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I have heard this same concern about auditing responsibilities in a number of other contexts.

It occurs to me that it needs to be viewed keeping in mind another complaint of the States-that Federal auditors, unaware of what States are doing, often moving in with varying standards or creating already a great deal of State expense, very often State auditors are following behind our auditors to check what we do, so if the expense of checking up on us is reflected in their current operations it certainly won't be increased by this proposal.

Moreover, in a great many of the programs I am familiar with, the State is already auditing. We have a dual set of auditing going on at present. It occurs to me and I have discussed this in the regional offices with our auditors-that surely there is some way to consolidate auditing at the Federal level so that we have one Federal approach to auditing and to consolidate auditing at the State level.

As for the charge that you would be turning the chickens over to the foxes by letting the States audit themselves, we do require there be an independent audit but as is true with our auditing and most State auditing a great deal is contracted out now.

Mr. VANDER JAGT. Thank you very much, Mr. Secretary. I cannot resist this opportunity to commend you on the impeccability of your logic in your statement when you addressed the day care center issue. And I thank you, Mr. Chairman, for this chance to commend and thank the Secretary.

Thank you.

Mr. CORMAN. Thank you, sir. If you have to leave, we understand. Secretary MATHEWS. Fine. I will leave behind my very able assistants who are very familiar with this. I do thank you for the courtesy. Mr. CORMAN. Thank you, Mr. Secretary.

Would you like a brief recess, Steve?

Mr. KURZMAN. At your pleasure, Mr. Chairman.

Mr. CORMAN. Fine.

Mr. Vander Jagt, do you have questions of the staff?

Mr. VANDER JAGT. Yes, Mr. Chairman.

I am particularly interested in what impact you think this might have on increased citizen participation and whether we have any experiences up to now that can tell us whether this would enhance citizen participation or curtail it?

Mr. MORRILL. Mr. Vander Jagt, I think our proposal would add to the process initiated under title XX. We have been through one cycle with the citizen participation. It is to be expected that some people are more or less happy with what happened the first time through. In a great many States, where the planning of social services had largely been done, if you will, in a closet, it is now out in the open, and the citizenry knows. Indeed in many locations there were public hearings held and widely attended. I believe in one State where there was dissatisfaction with the outcome several of the counties actually sued the State feeling that they had been inadequately treated, which is perhaps the ultimate in participation.

The process, we think, is strengthened in this bill by the addition of the accounting after the fact that we have proposed be added. Indeed those provisions were in the original title XX compromise bill as brought before the Congress and were eliminated in the process of, I

believe, the conference. These provisions would provide to the citizenry an open statement not only of where the money is planned to be spent but in fact with where it went. I think that added strengthening will help us in the citizen participation feature during the course of hearings or open comment.

Mr. VANDER JAGT. I thank you.

I have one other concern that I would like to have your attention directed.

I think there is substantial support, not only in the subcommittee but in the full committee and I think in the Congress, for the concept of the block grant approach. I think that we all are looking for some reduction of the complexities. There is also a very great concern that in taking this step that there will actually be a reduction in the amount of social service moneys received by recipients, that States will cut back.

I think if people are resistant to any kind of change, block grant represents a change. If we give them this change and in addition to that, there is a cut in the various social services they are receiving. I can well imagine that there would indeed be a hornet's nest of criticism. I know the Secretary has made a sort of passing reference to it. but he just said it was his belief that the States wouldn't reduce social services. I wonder if you can give us anything stronger to go on than the Secretary's belief?

Mr. MORRILL. Let me start with that question and Mike will probably want to add to my response.

I think in considering this matter there are two or three things that I think are important to be aware of. This concern clearly stems out of the current fiscal crunch that many States find themselves in.

I think one of the things that ought to be clearly recognized in looking at that is that the current matching requirements in this program. and indeed other programs such as medicaid, have not prevented States from cutting back their programs. Indeed that situation leaves one a little troubled, because what happens when a reduction for broad economic reasons occurs in State budgets is that there is almost a double penalty with respect to the recipients involved: For each dollar the State draws out, we take one out, too.

It is not clear that the matching requirements have served in an overall fiscal crisis to prevent States from reducing their effort for fiscal reasons to the detriment of the recipient.

A second point, I think, is that a number of States, seven or thereabouts, overmatch us anyhow which seems to suggest an increasing recognition of the importance of social services, at least in those States. Indeed there are strong interest groups and constituencies for those services within the States that can make their voice effectively heard in State legislatures and in Governors' offices.

Perhaps a third point is that it is always hard to tell on these matching requirements, as I think the subcommittee is aware, that in administering and tracking through Federal dollars of this sort it is a tough business administratively to see whether the State in fact has done that because the accounting books can be made to do quite a few tricks.

Mr. SUZUKI. I would just like to comment that we have another parallel social services program administered by SRS, the child welfare social services program. I think it is interesting to note that the

Federal participation in that is at the magnitude of $52 million. If you look at the total expenditures, States and local governments appropriate an additional $500 million to child welfare servicse.

I am really suggesting that without any match at all now, what you are really getting is that there is a demand and a need for services. States have responded and you know that is something people ask. Is it speculation that States will appropriate money year after year without a Federal requirement? I think the child welfare program indicates that States do-State money comes not just with Federal match. Mr. VANDER JAGT. Thank you very much, those answers were most helpful.

Mr. CORMAN. I would like to ask a question at this point.

Mr. VANDER JAGT. I am all through.

Mr. CORMAN. I wonder if you could give us the most recent figures available in gross dollars for Federal and State expenditures. Please indicate for us which States spent more and which States spent less than their full entitlement.

Mr. KURZMAN. I will be happy to do that, Mr. Chairman.

About 30 States have reached the ceiling under title XX this year, and as my colleagues have testified, 5 to 7 of them have overmatched in the sense that they spend more than the matching requirement. We will be happy to give you that.

Mr. CORMAN. We don't need a breakdown by category, just gross dollars in title XX.

Mr. KURZMAN. Absolutely.

[The information follows:]

STATES ALLOTMENT CEILINGS, AND ESTIMATED FEDERAL AND STATE EXPENDITURES FOR SOCIAL SERVICES FOR

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STATES ALLOTMENT CEILINGS, AND ESTIMATED FEDERAL AND STATE EXPENDITURES FOR SOCIAL SERVICES FOR FISCAL YEARS 1976-Continued

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2 States' estimates at ceiling, and based on grant awards issued for the 1st 3 quarters and initial grant awards for the 4th quarter projected to spend more than their entitlement.

The allotment ceiling for the territories is based on the reallotment of unused State allotments up to $16,000,000 (i.e. $500,000 for Guam, $15,000,000 for Puerto Rico, and $500,000 for Virgin Islands).

Note: 21 States are projected at ceiling and 9 States are projected to spend over 90 percent of their entitlement.
Source: Data based on States February 1976 estimates for fiscal year 1976.

Mr. CORMAN. Counsel?

Mr. JENSEN. Is the $101 million figure that you used, is that based on a new estimate of what the expenditures this year are?

Mr. MORRILL. Yes.

Mr. JENSEN. Netted out before at $80 million, that was the 2.4 usage in this fiscal year.

Mr. SUZUKI. Essentially that is what it is. We were really looking at the $2.4 billion under the title XX ceiling. You have to add in the factor-because we are talking about the consolidation-of State and local training expenditures and the $16 million for the Puerto Rico, Guam, and Virgin Islands. It changes under the block grant proposal but when you add it up and take the $2.4 billion-really $2.5 billion, in effect, under the block grant-that is really where the hundred thousand-$100 million-I am not used to these figures, where it comes out. It is really about $100 million. I wouldn't tie it to $101 million. It depends how you calculate the Puerto Rico, Guam, Virgin Islands, and training money.

Mr. CORMAN. Mr. Rangel?

Mr. RANGEL. Thank you.

Mr. KURZMAN. So I could clarify a little further, the $101 million is constructed by going to the $2.5 billion ceiling, and then adding on top of it for the training.

So that the difference is the difference between the total $2.5 billion ceiling which the block grant would propose be spent, plus the additional

Mr. SUZUKI. Almost $50 million-30 and 16, somewhere around there.

Mr. KURZMAN. About $46 million, the difference between that $2.546 billion and what the States will actually spend this year will constitute the add-on that we are proposing.

Mr. CORMAN. Mr. Rangel?

Mr. RANGEL. As I understand this, the Federal Government under the block grant merely leaves the present ceiling on plus whatever training you are talking about, removes the earmarking of funds, and allows the State to use them as they want with the exception that 75 percent of the Federal funds go to services for AFDC, SSI, and medicaid recipients, is that it?

Mr. MORRILL. Just to amend the last part of your description, I would say that not only those on the public assistance programs that you identified but also those below the poverty line though they may not be on public assistance at all.

Mr. SUZUKI. The one other feature is really the Puerto Rican, Virgin Islands, and Guam feature. Right now they participate only in title XX "excess". But in the new authorization there is an authorization especially for those territories in terms of services money.

Mr. RANGEL. And you provided the committee with a study to show there is no need to fear that the States will withdraw from the sibilities they now have under the matching fund concept?

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Mr. KURZMAN. We just had a very long answer to Mr. Vander Jagt's question on that point when you were out of the room, Mr. Rangel. We would be happy to restate it for you if you would like. Mr. RANGEL. No, the answer is just yes or no.

Mr. KURZMAN. The answer is yes, particularly because of the overmatching that has occurred in the current program and because of the experience under the title IV-B child welfare services programwhere there is no matching requirement, but as Mr. Suzuki said earlier. with about a $50 million Federal investment, the States have actually volnuteered to match without a Federal requirement to the tune of more than $500 million.

Mr. RANGEL. The Secretary indicated

Mr. KURZMAN. There is a very slight match. I don't want to overstate that.

Mr. RANGEL [Continuing]. $100 million more which shows the administration's commitment to the poor. Where is the $100 million more coming from?

Mr. KURZMAN. Instead of requiring matching, under which the States have been able to reach only about $2.4 billion in the current. year, we would eliminate the match and say they can get the difference. In other words, we would put the entire $2.5 billion out there without requiring them to match for it. That is one increase.

The other is that we would add on to the $2.5 billion what hitherto had been appropriated as a separate program for social service training. And that amounts to approximately $36 million more. So it is the difference between $2.336 billion and whatever the States actually

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