1 Selected resources as of June 30 are as follows: Unpaid undelivered orders, 1964 $18,000; 1965, $18,000; 1966, $20,000: 1967, $24,000.

Mr. FOGARTY. We shall now take up the appropriation requests of the Vocational Rehabilitation Administration.

Miss SWITZER. I have an opening statement, Mr. Chairman. I will run through the highlights briefly.

Mr. FOGARTY. We will put the statement in the record.

PREPARED STATEMENT

(The statement follows:)

STATEMENT BY COMMISSIONER OF VOCATIONAL REHABILITATION

GENERAL REMARKS

Mr. Chairman and members of the committee, I am most happy to present to you the appropriation request for fiscal year 1967. The President's budget for next year is indeed a historic one for all of the disabled and for VRA.

This year's budget reflects not only enactment of the vocational rehabilitation amendments but also the broadening of the program that has occurred through the amendments to the Social Security Act for use of trust funds to rehabilitate disabled beneficiaries, and the Correctional Rehabilitation Study Act to make manpower studies in this field in which rehabilitation is playing an important part.

This is a very forward-looking budget-one which I am particularly pleased to present to you because it provides for the attainment of one of our long-sought goals the rehabilitation to useful living of well over 200,000 disabled.

The grant amounts requested for next year as feasible because this committee, through its understanding and sympathetic approach over the years to VRA annual budget requests, has built a solid foundation on which the next advances can be based.

Grants for Rehabilitation Services and Facilities

This retitled appropriation is an enlarged version of the former "Grants to States" appropriation. The new appropriation includes the section 2 and section 3 formula grants to States as provided for in the "Grants to States" appropriation of last year as well as the grant funds for the new program of projects to expand rehabilitation services, for the construction of rehabilitation facilities, and the workshop improvement projects authorized by the 1965 amendments.

A total of $259,060,000 is requested for 1967 for these programs. This is an increase of almost $88 million over fiscal year 1966. This increase is due in the main to two factors-first, the higher allotment base and the increase in the Federal matching rate under the basic grants-to-States program and, second, the fact that most of the other activities authorized by the 1965 amendments under this appropriation in 1967 will be operating for the first full year.

Grants to States-Support grants section 2.-In terms of funding this program, the 1965 amendments increased the Federal commitment in two ways: 1. The allotment base the total amount on which each State's Federal entitlement for the year is calculated was increased from $200 to $300 million for this year, fiscal year 1966, and was set at $350 million for fiscal year 1967. 2. The Federal share of the Federal-State program was increased. Before the amendments, the Federal matching rate for a given State varied from 50 to 70 percent-the higher the State's per capita income, the lower the Federal matching rate. Under the 1965 amendments, the Federal matching rate for fiscal year 1967 is fixed at 75 percent for all States; i.e., for each dollar the State makes available for the rehabilitation program, the Federal Government pledges $3. For fiscal year 1966, the amendments increased the Federal matching rate for a State halfway between the fiscal year 1965 matching rate for the State and 75 percent.

The combination of larger entitlements under a higher allotment base and a higher Federal matching are the reasons why our goal of 200,000 rehabilitants can be reached and exceeded next year.

But it also means that we will need a supplemental appropriation for fiscal year 1966. The analyses of the State requests and reports to VRA indicate an additional $39 million will be required in fiscal year 1966 to match the available State funds for the basic rehabilitation services. This is shown in the President's Budget and is included in the base on which we build the request for $236 million for section 2 for fiscal year 1967.

The $236 million requested for next year is the amount to which States are entitled to match the $78.7 million State funds. The request for fiscal year 1967 (and the proposed fiscal year 1966 supplemental) limit the Federal matching of State funds to the entitlements under the allotment base.

The State agencies under section 2 grants will rehabilitate 207,500 persons in fiscal year 1967, 39,000 more than this year. The delay in the enactment of the new amendments until the very end of the last session of the Congress prevented the States from getting a full year's benefit from the new legislation during fiscal year 1966; by the end of November 1965, we were already rehabilitating at a rate of about 150,000 a year without any real impact yet from the broadening of the program by the new amendments. The State agencies now have a real solid base in terms of funds, organization, and community support to make the necessary program expansion.

The new amendments also will have a very significant impact on the ability of the vocational rehabilitation program to serve the more severely disabled. With the new facilities and with 75 percent Federal matching, no disease or condition, however difficult or complex the service, need any longer be outside the vocational rehabilitation program if the handicapped individual can reasonably be expected to be made capable of gainful employment. Moreover, we will be able to do what has already been the objective of the program-start services to the disabled at the point when the program can be of maximum help. The Federal-State program will be able to bring rehabilitation services to many more young people, particularly those in their last years of school when they can benefit most from the help provided by the vocational rehabilitation agencies in preparing them for jobs.

The State vocational rehabilitation agencies are showing in their work with the schools the values that accrue from evaluating the potentials of the disabled young people when they are still in school to determine those who have a disability which constitutes a significant employment handicap and to furnish the supplementary counseling, training, the restorative services and the specialized

placement which give them the capacity to take their places as productive citizens. Several hundred dollars spent for vocational rehabilitation services for a disabled high school youngster accomplishes more than thousands of dollars in later years for the same person in trying to overcome the compounding of the rehabilitation problems by delay. The vocational rehabilitation program makes its maximum contribution to the disabled youngster and to our country when the rehabilitation services are begun early enough to enable the individual to be ready for employment when he has reached employment age.

In addition, we now have the authority under the amendments to give rehabilitation services during a period of evaluation to those cases on which the initial prognosis is questionable. In this period which can range up to 18 months, many severely disabled individuals who otherwise could not have been accepted for services will get a chance to be rehabilitated. This new authority combined with the increased emphasis on heart disease, cancer, and stroke provided by the report of the President's Commission last year and the additional funds provided by the Congress to carry out the recommendations, are bringing these groups into the forefront of the State program activities.

The mentally retarded remain a shining example of what can be done where there is interest, drive, and funds. It was not too long ago that practically none of the mentally retarded were being rehabilitated or even considered for rehabilitation. In contrast, we are projecting the rehabilitation of about 19,000 mentally retarded next year.

The joint program with the Civil Service Commission developed initially with Mr. John Macy, on which I reported to you last year, under which mentally retarded persons are selected by the State vocational rehabilitation agencies and placed in Federal employment, has exceeded 1,000 such placements and the pace is accelerating.

As the committee knows, the economic and social benefits that accrue to the country as a whole as a result of rehabilitating the disabled, and the many benefits that accrue to the disabled individuals themselves, returns manifold the cost of their rehabilitation. Moreover, almost one in five of our rehabilitants are in receipt of public assistance or are supported from some other tax-supported institution at the time they are accepted for rehabilitation. In 1967, it is our expectation that at least 37,000 such persons will be included among the rehabilitants.

Perhaps more than in the past years, the increase in the work force by the rehabilitation of over 200,000 persons is a very significant factor that should be taken into consideration in evaluating the beneficial effects of this program. More and more we are hearing that the availability of qualified workers is a limiting factor to expanding our economy. The disabled being restored by the rehabilitation program are in a wide variety of occupations ranging all the way from professional to unskilled. Based on the experience last year, the 1967 rehabilitants are likely to include almost 9,000 teachers, engineers, and professional persons, 23,000 skilled workers as well as 32,000 clerical and sales persons. The $236 million requested for section 2 includes $5 million for matching funds contributed by private nonprofit organizations to the State agencies to establish rehabilitation facilities and workshops. This is the same amount as in the 1966 appropriation. This aspect of our program has been received with enthusiasm and it is amazing how well it has worked in the short time that we have had this authority. The $5 million under this section of the act goes only for alterations and expansion of existing facilities and is not available for any new construction. In connection with the basic grants to States I would also like to call your attention to the fact that the amendments to the Social Security Act enacted last year include for the first time, authority to use old-age and survivors insurance trust funds to pay the cost of rehabilitating disabled beneficiaries. The program is designed in total to increase the number of these beneficiaries who are rehabilitated.

The use of these trust funds is predicated on the basis that, in time, the total cost of their rehabilitation will be offset by the reduction in benefit cost to the trust fund. The amendments to the Social Security Act limit this program to 1 percent of the previous year's payments to the disabled beneficiaries which in 1967 limits the program to about $15 million.

We are hoping that we can increase the number of disabled beneficiaries to about 7,500 in 1967 compared to about 4,000 in this category in 1965.

The amounts used under this program are not included in this appropriation request nor is authority requested for transfer, since these transfers are made

under the general authority of the Social Security Act. The administrative expenses related to this program are included under the "Salaries and expenses" appropriation and will be discussed at the end of this statement.

Section 3-Innovation grants. We are requesting $3 million for these grants for 1967, the same as this year. It is our plan that these grants to the States will be used largely for starting programs or expanding vocational rehabilitation services to those with catastrophic or very severe disabilities for the heart disease, stroke, and cancer victims, for paraplegics, and for the severely mentally retarded, among others.

Expansion of vocational rehabilitation services.-A total of $9,560,000 is included in the request for carrying out section 4(a) (2) of the amended act. This is an increase of $4,560,000 over 1966.

This authority includes two programs. The first is the program of grants to States to develop statewide plans which will identify the size and scope of the rehabilitation needs, and to begin to develop programs in the States so that by 1975 the necessary physical and manpower resources can be developed to meet the vocational rehabilitation needs of all of the disabled in that State.

The 1967 request includes an estimated $3,250,000 for these planning grants. This is an increase of $1,250,000 over this year. The appropriation for 1967 would complete the funding of this activity. Even though the total amount for this program is relatively small, I think it is one of the most important segments of the whole new look in rehabilitation that is demanded by the 1965 amendments. If adequate planning is done by the States we will have the basis for a blueprint of what is required over the next decade.

For the second of these programs-grants to expand vocational rehabilitation services the request is for $6,310,000 as compared with $3 million available in 1966. Under this part of the program, grants will be made to public and other nonprofit agencies to expand vocational rehabilitation programs with the primary objective of increasing the number of persons who are rehabilitated. Vocational Rehabilitation Administration's experience with similar expansion grants immediately after the 1954 amendments indicate that there is a tremendous potential in this type of program with well-directed projects.

Workshop and rehabilitation facilities.-Some of the major changes in the vocational rehabilitation program made by the 1965 amendments relate to increasing the quantity and the quality of the services available through these rehabilitation facilities and workshops which are basic essentials of the vocational rehabilitation program.

Construction of workshops and facilities.-The 1967 budget request of $42 million for the construction of workshops and rehabilitation facilities and for providing part of the cost of the initial staff in such facilities is an increase of $3 million over the $1.5 million available this year. This year's funds are largely for the State VR agencies for State planning in facilities and workshop construction to identify the gaps which must be filled in terms of physical plant. In fiscal year 1967 when the actual construction program will be started, we expect to be able to support the construction of about 25 facilities and workshops.

Improvement of workshops.-The 1965 amendments authorized $14 million for fiscal year 1967 for two new programs to improve the ability of workshops in this country to serve the needs of the disabled. One is a program of "workshop improvement grants," the second is related to "grants for training services." The budget retquest includes $6 million for the two programs.

There are about 800 functioning workshops in the country, many of the very small and inadequately equipped; many of them operating inefficiently of ineffectively. The VRA objective is to provide the means for these workshops to raise their standards and to improve their services. Two-thirds of the request ($4 million of the $6 million) is for a program of workshop improvement which goes to pay part of the cost of improving the professional and technical services, and the administrative aspects of the workshop operations. We expect to make about 160 grants averaging about $25,000 each in fiscal year 1967. Criteria for an adequate workshop operation will be issued by the VRA on the recommendations of an outside of experts-the National Policy and Performance Council-authorized in the new amendments.

The other type of grants to be made to workshops next year is the training service grant. The request includes $2 million for this program which starts in fiscal year 1967. The grants provide for the payment of training allowances to the trainees in workshops and rehabilitation facilities and also provide funds for related training costs (training fees, and tools and equipment needed by the traines to engage in the training). These grants are expected to go to about 35 workshops.

The grants to the workshops, the work of the Performance Council in helping to develop standards, and the expert technical consultation are all designed to raise the level of performance in this very vital segment of the rehabilitation entourage. The whole workshop field has been too long neglected and too inadequately supported. We have a long way to go to make up the deficiencies, and a long way to go to bring the workshops to a level where they could be-and where they should be if we are going to take our next step forward in rehabilitating the more severely disabled.

Research and training

A total of $60,325,000 is requested for fiscal year 1967, an increase of $7,180,000 over last year. This appropriation is used to fund research and demonstrations, training program, special research and training centers, and domestic support of the international research program.

Research and demonstration.-This program for next year is estimated at $21,850,000 and will pay part of the cost of an estimated 449 research and demonstration projects. The fiscal year 1967 estimate maintains the program level at about that of 1966. The bulk of the funds will go to provide continuation costs of the projects started in prior years; the number of new projects that will be started will be somewhat less than the total started this year. In the main, our concentration in fiscal year 1967 will be on the development of projects to improve our techniques in rehabilitation of the more severely disabled, including the heart disease, cancer and stroke cases, and on projects to explore new ways of improving workshop and rehabilitation facilities operations. This latter emphasis stems, of course, from our new responsibilities in developing adequate facilities to serve the disabled.

About one-fifth of our total projects next year will be for the mentally retarded. These, as you know, have been among our most successful ventures. Our success in this area gives us hope that we can repeat this success in the heart disease, cancer, and stroke area where so much still remains to be done. Training. Our request for research and training include $29,800,000 for the training program, an increase of $5 million over this year. The 1965 amendments to the VR Act stepped up the pace of growth of the rehabilitation service program by at least 3 to 5 years.

This puts a tremendous strain on the rehabilitation manpower-physicians, the counselors, the physical therapists, occupational therapists, speech and hearing specialists, the trained manpower working with the mentally retarded, the Ideaf, the blind, and those working with heart disease, cancer, and stroke patients, and with the other disability groups where specialized knowledge is required.

Our most pressing immediate demands in 1967 fall in two areas-training rehabilitation counselors and training more personnel for rehabilitation workshops and work adjustment centers. State agencies must increase their staffs by over 2,000 counselors next year. For this reason we are planning to expand a number of counselor training programs so that the enrollment will increase to about 1,900 and so that we will get about 950 graduates. This will still be less than one-half of the expansion that the States are planning. In the area of workshop administration there are several major types of personnel for whom additional training programs must be developed. These are the administrative personnel who supervise the production aspects of the workshops, and the staff who are involved in evaluating work capabilities of the disabled. We are planning to start 16 projects for training such personnel next year and to have about 180 people begin their training.

Although these will be the points of major concentration next year, the emphasis on efforts to expand and improve the training of other personnel in rehabilitation will continue.

Research and training centers.-The 1967 request for the rehabilitation research and training center program is $8,575,000, an increase of $1 million over 1966.

The fiscal year 1967 program provides for continuation of 17 centers approved for this year, 10 medical, 3 vocationally oriented, 3 for the mentally retarded, and 1 center for the deaf.

Although this program has been in operation for less than 5 years it has amply rewarded the hopes of those who believe that by marshaling the talents