funds earns $279,000 of Federal funds. Under S. 2759, $288,000 of State money will be required to earn $167,000 Federal money, which is the State's maximum allotment under S. 2759, with the same appropriation. Now, if you will note Mississippi, which is at the bottom of the income list, right at the bottom of the first page, you notice that now $231,000 of State funds earns $388,000 Federal. Under S. 2759, $333,000 State would earn $664,000 Federal. Now, Wisconsin may be a better illustration than any of these because it is almost exactly the median State on a per capita income basis. In that State $280,000 now earns $550,000, while under S. 2759, $471,000 would be required to earn $469,000. There is one other State I would like to refer to, and that is Georgia, for another reason: Georgia is one of the low-income States which has developed its program to a very high level under present legislation. At the present time $900,000 of State money earns $1,500,000 of Federal money. Under this act $450,000 of State money would earn $844,000 of Federal. In other words, that is an illustration of a poor State which has developed its rehabilitation program to a high degree and which will have its Federal allotment cut practically half in two, under this particular proposal. By the way, in Florida the same situation exists to a somewhat lesser extent. I think, Mr. Chairman, that from this perusal of the table you can understand our concern that in many of the States difficulties would be presented. For instance, we find that there are 23 of the States which will have allotments less than their 1954 grants, and that there are 20 States whose matching ratios will be reduced to below 50 percent, although they average about 65 percent at this time. Again, we state that we are very much concerned that the purposes of the bill could be defeated if States getting their Federal funds for basic support reduced are expected to, at the same time, take advantage of Federal funds for improvement and extension. From a practical standpoint, we just don't think it can be done. By the way, I want to say a word or two here about the transition period. That should be made clear. There is a transition period provided to help the States to get to this level which has been described. Now, allotmentwise, for the rehabilitation services fund it would be provided that if a State's allotment for its rehabilitation service fund plus its allotment for its extension and improvementif those added together are less than 90 percent of its Federal grant for the year before, then the bill guarantees that its allotment will not be less than the 90 percent; but there is a point there that is very important. It makes a great deal of difference to combine the two allotments. It is possible for a State to get a 30-percent cut, for instance, in its rehabilitation service fund, and just because it gets an allotment for extension and improvement that moves the total up to 90 percent of the preceding year's grant, and the State can't use the improvement and extension funds, because it is getting cut at the other end, then it could get a full 30-percent cut, you see, in the rehabilitation services fund. We would strongly suggest that in whatever is worked out finally here, this transition period for allot ments be held to the rehabilitation services fund and not include the amount that is allotted for extension and improvement, which we do not know whether the State is going to be able to use or not until we have experience in this field. Now, with respect to matching, it is provided that a 2-year period is given to get the State from its present Federal percentage down to its S. 2759 percentage, whatever it may be, or to get it up, if there are any that would come up, and there are a few States who would have higher percentages. The State has to absorb 10 percent of the difference the first year, and 55 percent of the difference the second year, and the remainder of it in the third year in which it goes in full effect. We would not call your attention to these things, these weaknesses, we feel, in the method of financing the rehabilitation services fund if we were not in position to offer some alternatives which we think the committee might want to consider. We feel that if we were really wanting to expand rehabilitation services-and I am sure that is what every one of us is trying to do as a result of these hearings-that there are 2 or 3 principles that ought to prevail. The first principle should be that we should maintain what we have. By the way, present programs have been built up very laboriously and expensively, expensive particularly with relation to the training of staff, so these programs should be maintained; and, second, whatever method is devised for financing the program in the years ahead should encourage expansion in all of the States to the degree that is possible that Congress encourage the States; and, third, that if there is to be a transition from one method of financing to another, that there be a transition period long enough and with the gradations made gently enough that it will not upset the existing programs. Now, there are two alternative methods of financing, both of which we think are based upon these principles that we would like to discuss with you briefly. The first of them is found in S. 3039 which was introduced by Senator Potter at our request. By the way, this bill was worked out by a committee of State directors of rehabilitation with the help of the staff of the Office of Vocational Rehabilitation, although I want to say here that so far as I know, the Office of Vocational Rehabilitation never has officially endorsed the plan. This would provide that the grant for rehabilitation services be in 2 parts: First, a grant equal to 100 percent of the administration guidance and placement expendi tures in the base year 1954, and 50 percent of the case service expenditures in that same year, that is a continuation of the law that existed at that time; and then second, that additional Federal funds for the rehabilitation services fund appropriated by Congress would be allotted to the States on a population basis and earned 1 Federal dollar and 1 State dollar. This would have the effect that if the rehabilitation program becomes a $120-million program, which is visualized in the President's general plan, the Federal share at that time would be 54 percent. It would be 52 under the President's proposals. So you see the place we are both aiming at is approximately the same. We are just suggesting another method of getting there that will assure that no State has its funds cut below the present level as the program moves on rapidly ahead, as we believe it will. Now, a second alternative is one that would be based upon the method of financing public assistance which, by the way, is found in H. R. 7200. I don't believe there is a Senate counterpart to that bill yet. I may be mistaken. H. R. 7200 is the administration's amendments to the public assistance provisions of the Social Security Act. Now, in this bill, as it relates to the two categories for the disabled, that is, the aid to the totally disabled and the aid to the needy blind, this bill also incorporates the principles of the variable grant as the other bills do, but it provides that there shall be a 65 percent pivot point Federal percentage and the floor Federal percentage would be 60 percent. There is no limitation otherwise at the present time to the Federal Congress' participation in public assistance nor is any contemplated in this new proposal, however, there is an overall limitation to the extent that the Federal Government will only participate up to the amount of the Federal percentage of 55 a month, multiplied by the number of people who are on the rolls. There is no dollar limitation, but there is that limitation of the amount on any one particular case. It is our feeling that in an effort to expand rehabilitation, if the financing principles found in this particular bill were transplanted into the rehabilitation bill, that we could accomplish the results more quickly and more positively than otherwise. I want to say here that I realize that there is some State money that goes into public assistance in addition to that $55 a month. Some of the richer States, of course, are providing pensions higher than that, but there are over 20 States whose public assistance grants are within the $55 per month. Really, the main difference in this proposal and S. 2759 is a difference in percentages, as you see, plus the fact that there is no dollar limitation upon the amount to be used. Now, his plan would have the advantage of substantially maintaining the programs. There may be some States still getting a cut, because some States are getting more than 60 percent Federal under the present rehabilitation act. But substantially speaking, the program would be maintained, and the encouragement would be there to move ahead under the same plan that the States are encouraged to move ahead in providing adequate public assistance grants to the total and permanently disabled and to the blind who need aid. We feel that this, too, would have the advantage of removing something that I think many people consider somewhat of a stigma, that Congress has shown a tendency to be more liberal in its method of financing public assistance to the disabled than it has been in financing rehabilitation of the disabled. Now, I know that has never been any Congressman's purpose, but the schemes in which we have been caught up have apparently resulted in it appearing that that is the situation, and I think this would correct that. By the way, we have had language prepared which would incorporate the public assistance financing provisions, of H. R. 7200 into the President's bill for rehabilitation, and in a few days I will present to the committee this proposed language. I do not have it ready to insert at this time. Senator PURTELL. We would like very much to have it, and that, too, will become a part of the record. (The statement by Mr. E. B. Whitten above referred to is as follows:) AMENDMENTS TO CONFORM THE GRANT PROVISIONS FOR VOCATIONAL REHABILITA TION SERVICES (OTHER THAN EXTENSION AND IMPROVEMENT PROJECTS AND SPECIAL PROJECTS) TO THE PROPOSED GRANT PROVISIONS FOR ASSISTANCE FOR THE PERMANENTLY AND TOTALLY DISABLED IN H. R. 7200. Page 2, line 12, strike out "the Congress may determine" and in lieu thereof insert "may be necessary". Page 3, delete lines 10 through 24, inclusive; page 4, delete lines 1 through 24, inclusive; page 5, delete lines 1 through 4, inclusive, and in lieu thereof insert the following: "Sec. 2. (a) (1) From the sums appropriated therefore, the Secretary of the Treasury shall pay to each State which has an approved plan for vocational rehabilitation services, for each quarter, beginning with the quarter commencing April 1, 1955, (A) an amount equal to the Federal percentage for such State (as determined under Section 10 (h) of the total amounts expended during such quarter for vocational rehabilitation services under the State plan, and (B) an amount equal to one-half of the total of the sums expended during such quarter as found necessary by the Secretary for the proper and efficient administration of the State plan. "(2) The Federal percentage for a State for any quarter in the period beginning April 1, 1955, and ending with the close of June 30, 1957, as determined under section 10 (h), shall be increased to the extent (if any) it is less than the percentage which (A) an amount equal to 88 per centum of the sum to which such State was entitled under this section with respect to expenditures under the State plan for vocational rehabilitation services and administration during the fiscal year ending June 30, 1954 (determined by the Secretary on the basis of the best information available to him as of October 1, 1954), is of (B) the total amount expended under such State plan as vocational rehabilitation serv ices and administration during the fiscal year ending June 30, 1954 (as so determined by the Secretary). Minus 12 per centum of the sum to which the State was entitled under this section with respect to such expenditures (as so determined by the Secretary)." Page 18, lines 18 and 23, and page 19, lines 1 and 2, and lines 3 and 5, strike out "allotment" and insert in lieu thereof "Federal". Page 18, line 19, after "less" insert "the State percentage, and the State percentage shall be". Page 18, line 20, strike out "50" and insert in lieu thereof "35." Page 19, line 1, strike out "per centum or" and strike out "331⁄2" and insert in lieu thereof "60". Page 18, line 23, strike out "more than 75". Page 19, line 2, strike out "50" and insert in lieu thereof "65." Page 19, line 4, strike out "75" and in lieu thereof insert "65." Page 19, line 9, after “States” insert, “excluding Alaska.” Page 19, line 19, strike out all matter and insert "to the Federal percentage for such State." Page 19, strike out all matter on lines 20, 21, and 22. Pages 20, 21, 22, and 23: Strike out all matter from page 20, line 6 through page 23, line 21, inclusive. Page 23, line 22, strike out "12" and insert in lieu thereof “11.” Senator HILL. Mr. Whitten, how many States exceed the $55 for old-age assistance? Mr. WHITTEN. Just about half of them, Senator. By the way, I might add, though, the total share of Federal money in public assistance cost in all, I think, runs down to about 57 percent, when that extra money is counted in. That still is a much higher ratio than is suggested in the rehabilitation bill, and it is also true that most of that extra money going into public assistance is going in in a very few States; for instance, California, New York, and a few other wealthy States. Most of the States are getting a very high percentage of their public assistance expenditures from Federal funds. I referred to this restrictive language a while ago and what it would do in arbitrarily cutting down the appropriation if it is not taken out of the appropriation act or otherwise repealed. As you know, the new fiscal year is soon going to be here. The States are exceedingly worried about this appropriation language even though the President's bill, if it is passed, will have the effect of removing it, since it institutes an entirely new bill, and, therefore, there would have to be a new appropriation act based upon it. The States see the possibility that July 1 may come, this bill may not be through the legislative process, and they could be caught in a very embarrassing situation. In other words, it is very difficult to do any planning for rehabilitation next year, for which reason we would like to urge you to, just as quickly as possible, report a simple bill which would repeal the restrictive language in the Appropriation Act and get that out of the way, even though it might be a few weeks before your reporting of the rehabilitation bill itself should follow. Senator HILL. May I ask a question? Senator PURTELL, Senator Hill. Senator HILL. When did this restrictive language get into the bill? Mr. WHITTEN. Senator Hill, it got into the bill in conference somewhere. Senator HILL. How long ago; do you remember? Mr. WHITTEN. Just last year. Senator HILL. That is what I was thinking. I am a member of the Appropriations Committee of the Senate, and I know it didn't go in in the committee. It didn't go in on the floor, did it? It was put in in conference. I am not on that conference, but I— Mr. WHITTEN. That is right. This language was in neither the House nor the Senate versions, but was inserted in conference. When the conference committee report came out, it had this item marked "no agreement," and there never was any conference report showing why it was done or anything about it. Senator HILL. Under the rules of the House the conferees have to make a report to the House. That report has to be not only made, but it has to be printed in the Congressional Record. In fact, it has to be printed in the Congressional Record before it is in order to take up that conference report. In the report of the House conferees they didn't seek in any way to explain that particular language or tell why it was put in there or the reasons for it or anything of that kind. Mr. WHITTEN. It was read without comment and adopted, of course, without objection. Senator HILL. The report, but I say, did the report itself as printed in the Congressional Record, as required by the rules of the Houseit didn't state why that language was put in there? Mr. WHITTEN. No, sir. Senator HILL. Any reason for it? Mr. WHITTEN. No, sir. Senator HILL. I see. Mr. WHITTEN. So that is the reason we are suggesting that the thing is serious enough that it should be repealed in the next 2 or 3 weeks, so States can plan their programs much more effectively for the next |