Well, in my testimony I pointed out that shift of foster care from title XX to title XIX was because we thought that was more appropriate.

Mr. JENSEN. The original intent of title XX was to provide incentives against institutional funding. That is why the limitations, such as no money for room and board except if a subordinate part of a social service, no money for medical services if not a subordinate part of a social service.

Now, States are shifting over to pick up funds for those activities under IV-A.

That is the opposite direction as far as the goals of title XX. Mr. CARBALLO. I certainly would agree that it is appropriate to look at the different goals of the different programs.

I think perhaps I don't think anybody feels that foster care placement is the ideal placement. I certainly think that some sort of incentive to move people into more permanent settings, back to their families, or to an adopted setting, is preferable. We are, however, in Wisconsin, subsidizing adoption programs and have been since 1972. We feel that it hasn't been as successful as we expected. That is why we wish to conduct an evaluation to determine what seems to the obstacles.

I believe we should be using IV-A money and title XX for different purposes. We have done so.

Mr. CORMAN. If we cut back the Federal contribution to foster care so that it would still be cheaper for the States to go the adoption route, would that help?

Mr. CARBALLO. We are talking under IV-A?

Mr. CORMAN. Just under the general philosophy of these partnership agreements.

In other words, we will give you so little Federal money that it will be a penalty to you if you waste it.

Mr. CARBALLO. I guess I have to again answer in the Wisconsin context. In that context the people that are currently there, they are extremely dedicated professionals who simply will not look at dollar signs when they are making judgments about kids. That is as it should be.

I think what you are suggesting is that we can make a number of fiscal adjustments that might be of interest to administrators like me but would not necessarily be effective in the field in terms of actual placement decisions, firstly.

Secondly, of the children that are currently in foster care we think, in our case because we do have a subsidized program, we are down to a ridiculous situation.

We have already moved toward providing some incentive for adoption and placement. So, if one were to change the reimbursement schedule in a way that foster care were affected less and adoption more, it would not have necessarily the impact intended. The impact of it would be to simply require the States to pay more for foster

care.

Mr. CORMAN. Well, what if every State did? We wouldn't have to change the law?

Mr. CARBALLO. Well, I cannot answer for other States.

Mr. CORMAN. Wisconsin doesn't need a change in the law?

Mr. CARBALLO. I don't believe it does.

Mr. BOWLER. Tell me how much the State of Wisconsin spends for child welfare services for the preventive services and maintenance under IV-A, IV-B, and title XX.

Mr. CARBALLO. We pay about $14 million in total. I may have more exact figures, if you bear with me for a moment.

Mr. BOWLER. Under the bill we might pass, should this bill prevent the State of Wisconsin from spending any less than $14 million or any less than what it is spending right now?

Mr. CARBALLO. For all child services?

Mr. BOWLER. I am asking this because we have had three or four people testify. Somebody used the phrase "maintainence of efforts." Others talk about refinancing. There seems to be a lot of double talk in terms of terminology. I am just trying to pinpoint down what it is.

Should the bill prevent you from spending less than $14 million if that is the total amount you are spending for child services, maintenance, or whatever?

Mr. CARBALLO. Well, we have no difficulty in the concept although I think one has to look a little bit into the future. The State of Wisconsin today has twice as many 14-year-olds as it has 1-year-olds. Now, although one can assume still some sizeable increase in the cost of doing what we are doing-if we assume a constant, a relatively constant rate of need for foster placement and the like it would appear that the number of children should be declining over time as the birth rate declines. So, therefore, although I would agree in concept with the notion of maintanence of effort, the legal construct that would make that work, perhaps on a per capita basis, needs to be appropriate, it has to be tailored to recognize that the number of children is declining proportionate to the population.

Mr. BOWLER. You generally support a maintanence of efforts in concept. What does that mean to you?

Mr. CARBALLO. That would mean that we in essence must tell the State legislatures that we cannot substitute Federal dollars for some State dollars that we are currently spending.

Mr. BOWLER. What does the concept of refinancing mean? Does that mean something different?

Mr. CARBALLO. I didn't use the phrase and I don't know what the person who used it meant. I guess that it means the substitution of Federal funds for local. But that is a guess.

Mr. JENSEN. One of the requirements in another Federal law, under the LEAA, is deinstitutionalization of children and placement through that system. Some States are moving children from those institutions using IV-A money for that purpose.

Are you doing that in Wisconsin? Is it primarily problems with families or is it problems of the child?

Mr. CARBALLO. It is problems of the child. We include, I would sav, substantially more children in the area of developmental disability than juvenile placement. The bulk of them are problems of the family. Then I would say second in number would be the developmental disability area and third would be the juveniles who are

moved out of a correctional setting, totally, in terms of total expendi

tures.

Mr. JENSEN. One of the things cited in the GAO report was that Congress should look at the use being made of IV-A money for things beyond the original intent of IV-A which I assume was primarily room and board as compared to educational and social services.

How is Wisconsin using that and do you think IV-A should be the single source for a broad range of services?

Mr. CARBALLO. Well, I think we-we think it probably should be the single source of funds but it ought to be subjected to kinds of restraints that would prevent the substitution of Federal dollars for State dollars.

Mr. CORMAN. Thank you very much.

Our next witness is Fred St. Clair of the Mississippi Department of Public Welfare.

Is Mr. St. Clair here?

[No response.]

Mr. CORMAN. Then the next witness is Lynn Cutler of the National Association of Counties.

Ms. JOHNSON. I am Pat Johnson representing the National Association of Counties as well as Los Angeles County.

I am filling in for Supervisor Cutler from Black Hawk County in Iowa who is also the chairperson for social services. In that capacity she represents both the Welfare and Social Services Policy Steering Committee and its affiliate, the National Association of County Welfare Directors, who administer the social services programs that are the subject of these hearings.

Supervisor Cutler made every possible effort to be here to present her testimony before you but the only plane that she could get would have landed at 12:30 today. So, I am glad to have the opportunity to present her testimony on her behalf. So, she will be asking for a favor sometime.

STATEMENT OF LYNN CUTLER, SUPERVISOR, BLACK HAWK COUNTY, IOWA, REPRESENTING THE NATIONAL ASSOCIATION OF COUNTIES, PRESENTED BY PAT JOHNSON, NATIONAL ASSOCIATION OF COUNTIES AND LOS ANGELES COUNTY

Ms. JOHNSON. I want to commend this committee for your serious efforts to address and correct some of the funding and policy problems of the present title XX and title IV-B programs.

The essence of my remarks is that the funding ceiling on title XX must be lifted and that counties must have maximum flexibility in providing the services needed in local communities, within the available funds. I will also address some of the policy issues for social services and the specialized child welfare services, and standardizing the AFDC work expense disregard.

First the title XX funding increase. By now, this committee is of course very familiar with NACO's position on this matter: That the $2.5 billion ceiling must be increased to halt the erosion of services that has been occurring due to inadequate funding; and that the

authorization must be increased annually based on increases in the cost of living. Our steering committee determined that the ceiling should be increased to $3.5 billion for fiscal year 1978, with subsequent adjustments annually to reflect cost of living expenses.

I note from the Ways and Means Committee report to the House Committee that this subcommittee supports extension of the $200 million for child day care that is also part of the President's budget, and I thank you. However, two things concern me. First, that you did not recommend that this be a permanent increase. Second, that you were undecided as to earmarking of the additional funds.

Although this $200 million falls far short of the full $1 billion increase we need for title XX, I urge you to make it a permanent part of the authorization, without earmarking.

As I indicated a few minutes ago, maximum flexibility is needed in the counties to administer services that fit the needs of our communities. Some localities do not need what amounts to the penalty of earmarking chunks of the limited pot of money for certain services. Many States and counties are up to standard in day care provision and they require additional funds for other needed services.

As a longtime day care advocate, I hasten to add that States with inadequate day care programs should be required to upgrade services in that area. This can be done effectively through regulation and monitoring by HEW of the day care standards rather than by legislative earmarking of the funds.

Furthermore, earmarking of funds for any specific service or standard is contrary to the intent of the title XX law, which was to permit local government to deploy their share of social services dollars to those services most suited to their jurisdiction; within the broad guidelines of self-support, self-sufficiency, protection, and enabling persons to choose home care over institutions. It is a good law, and we would like to insure its integrity with adequate funding and by not earmarking.

Next, the title IV-B child welfare services. I certainly applaud your leadership in recommending the full $266 million authorization. NACO also supports the emphasis on services to prevent foster care and to provide alternatives to indefinite or "limbo" foster placement

of kids.

The increased child welfare funding does not in any way decrease or offset the need for title XX services money. It does, however, put some teeth and meaning into a program that is not now very well developed in most places in the Nation. The traditional low level of funding for the title IV-B services described in the law has negated any really effective use of the program to prevent or reduce the incidence of foster care. In many States and counties, the IV-B funds have been used to pay maintenance costs of foster care.

Let me add a cautionary note about the level of funding and the imposition of standards and accountability. Services to provide alternatives to foster care can be very costly; and $266 million for a whole nation is not very much. Proposed requirements for the use of the additional funds should be examined carefully to be sure that some one requirement does not eat up all the money. Once again, flexibility at the local level in use of the funds should be combined with strong Federal guidelines to provide a workable program.

A few additional recommendations for the IV-B increase:

A restriction against use of the child welfare services funds for foster care maintenance payments should be included, to insure that the money does get used for protective and preventive services. We support the proposal to convert IV-B into an entitlement

program.

The IV-B child welfare services should continue to be nonmeans tested.

Like title XX, it must also have an annual cost of living adjustment.

The matching rate should be the same as for title XX.

Strong disincentives to use the funds for maintenance payments should be included.

In order to make alternatives to foster care a viable service, or to insure adequate child welfare services of any sort, increased emphasis on training of staff and foster parents is needed. Increased training funds should be available, but must not be included in the closed end appropriations for title XX or title IV-B.

Voluntary foster care: Very closely tied to this child welfare services issue is that of the Federal limitation on funding of foster care maintenance payment to those situations in which a court order exists. The rationale for not participating in the costs of voluntary foster care must have been to encourage local government to keep families together whenever possible; and that is sound.

But there are many situations that clearly call for a substitute foster home arrangement, for which court intervention could be patently foolish, and which extend for good reason beyond the 14- to 30-day "emergency shelter" period that is federally matchable.

An example is the child whose AFDC mother is hospitalized temporarily yet longer than the federally defined "shelter" period. He was eligible for Federal matching at home on AFDC; eligible for Federal matching for 2 weeks of shelter care; ineligible for the intervening weeks or months until mother returns home, unless we go to court to have a judge tell us (a) that the mother and relatives are unable to care for him, and (b) that he has to be in a foster home a while longer. Then we can claim Federal matching.

Indeed, many such nonlegal situations are being processed through the courts for the sole purpose of securing Federal matching. This is a disservice to the social agencies and the children and parents, especially when families are cooperating in the placement. And, of course, it adds to court costs and wastes legal resources.

NACO recommends that the title IV-B requirement for court ordered determinations as a condition for Federal subvention of foster care be eliminated. The necessary safeguards to prevent its abuse can come through Federal standard setting such as requiring regular and thorough administrative reviews of voluntary placements that extend beyond a given period. These, like the decision for placement, can best be handled by our trained social work staff. Rubberstamping by the legal profession of these decisions where court protection is not required is wasteful and inequitable.

The AFDC work expense disregard: NACO has long supported a standardized work expense deduction, and your committee beard, testimony from us on it last year.