art-Past and proposed programs

This chart shows the administration's proposed program against the backdrop fed and in relation to accomplishments in the past.

At present about 60,000 disabled persons are being rehabilitated annually. administration's goal calls for 200,000 disabled persons to be rehabilitated Lally by 1959.

art J-Erpanded rehabilitation program

Cart J shows that projected accomplishments, both of the present program the expanded program, for the fiscal years 1955-59.

fiscal 1955, although a substantial tooling up to establish the necessary addifacilities and personnel would be required, the rehabilitation of 10,000 e persons than are now being rehabilitated annually would be achieved. La biscal 1956, the second year, 40,000 more disabled persons would be rehabiliated. Together with the 60,000 from the basic program, this would, for the first e. achieve the goal of 100,000 rehabilitations in a single year.

In the fifth year, fiscal 1959, the expanded program would achieve the rehabilitation of 200,000 disabled persons.

Over the next 5 years, then, it is estimated that an additional 360,000 disabled Persons could be rehabilitated. Together with the 300,000 from the basic proTam, this would total 660,000 disabled persons established in productive work Caning that period.

tart K-Expanded rehabilitation program, estimated cost, 1955-59

Chart K shows the projected estimate of the cost of continuing the existing ygram and of providing for the proposed expansion.

For the first year of the expanded program (fiscal 1955) total Federal grants States and State matching funds are estimated at $42 million.

During the next 4 years, total program costs would continue to increase, reaching $120 million in 1959.

Chart L-Cost of 5-year proposed expansion

Chart Lillustrates the computation of the estimated cost of the expanded

[gram alone.

The bar at the left shows the estimated 360,000 more disabled persons to be rehabilitated. If special efforts are made to reach persons receiving public assistance, it is estimated that about 107,000, or 30 percent, of these persons to be rehabilitated would be taken from the public-assistance rolls.

On the basis of past experience, it is estimated that the total cost of the panded program will average about $580 per rehabilitant. Multiplying this by the estimated 360,000 disabled persons, the total program cost, both Federal and State, for the proposed expansion would be about $209 million.

Chart M-Erpanded rehabilitation program; costs and savings expected

It is self-evident that rehabilitation pays social dividends in restoring independence and confidence to a disabled person. But the dollars-and-cents returns to the Federal and State governments are striking.

The first bar on the left side shows the estimated total Federal-State cost8 million-for the expanded part of the program of rehabilitating 360,000 more disabled persons during the 5-year period.

The right side of the chart shows two areas of possible savings. It is estimated that the 360,000 disabled persons who would be rehabilitated under the expanded program could be expected to pay Federal income taxes totaling $280 illion during a 5-year work period after their rehabilitation-thereby more than repaying the program cost.

It is estimated that 107,000 of the disabled persons rehabilitated through the proposed expansion could be removed from public-assistance rolls. If they renmined on public assistance, they would require public aid for an average of 9 years at a total cost (Federal-State-local) of $722 million. About 58 percent of this cost would be borne by the States and local communities and 42 percent by the Federal Government.

Thus, increased income-tax revenues and the reduction in public-assistance payments would substantially exceed the cost of the proposed program.

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.

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 three-part 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 allotmetn 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 financing. Under these transition provisions the average Federal share of total expenditures would be 60 percent in 1955, 55 percent in 1956, and approximately 50 percent in 1957. Furthermore, the bill would limit to 10 percent the decrease in any one year of a State's total rehabilitation allotments which may result specifically from

the change in the allotment formula.

(2) Extension and Improvement Grants.-The second part of the proposed grant structure would be the extension and improvement grants to assist the States in meeting the costs of adding to and improving their vocational re

habilitation services.

Allotments would be made on the basis of State population, with provision for a minimum State allotment of $5,000. As described yesterday, the Federal share would be 75 percent for the first 2 years of a new activity, 50 percent for the next 2 years and 25 percent for the last 2 years of the 6-year limitation for any one activity or project.

(3) Special Project Grants.--The third part of the proposed new grant structure is special project grants, to assist States, localities and nonprofit organizations and agencies in meeting special rehabilitation needs and problems. These could include, for example, the conduct of demonstrations or research. Because of the nature of these project grants, there is no fixed allotment or matching formula prescribed in the bill with respect to them. Instead, application for such project grants would be submitted to the Secretary of Health, Education, and Welfare, with grant awards being made on the basis of the com. parative importance and immediacy of the various projects.

For 1955 and 1956 the bill also provides authority under these special project grants for initiating the nationwide expansion of the vocational rehabilitation program proposed by the administration.

Mr. Rockefeller will now present some additional charts which reflect the application of the new three-part grant system to the proposed expanded rehabilitation program.

Chart O-HEW proposes-3 types of grants

S. 2759 would adopt the uniform grant structure proposed for 14 of the present grant-in-aid programs administered by the Department of Health, Education, and Welfare. It would authorize three types of grants:

1. Support grants, to be allotted on the basis of financial need to the States. 2. Extension and improvement grants, to be allotted on the basis of population of the States.

3. Special projects, to be granted on the basis of special problems and opportunities as they arise.

Chart P-New allotment formula

This chart summarizes the Department's proposed new grant structure for 14 grant-in-aid programs. In the left-hand vertical bar are all three of the proposed types of grants-support, extension and improvement, and special projects. At the right are the formulas for the first two types-the hospital survey and construction formula for the support grants and the population and special matching formula for the extension and improvement grants.

The horizontal bar at the bottom represents the special project grants to be paid on the basis of approved projects.

Congress would decide each year how much of the total appropriation would be available for each of the three types of grant-in-aid.

Chart Q-Expanded rehabilitation program; estimated cost, 1955-59 (same as Chart K)

The chart shows the dollar cost to which the new grant structure would be applied. The proposed three-part grant structure would be sufficiently flexible to meet the needs of the expanded program.

Chart R-Expanded rehabilitation program; Federal and State shares, 1955–59 This chart shows the distribution of projected total program costs between the States and Federal Government.

A. Present Program.-The left side of the chart reflects the application of the Department's proposed support grant formula to the present program. The method recommended is the Hill-Burton formula. There would be a minimum allotment to each State of $50,000. Provision is made for a transition period during which the States will have opportunity to make the necessary adjustments and no State would receive a reduction in its allotment greater than 10 percent of that which it received for the previous year. It is expected that the Federal national percentage average will decrease to 60 percent for 1955; 55 percent for 1956; and 50 percent for 1957 and thereafter.

B. Expanded Program.-On the right side of the chart we see the FederalState percentage for the expanded program. Here, too, we find a gradual reduction in the Federal share. The proposal calls for use of special project grants in 1955 to increase the number of rehabilitated disabled persons by 10,000. In 1956, a start would be made toward use of the extension and improvement grants. As a result the Federal share of the expanded program would drop to 90 percent in 1956.

The emphasis in the fiscal year 1957, 1958, and 1959, would be on the use of the extension and improvement grants for continued program expansion. The Federal share would, therefore, decrease in the fiscal year 1957-59 in accordance with the matching requirements for extension and improvement grants contained in S. 2759.