Estimates of Aliens Who End Up As Public Charges

Based on a sample study of 2,600 cases of new recipients of SSI benefits from January 1975-June 1976, approximately 4.7% were aliens.

D. SUMMARY OF AMENDMENTS FROM SSI BILL (H.R. 8911) PASSED BY THE HOUSE IN 1976 BUT NOT ACTED ON BY THE SENATE-INTRODUCED AS SSI AMENDMENTS OF 1977: H.R. 6124

Section 2-1 Attribution of Parents Income and Resources to Children

Makes uniform the SSI eligibility for blind or disabled individuals aged 18-21, regardless of student status.

Section 3-Outreach Program

Requires the Department of Health, Education and Welfare to conduct an outreach program for individuals potentially eligible for SSI. HEW is to report on the program's success in six months.

Section 4 Modification to Requirements for Third Party Payee

Allows for direct payments of SSI benefits to drug addicts or alcoholics upon certification of a medical officer that such a payment procedure has significant therapeutic value for the individual with little risk of misuse.

Section 5- Continuation of Benefits for Individuals Hospitalized Outside the U.S. in Certain Cases

Provides that SSI recipients not lose eligibility when absent from the U.S. in order to obtain inpatient hospital services.

Section 6-1 Exclusion of Certain Gifts and Inheritances from Income

Permits the Secretary of the Department of Health, Education and Welfare to issue regulations which provide that nonliquid gifts and inheritances can be considered resources rather than income in determining eligibility. Section 7-1Increased Payments for Presumptively Eligible Individuals

Merges the $100 emergency payments and the presumptive eligibility authorization to provide an individual with the upper limit of the benefit.

Section 8-Emergency Replacement of Benefit Payments

Provides for emergency replacement of lost, stolen or undelivered checks through Federal reimbursement to the state agency which issues the emergency check.

Section 9-1 Termination of Mandatory Minimum State Supplementation in Certain Cases

Eliminates the mandatory minimum supplementation of SSI benefits for recipients who received assistance under Federal-state programs in December 1973, where it is no longer beneficial to the recipient.

Section 10-1 Monthly Computation for Determination of SSI Benefits

Provides that benefits be determined using monthly computation instead of quarterly method.

Section 11- Eligibility of Individuals in Certain Medical Institutions

Provides that an institutionalized individual would continue to receive his full SSI benefits for a period of at least three months before such benefit is reduced due to Medicaid benefits. After the third month, the SSI grant would be reduced to $25, which is currently the case after one month.

Section 12-Exclusion of Income of Certain Assistance Based on Need

Eliminates any deduction from SSI resulting from assistance provided an individual based on need furnished by a private charitable entity.

1 Amendments which have been cited by the Social Security Administration to improve the administrative efficiency of the SSI program.

Section 13-Exclusion of Certain Assistance Payments from Income

The Housing Amendments of 1976 provide that subsidies under the Act shall not be counted as income for determining the amount of SSI benefits effective October 1, 1976. This amendment would cancel any overpayments attributable under such subsidies prior to October 1, 1976.

E. ELIGIBILITY OF SSI RECIPIENTS FOR FOOD STAMPS

President Carter's budget does not mention a provision of law which expires on June 30 which will result in changes in the conditions related to the eligibility of SSI recipients for food stamps. In 1976 when this issue was dealt with on an emergency basis it was anticipated that a major food stamp reform bill would be enacted in 1976, thus permanently resolving this issue.

If there is no further action by the Congress, effective July 1, each SSI recipient would have his food stamp benefit calculated by a very complex procedue which is generally seen as being administratively unworkable or at the least very expensive to administer. The individual eligibility determination would have to be made on the basis of whether current income is larger or smaller than that received or would have been received in December 1973.

This issue is also mentioned in the House Agriculture Committee's March 15th Report to the Budget Committee. If the House Agriculture Committee does not act on this matter, the Ways and Means Committee will need to act to decide whether or not to continue the current requirements related to eligibility of SSI recipients for food stamps.

AID TO FAMILIES WITH DEPENDENT CHILDREN (AFDC) ISSUES

A. WAYS AND MEANS MARCH 15 BUDGET REPORT RECOMMENDATIONS

The Committee on Ways and Means included in their March 15 Report to the House Committee, the following items related to the Aid to Families with Dependent Children (AFDC) program:

1. The Committee included the President's recommendation to reduce AFDC expenditures by standardizing the work related expenses disregard provisions. 2. The Committee recommended elimination of the current statutory ceiling on Federal funding for the AFDC program in Puerto Rico, Guam and the Virgin Islands.

B. ADMINISTRATION'S RECOMMENDATION TO STANDARDIZE THE AFDC WORK-RELATED EXPENSES INCOME DISREGARDS

The President's budget for fiscal year 1978 contained a $50 million reduction in Federal expenditures for the Aid to Families with Dependent Children (AFDC) program by standardizing the disregard for work-related expenses. The Committee has not yet received the details of the Administration's proposal. This $50 million reduction in AFDC expenditures proposed by the President was included in the Ways and Means March 15th report to the Budget Committee. In making this recommendation the Committee recognized that the Subcommittee on Public Assistance considered proposals to standardize the AFDC work expense disregard during the 94th Congress but was unable to reach agreement.

Currently, applicants for and recipients of AFDC are allowed to deduct those expenses which are reasonably attributable to employment from their earnings when determining eligibility for and the amount of their AFDC grant. Under present law, $30 is also subtracted (in the case of those applicants found eligible) from gross monthly earnings plus one-third of additional earnings. Each state defines what it considers to be legitimate work-related expenses. Consequently, the type and amount of work expenses vary from state to state. The remaining monthly earnings, after the disregards, are compared against the grant level of the state to determine the amount of AFDC benefit.

C. ELIMINATIONS OF THE CEILING OF FEDERAL FUNDING FOR THE AFDC PROGRAM IN PUERTO RICO, GUAM AND THE VIRGIN ISLANDS

The Aid to Families with Dependent Children (AFDC) program exists in Puerto Rico, Guam and the Virgin Islands, but current law denies those jurisdictions coverage under the same terms as provided to the fifty states. Section 1108 of the Social Security Act imposes absolute ceilings on Federal financial participation for all income maintenance programs in those jurisdictions. Since 1972 the income maintenance ceilings have been $24 million per year in Puerto Rico, $1.1 million in Guam, and $0.8 million in the Virgin Islands. These ceilings represent not only the amount of Federal funds available for costs of administration and benefit payments involved in the AFDC program, but also for cash assistance programs for the aged, blind, and disabled.

The fifty states, by contrast, have no ceilings on Federal financial participation for either payments or the administrative costs of AFDC. A report recently issued by the Under Secretary's Advisory Group on Puerto Rico, Guam and the Virgin Islands stated that the Federal share of the average monthly AFDC grant in Puerto Rico is $4.78 as compared to a U.S. average of $39. (Based on November 1975 data.)

In order to provide equal treatment of U. S. citizens residing on the mainland and in Puerto Rico, Guam and the Virgin Islands, the Committee on Ways and Means recommended the elimination of the ceilings on Federal financial participation for AFDC in those jurisdictions.

D. EXPIRATION OF FEDERAL REIMBURSEMENT FOR CHILD SUPPORT ENFORCEMENT FOR NON-WELFARE RECIPIENTS-JUNE 30, 1977

Public Law 93-647, passed January 4, 1975, required each state to implement a child support enforcement program for the purpose of establishing paternity, locating deserting parents, and collecting child support payments for families on welfare and those not on welfare who request the service. One of the primary goals of the program was to reduce welfare costs by obtaining financial support for dependent children on the welfare rolls. One reason for offering the service to non-welfare individuals upon request was to help prevent future reliance on welfare. The program was also envisioned as a method of deterring fathers from deserting their families.

To cover the costs of the program, 75 percent Federal matching was provided for support and enforcement services to both welfare and non-welfare individuals, but only for one year (until June 30, 1976) for non-welfare individuals. It was intended that after one year the cost of services to non-welfare individuals would be taken over by the states. Under Federal law, states may charge nonwelfare individuals an application fee and may also recover costs in excess of the application fee from the amount of the support payment. Three-fourths of the states currently charge such a fee.

Public Law 94-365, enacted July 14, 1976, extended the 75 percent Federal matching for child support services to non-welfare individuals until June 30, 1977. The American Public Welfare Association, the American Bar Association, and several District Attorneys favored the extension for an additional year to give states adequate time to develop the program and begin collecting sufficient fees for the program to be self-supporting.

The President's fiscal year 1978 budget assumes the expiration on June 30, 1977 of Federal funding for child support services to non-welfare individuals, and the Committee did not recommend an extension. States will still be required to continue a program of child support services to non-welfare individuals. HEW estimates that a one-year extension would cost an estimated $22.5 million in fiscal year 1978.

Mr. CORMAN. Does anyone else want to make a statement before we proceed?

Did you want to make a statement, Mr. Rangel?

Mr. RANGEL. No. I thought there was a prepared statement.
Mr. CORMAN. We have a slight mechanical problem.

We are pleased to welcome a famous Californian, Mr. Hale Champion, to the subcommittee to present the views of the Secretary and the administration.

STATEMENT OF HALE CHAMPION, UNDER SECRETARY OF HEALTH, EDUCATION, AND WELFARE, ACCOMPANIED BY ARABELLA MARTINEZ, ASSISTANT SECRETARY FOR HUMAN DEVELOPMENT; JAMES B. CARDWELL, COMMISSIONER OF SOCIAL SECURITY; AND RICHARD WARDEN, ASSISTANT SECRETARY FOR LEGISLATION

Mr. CHAMPION. Thank you.

It is a pleasure to be here today to discuss the standardization of aid to dependent children (AFDC) work expense disregard and to extend for 1 year the $200 million increase for child day care services under the title XX-social services program-ceiling.

We will also discuss several legislative proposals which the committee has recommended to the Budget Committee for inclusion in the first concurrent budget resolution. These include amendments to the supplemental security income-title XVI-social services grant— title XX-AFDC-title IV-A-and child welfare services-title

IV-B-programs.

As you know, the administration has assigned a high priority to a systematic review of our national welfare system. While the Department is not yet in a position to present specific proposals based on this review, and Secretary Califano will be before you to discuss the principles of that program on Wednesday, we recognize that short-term changes are needed in present programs.

I will comment, first, on those provisions the Ways and Means Committee recommended in its March 15 report to the Budget Committee and then upon a number of supplemental security income issues contained in other bills on which our views were requested. First, with respect to standardization of the AFDC work expense disregard:

The administration is proposing to change provisions of title IV of the Social Security Act which deal with the work expense disregard in the AFDC program. The law now provides for disregarding a portion of the earned income of an AFDC recipient, permitting the recipient to retain the first $30 of earnings plus one-third of the excess earnings over $30 in addition to allowable work expenses, including child care. This built-in financial work incentive was intended to encourage AFDC recipients to continue working and to lead eventually to reduced welfare caseloads.

We believe the present income disregard policy should be changed to avoid the most difficult item, the calculation of work-related expenses. Experience has shown that the present disregard, first, has been a heavy cost item; second, has been a major source of error and administrative confusion; and, third, has created inequities. We propose elimination of the present requirement for itemized calculation of work-related expenses attributable to the earnings of income in determining need under the aid to facilities with dependent children program. We urge instead substitution for this provision a new income disregard in lieu of such itemization of work-related expenses.

This amendment would require States to disregard, first, for purposes of determining need, an amount equal to any expenses which

are for the care of a dependent child and are reasonably attributable to the earning of income.

States would be required to set reasonable limits on expenses which could be covered by this provision. Instead of requiring the disregard of other itemized work-related expenses, this amendment would require States to disregard a percentage of total earned income. The percentage would be limited to not less than 15 percent, nor more than 25 percent, and would be required to be uniformly applied throughout any given State. The amendment would thus eliminate, with respect to all work-related expenses other than day care, the necessity to measure or predict the actual level of such expenses on a case-by-case basis. By requiring the disregard of a percent of gross income, the amendment takes into account the tendency of work-related expenses to rise along with income.

Our proposal would simplify administration, promote equity and understanding, and reduce program costs by approximately $119 million a year. This estimate has been revised from an earlier projected saving of $50 million to reflect the changes made in the proposal as we intend to submit it to the Congress.

Second, with respect to extension of the $200 million increase in the title XX social services ceiling:

In our fiscal year 1978 budget recommendations we requested an extension of the $200 million increase in the title XX social services ceiling to $2.7 billion for fiscal year 1978.

We were pleased to note that the committee has already recommended this extension. We urge the committee to extend for one year other temporary provisions of Public Law 94-401. These provisions relate to State grants to child day care providers for the employment of AFDC recipients, the moratorium on Federal staffing standards in day care centers and group day care homes that serve children 6 weeks to 6 years of age, the exemption from certain service limitations on programs providing services to drug addicts and alcoholics, and the option of State waivers of Federal staffing standards in day care facilities that serve few title XX children.

Next, establishment of an entitlement program for child welfare services title IV-B of the Social Security Act:

Mr. Chairman, we agree with you about the need to strengthen and improve child welfare services. We share your dissatisfaction with the current emphasis in these programs on room and board in foster care, with the lack of preventive services to children and their families, and the lack of sufficient trained staff to provide the needed quality of services.

The committee's proposal, however, would add $209 million to the President's budget for fiscal year 1978. We are unable to support this program expansion at this time. Moreover, as part of our fiscal year 1979 budget and legislative process, which I discussed earlier, we are examining legislation pending in your subcommittee as well as proposals developed outside of Congress.

We agree that additional Federal funds should not be used to supplant current State and local expenditures in the program. We believe the best way to avoid this is to examine ideas for future legislation, such as targeting funds for specific needs, building in