EXHIBIT XVII

Aged beneficiaries of old-age and survivors insurance, amount of payment and average benefit, by State, June 1953

Source: Social Security Bulletin, October 1953, vol. 16, No. 10, p. 23.

Senator CARLSON. If there are no questions, we thank you very

much, Mrs. Coughlan.

The next witness is Charles I. Schottland, director of the California

State Department of Social Welfare.

Mr. Schottland, we are very happy to have you here.

STATEMENT OF CHARLES I. SCHOTTLAND, DIRECTOR CALIFORNIA STATE DEPARTMENT OF SOCIAL WELFARE

Mr. SCHOTTLAND. Thank you, Mr. Chairman. My name is Charles I. Schottland. I am director of the Department of Public Welfare of the State of California.

I am happy to appear before the Finance Committee of the United States Senate to endorse H. R. 9366, both in my capacity as director of a State department of public welfare which has the largest public assistance program for the aged in the United States and also as chairman of the Council of State Public Assistance and Welfare Adminis trators of the American Public Welfare Association. Our council is composed of the various State department heads who for the most part are appointed by and responsible to the governors of the respective States.

These State directors are the people on the firing line in connection with problems of income maintenance for the aged. We are the public officials to whom the old people come for help when their income stops. We have, therefore, a compelling interest in any program which assures continuing income to aged persons. State directors have looked with great concern on the growing number of aged in the United States who have little or no income or savings. As the number of persons over 65 has increased from 9 million in 1940 to 12 million in 1953, as the average age of our senior citizens over 65 has continued to increase, as employment policies and private-pension programs have resulted in the termination of employment for many older persons, as all of these and other factors have produced an increasing total number of senior citizens without income, welfare directors have seen more and more of the aged depending upon two basic sources for income to purchase food, clothing, shelter, medical care, and other necessary items. These two sources of income are oldage and survivors insurance and old-age assistance.

We

The welfare directors of this country have in the past almost unanimously endorsed the expansion of OASI because we believe in, and support a wage-related, contributory social-insurance program. believe that the ultimate goal of OASI should be: (1) The inclusion in its provisions of all of the gainfully employed and their dependents, and (2) provision for a benefit payment which is adequate so that all persons past the retirement age may be able to maintain health and a decent living standard.

The impact of OASI on the old-age assistance program which we administer has been increasingly significant. Today there are almost 6 million beneficiaries of OASI, approximately 2,600,000 recipients of old-age assistance, and approximately 450,000 persons in the United States who receive both.

Because a substantial number of witnesses have presented complete facts, figures, and analyses of H. R. 9366, I shall not attempt to do so in this brief presentation; rather I should like to point out a few general facts from the point of view of an administrator of old-age assistance. May I use California as a case in point.

California has 371,000 OASI beneficiaries age 65 or over. We also have 272,000 recipients of old-age assistance. Ninety thousand per sons received both OASI and old-age assistance. H. R. 9366 will have an almost immediate effect on the 90,000, since it will raise the average

payments they receive from OASI. But more than that, H. R. 9366 will begin to tackle the problem typified by the remaining 180,000 persons receiving old-age assistance who are ineligible to OASI. They are not eligible because during their working days they were not covered, or in the case of the large number of women receiving old-age assistance, they never had work experience. H. R. 9366 by increasing coverage will reduce somewhat the number of persons who upon reaching 65 are not eligible to benefits.

In previous years when Congress considered expansion of OASI it was made abundantly clear by testimony of public welfare administrators that we feel that the way to reduce the cost of the programs which we administer is to maintain the income of the aged through a wage-related, contributory social-insurance system.

We in State government are confronted with the painful fact that large numbers of our citizenry reach old age without savings, without income, and in need of financial assistance. Aged citizens have become restless with the slow growth of OASI and a relatively low standard of relief through old-age assistance. The result has been many movements and pressure organizations which have attempted to increase expenditures for old-age assistance as a substitute for the lagging OASI insurance program during the first 15 years of its operation. H. R. 9366 is a step toward remedying this situation.

Social insurance and public assistance together will continue to be the major source of income for the majority of the aged, since the average citizen who reaches old age does not have any substantial savings. In California, for example, the average recipient of old-age assistance has personal property with a value of less than $200. Thirty percent have no personal property whatsoever other than clothing and personal effects. Only 15 percent have personal property of over $600. Since the average age of the 272,000 recipients is 75.4 years, opportunities for earning are relatively small.

Old-age assistance throughout the United States and in California has grown steadily since 1936, except during the past 2 to 4 years. During the past few years the program has stabilized and much of this stabilization must be attributed to OASI, particularly the amendments of the OASI program in 1950 and 1952. However, the stabilization or decline has been due to a considerable extent to a decline in the proportion of men who are in receipt of assistance. In 1940, approximately half of the recipients in California were men and half were women. Today about only one-third of the recipients are men and two-thirds are women. To state the shift between men and women in another way, since 1940 the proportion of men 65 and over who are in receipt of old-age assistance has declined from 26 percent to 20 percent, whereas the percentage of women has increased from 24 to 31. This would tend to indicate that the survivor aspects of the insurance program require further exploration. It also demonstrates why we still have a substantial number of needy persons who are not covered by OASI and suggests that we may except a relatively slow decline in our assistance rolls.

Last month, my department in California spent over $18,700,000 on old-age assistance. We are, therefore, vitally concerned with this problem and with the passage of this bill (H. R. 9366) because its long-range objectives will inevitally result in a reduction of our expenditures. In the meantime, we must be prepared to continue public

assistance for a substantial number of our aged citizens, many of whom will be beneficiaries under the OASI program also. Even with the improvements made by H. R. 9366, the average OASI beneficiary will not receive a sufficient allowance to take care of his minimum needs. Unless such OASI beneficiary has other means with which to supplement his benefit he must seek old-age assistance. This companion-assistance program is essential and is the most economical way of making certain that during the long term buildup of the socialinsurance program all persons who are in need will be provided with minimum allowance for a respectable standard of living. The continuation of the present Federal-State partnership in the operation and financing of old-age assistance will enable OASI to be most effective in maintaining the income of aged persons.

The continuation of the present Federal-State partnership arrangement is provided for in H. R. 9366. As you are aware, the present Federal sharing ratio of the public-assistance grain-in-aid programs under the Social Security Act is continued by this bill until September 30, 1955.

From the standpoint of the States this termination date presents a number of serious problems. It comes in the middle of the fiscal year of both the Federal and most of the State governments. It does not give the States time to reorient their thinking and their entire financial and tax structure to absorb the impact of any substantial change that might take effect upon termination of this legislation. It is therefore respectfully suggested that the termination date be changed from September 30, 1955, to June 30, 1957. This would coincide with the fiscal year of the Federal Government and most of the States and would give the States and the Congress sufficient time in which to consider desirable changes, if any, in Federal-State financia! relationships in the public-assistance field.

I should like to point out to you, however, that the increase in OASI in the past has resulted in savings both for the Federal and State Governments, and it is my belief that as OASI increases in coverage and benefits, the savings in public-assistance funds should be taken by both Federal and State Governments just as both levels of gov ernment now share in the costs. It will not be too long before the expanding OASI program will materially reduce our old-age assistance caseloads, a situation which will result in savings to both the Federal Government and the States. Today in California the Federal share of old-age assistance is less than it was in the 1936-37 fiscal year, the first full year of operation of the old-age assistance program under the Federal Social Security Act. In that year the Federal Government provided almost 50 percent of the total cost. For the 1952-53 fiscal year the Federal share amounted to 46.7 percent of the total cost.

The State government of California has no disagreement with the present formula which in general is more beneficial to the low-income States but at the same time does not penalize States like California. We believe that the formula should be continued until such time as OASI makes a more significant impact on our old-age assistance expenditures.

its

In conclusion, the overwhelming majority of welfare directors and the State administration of California favor H. R. 9366 and urge immediate passage. We believe that the American people feel like

wise and will recognize, with the Congress, that this is another forward step in bringing security to our aged citizens.

Senator CARLSON. Mr. Schottland, we appreciate very much your statement before the committee this morning. It has been very helpful in determining what action the committee will take.

Are there any questions?

Senator GEORGE. Mr. Schottland, I would like to ask you about the wage base. Is it the general view that $4,200 is a proper base?

Mr. SCHOTTLAND. I can only give you my personal opinion, Senator. I do not know what the general view on that particular point is.

My personal opinion is that the wage base should be increased to higher than $4,200. At the time the Social Security Act went into operation in the middle of the 1930's a very small percentage of wage earners were making in excess of $3,600.

Senator GEORGE. It was $3,000.

Mr. SCHOTTLAND. Yes. I think it was only 6 percent. I do not have the figures before me. Today well over 40 percent, if I recall the figures, are making above $4,200. I think, therefore, that in order to have a distribution more in keeping with what it was at the start of the Social Security Act that there is every justification for increasing the wage base above the $4,200.

Senator GEORGE. Thank you very much.

Senator BYRD. You want to go above the bill? The bill provides the $4,200, does it not?

Mr. SCHOTTLAND. I am in favor of the bill as it is, but in answer to the Senator's question my personal view is that it could go higher. Senator BYRD. Thank you very much.

Senator CARLSON. If there are no further questions, we thank you. That concludes the list of witnesses on the calendar for today, and it concludes the hearings on H. R. 9366. If there are those who wish to submit statements for the record, the clerk will receive them for at least 1 more day.

The hearings are concluded.

(By direction of the chairman, the following are made a part of the record :)

Chairman MILLIKIN,

Committee on Finance,

LOS ANGELES 46, CALIF., June 14, 1954.

United States Senate, Washington, D. C.:

Calling the committee's attention again to my proposed clarifying amendment to an unjust and unfair provision of section 211 of Public Law 734, which I bumped into when I applied for retirement benefits within the last 2 years, which has resulted in my application being rejected.

The accompanying proposed amendment which I have prepared is self-explanatory and, if adopted, would, in substance at least, remove this unjust provision in the present law and be a blessing to thousands, especially in the retirement-age bracket, who find themselves in my position.

I think both Senators Knowland and Kuchel, from my State of California, both of whom have copies of the amendment, will find themselves in accord with this request.

Thanks.

E. E. LITTLEFIELD, Electrical Research.