purpose for the fiscal year, a supplemental appropriation of $238 million will be needed. Of the regular 1955 appropriation $9,307,748 was required to meet a portion of the requirements for public assistance grants for the fiscal year 1954. The primary reasons for a supplemental request are: (1) The 1952 amendments to the Social Security Act were extended from September 30, 1954, to September 30, 1956, after the appropriation for 1955 was approved by the Congress. Therefore, the Federal share of payments to recipients was not reduced as anticipated in the 1955 estimates. (2) Program trends have changed since the 1955 estimates were acted upon and the number of recipients is larger than originally estimated. (3) Administrative expenses are also greater than originally estimated, due to the increase in number of recipients and a small increase in average salary of State and local employees.

Under the established procedures, all grants are approved by the Commissioner of Social Security are certified to the Treasury Department prior to the beginning of a quarter unless there are instances of pending questions of conformity, unavailability of Federal funds, or failure of a State to submit required reports. Thus, the obligations of $1,057,649,884 through December 31, 1954, include obligations for grants to States for the quarters ended September 30, and December 31, 1954, as well as a major portion of the grants for the quarter ending March 31, 1955. Funds required for the quarter ending June 30, 1955, which include the supplemental request of $238 million should be obligated for the entire quarter in March. April payments are due in the States between March 10 and March 20; and May payments are due between April 10 and April 20.. The system of grants established under the public assistance titles of the Social Security Act provides for advances to States on the basis of quarterly estimates and for adjusting the amounts granted by adding to or deducting from subsequent grants on the basis of the States' actual expenditures. Thus, all grant operations are on a quarterly basis except that payments to States are scheduled in monthly installments. Any balance of funds not granted to States at the end of a fiscal year reverts to the United States Treasury.

OPENING STATEMENT BY JAY L. RONEY, DIRECTOR, BUREAU OF PUBLIC ASSISTANCE

Under titles I, IV, X, and XIV of the Social Security Act, Federal funds are granted to States for four programs of public assistance-old-age assistance, aid to dependent children, aid to the blind, and aid to the permanently and totally disabled. The amounts of Federal funds to be paid are determined by applying the formula provided in the act to the expenditures made by the States. The need for a supplemental of $238 million, in addition to the 1955 regular appropriation of $1,200 million, is due primarily to the extension of the 1952 amendments to the public-assistance titles of the Social Security Act. Those amendments made additional Federal funds available to all jurisdictions except Puerto Rico and the Virgin Islands, by raising the maximums on the amount of the payments in which the Federal Government shares and by changing the formula for computing the Federal share. The action on extending the 1952 amendments from September 30, 1954, to September 30, 1956, was taken after the 1955 appropriation was approved by the Congress. Thus the amendments, instead of being in effect for only one quarter of the fiscal year 1955, will be in effect for the entire fiscal year and the additional cost is estimated at $154 million. The second factor giving rise to the need for more funds is that program trends have changed since the 1955 appropriation was prepared and the number of recipients and average monthly payments are larger than originally estimated. Furthermore, about $9,300,000 from the 1955 appropriation was used to meet some of the 1954 requirements.

The system of grants for public assistance established under the Social Security Act provides for quarterly advances to States on the basis of their estimated requirements. Any amount by which a State's actual expenditures may be over or under its estimates will be adjusted by adding to or deducting from subsequent grants. Thus, the supplemental request relates to funds to be