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disabled and then put back to work can only do certain restricted or limited types of work.

The next chart, still dealing with the 1952 program, shows the effect of rehabilitation on earning ability. Before rehabilitation this is the division of the 64,000 people. Only 24 percent of them were employed, and many of them had very unstable or unsafe employment and were very limited in the type of work they could do. The remaining 76 percent were unemployed, and 20 percent of the total were on public assistance.

It is interesting to note that the annual maintenance cost of that 20 percent was $8 million, whereas the cost of rehabilitating those people was only $6 million, or less than 1 year's maintenance on public assistance.

After the rehabilitation program, all of these people were gainfully employed.

Then you move on over to the next part of this chart, which shows the annual wages of the group before rehabilitation. Their total earnings were $17 million. After rehabilitation, on the basis of the jobs which they received and the annual wages that were being paid, they had a total earning of $115 million.

Of course, this chart only shows the financial gain and not the moral and spiritual values which are so significant in this program. Taking the next chart, you have here the Federal-State expenditures for vocational rehabilitation. Up to 1943, that is, from 1920 when the law was passed, to 1943, the expenditures were on a 50-50 basis, Federal-State, and never reached a higher figure than the $6 million for the entire country. The law was changed in that year and the program started to climb very rapidly, reaching a total expenditure by 1949 of $26 million, and climbing up to a total of $37 million in 1954.

The next section of the chart shows the percentage of Federal-State expenditures which went to make up these totals.

As I pointed out, it was on a 50-50 basis up to 1943. Then it climbed rapidly, reaching a peak in 1947, and then the Federal share has slowly declined, coming down to a point where the States are paying as high as 38 percent at the present time. The Federal Government is paying the remainder.

The basis since 1943 has been that the Federal Government matched 50-50 the actual cost of the handling of the people, and the Federal Government paid all of the expense for personnel in the States and administration. That is up to this point here.

Now, let us see what the results of this program were in terms of the number of people rehabilitated and the unmet needs, going from 1920 to 1953.

As I mentioned in connection with the first chart, the approximate number of people at the present time who could be rehabilitated and who are not cared for by private groups amounts to 250,000 a year in new cases. This shows the growth of the Federal-State program. It was very small at first and then gradually, in the early 1940's, picking up with the change in the law, until you reach this figure here of approximately 64,000 people. There has been a slight decline since. 1952 down to 60,000. That is caused by three things.

(1) Inflation and the increased cost due to inflation;

(2) The additional time and expense involved in serving the more difficult cases; and

(3) The more expensive treatments and other services that have been developed in medicine and other professions, particularly in the area of the correction of physical disabilities.

That accounts for this drop in number here. That leaves us then with an unmet need of approximately 190,000 people who are coming into the backlog annually and have now accumulated to a total of 2 million who could be rehabilitated for gainful employment.

Senator PURTELL. I am sure you cannot put it on there because you cannot get accurate figures, but in regard to the effect of rehabilitation on earning ability, there might be another figure shown that would indicate the amount recoverable from those earnings of about $115 million.

Secretary HOBBY. Later there is a chart on that point, which I think you will find of great interest, Senator.

Senator PURTELL. Yes.

Secretary HOBBY. From this brief background, I think you can understand the tremendous importance of the rehabilitation program, both to disabled individuals and to the Nation as a whole.

The charts have also illustrated the static condition of the program today, in terms of numbers, of persons rehabilitated annually. Our total effort is exceedingly inadequate. A vast backlog of physically handicapped persons exists, and yet every day newly disabled individuals are becoming dependent upon their families and the public. As a Nation, Mr. Chairman, we have shown great shortsightedness in not devoting more attention to the potentialities of the rehabilitation As the President stated in his special health message of January 18:

There are no statistics to portray the full depth and meaning in human terms of the rehabilitation program, but clearly it is a program that builds a better America.

It was for these reasons that the President, in his health message, recommended a progressive expansion of our rehabilitation program over a 5-year period. He suggested that we establish goals to increase the number of rehabilitants far above the present 60,000 per year. As 1955 goal he recommended 70,000 rehabilitants; for 1956, 100,000; and progressively upward until we reach by 1959 the goal of 200,000 rehabilitated persons in the course of the year. This schedule progression takes into consideration the time required to expand facilities and to increase the supply of trained personnel. It also gives the States an opportunity to plan for their part of the additional financial support needed.

If the program were to be merely continued at its present level during the next 5 years, we could anticipate rehabilitating in that period about 300,000 persons. The expanded program would rehabilifate an additional 360,000 persons at an estimated additional cost of $209 million. As you will see, however, this additional cost to the States and Federal Government would be offset several times by the resulting savings in public-assistance costs and the revenues from income taxes of the persons restored to jobs.

The bill before you is designed to provide the legislative framework for the dynamic expansion of the program which the administration

has recommended. Before we proceed with the actual legislative changes in the bill, however, I would like to ask Mr. Rockefeller to illustrate, with the charts, the goals, and the costs of the proposed expansion.

Mr. ROCKEFELLER. Mrs. Secretary, Mr. Chairman, and gentlemen, this chart, you will remember, was discussed there. That is showing the growth of the number of people rehabilitated under the present program up to 1954, keeping in mind that 250,000 are being disabled annually who can be rehabilitated, of which 60,000 are taken care of by the Federal-State program.

Now, the proposed program which the Secretary has just mentioned is illustrated here in blue-the effect of that program if it were added to the existing program, that is. A very rapid rise in the number of people to be rehabilitated annually, reaching a peak of 200,000 a year by 1959, is shown there. That is adding the new program on to the existing program of 60,000.

The Secretary mentioned in the early part of her text the increased evidence of safety programs and the research work in the various diseases which it is hoped will also have the effect of cutting down the number who are disabled. In other words, the preventive aspect, as well as the corrective aspect.

Taking this program and translating it into numbers each year for the ensuing 5 years, as recommended under the bill, you have this chart here. Under the expanded rehabilitation program, during the first years, if the bill were enacted, there would be an addition of 10,000 people. The reason why the program starts out slowly is because of the lack of facilities and trained personnel. Therefore, to step up the number of people who can be taken care of, there is a major capital expense which was referred to in the hospital survey and extension bill, which was before you recently, and then a training program.

So the first year there will be 10,000 added. The next year there will be 40,000. The next year there will be 70,000. Then the next year 100,000 and the last year 140,000, giving you a total by the fifth year of 200,00 people to be rehabilitated.

In terms of money, what have we? Here is the expanded rehabilitation program's estimated cost from 1955 to 1959. Again using the present program as a base and building on it, the first year your total cost would be $42 million, $61 million the following year, $81 million total the following year, $98 million and then $120 million. That is to cover the total cost of the expanded program and the present program. Now, going from the annual cost

The CHAIRMAN. Is that the annual expenditure there?

Mr. ROCKEFELLER. This bill only takes us to this 5-year rapid expansion. I would presume at that point the situation would have to be reviewed to see whether due to the research and preventive measures, this number could be reduced, so that you did not have 250,000. At that time, the future could be foreseen. The 5-year proposed expansion (we are now just dealing with the part in blue here, which is the additional number) would mean a total of 360,000 additional people rehabilitated during those 5 years, in addition to the 300,000 approximately which would be rehabilitated by the basic program.

I might point out, Mr. Chairman, that 30 percent of these 360.000 people could be expected to come off the public-assistance rolls. The

average cost, it is figured, is about $580 per person, thus making a total cost for rehabilitating the 360,000 people of $209 million.

Bringing this down to the question which the chairman raised a moment ago, here is your Federal-State share of that $209 million for the new program cost and the total of $209 million. Offsetting that, you have over here, based on past experience, the estimated earnings of these people in a 5-year period-and that is conservative. But just taking 5 years of work after rehabilitation, based on past experience, they would pay a total Federal income tax during that period of $280 million-in other words, more than the total Federal-State cost of rehabilitating the entire group.

But that is not the only plus financially. You have an even more significant plus in terms of the possible savings in public assistance, because during this period we can anticipate that if these people were not rehabilitated, they would spend, or a group of them would spend, an average of 9 years, on relief. The total cost of that relief would be $722 million. This is the local share and this is the Federal share. So you would have, in addition to the taxes paid in, a total of $722 million saved in public assistance to the States and the Federal Government.

Thus for a total expenditure of $209 million you have an income of more than that amount and you have savings of approximately three times that. Of course, this is only in terms of dollars and not in terms of human and spiritual values.

Senator LEHMAN. May I ask a question?

Senator PURTELL. Yes.

Senator LEHMAN. This is of great interest. It would seem to me that the rehabilitation program, aside from the humanitarian aspects, would be a very profitable thing for the Federal Government. You show there that the program cost from 1955 to 1959 would be $209 million in the aggregate, but that the Federal Government alone would not only recoup its expenditures, but would save a very large additional sum. In other words, they would gain through income-tax payments $208 million.

If that is the case-and I have no doubt it is, and I feel very strongly at this time in favor of the program-why should not the Federal Government appropriate all of the money that could be used effectively, with the only limitation in regard to the number being that of having efficient and experienced and trained personnel?

But you are not proposing to do that under this bill, it seems to me. Secretary HOBBY. Senator Lehman, you make a very good point. The reason for the increase in 1955 is because there are not enough trained personnel in the United States to do this. Neither have we rehabilitation centers, either partial or comprehensive, to take care of that load.

I think my memory serves me correctly when I say that out of that 360,000 about 20 percent of those people will be people who have to be rehabilitated in the comprehensive rehabilitation facility. I think you may remember that chart, as well as the geographic chart, in which we showed the sparsity and uneven distribution of comprehensive rehabilitation centers in the United States.

We have taken this on a stepped-up 5-plan because the people in vocational rehabilitation believe this is as fast as we can expand trained personnel and rehabilitation facilities.

I thank you for giving me the opportunity to tell you what went into our thinking.

Senator LEHMAN. May I ask you one more question? I was here when Dr. Rusk testified to the small number of available personnel. But I pointed out at the time that it did not seem that this bill did very much in the way of helping to train additional personnel on any large scale and that seems to be the bottleneck.

Secretary HOBBY. We do have later in the bill, Senator, a training provision and an amount set aside for the training of personnel.

Mr. ROCKEFELLER. I think that is also as rapid an advance in the number of people to be trained as they felt was possible. In other words, the whole program of the Secretary which she is recommending here was based on how fast could you pick up this load. That is exactly the basis on which this was designed.

Senator PURTELL. 2759 provides to some extent for that training? Mr. ROCKEFELLER. Yes, sir. It does.

Senator PURTELL. Are there any other questions? Senator Smith? The CHAIRMAN. Not at the moment.

Senator PURTELL. Senator Cooper.

Senator COOPER. No questions.

Senator PURTELL. Senator Lehman, have you any other questions? Senator LEHMAN. Not at the moment. I think the Secretary is continguing to testify, is she not?

Senator PURTELL. Yes. I thought Mr. Rockefeller was through for the moment.

You may continue.

Secretary HOBBY. The present Vocational Rehabilitation Act does not provide adequate legislative authority to attain the objectives and goals which we have outlined. The bill would, therefore, substitute a new act for the existing vocational rehabilitation law, to be effective July 1, 1954.

All of you gentlemen are familiar with this, but it applies to this

bill too.

I. NEW THREE-PART GRANT STRUCTURE

The major change the bill would bring about is to revamp completely the "open-end" financing provisions of the present law, which have made administration both difficult and uncertain. The bill would achieve this revision by adopting for this program the same new threepart grant structure which was described at length at yesterday's hearings relating to S. 2778, the Public Health grant-in-aid bill.

You will recall that the three types of grants proposed are: Support grants; Extension and improvement grants; and Special-project grants.

I shall review briefly the major aspects of this three-part grant

structure.

(1) Support Grants. The support grants would be to assist the States in meeting the costs of their basic vocational rehabilitation services. The allotment and matching formula of the Hospital Survey and Construction Act would be used, with provision for a minimum State allotment of $50,000.

The bill contains transition provisions designed to avoid serious dislocations in the States while they adjust to the new system of financ

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