Act, the net additional cost to be met from Federal public assistance funds for these purposes in 1967 over 1966 is $69 million.

OTHER PROGRAM COSTS

Cost related to program trends and to legislation adopted in prior years will also rise in fiscal year 1967. Rising caseloads and higher average monthly benefits will result in increases totaling $101 million. These increases occur primarily in the programs of aid to families with dependent children, and aid to the permanently and totally disabled. In addition, increases are forecast for the costs of administration, services, and training for all programs. These increases primarily reflect the increase in caseloads and the continuing effect of the 1962 amendments under which the cost of the Federal share of preventive and rehabilitative services is matched at 75 percent. As these amendments are progressively implemented, the proportion of total expenditures subject to the higher (75 percent) Federal financial participation is estimated to increase from a little less than one-third of the total in 1965, to about 39 percent in 1967.

Although caseloads and average monthly payments are expected to rise during this period of high economic activity, it should be pointed out that the public assistance programs will still not reach all those persons who now live in poverty, because of restrictive State eligibility requirements and assistance standards. It is estimated that as many people need assistance and are not receiving it as those currently on the rolls.

ASSISTANCE FOR REPATRIATED UNITED STATES NATIONALS

An appropriation of $460,000 is requested for 1967 to assist needy U.S. citizens who are returned from abroad because of mental illness, destitution, sickness, or international crisis. Assistance is not provided under this program until the repatriate arrives in the United States; the name, citizenship and reason for return for each person must be certified by the Department of State.

The program is administered under two laws-one covering mentally ill repatriates and one covering persons repatriated for reasons other than mental illness. Both laws are administered by the Bureau of Family Services with the cooperation of State welfare departments who act as agents of the U.S. Government in determining residence, availability of resources, and in receiving and arranging for necessary

care.

The total 1967 request represents a net increase of $8,000 over the 1966 estimate; this net increase gives account to (1) a decrease of $35,000, primarily because funds available in 1966 for repatriates returned from the Dominican Republic are not expected to be needed again, and (2) an increase of $43,000 primarily because of the increasing number of referrals by the State Department which is expected to result in higher caseloads of both the mentally ill and other sick and destitute persons.

BUREAU OF FAMILY SERVICES, SALARIES AND EXPENSES

Mr. Chairman, our 1967 request for salaries and expenses for the Bureau is $8,295,000 for 715 positions, an increase of $1,368,000 over the 1966 level. The increase includes $806,300 for continuing the budget authorized for 1966 and $561,700 for 85 new positions requested for 1967. In the public assistance grants presentation, I discussed the scope of the several public assistance categories. Bureau responsibilities for administering Federal grants in support of these programs are many. They range from providing technical assistance and leadership to the States to effect basic program changes, such as those provided for by the 1965 amendments, to processing grants and assuring that the funds are expended for the purpose intended.

EXPANDED RESPONSIBILITIES AND SELELCTED WORK AREAS

The increase requested for 1967 is to enable the Bureau to carry out more effectively both its on-going and recently expanded responsibilities. For example, one of the top priorities will be helping States get their new title XIX medical assistance programs underway. At least 12 States are expected to be operating this program by the end of this fiscal year, with 16 or more additional States planning to begin between July and December 1966. As of now, a total of 45 States have indicated they may have the program in effect before the end of fiscal year 1967.

Another high priority area relates to the long-range social service provisions of the 1962 public welfare amendments. We are currently conducting a nationwide review of the States' social services programs which will provide information necessary to assess each State's efforts in developing these programs and to obtain insight to problems which must be overcome to achieve the maximum results possible in helping dependent persons become more self-reliant.

The quality control systems, which have been effected in each State to provide improved methods of safeguarding against assistance going to ineligible persons, are also scheduled for nationwide review. Plans are also being developed to extend the quality control system to medical care and social services as soon as possible.

A major undertaking will be the development of a revised statistical reporting system in 1967. Plans provide for obtaining more comprehensive data to meet new demands for information, for maximizing the analytical value of the data, and for keeping costs as low as possible by such methods as increased use of sampling and ADP processing. Another major move to strengthen the Bureau's administrative capabilities to carry out its expanded program responsibilities is a survey that is being made this fiscal year of the Bureau's organization, work processes, and administrative methods. Recommendations from the survey will be utilized to streamline and improve the Bureau's administrative framework wherever necessary to enable it to meet the demands of today's public assistance programs as effectively as possible.

NEED FOR NEW POSITIONS

States require and expect Bureau staff to help provide leadership, interpretation, guidance, and day-to-day assistance in carrying out the increasingly diverse and complex provisions in public assistance administration. In 1967, some 8 million persons will be receiving some form of assistance under these programs-basic maintenance, medical care, or social services, and in many instances, all three. The programs will operate in over 3,000 political subdivisions, at a total cost of nearly $6.3 billion; about 95,000 employees of State and local public assistance agencies will be engaged in their administration. The total appropriation request for the Bureau's salaries and expenses for 1967 represents only about one-fifth of 1 percent of the Federal

grants.

The increase of 85 positions for 1967 is to enable the Bureau to strengthen administration of these public assistance grants programs. More consultation and technical assistance to State agencies will be possible. More attention can be directed to reviewing their operations. Increased emphasis will be placed on work related to the new medical assistance programs, preventive and rehabilitative services for public assistance recipients, and civil rights compliance activities. Mr. Chairman, if you and the members of the committee have any questions, we shall do our best to answer them.

BUDGET REQUEST

Mr. FOGARTY. The appropriation for 1966, including the pending supplemental is $3,603 million. The request for 1967 is $3,746,400,000, an increase of $143,400,000, which is the net result of several pluses and minuses.

STATE MATCHING SHARE

Your opening statement said the total public asistance program amounts to about $6.3 billion.

Mr. STEININGER. Yes, sir.

Mr. FOGARTY. And about 60 percent is Federal?

Mr. STEININGER. Yes.

Mr. FOGARTY. We used to say, in public assistance, whatever the States came up with, we would match it on a 50-50 basis. Now, where did the 60 percent come from? Is that because of the 1965 amendments?

Mr. STEININGER. Yes. There is 75 percent reimbursement for prescribed administrative services.

Mr. FOGARTY. This matching fromula changed last year.

Mrs. WEST. It wasn't just last year. We started in 1946. At that time we changed the Federal participation from just half to a higher rate. For a long time before that change was made the Federal share was actually less than 50 percent of the total expended because the States always spent amounts above the amount in which the Federal Government could participate. This increase in the rate of Federal participation has been going on since 1946.

Mr. FOGARTY. Expand on this for the record. (The information requested follows:)

1935 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66

FEDERAL LEGISLATION AND ANNUAL EXPENDITURES FROM FEDERAL FUNDS FOR PUBLIC ASSISTANCE

Changes in Federal legislation affecting the Federal share of assistance costs, the establishment and growth of State assistance programs, the increase in population, and the rise in living costs, together account for the growth in Federal grants-in-aid for public assistance from $20 million in 1936-the first year in which such grants were made to States under the Social Security Act-to $3.2 billion in fiscal year 1965.

Prior to 1965,1 Congress had amended the public assistance provisions of the original Social Security Act 10 times. The foregoing chart shows the upward surge in Federal expenditures that followed each amendment.

Material submitted to the committee in previous years shows that all but a small part of the increase in Federal funds is the result of Federal legislation. The overwhemling proportion of the increase (about two-thirds) is for legislation that established new programs. The remainder of the increase is largely attributable to changes in the formulas for computing the Federal share of assistance. These changes raised the amount in which the Federal Government shares and the rate of Federal participation within that amount.

Under the original provisions of the Social Security Act, the Federal share of assistance payments, within specified maximums on individual payments, was one-half the total in old-age assistance and aid to the blind and one-third (changed to one-half in 1940) the total in aid to families with dependent children. Beginning in October 1946, the Federal share of assistance payments, within specified maximums, became two-thirds of the first $15 per recipient of old-age assistance and aid to the blind and of $9 per child in aid to families with dependent children, plus one-half the balance up to specified individual maximums. Thereafter through successive amendments, the Federal share was raised (1) by increasing the first fraction and the average amounts per recipient to which it was applied; (2) by raising the maximum on the total payments in which there was Federal financial participation; (3) by raising to more than 50 percent the rate of Federal participation in the second part of the payment in States with below-average per capita income; and (4) by providing additional Federal financial participation based on the amount expended for vendor medical payments for the aged. As a result of these changes, the Federal percentages of assistance payments has increased as follows:

The major change in the Federal share of State expenditures for administration, services, and training occurred under the 1962 amendments which raised from 50 to 75 percent the Federal share of costs of certain welfare services and training activities as specified by the Secretary of HEW. Since 1962 the Federal percentage for administration, services, and training increased from just under 50 percent to 57.5 percent in 1965.

EFFECT OF 1965 AMENDMENTS ON BUDGET FOR FISCAL 1967

Mr. FOGARTY. You estimate an increase of $274 million as a result of the 1965 amendments. Are there some provisions that don't go into effect until 1967 or what is the reason for this?

Mr. SMITH. Many of the provisions are in effect only for the half year during fiscal year 1966.

Mr. STEININGER. We are going into a full year now.

MEDICAL ASSISTANCE TO THE AGED

Mr. FOGARTY. I notice medical assistance to the aged only drops from $350,100,000 to an estimate of $267,700,000. Many people thought the medicare program would almost eliminate this type of public assistance program.

1The 1965 amendments, which were approved on July 30, 1965, do not relate to fiscal years prior to 1966; expenditure data for fiscal year 1966 is not yet available.